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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/10808-0.txt b/10808-0.txt new file mode 100644 index 0000000..3c43447 --- /dev/null +++ b/10808-0.txt @@ -0,0 +1,873 @@ +*** START OF THE PROJECT GUTENBERG EBOOK 10808 *** + +CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE + +_Published April 1922_ + +_by_ + +The Consumers' League of New York + +289 FOURTH AVENUE + +NEW YORK CITY + + * * * * * + +This study was originally prepared for the Consumers' League of New York +in 1921 by Mr. Cedric Long. It has been revised by the League in April, +1922. The Consumers' League wishes to express its appreciation of the +valuable advice and assistance given by Mr. Louis B. Blachly of the +Bureau of Cooperative Associations of the State Department of Farms and +Markets both in the original preparation of the material and in its +revision. + + * * * * * + + + + +COOPERATIVE PRINCIPLES + +The principles established by the Rochdale Pioneers in England in 1844 +and observed consistently by successful societies since that time are as +follows: + +1. Earnings of capital stock limited to legal or current rate of interest. + +2. Surplus earnings to be returned to members in proportion to patronage. + +3. One vote for each member regardless of amount of stock owned. No +proxy voting permitted. + +In addition, the majority of societies adhere to the following principles: + +1. Business to be done for cash. + +2. Goods to be sold at current market prices. + +3. Education given in the principles and aims of cooperation. + + + + +CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE + +The Extent of Consumers' Cooperation. + +The Tenth International Cooperative Congress, held in Switzerland in +1921, disclosed the fact that since the last Congress, in 1913, the +number of cooperators in the twenty-five countries represented had +increased from approximately eight million to thirty million and that +cooperative trade had increased correspondingly. + +Today in Great Britain the cooperative societies number more than four +million members, nearly one-third of the entire population being +represented in these societies. Switzerland, in 1920, boasted three +hundred and sixty-two thousand members and a third of the Swiss people +bought goods through their own societies. Cooperation is still alive in +Russia in spite of its unsettled economic conditions. In 1920 there were +twenty-five thousand societies with twelve million heads of families. In +the same year the German cooperative societies were two million seven +hundred thousand members strong. + +In the United States cooperation has had an erratic development. Within +the past seven years, however, there has been a rapid increase in new +societies until today it is estimated that there are about three +thousand with a membership of half a million. In number of societies New +York is far behind most of its sister states. It has one hundred and +twenty-five genuine consumers' cooperative associations, seventy-five of +which are among farmer groups and the remaining fifty among city +consumers. There are in addition some twenty cooperative buying groups +connected with large commercial organizations. No complete tabulation +has been made of the total business of all these cooperative groups, but +in 1921 the five largest cooperative societies among the city consumers, +with an average membership of 1,800 persons, all located in New York +City, did a total business of approximately one million dollars. These +societies and many others are prospering. On the other hand there are +many cooperatives which have failed. Whether they have failed or +succeeded more knowledge of practical cooperation can be gained from +their experience than can ever be learned from books. + +The Consumers' League feels that the experience of these societies +should not be wasted. For this reason it is telling the stories of +several cooperatives in New York, some of which are successfully +established and some of which have fallen by the roadside. In these +brief stories are written a hundred lessons that cooperatives should +heed. + + + + +SUCCESSFUL COOPERATION + +The Utica Cooperative Society. + +At the corner of Court and Schuyler Streets in Utica stands a grocery +store which is different from an ordinary store. It is different because +it is a cooperative store and it belongs to those who buy as well as to +those who serve. There is no need for the purchaser to be on guard lest +the bargain be to his disadvantage, for he is dealing with friendly +clerks who are there to help him find what he wants, not to sell him +something he cannot use. In this store the purchaser can find all the +articles carried by a first-class grocer, canned goods, green goods, +dairy products and, in addition, a complete supply of baked goods, baked +by the cooperative society itself. + +The bakery is to be found behind the grocery. Large, high windows throw +a flood of light into the mixing room. The oven is of a modern type, +large, easily controlled and economical. Five men work at the baking and +a boy wraps bread in waxed paper with a mechanical device which +automatically folds and seals. The three delivery wagons bear the +cooperative motto, "Each for All, and All for Each." They are used in +the morning for the delivery of baked goods and in the afternoon for the +delivery of groceries. It keeps three boys busy all day covering the +territory between the cooperators' homes. The delivery system is +essential because the membership is scattered throughout the entire +city. + +There are fourteen employees in the grocery and bakery. Hitherto they +have received wages higher than those generally prevailing throughout +the city for the same kind of work, but recently on their own initiative +they voted themselves a ten per cent decrease. In a cooperative all +members may know the financial status of the business and the employees +found that, due to the diminishing margin of profit, the business could +not support such a high scale of wages. Their wage cut followed because +as members of the cooperative they were interested not only in their own +wages but in the good of the society as a whole. + +The Utica Cooperative Society was organized in 1915 by a group of +Germans. Half a dozen nationalities are now represented, although +Americans predominate. Although they had only ninety-two members and +$1,250 to start, they bought out a private store and began cooperative +business. Their bakery was originally in the cellar under the store. The +former owner was employed as manager. For three or four years they +experienced many difficulties. Within two years two managers proved +inefficient and had to be replaced. Only the tenacious loyalty of a few +kept the society alive. But they had the foresight and determination to +fight through those lean years. + +Now for five years they have had the same manager. He insists upon +scrupulous bookkeeping methods, careful buying, close supervision of his +work by the board of fifteen directors, strict regard for the needs and +desires of the membership, and exceptional precautions against waste and +leakage. The president, a man having a private business of his, own, has +an idealism almost religious in quality. These two men cooperate closely +on matters of policy and provide much of the leadership which has +brought success. + +The membership is now 380. The capital stock has increased from $1,250 +to $27,594. The business in 1921 amounted to $105,598, forty per cent of +which was done by the bakery. Since 1915 the rebates to members on +patronage have totaled $8,207, fluctuating from nothing at all in some +years to eight per cent and ten per cent in other years. During this +period the lump sum saved to purchasers, including rebates, the earnings +on stock shares, and reserve fund, amounted to $12,642. This sum would +have gone into the pockets of private storekeepers except for the +cooperative store. + +The Utica Society has succeeded because it has met the prime +requirements for effective cooperation. The greater part of the +membership was loyal during critical times when the easy way would have +been to withdraw and trade at chain stores. The management worked +unceasingly to put the business on an economical basis. Finally they won +out because they put Service over Profit and carried out that rule in +the most practical and businesslike way they could find. + + * * * * * + +Our Cooperative Cafeteria. + +If you should drop in for lunch at any one of the three branches of our +Cooperative Cafeteria in New York City the first thing that would strike +you would be the friendly spirit of those back of the serving tables. +Before you paid your check you would observe further that the food had a +variety and flavor not found in the ordinary restaurant. If you were +discerning you would detect that a complex machinery was at work which +had nearly escaped you because of its smooth operation. + +That genial spirit which infects the whole place and those subtle things +which appeal to your eye and palate explain the success of the +cafeteria. But there are some underlying causes for these things that we +must get hold of and to do that we must go back to the year 1919. In +October of that year a private cafeteria was started by two women with a +record of successful cafeteria experience behind them. The experiment +proved successful and the following April a momentous step was taken. It +was proposed that the persons who ate there become the owners. A +cooperative society was formed and in two weeks shares were sold to the +value of two thousand dollars. The new owners took over the cafeteria +and the former owners became their hired employees. This was the +beginning of Our Cooperative Cafeteria. + +The cafeteria had from the outset advantages which are gained by many +cooperatives only after bitter and costly experience. They had skillful +and experienced management to which they immediately gave over all +technical control, holding them responsible through an active Board of +Directors and an accounting system devised by experts. The management +justified the confidence of the shareholders. On April 1, 1921, after +one year of operation they had outgrown the first plant and a new branch +had been running for two months. There were in all 379 members. The +year's business had been $96,000, of which $6,000 were net earnings. The +stockholders had received six per cent on their investment, a reserve +fund had been laid aside, and every month the member-patrons had +received rebates on the food eaten of from six per cent to sixteen per +cent. At the end of the second year the third branch, larger than either +of the others, located in the Wall Street business section, had been in +operation for three months. The membership of the society had increased +to 750. The business for the year had been $190,000 and the net earnings +were $12,000. + +The cafeteria now employs sixty-eight workers, most of whom are +shareholders and vote as such in membership meetings. The worker +receives the same food as the patrons, served at the same counter. +Against all restaurant traditions the worker is served before the meal +so that she may have the best there is and have it before she is too +tired to eat it. The minimum wage is higher than the customary rate for +restaurant workers in New York. The forty-eight hour week is the +standard, although as yet some of the help work over that time. Overtime +is one thing that the management has not yet been able wholly to +eliminate. + +It has been found that the policy determining function of the +stockholders and Board of Directors cannot operate independently of the +plans of the management. The two in a business organization must be +closely inter-related. The stockholders have not tried to supervise the +details of the business, as has sometimes been done to the disaster of +cooperatives. The general manager instead has gone to the Board of +Directors and sits there practically as a full member. As a result the +policy function of the Board and the management function are closely +linked together as they must be in a business that is to be permanent. + +The stockholders are not idle, however. Through their committees, they +have amended the by-laws. They have recently called a general meeting +for the consideration of labor policy, and they publish monthly a little +paper known as "The Cooperative Crier." The average attendance at the +shareholders' monthly meetings is sixty or sixty-five. + +To an unusual degree the success of Our Cooperative Cafeteria is bound +up with its management, not only because it is technically expert, but +because it is thoroughly imbued with the cooperative spirit. Around the +first nucleus has grown a staff of intelligent young men and women, +usually college bred, who are devoting all their brains and energy to +see that this cooperative cafeteria succeeds. They seem to find a +peculiar satisfaction in knowing that their efforts will not enrich a +few individuals at the expense of patron and employee alike, but will +increase the common welfare of the community itself. + +Like other cooperatives, the cafeteria has found the need for expert and +trained workers in place of the hard-pressed volunteer. Much of the work +on education and cooperative organization is carried on by trained +members of the staff. This interest of the paid employees in things +other than mere technical efficiency contributes much to that friendly +spirit which makes Our Cooperative Cafeteria unique among the +restaurants of New York. + + * * * * * + +The Village Cooperative Society, Inc. + +After nearly two years of discussion and meetings and after long +consultation with experts a group composed largely of the housewives in +Greenwich Village in the heart of New York City started in January, +1921, a cooperative laundry. The second-hand machinery which they +purchased was not a laundry unit, the capacity of the washer being +one-fourth that of the ironer; they had insufficient capital, half of it +borrowed; they employed an inexperienced manager and a green bookkeeper; +and for the first eight months the supervision was almost entirely +carried on by volunteers, hard working, but without the foresight and +power of control so essential to a new organization. Under these +handicaps the cooperative laundry lost money every month. + +It existed through those months due largely to two things. First, they +were forced almost immediately to employ a new manager who consistently +turned out high grade work, and secondly, a small group of volunteers +put all their energy into making the thing a success. + +Then the causes of the continued failure were one by one eliminated. A +business manager who had an intense interest in cooperation was hired to +supervise general operations. He took over much of the work of the +volunteers and for the first time the laundry developed a well thought +out policy. The inexperienced bookkeeper was eliminated and all +supervision headed up in the new manager. Better service brought more +work, and new machinery made greater output possible without additional +labor. The manager found labor cost too high and introduced methods +which saved both labor and money. He found the machinery badly arranged. +When the plumber told him it would cost twenty-five dollars to rearrange +it he spent a dollar and forty cents and did it himself. After a +discussion in the Board of Directors which nearly wrecked the +organization, a Board policy of leaving all details of management to the +manager and chairman of a managing committee was determined upon, while +the Board devoted itself to the determination of general policies. + +The results of these changes were soon apparent. For the first time the +dead line between losses and earnings was crossed and net earnings +gradually began to mount. In September, 1921, the amount of business +wavered around a hundred dollars a week. In March, 1922, it averaged +about $330 per week, and net earnings have run as high as $75 per week. + +The laundry is still small and is located in quarters for which it pays +a regular commercial rent. It has expanded several times and now has +three power washers, an ironer or mangle, a dry room and other +equipment. It employs a business manager, who supervises the plant and +does everything from keeping the books to collecting the laundry in a +pinch, a work manager, a washer, a sorter and marker, four ironers and a +delivery boy. It still holds hard to the policy of putting out the very +best kind of work and economizing in every particular. + +Its very success has in a way embarrassed the laundry. The manager has +been offered special inducements to leave. The delivery system has been +tampered with. There has even been acid thrown on the clothes by +outsiders jealous of its business. But this has only stimulated the +whole membership to fight harder to realize their aim of getting their +own laundry work done the way they want it, and without profit. + + * * * * * + +The Finnish Cooperative Societies of Brooklyn. + +What is it that makes the Finns so successful at Cooperation? Industry +and cleanliness. At any rate those are the striking characteristics of +the Finns of Brooklyn. + +Up to the present time they have never paid any dividends. It has been +explained to them, as their manager says, that if the business is to +serve them properly it must grow, and in order to grow it needs all the +surplus earnings for expansion. And so, because the members are +industrious and far-sighted, they have foregone their dividends. The +cleanliness of their stores, too, is an inspiration not only to their +membership but to hundreds of others who have visited their plant. This +is one of the biggest business assets they possess. + +These virtues have enabled the Finnish group in Brooklyn to build +cooperatively a three-story modern business block, to run therein a +wholesale bakery, a retail bakery, a meat shop and grocery store, a +cooperative restaurant and a cooperative pool room, to build adjacent to +this two modern cooperative apartment houses and to lay the foundations +for a third now under construction. Outside of the housing venture the +business done last year was $175,000 and today there are nearly two +thousand members. + +Although these undertakings are practically a part of the same group +there are three separate corporations. The largest of these is the +Finnish Cooperative Trading Association, Inc. The restaurant is operated +as the Workers' Cooperative Restaurant, Inc., and the housing +association as the Finnish Homebuilders' Association, Inc. + +The restaurant is the oldest. Seven years ago a group of Finns in this +locality boarded together. Their capital was a hundred dollars which +some one had loaned to them. They ran their little business on a +cooperative basis, paying for the meals and putting back any surplus +into a reserve. No one contributed anything, but before long they paid +back the one hundred dollars. Early in 1922 they incorporated. They then +owned a fine modern restaurant, had done $70,000 worth of business in +1921, and had three thousand dollars in the bank. And no one had ever +paid a cent into the business. With all this they sell their food at +unusually low prices, well cooked, wholesome, and clean. + +In 1917 a larger group determined to have a bakery which came up to +their standards. In 1919 they had raised enough money to start +construction. Then they faced their first test Their money gave out. +Undaunted they organized a money raising "army," as they called it, of +thirty or forty men. The money was raised. By the time the new bakery +was opened they had fourteen hundred members and had raised $140,000. +The total organization expenses for three years came to $400, less than +three-tenths of one per cent for promotion expenses. + +The new business block was opened in May, 1920. All but the restaurant +was under one general manager. He was bonded for $10,000. He had had +business experience in running a cooperative bank in Wisconsin. To him +was delegated a large degree of freedom, but he was held strictly +accountable to the Board of Directors. A thorough and comprehensive +system of bookkeeping and accounting was installed. Each separate +business, the bakeries, the pool room, the meat shop, was put on a cost +accounting basis and the manager knew just which one was making or +losing money. + +All the branches of the business, however, have made money. Over $12,000 +in net earnings, after allowing for interest on the investment, have +been made since the business started. Last year the bakery did business +to the extent of $135,000, the meat market and grocery $58,000, and the +pool room $12,000. Already the business has outgrown its quarters. A new +oven has been added to the bakery. The third floor, which was used +exclusively as a pool room, has been invaded and the thirteen pool +tables rearranged and put closer together so that more room may be had +for bakery products. Adjacent land has been purchased so that the +building itself may be added to. The membership of the Trading +Association alone is eighteen hundred and forty. + +The employees of the association work among almost ideal conditions. The +twelve bakers are all union men and members of the cooperative +association as well. They work seven and one-half hours a day and are +paid from forty-five to fifty dollars per week. The light, airy bakery +is always kept spotless. Adjacent to it is a commodious room with +lockers for each man and two shower baths make it easy to keep clean. +Down on the first floor the retail bakery is so immaculately clean that +you would be willing to defy anyone to find one speck of dust in the +place. Every article of food is under shining glass. The floor is white +tiled. But the food is what attracts one. The pies swell out as if about +to burst. To look at the bread and rolls makes one hungry and to smell +them hungrier still. This, you are told, is because only the purest +ingredients are used. Many bakers use powdered eggs for baking, commonly +imported from China; this cooperative uses only fresh eggs. They buy a +better grade of flour than their competitors do. The same thing is true +of the meat shop next door. They do not aim to make money on their meat. +Their sole aim is to sell only the best. This policy has been so popular +that the quantity sold the first three months of 1922 was almost treble +that for the same months in 1921. And the meat store, too, has made +substantial net earnings. + +The two cooperative apartments which lie adjacent to the business block +house thirty-two families. The apartments contain five rooms and bath +and are thoroughly modern. They are light and airy with high ceilings +and hardwood floors. Needless to say their tenant-owners keep them in +the most immaculate condition. Recently a group of business men, several +of them builders, went through the buildings and many expressed the wish +that they could get similar apartments for three times the money that +these cooperators were paying. For the best apartments the rent has +recently been raised to $31.50 per month. But out of this amount the +tenant-owner is not only paying all upkeep but is paying off the +mortgage at the rate of $1,000 per year. Similar apartments in the +locality rent from $75 to $80 per month. The tenant-owners, of course, +run their apartments on the cooperative plan of one vote per member. + +The members of the Finnish Cooperative Societies of Brooklyn are fast +becoming independent of the middlemen, for cooperation touches them on +many sides. They have learned to serve themselves and they get what they +want, honest goods--and clean. + + + + +COOPERATIVES THAT FAILED + +When one has made mistakes the importance which is attached to them +depends upon the gravity of the consequences. This being the case, the +stones of cooperatives which follow are worth attention, for, as a +result of their mistakes, they are now dead. One of the most pitiful +aspects of cooperative failures is that one group after another will go +on making the identical mistakes that have brought ruin to others. +Sometimes it is the result of sheer ignorance, and sometimes of shameful +negligence. In either case the result is the same--the stockholders lose +their savings and cooperation feels the blow. + +Two years ago the State authorities were called upon to investigate a +cooperative that was about to fail. Several members made the claim that +the officers had defaulted with property of the association. An +accountant was called in to examine the books. After considerable +coaxing the secretary-treasurer unearthed them and turned them over. +They consisted of an old black bag full of all the bills, vouchers and +other scrap paper for the previous six months! Those were his books. He +had sold the store without taking an inventory. When an inventory was +finally made it was found that some of the stock had not turned over for +a year. On one top shelf two hundred pepper shakers full of pepper +stretched half the length of the room. Full value had been paid for this +dead stock and several hundred dollars to boot for "good will." From the +cooperative standpoint the most dangerous thing was that half the +directors had become disgruntled and, though remaining on the Board, +refused to attend meetings. A quorum could not be obtained and for +months the president and treasurer had run the business without +reference to directors or stockholders. The cooperative society failed +and every cent of the four thousand dollars of the cooperators was lost. + +Another cooperative store, this time in the Bronx, was taken over by the +manager within one year. Upon inquiry its directors proudly exhibited +its books. It was a beautiful set costing, they said, nearly +seventy-five dollars. The store had started in November. For November +and the first three days of December everything was kept in good shape. +But during the entire next year not an entry had been made. The +directors had the books, but the manager had the store. The stockholders +lost all their capital. + +A thriving business was being done by still another cooperative store in +New York. At the outset the directors had voted to bond the manager. But +the matter was put off and put off. One day the manager disappeared and +with him two thousand dollars belonging to the cooperative. After a few +months the manager was found, but the money was gone. The loss of the +total sum was more than the cooperative could stand, however, and after +struggling along for a few months, it closed its doors. + +A clever organizer two years ago started organizing a cooperative store +in New York. On the society's letter heads he had printed a picture of +the world and across the world the word "BIG." He was going to start a +whole chain of stores. In three months the first and only store was put +into the hands of an assignee and the man left the city. An audit of his +accounts showed that he had collected $3,600. One-fourth of this had +gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving +only $350 for operating expenses. Where the Finns spent three-tenths of +one per cent for promotion he had spent twenty-five per cent. This had +forced the association to start with so small an operating capital that +it was soon badly embarrassed for lack of funds and could do nothing but +close its doors. + +It would be possible to go on with many other illustrations. Such +failures as these are not really a test of genuine cooperation. Any +ordinary business with such management would also have failed. But it is +significant that most of the recent cooperative failures have been among +grocery stores. In this particular business the margin of profit is so +small that only the most skillful and economical management can bring +success. A recent survey of all the private grocery stores in one city +showed that the average annual profit was only $400 per grocer. + +There is no longer any excuse for cooperatives to follow the blind into +the pit. There are many sources of information and advice available to +cooperatives that should be fully utilized before any money is spent in +a cooperative enterprise that promises only failure. + + + + +FALSE COOPERATIVES + +The impractical cooperative which fails is bad enough, for it +discourages many people from making a second attempt, but the false +cooperative is a greater menace to the cooperative movement. The private +promoter with his selfish interests rigs up a scheme to look like +cooperation, but the actual purpose is to provide a channel whereby +thousands of dollars will flow from the pockets of the working people +into those of the promoter. Inasmuch as New York State has a law which +forbids the use of the word cooperation by any concern which is not +organized under the Cooperative Law, such promoters have to be +uncommonly shrewd. + + * * * * * + +The Glynn System. + +Early in 1920 a group of three or four private business men in Buffalo +established a promoting corporation and then set out to organize a +cooperative wholesale which was to be a separate concern from their +promoting enterprise but was to be controlled by it. The promoters sold +shares in the Buffalo Wholesale to individuals in fifteen or twenty +cities and towns all the way across the central part of the State. They +opened up six or seven stores and handled goods in large quantities +through their wholesale plant. + +The capital was solicited chiefly through labor unions. Elaborate +promises were made to prospective shareholders: they were to have a +local store in their neighborhood, dividends were to be paid regularly, +goods could be bought at prices below those prevailing at the chain +stores and the local group was to have local autonomy. As a matter of +fact the ultimate control was always in the hands of the few promoters +in Buffalo. + +These men had two large sources of revenue from the many transactions +carried on. They exacted from each member five dollars "for organizing +expenses," and they took a commission on all the business handled +through the wholesale. + +By the spring of 1921 some of the members in one or two centers became +suspicious, and began an investigation. They found that stores were in +many cases grossly mismanaged. One manager had absconded with $600. +Organizing or promoting expenses in some places were as high as +thirty-three per cent. The weekly newspaper was discontinued for lack of +funds. Some wholesale merchants finally refused to give further credit +to the Buffalo headquarters and at the end of the first year of +operation one of the office force confided to a friend that there was a +ten thousand dollar deficit. When bankruptcy was finally declared in +midsummer, the promoters were not to be found. The principal organizer, +an ardent friend of labor for many years, had been completely duped by +these promoters and was left penniless and alone to face hundreds of +investors. Cooperation was put in disrepute for thousands of men and +women in dozens of cities and towns throughout the State. + +Cooperation cannot be developed downward from a central wholesale +organization with a corps of organizers, nor will it grow when built +upon mercenary motives. In this case organized labor in the state was +partly to blame for not heeding the warning of a few groups of +cooperators who were aware of the nature of the concern early in its +history. But the ultimate blame lies with the individual men and women +who joined the corporation without looking carefully into its +organization. + + * * * * * + +The Cooperative Society of America. + +In 1920 The Cooperative Society of America was doing a flourishing +business in Chicago and vicinity. One of the leaders of the enterprise +went to Europe in 1921 and convinced most of the leading cooperators of +those countries that he was the greatest power in the cooperative +movement in the United States. By the summer of 1921, the agents of the +principal promoter of this scheme, Harrison Parker, were operating in +New York City, and scores of salesmen were covering the various boroughs +selling stock. Within two weeks all the agencies interested in +protecting cooperation were organized to fight this fraud. The matter +was placed in the hands of the Attorney General and a special deputy +appointed to prosecute. The leading newspapers ran an expose of its +operations. At this juncture, the Chicago headquarters suddenly went +into the hands of a receiver and the New York office closed its doors. + +Late in the year federal action was instituted against Harrison Parker +in Chicago. The entire business of the so-called cooperative was +disclosed to the courts. It was found that 81,000 people had invested +fifteen millions in this gigantic fraud. Here in New York there were +many hundreds, if not several thousands, of men and women who lost large +sums of money in the ensuing bankruptcy. These people were taken in by +the dramatic appeal to their selfish interests. The Chicago organization +showed them photographs of the "massive buildings" in Chicago in which +it was doing business, spoke glibly of its banking and insurance +departments, and then promised them a share in the spoils if they would +pay $75 for their certificates which were worth only $25 or $50 at their +face value. + +That so many people could be duped by these "get-rich-quick" methods is +an indication of the amazing lack of cooperative understanding which +prevails in the United States. It is a part of the purpose of this +Bulletin to correct the misunderstanding which prevails because of the +fraudulent use of the word cooperation. In the case of a suspected false +cooperative, test it by the Rochdale principles. If it fails to measure +up to them take the matter up directly with the State authorities or the +Cooperative League of America. + + + + +HOW TO START A COOPERATIVE ENTERPRISE IN NEW YORK STATE + +In starting a cooperative enterprise two things must be considered: +first, the kind of business to go into and, second, the method of +organization. Any group desiring to engage in a cooperative venture +should first of all, through a committee and by consultation with +experts, determine what type of enterprise will serve them most +effectively. Where competition is unusually keen and profit margins are +low, cooperation is less likely to be of service than where the opposite +is the case. Whatever enterprise is started men experienced in that +business should be consulted as to the location of the business, the +stock and equipment needed, the operating capital necessary, etc. + +Preliminary organization should likewise be handled by a committee which +might estimate the number of persons who would become members, the +service each could contribute to the society, etc. Meetings should be +held to educate the group in both cooperation and the special need of +the undertaking. For this purpose many educational bulletins may be +obtained from the Cooperative League of America and other reliable +sources. + +Actual organization of the society consists of incorporation, election +of officers, the adoption of by-laws, and the immediate adoption of a +sound system of bookkeeping. No action undertaken before incorporation +has any legal effect on an incorporated body, so early incorporation is +desirable. The New York State law requires that all firms using the word +"cooperation" incorporate under one of the three state cooperative laws. +Outside of farmers' cooperatives practically all cooperative societies +are incorporated under the Stock Law known as Article III. Copies of +these laws may be obtained from the State Department of Farms and +Markets. The Department has prepared simple forms for incorporation +under this law. When these are filled out and sworn to and the papers +filed with the Secretary of State and the County Clerk, the society may +legally begin business. The fee of the Secretary of State is $30. A +board of directors is named in the incorporation papers and this board, +through a paid manager, will transact the society's business. Model +by-laws, upon which the by-laws controlling the organization may be +based, may be obtained from the State Department of Farms and Markets or +from the Cooperative League of America. + + + + +THE PRESENT TREND OF COOPERATION + +There have been significant developments in the cooperative enterprise +in New York in the last two years. In the first place while a number of +small groceries closed their doors, the larger cooperatives have grown +larger and more prosperous. At last there appear to have developed +cooperatives which have passed that critical stage connected with the +life of a newly-organized business. One of these larger cooperatives, +which did over $200,000 worth of business in 1921, has turned its +surplus into its business ever since it started and is now buying more +land to erect a second business block in order to take care of expansion +which is forced upon it by the growing trade. Another cooperative has +established two prosperous branches and is now doing a business of a +quarter of a million dollars a year. A third, following a profitable +year in which its business amounted to $205,000, is likewise building a +new plant. The balance sheets of each of these associations would be the +envy of most business undertakings. + +A second development is the appearance of a new type of management. A +group of younger men and women with a broad background, an intense +interest in cooperation and a capacity of growing up with the business +is working now to make these cooperatives even more successful. The +cooperative movement is likely to grow in pretty close proportion to the +ability of these leaders and the men and women they can attach to +themselves. Heretofore the greatest handicap of the cooperative movement +in this country has been the lack of trained and able leaders. + +A third significant development is the adoption by cooperatives of the +best methods of management and accounting. Until this had been done the +cooperatives had small chance of succeeding. It is probable that +cooperatives which lack some of the incentives of the ordinary +commercial business will be compelled constantly to adopt the most +efficient and advanced type of machinery. In setting this up as a +definite standard they will escape the inertia and conservatism that +ordinarily characterize large groups, a condition which at the present +time is retarding the British cooperative movement. Two years ago +accurate accounting was an unusual thing among cooperatives. At the +present time practically all the cooperatives in the State have their +books gone over periodically by trained public accountants. + +A still further trend in the cooperative development is the extension of +the movement into new lines of business. To this extent the failure of +cooperative grocery stores has had a beneficial effect since it has +forced groups to undertake different kinds of cooperative business. In +New York City at the present time cooperatives are engaged in such +diverse business as that of restaurants, cafeterias, bakeries, coal +associations, pool rooms, printing establishments, meat stores and +laundries. This means that the cooperatives are not following tradition +but are thinking for themselves and are selecting that enterprise which +will serve them most effectively. In going into these businesses where +profits are greatest they are not only prospering themselves but they +are performing one of their most legitimate functions, that of +protecting the consumer from extortionate profits. + + + + +BIBLIOGRAPHY + +Books + + Bubnoff, J.V. The Cooperative Movement in Russia. 162 p. Manchester, + 1917. + + Faber, Harold. Cooperation in Danish Agriculture. 176 p. London, 1918. + + Gebhard, Hannes. Cooperation in Finland. 190 p. London, 1916. + + [A] Gide, Charles. Consumers' Cooperative Societies (trans. from the + French). 251 p. Manchester, 1921. + + [A] Harris, Emerson P. Cooperation, The Hope of the Consumer. 328 p. + New York, Macmillan Company, 1918. + + Howe, Frederick C. Denmark, A Cooperative Commonwealth. 203 p. New + York, Harcourt, Brace and Company, 1921. + + Johns Hopkins University Studies, Vol. VI. History of Cooperation in + the United States. 540 p. Baltimore, 1888. + + Nicholson, Isa. Our Story. 80 p. Manchester, 1918. + + Powell, G. Harold. Cooperation in Agriculture. 327 p. New York, + Macmillan Company, 1913. + + Redfern, Percy. The Story of the Cooperative Wholesale Society. 439 p. + Manchester, 1913. + + Redfern, Percy. The Consumer's Place in Society. 107 p. Manchester, + 1920. + + Smith-Gordon and Staples. Rural Reconstruction in Ireland. 279 p. + London, 1917. + + [A] Sonnischsen, Albert. Consumers' Cooperation. 223 p. New York, + Macmillan Company, 1919. + + [A] Webb, Catherine. Industrial Cooperation. 278 p. Manchester, 1917. + + [A] Webb, Beatrice and Sidney. The Consumers' Cooperative Movement. + 504 p. London, 1921. + + [A] Woolf, Leonard. Cooperation and the Future of Industry. 141 p. + London, 1918. + + Woolf, Leonard. Socialism and Cooperation. 129 p. London, 1921. + + Transactions of American Cooperative Convention. New York, + Cooperative League of America, 1918 and 1921. + + People's Year Book, Annual of the English and Scottish Wholesale + Societies. London, 1921. + +[Footnote A: Best books on the subject.] + + +Magazines + + Cooperation. The Cooperative League of America, New York, N.Y. + + The Canadian Cooperator. Brantford, Ontario, Canada. + + The International Cooperative Bulletin. 14 Great Smith Street, + Westminster, London, England. + + +Pamphlets + +Historical + + Consumers' Cooperation in New York City. Bulletin of the Division of + Foods and Markets for May, 1920. Prepared in cooperation with The + Consumers' League of New York City. + + An Idea That Grew. Genevieve M. Fox. National Board, Young Women's + Christian Association, 600 Lexington Avenue, New York City. + + +The following are pamphlets of the Cooperative League of America: + + Story of Cooperation. + + British Cooperative Movement. + + A Baker and What He Baked. + + The Control of Industry by the People through the Cooperative Movement. + + Cooperative Consumers' Movement in the United States. + + Cooperative Movement (Yiddish). + + +Technical. + + Credit Union and Cooperative Store. Arthur Ham. The Russell Sage + Foundation, 130 East 22nd Street, New York City. + + +The following are pamphlets of the Department of Farms and Markets: + + Cooperative Housing. + + Article 3, Stock Cooperative Law. + + By-laws for Cooperative Associations organized under Article 3, Stock + Cooperative Law. + + Article 21, Membership Cooperative Law. + + By-laws for Cooperative Associations organized under Article 21, + Membership Cooperative Law. + + Article 13 A, Farmers' Cooperative Law. + + By-laws for Cooperative Associations organized under Article 13 A, + Farmers' Cooperative Law. + + +The following are pamphlets of the Cooperative League of America: + + How to Start and Run a Rochdale Cooperative Store. + + System of Store Records and Accounts. + + A Model Constitution and By-Laws for a Cooperative Society. + + Cooperative Education. Duties of Educational Committee Defined. + + How to Start a Cooperative Wholesale. + + Why Cooperative Stores Fail. + + Cooperative Housebuilding. + + Cooperative Housing for Europe's Homeless. + + + + + + +End of the Project Gutenberg EBook of Consumers' Cooperative Societies in +New York State, by The Consumers' League of New York + +*** END OF THE PROJECT GUTENBERG EBOOK 10808 *** diff --git a/10808-h/10808-h.htm b/10808-h/10808-h.htm new file mode 100644 index 0000000..b713858 --- /dev/null +++ b/10808-h/10808-h.htm @@ -0,0 +1,1120 @@ +<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"> +<html> +<head> +<meta http-equiv="Content-Type" + content="text/html; charset=UTF-8"> +<title>The Project Gutenberg eBook of + Consumers' Cooperative Societies in New York State, + by The Consumers' League of New York. +</title> +<style type="text/css"> + <!-- + * { font-family: Times;} + P { text-indent: 1em; + margin-top: .75em; + font-size: 12pt; + text-align: justify; + margin-bottom: .75em; } + H1,H2,H3,H4,H5,H6 { text-align: center; } + HR { width: 33%; } + PRE { font-family: Courier, monospaced; } + // --> +</style> +</head> +<body> +<div>*** START OF THE PROJECT GUTENBERG EBOOK 10808 ***</div> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<h1>CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE</h1> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<center> +<i>Published April 1922</i> +<br> +<i>by</i> +<br> +<h3>The Consumers' League of New York</h3> +289 FOURTH AVENUE +<br> +NEW YORK CITY +</center> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<hr> +<p> +This study was originally prepared for the Consumers' League of New York +in 1921 by Mr. Cedric Long. It has been revised by the League in April, +1922. The Consumers' League wishes to express its appreciation of the +valuable advice and assistance given by Mr. Louis B. Blachly of the +Bureau of Cooperative Associations of the State Department of Farms and +Markets both in the original preparation of the material and in its +revision. +</p> +<hr> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<h2> + Contents. +</h2> + +<table border=0 summary="" align="center"> +<tr> +<td> +<hr> +<a href="#RULE4_1">Cooperative Principles</a><br> +<a href="#RULE4_2">Consumers' Cooperative Societies in New York State</a><br> +<a href="#RULE4_3">Successful Cooperation</a><br> +<a href="#RULE4_4">Cooperatives that Failed</a><br> +<a href="#RULE4_5">False Cooperatives</a><br> +<a href="#RULE4_6">How to Start a Cooperative Enterprise in New York State</a><br> +<a href="#RULE4_7">The Present Trend of Cooperation</a><br> +<a href="#BIB">Bibliography</a> +<hr> +</td> +</tr> +</table> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_1"><!-- RULE4 1 --></a> +<h2> + COOPERATIVE PRINCIPLES +</h2> + +<p> +The principles established by the Rochdale Pioneers in England in 1844 +and observed consistently by successful societies since that time are as +follows: +</p> +<p> +1. Earnings of capital stock limited to legal or current rate of interest. +</p> +<p> +2. Surplus earnings to be returned to members in proportion to patronage. +</p> +<p> +3. One vote for each member regardless of amount of stock owned. No +proxy voting permitted. +</p> +<p> +In addition, the majority of societies adhere to the following principles: +</p> +<p> +1. Business to be done for cash. +</p> +<p> +2. Goods to be sold at current market prices. +</p> +<p> +3. Education given in the principles and aims of cooperation. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_2"><!-- RULE4 2 --></a> +<h2> + CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE +</h2> + +<p> +<b>The Extent of Consumers' Cooperation</b>. +</p> +<p> +The Tenth International Cooperative Congress, held in Switzerland in +1921, disclosed the fact that since the last Congress, in 1913, the +number of cooperators in the twenty-five countries represented had +increased from approximately eight million to thirty million and that +cooperative trade had increased correspondingly. +</p> +<p> +Today in Great Britain the cooperative societies number more than four +million members, nearly one-third of the entire population being +represented in these societies. Switzerland, in 1920, boasted three +hundred and sixty-two thousand members and a third of the Swiss people +bought goods through their own societies. Cooperation is still alive in +Russia in spite of its unsettled economic conditions. In 1920 there were +twenty-five thousand societies with twelve million heads of families. In +the same year the German cooperative societies were two million seven +hundred thousand members strong. +</p> +<p> +In the United States cooperation has had an erratic development. Within +the past seven years, however, there has been a rapid increase in new +societies until today it is estimated that there are about three +thousand with a membership of half a million. In number of societies New +York is far behind most of its sister states. It has one hundred and +twenty-five genuine consumers' cooperative associations, seventy-five of +which are among farmer groups and the remaining fifty among city +consumers. There are in addition some twenty cooperative buying groups +connected with large commercial organizations. No complete tabulation +has been made of the total business of all these cooperative groups, but +in 1921 the five largest cooperative societies among the city consumers, +with an average membership of 1,800 persons, all located in New York +City, did a total business of approximately one million dollars. These +societies and many others are prospering. On the other hand there are +many cooperatives which have failed. Whether they have failed or +succeeded more knowledge of practical cooperation can be gained from +their experience than can ever be learned from books. +</p> +<p> +The Consumers' League feels that the experience of these societies +should not be wasted. For this reason it is telling the stories of +several cooperatives in New York, some of which are successfully +established and some of which have fallen by the roadside. In these +brief stories are written a hundred lessons that cooperatives should +heed. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_3"><!-- RULE4 3 --></a> +<h2> + SUCCESSFUL COOPERATION +</h2> + +<p> +<b>The Utica Cooperative Society</b>. +</p> +<p> +At the corner of Court and Schuyler Streets in Utica stands a grocery +store which is different from an ordinary store. It is different because +it is a cooperative store and it belongs to those who buy as well as to +those who serve. There is no need for the purchaser to be on guard lest +the bargain be to his disadvantage, for he is dealing with friendly +clerks who are there to help him find what he wants, not to sell him +something he cannot use. In this store the purchaser can find all the +articles carried by a first-class grocer, canned goods, green goods, +dairy products and, in addition, a complete supply of baked goods, baked +by the cooperative society itself. +</p> +<p> +The bakery is to be found behind the grocery. Large, high windows throw +a flood of light into the mixing room. The oven is of a modern type, +large, easily controlled and economical. Five men work at the baking and +a boy wraps bread in waxed paper with a mechanical device which +automatically folds and seals. The three delivery wagons bear the +cooperative motto, "Each for All, and All for Each." They are used in +the morning for the delivery of baked goods and in the afternoon for the +delivery of groceries. It keeps three boys busy all day covering the +territory between the cooperators' homes. The delivery system is +essential because the membership is scattered throughout the entire +city. +</p> +<p> +There are fourteen employees in the grocery and bakery. Hitherto they +have received wages higher than those generally prevailing throughout +the city for the same kind of work, but recently on their own initiative +they voted themselves a ten per cent decrease. In a cooperative all +members may know the financial status of the business and the employees +found that, due to the diminishing margin of profit, the business could +not support such a high scale of wages. Their wage cut followed because +as members of the cooperative they were interested not only in their own +wages but in the good of the society as a whole. +</p> +<p> +The Utica Cooperative Society was organized in 1915 by a group of +Germans. Half a dozen nationalities are now represented, although +Americans predominate. Although they had only ninety-two members and +$1,250 to start, they bought out a private store and began cooperative +business. Their bakery was originally in the cellar under the store. The +former owner was employed as manager. For three or four years they +experienced many difficulties. Within two years two managers proved +inefficient and had to be replaced. Only the tenacious loyalty of a few +kept the society alive. But they had the foresight and determination to +fight through those lean years. +</p> +<p> +Now for five years they have had the same manager. He insists upon +scrupulous bookkeeping methods, careful buying, close supervision of his +work by the board of fifteen directors, strict regard for the needs and +desires of the membership, and exceptional precautions against waste and +leakage. The president, a man having a private business of his, own, has +an idealism almost religious in quality. These two men cooperate closely +on matters of policy and provide much of the leadership which has +brought success. +</p> +<p> +The membership is now 380. The capital stock has increased from $1,250 +to $27,594. The business in 1921 amounted to $105,598, forty per cent of +which was done by the bakery. Since 1915 the rebates to members on +patronage have totaled $8,207, fluctuating from nothing at all in some +years to eight per cent and ten per cent in other years. During this +period the lump sum saved to purchasers, including rebates, the earnings +on stock shares, and reserve fund, amounted to $12,642. This sum would +have gone into the pockets of private storekeepers except for the +cooperative store. +</p> +<p> +The Utica Society has succeeded because it has met the prime +requirements for effective cooperation. The greater part of the +membership was loyal during critical times when the easy way would have +been to withdraw and trade at chain stores. The management worked +unceasingly to put the business on an economical basis. Finally they won +out because they put Service over Profit and carried out that rule in +the most practical and businesslike way they could find. +</p> +<hr> +<p> +<b>Our Cooperative Cafeteria</b>. +</p> +<p> +If you should drop in for lunch at any one of the three branches of our +Cooperative Cafeteria in New York City the first thing that would strike +you would be the friendly spirit of those back of the serving tables. +Before you paid your check you would observe further that the food had a +variety and flavor not found in the ordinary restaurant. If you were +discerning you would detect that a complex machinery was at work which +had nearly escaped you because of its smooth operation. +</p> +<p> +That genial spirit which infects the whole place and those subtle things +which appeal to your eye and palate explain the success of the +cafeteria. But there are some underlying causes for these things that we +must get hold of and to do that we must go back to the year 1919. In +October of that year a private cafeteria was started by two women with a +record of successful cafeteria experience behind them. The experiment +proved successful and the following April a momentous step was taken. It +was proposed that the persons who ate there become the owners. A +cooperative society was formed and in two weeks shares were sold to the +value of two thousand dollars. The new owners took over the cafeteria +and the former owners became their hired employees. This was the +beginning of Our Cooperative Cafeteria. +</p> +<p> +The cafeteria had from the outset advantages which are gained by many +cooperatives only after bitter and costly experience. They had skillful +and experienced management to which they immediately gave over all +technical control, holding them responsible through an active Board of +Directors and an accounting system devised by experts. The management +justified the confidence of the shareholders. On April 1, 1921, after +one year of operation they had outgrown the first plant and a new branch +had been running for two months. There were in all 379 members. The +year's business had been $96,000, of which $6,000 were net earnings. The +stockholders had received six per cent on their investment, a reserve +fund had been laid aside, and every month the member-patrons had +received rebates on the food eaten of from six per cent to sixteen per +cent. At the end of the second year the third branch, larger than either +of the others, located in the Wall Street business section, had been in +operation for three months. The membership of the society had increased +to 750. The business for the year had been $190,000 and the net earnings +were $12,000. +</p> +<p> +The cafeteria now employs sixty-eight workers, most of whom are +shareholders and vote as such in membership meetings. The worker +receives the same food as the patrons, served at the same counter. +Against all restaurant traditions the worker is served before the meal +so that she may have the best there is and have it before she is too +tired to eat it. The minimum wage is higher than the customary rate for +restaurant workers in New York. The forty-eight hour week is the +standard, although as yet some of the help work over that time. Overtime +is one thing that the management has not yet been able wholly to +eliminate. +</p> +<p> +It has been found that the policy determining function of the +stockholders and Board of Directors cannot operate independently of the +plans of the management. The two in a business organization must be +closely inter-related. The stockholders have not tried to supervise the +details of the business, as has sometimes been done to the disaster of +cooperatives. The general manager instead has gone to the Board of +Directors and sits there practically as a full member. As a result the +policy function of the Board and the management function are closely +linked together as they must be in a business that is to be permanent. +</p> +<p> +The stockholders are not idle, however. Through their committees, they +have amended the by-laws. They have recently called a general meeting +for the consideration of labor policy, and they publish monthly a little +paper known as "The Cooperative Crier." The average attendance at the +shareholders' monthly meetings is sixty or sixty-five. +</p> +<p> +To an unusual degree the success of Our Cooperative Cafeteria is bound +up with its management, not only because it is technically expert, but +because it is thoroughly imbued with the cooperative spirit. Around the +first nucleus has grown a staff of intelligent young men and women, +usually college bred, who are devoting all their brains and energy to +see that this cooperative cafeteria succeeds. They seem to find a +peculiar satisfaction in knowing that their efforts will not enrich a +few individuals at the expense of patron and employee alike, but will +increase the common welfare of the community itself. +</p> +<p> +Like other cooperatives, the cafeteria has found the need for expert and +trained workers in place of the hard-pressed volunteer. Much of the work +on education and cooperative organization is carried on by trained +members of the staff. This interest of the paid employees in things +other than mere technical efficiency contributes much to that friendly +spirit which makes Our Cooperative Cafeteria unique among the +restaurants of New York. +</p> + +<hr> +<p> +<b>The Village Cooperative Society, Inc.</b> +</p> + +<p> +After nearly two years of discussion and meetings and after long +consultation with experts a group composed largely of the housewives in +Greenwich Village in the heart of New York City started in January, +1921, a cooperative laundry. The second-hand machinery which they +purchased was not a laundry unit, the capacity of the washer being +one-fourth that of the ironer; they had insufficient capital, half of it +borrowed; they employed an inexperienced manager and a green bookkeeper; +and for the first eight months the supervision was almost entirely +carried on by volunteers, hard working, but without the foresight and +power of control so essential to a new organization. Under these +handicaps the cooperative laundry lost money every month. +</p> +<p> +It existed through those months due largely to two things. First, they +were forced almost immediately to employ a new manager who consistently +turned out high grade work, and secondly, a small group of volunteers +put all their energy into making the thing a success. +</p> +<p> +Then the causes of the continued failure were one by one eliminated. A +business manager who had an intense interest in cooperation was hired to +supervise general operations. He took over much of the work of the +volunteers and for the first time the laundry developed a well thought +out policy. The inexperienced bookkeeper was eliminated and all +supervision headed up in the new manager. Better service brought more +work, and new machinery made greater output possible without additional +labor. The manager found labor cost too high and introduced methods +which saved both labor and money. He found the machinery badly arranged. +When the plumber told him it would cost twenty-five dollars to rearrange +it he spent a dollar and forty cents and did it himself. After a +discussion in the Board of Directors which nearly wrecked the +organization, a Board policy of leaving all details of management to the +manager and chairman of a managing committee was determined upon, while +the Board devoted itself to the determination of general policies. +</p> +<p> +The results of these changes were soon apparent. For the first time the +dead line between losses and earnings was crossed and net earnings +gradually began to mount. In September, 1921, the amount of business +wavered around a hundred dollars a week. In March, 1922, it averaged +about $330 per week, and net earnings have run as high as $75 per week. +</p> +<p> +The laundry is still small and is located in quarters for which it pays +a regular commercial rent. It has expanded several times and now has +three power washers, an ironer or mangle, a dry room and other +equipment. It employs a business manager, who supervises the plant and +does everything from keeping the books to collecting the laundry in a +pinch, a work manager, a washer, a sorter and marker, four ironers and a +delivery boy. It still holds hard to the policy of putting out the very +best kind of work and economizing in every particular. +</p> +<p> +Its very success has in a way embarrassed the laundry. The manager has +been offered special inducements to leave. The delivery system has been +tampered with. There has even been acid thrown on the clothes by +outsiders jealous of its business. But this has only stimulated the +whole membership to fight harder to realize their aim of getting their +own laundry work done the way they want it, and without profit. +</p> +<hr> + +<b>The Finnish Cooperative Societies of Brooklyn.</b> + +<p> +What is it that makes the Finns so successful at Cooperation? Industry +and cleanliness. At any rate those are the striking characteristics of +the Finns of Brooklyn. +</p> +<p> +Up to the present time they have never paid any dividends. It has been +explained to them, as their manager says, that if the business is to +serve them properly it must grow, and in order to grow it needs all the +surplus earnings for expansion. And so, because the members are +industrious and far-sighted, they have foregone their dividends. The +cleanliness of their stores, too, is an inspiration not only to their +membership but to hundreds of others who have visited their plant. This +is one of the biggest business assets they possess. +</p> +<p> +These virtues have enabled the Finnish group in Brooklyn to build +cooperatively a three-story modern business block, to run therein a +wholesale bakery, a retail bakery, a meat shop and grocery store, a +cooperative restaurant and a cooperative pool room, to build adjacent to +this two modern cooperative apartment houses and to lay the foundations +for a third now under construction. Outside of the housing venture the +business done last year was $175,000 and today there are nearly two +thousand members. +</p> +<p> +Although these undertakings are practically a part of the same group +there are three separate corporations. The largest of these is the +Finnish Cooperative Trading Association, Inc. The restaurant is operated +as the Workers' Cooperative Restaurant, Inc., and the housing +association as the Finnish Homebuilders' Association, Inc. +</p> +<p> +The restaurant is the oldest. Seven years ago a group of Finns in this +locality boarded together. Their capital was a hundred dollars which +some one had loaned to them. They ran their little business on a +cooperative basis, paying for the meals and putting back any surplus +into a reserve. No one contributed anything, but before long they paid +back the one hundred dollars. Early in 1922 they incorporated. They then +owned a fine modern restaurant, had done $70,000 worth of business in +1921, and had three thousand dollars in the bank. And no one had ever +paid a cent into the business. With all this they sell their food at +unusually low prices, well cooked, wholesome, and clean. +</p> +<p> +In 1917 a larger group determined to have a bakery which came up to +their standards. In 1919 they had raised enough money to start +construction. Then they faced their first test Their money gave out. +Undaunted they organized a money raising "army," as they called it, of +thirty or forty men. The money was raised. By the time the new bakery +was opened they had fourteen hundred members and had raised $140,000. +The total organization expenses for three years came to $400, less than +three-tenths of one per cent for promotion expenses. +</p> +<p> +The new business block was opened in May, 1920. All but the restaurant +was under one general manager. He was bonded for $10,000. He had had +business experience in running a cooperative bank in Wisconsin. To him +was delegated a large degree of freedom, but he was held strictly +accountable to the Board of Directors. A thorough and comprehensive +system of bookkeeping and accounting was installed. Each separate +business, the bakeries, the pool room, the meat shop, was put on a cost +accounting basis and the manager knew just which one was making or +losing money. +</p> +<p> +All the branches of the business, however, have made money. Over $12,000 +in net earnings, after allowing for interest on the investment, have +been made since the business started. Last year the bakery did business +to the extent of $135,000, the meat market and grocery $58,000, and the +pool room $12,000. Already the business has outgrown its quarters. A new +oven has been added to the bakery. The third floor, which was used +exclusively as a pool room, has been invaded and the thirteen pool +tables rearranged and put closer together so that more room may be had +for bakery products. Adjacent land has been purchased so that the +building itself may be added to. The membership of the Trading +Association alone is eighteen hundred and forty. +</p> +<p> +The employees of the association work among almost ideal conditions. The +twelve bakers are all union men and members of the cooperative +association as well. They work seven and one-half hours a day and are +paid from forty-five to fifty dollars per week. The light, airy bakery +is always kept spotless. Adjacent to it is a commodious room with +lockers for each man and two shower baths make it easy to keep clean. +Down on the first floor the retail bakery is so immaculately clean that +you would be willing to defy anyone to find one speck of dust in the +place. Every article of food is under shining glass. The floor is white +tiled. But the food is what attracts one. The pies swell out as if about +to burst. To look at the bread and rolls makes one hungry and to smell +them hungrier still. This, you are told, is because only the purest +ingredients are used. Many bakers use powdered eggs for baking, commonly +imported from China; this cooperative uses only fresh eggs. They buy a +better grade of flour than their competitors do. The same thing is true +of the meat shop next door. They do not aim to make money on their meat. +Their sole aim is to sell only the best. This policy has been so popular +that the quantity sold the first three months of 1922 was almost treble +that for the same months in 1921. And the meat store, too, has made +substantial net earnings. +</p> +<p> +The two cooperative apartments which lie adjacent to the business block +house thirty-two families. The apartments contain five rooms and bath +and are thoroughly modern. They are light and airy with high ceilings +and hardwood floors. Needless to say their tenant-owners keep them in +the most immaculate condition. Recently a group of business men, several +of them builders, went through the buildings and many expressed the wish +that they could get similar apartments for three times the money that +these cooperators were paying. For the best apartments the rent has +recently been raised to $31.50 per month. But out of this amount the +tenant-owner is not only paying all upkeep but is paying off the +mortgage at the rate of $1,000 per year. Similar apartments in the +locality rent from $75 to $80 per month. The tenant-owners, of course, +run their apartments on the cooperative plan of one vote per member. +</p> +<p> +The members of the Finnish Cooperative Societies of Brooklyn are fast +becoming independent of the middlemen, for cooperation touches them on +many sides. They have learned to serve themselves and they get what they +want, honest goods—and clean. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_4"><!-- RULE4 4 --></a> +<h2> + COOPERATIVES THAT FAILED +</h2> + +<p> +When one has made mistakes the importance which is attached to them +depends upon the gravity of the consequences. This being the case, the +stones of cooperatives which follow are worth attention, for, as a +result of their mistakes, they are now dead. One of the most pitiful +aspects of cooperative failures is that one group after another will go +on making the identical mistakes that have brought ruin to others. +Sometimes it is the result of sheer ignorance, and sometimes of shameful +negligence. In either case the result is the same—the stockholders lose +their savings and cooperation feels the blow. +</p> +<p> +Two years ago the State authorities were called upon to investigate a +cooperative that was about to fail. Several members made the claim that +the officers had defaulted with property of the association. An +accountant was called in to examine the books. After considerable +coaxing the secretary-treasurer unearthed them and turned them over. +They consisted of an old black bag full of all the bills, vouchers and +other scrap paper for the previous six months! Those were his books. He +had sold the store without taking an inventory. When an inventory was +finally made it was found that some of the stock had not turned over for +a year. On one top shelf two hundred pepper shakers full of pepper +stretched half the length of the room. Full value had been paid for this +dead stock and several hundred dollars to boot for "good will." From the +cooperative standpoint the most dangerous thing was that half the +directors had become disgruntled and, though remaining on the Board, +refused to attend meetings. A quorum could not be obtained and for +months the president and treasurer had run the business without +reference to directors or stockholders. The cooperative society failed +and every cent of the four thousand dollars of the cooperators was lost. +</p> +<p> +Another cooperative store, this time in the Bronx, was taken over by the +manager within one year. Upon inquiry its directors proudly exhibited +its books. It was a beautiful set costing, they said, nearly +seventy-five dollars. The store had started in November. For November +and the first three days of December everything was kept in good shape. +But during the entire next year not an entry had been made. The +directors had the books, but the manager had the store. The stockholders +lost all their capital. +</p> +<p> +A thriving business was being done by still another cooperative store in +New York. At the outset the directors had voted to bond the manager. But +the matter was put off and put off. One day the manager disappeared and +with him two thousand dollars belonging to the cooperative. After a few +months the manager was found, but the money was gone. The loss of the +total sum was more than the cooperative could stand, however, and after +struggling along for a few months, it closed its doors. +</p> +<p> +A clever organizer two years ago started organizing a cooperative store +in New York. On the society's letter heads he had printed a picture of +the world and across the world the word "BIG." He was going to start a +whole chain of stores. In three months the first and only store was put +into the hands of an assignee and the man left the city. An audit of his +accounts showed that he had collected $3,600. One-fourth of this had +gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving +only $350 for operating expenses. Where the Finns spent three-tenths of +one per cent for promotion he had spent twenty-five per cent. This had +forced the association to start with so small an operating capital that +it was soon badly embarrassed for lack of funds and could do nothing but +close its doors. +</p> +<p> +It would be possible to go on with many other illustrations. Such +failures as these are not really a test of genuine cooperation. Any +ordinary business with such management would also have failed. But it is +significant that most of the recent cooperative failures have been among +grocery stores. In this particular business the margin of profit is so +small that only the most skillful and economical management can bring +success. A recent survey of all the private grocery stores in one city +showed that the average annual profit was only $400 per grocer. +</p> +<p> +There is no longer any excuse for cooperatives to follow the blind into +the pit. There are many sources of information and advice available to +cooperatives that should be fully utilized before any money is spent in +a cooperative enterprise that promises only failure. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_5"><!-- RULE4 5 --></a> +<h2> + FALSE COOPERATIVES +</h2> + +<p> +The impractical cooperative which fails is bad enough, for it +discourages many people from making a second attempt, but the false +cooperative is a greater menace to the cooperative movement. The private +promoter with his selfish interests rigs up a scheme to look like +cooperation, but the actual purpose is to provide a channel whereby +thousands of dollars will flow from the pockets of the working people +into those of the promoter. Inasmuch as New York State has a law which +forbids the use of the word cooperation by any concern which is not +organized under the Cooperative Law, such promoters have to be +uncommonly shrewd. +</p> +<hr> + +<b>The Glynn System.</b> + +<p> +Early in 1920 a group of three or four private business men in Buffalo +established a promoting corporation and then set out to organize a +cooperative wholesale which was to be a separate concern from their +promoting enterprise but was to be controlled by it. The promoters sold +shares in the Buffalo Wholesale to individuals in fifteen or twenty +cities and towns all the way across the central part of the State. They +opened up six or seven stores and handled goods in large quantities +through their wholesale plant. +</p> +<p> +The capital was solicited chiefly through labor unions. Elaborate +promises were made to prospective shareholders: they were to have a +local store in their neighborhood, dividends were to be paid regularly, +goods could be bought at prices below those prevailing at the chain +stores and the local group was to have local autonomy. As a matter of +fact the ultimate control was always in the hands of the few promoters +in Buffalo. +</p> +<p> +These men had two large sources of revenue from the many transactions +carried on. They exacted from each member five dollars "for organizing +expenses," and they took a commission on all the business handled +through the wholesale. +</p> +<p> +By the spring of 1921 some of the members in one or two centers became +suspicious, and began an investigation. They found that stores were in +many cases grossly mismanaged. One manager had absconded with $600. +Organizing or promoting expenses in some places were as high as +thirty-three per cent. The weekly newspaper was discontinued for lack of +funds. Some wholesale merchants finally refused to give further credit +to the Buffalo headquarters and at the end of the first year of +operation one of the office force confided to a friend that there was a +ten thousand dollar deficit. When bankruptcy was finally declared in +midsummer, the promoters were not to be found. The principal organizer, +an ardent friend of labor for many years, had been completely duped by +these promoters and was left penniless and alone to face hundreds of +investors. Cooperation was put in disrepute for thousands of men and +women in dozens of cities and towns throughout the State. +</p> +<p> +Cooperation cannot be developed downward from a central wholesale +organization with a corps of organizers, nor will it grow when built +upon mercenary motives. In this case organized labor in the state was +partly to blame for not heeding the warning of a few groups of +cooperators who were aware of the nature of the concern early in its +history. But the ultimate blame lies with the individual men and women +who joined the corporation without looking carefully into its +organization. +</p> +<hr> + +<b>The Cooperative Society of America.</b> + +<p> +In 1920 The Cooperative Society of America was doing a flourishing +business in Chicago and vicinity. One of the leaders of the enterprise +went to Europe in 1921 and convinced most of the leading cooperators of +those countries that he was the greatest power in the cooperative +movement in the United States. By the summer of 1921, the agents of the +principal promoter of this scheme, Harrison Parker, were operating in +New York City, and scores of salesmen were covering the various boroughs +selling stock. Within two weeks all the agencies interested in +protecting cooperation were organized to fight this fraud. The matter +was placed in the hands of the Attorney General and a special deputy +appointed to prosecute. The leading newspapers ran an expose of its +operations. At this juncture, the Chicago headquarters suddenly went +into the hands of a receiver and the New York office closed its doors. +</p> +<p> +Late in the year federal action was instituted against Harrison Parker +in Chicago. The entire business of the so-called cooperative was +disclosed to the courts. It was found that 81,000 people had invested +fifteen millions in this gigantic fraud. Here in New York there were +many hundreds, if not several thousands, of men and women who lost large +sums of money in the ensuing bankruptcy. These people were taken in by +the dramatic appeal to their selfish interests. The Chicago organization +showed them photographs of the "massive buildings" in Chicago in which +it was doing business, spoke glibly of its banking and insurance +departments, and then promised them a share in the spoils if they would +pay $75 for their certificates which were worth only $25 or $50 at their +face value. +</p> +<p> +That so many people could be duped by these "get-rich-quick" methods is +an indication of the amazing lack of cooperative understanding which +prevails in the United States. It is a part of the purpose of this +Bulletin to correct the misunderstanding which prevails because of the +fraudulent use of the word cooperation. In the case of a suspected false +cooperative, test it by the Rochdale principles. If it fails to measure +up to them take the matter up directly with the State authorities or the +Cooperative League of America. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_6"><!-- RULE4 6 --></a> +<h2> + HOW TO START A COOPERATIVE ENTERPRISE IN NEW YORK STATE +</h2> + +<p> +In starting a cooperative enterprise two things must be considered: +first, the kind of business to go into and, second, the method of +organization. Any group desiring to engage in a cooperative venture +should first of all, through a committee and by consultation with +experts, determine what type of enterprise will serve them most +effectively. Where competition is unusually keen and profit margins are +low, cooperation is less likely to be of service than where the opposite +is the case. Whatever enterprise is started men experienced in that +business should be consulted as to the location of the business, the +stock and equipment needed, the operating capital necessary, etc. +</p> +<p> +Preliminary organization should likewise be handled by a committee which +might estimate the number of persons who would become members, the +service each could contribute to the society, etc. Meetings should be +held to educate the group in both cooperation and the special need of +the undertaking. For this purpose many educational bulletins may be +obtained from the Cooperative League of America and other reliable +sources. +</p> +<p> +Actual organization of the society consists of incorporation, election +of officers, the adoption of by-laws, and the immediate adoption of a +sound system of bookkeeping. No action undertaken before incorporation +has any legal effect on an incorporated body, so early incorporation is +desirable. The New York State law requires that all firms using the word +"cooperation" incorporate under one of the three state cooperative laws. +Outside of farmers' cooperatives practically all cooperative societies +are incorporated under the Stock Law known as Article III. Copies of +these laws may be obtained from the State Department of Farms and +Markets. The Department has prepared simple forms for incorporation +under this law. When these are filled out and sworn to and the papers +filed with the Secretary of State and the County Clerk, the society may +legally begin business. The fee of the Secretary of State is $30. A +board of directors is named in the incorporation papers and this board, +through a paid manager, will transact the society's business. Model +by-laws, upon which the by-laws controlling the organization may be +based, may be obtained from the State Department of Farms and Markets or +from the Cooperative League of America. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_7"><!-- RULE4 7 --></a> +<h2> + THE PRESENT TREND OF COOPERATION +</h2> + +<p> +There have been significant developments in the cooperative enterprise +in New York in the last two years. In the first place while a number of +small groceries closed their doors, the larger cooperatives have grown +larger and more prosperous. At last there appear to have developed +cooperatives which have passed that critical stage connected with the +life of a newly-organized business. One of these larger cooperatives, +which did over $200,000 worth of business in 1921, has turned its +surplus into its business ever since it started and is now buying more +land to erect a second business block in order to take care of expansion +which is forced upon it by the growing trade. Another cooperative has +established two prosperous branches and is now doing a business of a +quarter of a million dollars a year. A third, following a profitable +year in which its business amounted to $205,000, is likewise building a +new plant. The balance sheets of each of these associations would be the +envy of most business undertakings. +</p> +<p> +A second development is the appearance of a new type of management. A +group of younger men and women with a broad background, an intense +interest in cooperation and a capacity of growing up with the business +is working now to make these cooperatives even more successful. The +cooperative movement is likely to grow in pretty close proportion to the +ability of these leaders and the men and women they can attach to +themselves. Heretofore the greatest handicap of the cooperative movement +in this country has been the lack of trained and able leaders. +</p> +<p> +A third significant development is the adoption by cooperatives of the +best methods of management and accounting. Until this had been done the +cooperatives had small chance of succeeding. It is probable that +cooperatives which lack some of the incentives of the ordinary +commercial business will be compelled constantly to adopt the most +efficient and advanced type of machinery. In setting this up as a +definite standard they will escape the inertia and conservatism that +ordinarily characterize large groups, a condition which at the present +time is retarding the British cooperative movement. Two years ago +accurate accounting was an unusual thing among cooperatives. At the +present time practically all the cooperatives in the State have their +books gone over periodically by trained public accountants. +</p> +<p> +A still further trend in the cooperative development is the extension of +the movement into new lines of business. To this extent the failure of +cooperative grocery stores has had a beneficial effect since it has +forced groups to undertake different kinds of cooperative business. In +New York City at the present time cooperatives are engaged in such +diverse business as that of restaurants, cafeterias, bakeries, coal +associations, pool rooms, printing establishments, meat stores and +laundries. This means that the cooperatives are not following tradition +but are thinking for themselves and are selecting that enterprise which +will serve them most effectively. In going into these businesses where +profits are greatest they are not only prospering themselves but they +are performing one of their most legitimate functions, that of +protecting the consumer from extortionate profits. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> +<a name="BIB"><!-- BIB --></a> +<h2> + BIBLIOGRAPHY +</h2> + +<center> +<B>Books</B> +</center> +<p> +Bubnoff, J.V. The Cooperative Movement in Russia. 162 p. Manchester, +1917. +</p> +<p> +Faber, Harold. Cooperation in Danish Agriculture. 176 p. London, 1918. +</p> +<p> +Gebhard, Hannes. Cooperation in Finland. 190 p. London, 1916. +</p> +<p> +[<a href="#note-A">A</a>] Gide, Charles. Consumers' Cooperative Societies (trans. from the +French). 251 p. Manchester, 1921. +</p> +<p> +[<a href="#note-A">A</a>] Harris, Emerson P. Cooperation, The Hope of the Consumer. 328 p. New +York, Macmillan Company, 1918. +</p> +<p> +Howe, Frederick C. Denmark, A Cooperative Commonwealth. 203 p. New York, +Harcourt, Brace and Company, 1921. +</p> +<p> +Johns Hopkins University Studies, Vol. VI. History of Cooperation in the +United States. 540 p. Baltimore, 1888. +</p> +<p> +Nicholson, Isa. Our Story. 80 p. Manchester, 1918. +</p> +<p> +Powell, G. Harold. Cooperation in Agriculture. 327 p. New York, +Macmillan Company, 1913. +</p> +<p> +Redfern, Percy. The Story of the Cooperative Wholesale Society. 439 p. +Manchester, 1913. +</p> +<p> +Redfern, Percy. The Consumer's Place in Society. 107 p. Manchester, +1920. +</p> +<p> +Smith-Gordon and Staples. Rural Reconstruction in Ireland. 279 p. +London, 1917. +</p> +<p> +[<a href="#note-A">A</a>] Sonnischsen, Albert. Consumers' Cooperation. 223 p. New York, +Macmillan Company, 1919. +</p> +<p> +[<a href="#note-A">A</a>] Webb, Catherine. Industrial Cooperation. 278 p. Manchester, 1917. +</p> +<p> +[<a href="#note-A">A</a>] Webb, Beatrice and Sidney. The Consumers' Cooperative Movement. 504 +p. London, 1921. +</p> +<p> +[<a href="#note-A">A</a>] Woolf, Leonard. Cooperation and the Future of Industry. 141 p. +London, 1918. +</p> +<p> +Woolf, Leonard. Socialism and Cooperation. 129 p. London, 1921. +</p> +<p> +Transactions of American Cooperative Convention. New York, Cooperative +League of America, 1918 and 1921. +</p> +<p> +People's Year Book, Annual of the English and Scottish Wholesale +Societies. London, 1921. +</p> +<p> +<a name="note-A"><!-- Note Anchor A --></a>[Footnote A: Best books on the subject.] +</p> + +<center> +<B>Magazines</B> +</center> + +<p> +Cooperation. The Cooperative League of America, New York, N.Y. +</p> +<p> +The Canadian Cooperator. Brantford, Ontario, Canada. +</p> +<p> +The International Cooperative Bulletin. 14 Great Smith Street, +Westminster, London, England. +</p> + +<center> + <B>Pamphlets</B> +</center> + +<p> +<b>Historical</b> +</p> + +<p> +Consumers' Cooperation in New York City. Bulletin of the Division of +Foods and Markets for May, 1920. Prepared in cooperation with The +Consumers' League of New York City. +</p> +<p> +An Idea That Grew. Genevieve M. Fox. National Board, Young Women's +Christian Association, 600 Lexington Avenue, New York City. +</p> +<p> +The following are pamphlets of the Cooperative League of America: +</p> +<p> +Story of Cooperation. +</p> +<p> +British Cooperative Movement. +</p> +<p> +A Baker and What He Baked. +</p> +<p> +The Control of Industry by the People through the Cooperative Movement. +</p> +<p> +Cooperative Consumers' Movement in the United States. +</p> +<p> +Cooperative Movement (Yiddish). +</p> + +<p> +<b>Technical.</b> +</p> + +<p> +Credit Union and Cooperative Store. Arthur Ham. The Russell Sage +Foundation, 130 East 22nd Street, New York City. +</p> + +<p> </p> + +<p> +The following are pamphlets of the Department of Farms and Markets: +</p> +<p> +Cooperative Housing. +</p> +<p> +Article 3, Stock Cooperative Law. +</p> +<p> +By-laws for Cooperative Associations organized under Article 3, Stock +Cooperative Law. +</p> +<p> +Article 21, Membership Cooperative Law. +</p> +<p> +By-laws for Cooperative Associations organized under Article 21, +Membership Cooperative Law. +</p> +<p> +Article 13 A, Farmers' Cooperative Law. +</p> +<p> +By-laws for Cooperative Associations organized under Article 13 A, +Farmers' Cooperative Law. +</p> + +<p> </p> + +<p> +The following are pamphlets of the Cooperative League of America: +</p> +<p> +How to Start and Run a Rochdale Cooperative Store. +</p> +<p> +System of Store Records and Accounts. +</p> +<p> +A Model Constitution and By-Laws for a Cooperative Society. +</p> +<p> +Cooperative Education. Duties of Educational Committee Defined. +</p> +<p> +How to Start a Cooperative Wholesale. +</p> +<p> +Why Cooperative Stores Fail. +</p> +<p> +Cooperative Housebuilding. +</p> +<p> +Cooperative Housing for Europe's Homeless. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<div>*** END OF THE PROJECT GUTENBERG EBOOK 10808 ***</div> +</body> +</html> diff --git a/LICENSE.txt b/LICENSE.txt new file mode 100644 index 0000000..6312041 --- /dev/null +++ b/LICENSE.txt @@ -0,0 +1,11 @@ +This eBook, including all associated images, markup, improvements, +metadata, and any other content or labor, has been confirmed to be +in the PUBLIC DOMAIN IN THE UNITED STATES. + +Procedures for determining public domain status are described in +the "Copyright How-To" at https://www.gutenberg.org. + +No investigation has been made concerning possible copyrights in +jurisdictions other than the United States. 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You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Consumers' Cooperative Societies in New York State + +Author: The Consumers' League of New York + +Release Date: January 23, 2004 [EBook #10808] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK COOPERATIVE SOCIETIES OF NY *** + + + + +Produced by David Garcia and the Online Distributed Proofreading Team. + + + + + +</pre> + + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<h1>CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE</h1> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<center> +<i>Published April 1922</i> +<br> +<i>by</i> +<br> +<h3>The Consumers' League of New York</h3> +289 FOURTH AVENUE +<br> +NEW YORK CITY +</center> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<hr> +<p> +This study was originally prepared for the Consumers' League of New York +in 1921 by Mr. Cedric Long. It has been revised by the League in April, +1922. The Consumers' League wishes to express its appreciation of the +valuable advice and assistance given by Mr. Louis B. Blachly of the +Bureau of Cooperative Associations of the State Department of Farms and +Markets both in the original preparation of the material and in its +revision. +</p> +<hr> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<h2> + Contents. +</h2> + +<table border=0 summary="" align="center"> +<tr> +<td> +<hr> +<a href="#RULE4_1">Cooperative Principles</a><br> +<a href="#RULE4_2">Consumers' Cooperative Societies in New York State</a><br> +<a href="#RULE4_3">Successful Cooperation</a><br> +<a href="#RULE4_4">Cooperatives that Failed</a><br> +<a href="#RULE4_5">False Cooperatives</a><br> +<a href="#RULE4_6">How to Start a Cooperative Enterprise in New York State</a><br> +<a href="#RULE4_7">The Present Trend of Cooperation</a><br> +<a href="#BIB">Bibliography</a> +<hr> +</td> +</tr> +</table> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_1"><!-- RULE4 1 --></a> +<h2> + COOPERATIVE PRINCIPLES +</h2> + +<p> +The principles established by the Rochdale Pioneers in England in 1844 +and observed consistently by successful societies since that time are as +follows: +</p> +<p> +1. Earnings of capital stock limited to legal or current rate of interest. +</p> +<p> +2. Surplus earnings to be returned to members in proportion to patronage. +</p> +<p> +3. One vote for each member regardless of amount of stock owned. No +proxy voting permitted. +</p> +<p> +In addition, the majority of societies adhere to the following principles: +</p> +<p> +1. Business to be done for cash. +</p> +<p> +2. Goods to be sold at current market prices. +</p> +<p> +3. Education given in the principles and aims of cooperation. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_2"><!-- RULE4 2 --></a> +<h2> + CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE +</h2> + +<p> +<b>The Extent of Consumers' Cooperation</b>. +</p> +<p> +The Tenth International Cooperative Congress, held in Switzerland in +1921, disclosed the fact that since the last Congress, in 1913, the +number of cooperators in the twenty-five countries represented had +increased from approximately eight million to thirty million and that +cooperative trade had increased correspondingly. +</p> +<p> +Today in Great Britain the cooperative societies number more than four +million members, nearly one-third of the entire population being +represented in these societies. Switzerland, in 1920, boasted three +hundred and sixty-two thousand members and a third of the Swiss people +bought goods through their own societies. Cooperation is still alive in +Russia in spite of its unsettled economic conditions. In 1920 there were +twenty-five thousand societies with twelve million heads of families. In +the same year the German cooperative societies were two million seven +hundred thousand members strong. +</p> +<p> +In the United States cooperation has had an erratic development. Within +the past seven years, however, there has been a rapid increase in new +societies until today it is estimated that there are about three +thousand with a membership of half a million. In number of societies New +York is far behind most of its sister states. It has one hundred and +twenty-five genuine consumers' cooperative associations, seventy-five of +which are among farmer groups and the remaining fifty among city +consumers. There are in addition some twenty cooperative buying groups +connected with large commercial organizations. No complete tabulation +has been made of the total business of all these cooperative groups, but +in 1921 the five largest cooperative societies among the city consumers, +with an average membership of 1,800 persons, all located in New York +City, did a total business of approximately one million dollars. These +societies and many others are prospering. On the other hand there are +many cooperatives which have failed. Whether they have failed or +succeeded more knowledge of practical cooperation can be gained from +their experience than can ever be learned from books. +</p> +<p> +The Consumers' League feels that the experience of these societies +should not be wasted. For this reason it is telling the stories of +several cooperatives in New York, some of which are successfully +established and some of which have fallen by the roadside. In these +brief stories are written a hundred lessons that cooperatives should +heed. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_3"><!-- RULE4 3 --></a> +<h2> + SUCCESSFUL COOPERATION +</h2> + +<p> +<b>The Utica Cooperative Society</b>. +</p> +<p> +At the corner of Court and Schuyler Streets in Utica stands a grocery +store which is different from an ordinary store. It is different because +it is a cooperative store and it belongs to those who buy as well as to +those who serve. There is no need for the purchaser to be on guard lest +the bargain be to his disadvantage, for he is dealing with friendly +clerks who are there to help him find what he wants, not to sell him +something he cannot use. In this store the purchaser can find all the +articles carried by a first-class grocer, canned goods, green goods, +dairy products and, in addition, a complete supply of baked goods, baked +by the cooperative society itself. +</p> +<p> +The bakery is to be found behind the grocery. Large, high windows throw +a flood of light into the mixing room. The oven is of a modern type, +large, easily controlled and economical. Five men work at the baking and +a boy wraps bread in waxed paper with a mechanical device which +automatically folds and seals. The three delivery wagons bear the +cooperative motto, "Each for All, and All for Each." They are used in +the morning for the delivery of baked goods and in the afternoon for the +delivery of groceries. It keeps three boys busy all day covering the +territory between the cooperators' homes. The delivery system is +essential because the membership is scattered throughout the entire +city. +</p> +<p> +There are fourteen employees in the grocery and bakery. Hitherto they +have received wages higher than those generally prevailing throughout +the city for the same kind of work, but recently on their own initiative +they voted themselves a ten per cent decrease. In a cooperative all +members may know the financial status of the business and the employees +found that, due to the diminishing margin of profit, the business could +not support such a high scale of wages. Their wage cut followed because +as members of the cooperative they were interested not only in their own +wages but in the good of the society as a whole. +</p> +<p> +The Utica Cooperative Society was organized in 1915 by a group of +Germans. Half a dozen nationalities are now represented, although +Americans predominate. Although they had only ninety-two members and +$1,250 to start, they bought out a private store and began cooperative +business. Their bakery was originally in the cellar under the store. The +former owner was employed as manager. For three or four years they +experienced many difficulties. Within two years two managers proved +inefficient and had to be replaced. Only the tenacious loyalty of a few +kept the society alive. But they had the foresight and determination to +fight through those lean years. +</p> +<p> +Now for five years they have had the same manager. He insists upon +scrupulous bookkeeping methods, careful buying, close supervision of his +work by the board of fifteen directors, strict regard for the needs and +desires of the membership, and exceptional precautions against waste and +leakage. The president, a man having a private business of his, own, has +an idealism almost religious in quality. These two men cooperate closely +on matters of policy and provide much of the leadership which has +brought success. +</p> +<p> +The membership is now 380. The capital stock has increased from $1,250 +to $27,594. The business in 1921 amounted to $105,598, forty per cent of +which was done by the bakery. Since 1915 the rebates to members on +patronage have totaled $8,207, fluctuating from nothing at all in some +years to eight per cent and ten per cent in other years. During this +period the lump sum saved to purchasers, including rebates, the earnings +on stock shares, and reserve fund, amounted to $12,642. This sum would +have gone into the pockets of private storekeepers except for the +cooperative store. +</p> +<p> +The Utica Society has succeeded because it has met the prime +requirements for effective cooperation. The greater part of the +membership was loyal during critical times when the easy way would have +been to withdraw and trade at chain stores. The management worked +unceasingly to put the business on an economical basis. Finally they won +out because they put Service over Profit and carried out that rule in +the most practical and businesslike way they could find. +</p> +<hr> +<p> +<b>Our Cooperative Cafeteria</b>. +</p> +<p> +If you should drop in for lunch at any one of the three branches of our +Cooperative Cafeteria in New York City the first thing that would strike +you would be the friendly spirit of those back of the serving tables. +Before you paid your check you would observe further that the food had a +variety and flavor not found in the ordinary restaurant. If you were +discerning you would detect that a complex machinery was at work which +had nearly escaped you because of its smooth operation. +</p> +<p> +That genial spirit which infects the whole place and those subtle things +which appeal to your eye and palate explain the success of the +cafeteria. But there are some underlying causes for these things that we +must get hold of and to do that we must go back to the year 1919. In +October of that year a private cafeteria was started by two women with a +record of successful cafeteria experience behind them. The experiment +proved successful and the following April a momentous step was taken. It +was proposed that the persons who ate there become the owners. A +cooperative society was formed and in two weeks shares were sold to the +value of two thousand dollars. The new owners took over the cafeteria +and the former owners became their hired employees. This was the +beginning of Our Cooperative Cafeteria. +</p> +<p> +The cafeteria had from the outset advantages which are gained by many +cooperatives only after bitter and costly experience. They had skillful +and experienced management to which they immediately gave over all +technical control, holding them responsible through an active Board of +Directors and an accounting system devised by experts. The management +justified the confidence of the shareholders. On April 1, 1921, after +one year of operation they had outgrown the first plant and a new branch +had been running for two months. There were in all 379 members. The +year's business had been $96,000, of which $6,000 were net earnings. The +stockholders had received six per cent on their investment, a reserve +fund had been laid aside, and every month the member-patrons had +received rebates on the food eaten of from six per cent to sixteen per +cent. At the end of the second year the third branch, larger than either +of the others, located in the Wall Street business section, had been in +operation for three months. The membership of the society had increased +to 750. The business for the year had been $190,000 and the net earnings +were $12,000. +</p> +<p> +The cafeteria now employs sixty-eight workers, most of whom are +shareholders and vote as such in membership meetings. The worker +receives the same food as the patrons, served at the same counter. +Against all restaurant traditions the worker is served before the meal +so that she may have the best there is and have it before she is too +tired to eat it. The minimum wage is higher than the customary rate for +restaurant workers in New York. The forty-eight hour week is the +standard, although as yet some of the help work over that time. Overtime +is one thing that the management has not yet been able wholly to +eliminate. +</p> +<p> +It has been found that the policy determining function of the +stockholders and Board of Directors cannot operate independently of the +plans of the management. The two in a business organization must be +closely inter-related. The stockholders have not tried to supervise the +details of the business, as has sometimes been done to the disaster of +cooperatives. The general manager instead has gone to the Board of +Directors and sits there practically as a full member. As a result the +policy function of the Board and the management function are closely +linked together as they must be in a business that is to be permanent. +</p> +<p> +The stockholders are not idle, however. Through their committees, they +have amended the by-laws. They have recently called a general meeting +for the consideration of labor policy, and they publish monthly a little +paper known as "The Cooperative Crier." The average attendance at the +shareholders' monthly meetings is sixty or sixty-five. +</p> +<p> +To an unusual degree the success of Our Cooperative Cafeteria is bound +up with its management, not only because it is technically expert, but +because it is thoroughly imbued with the cooperative spirit. Around the +first nucleus has grown a staff of intelligent young men and women, +usually college bred, who are devoting all their brains and energy to +see that this cooperative cafeteria succeeds. They seem to find a +peculiar satisfaction in knowing that their efforts will not enrich a +few individuals at the expense of patron and employee alike, but will +increase the common welfare of the community itself. +</p> +<p> +Like other cooperatives, the cafeteria has found the need for expert and +trained workers in place of the hard-pressed volunteer. Much of the work +on education and cooperative organization is carried on by trained +members of the staff. This interest of the paid employees in things +other than mere technical efficiency contributes much to that friendly +spirit which makes Our Cooperative Cafeteria unique among the +restaurants of New York. +</p> + +<hr> +<p> +<b>The Village Cooperative Society, Inc.</b> +</p> + +<p> +After nearly two years of discussion and meetings and after long +consultation with experts a group composed largely of the housewives in +Greenwich Village in the heart of New York City started in January, +1921, a cooperative laundry. The second-hand machinery which they +purchased was not a laundry unit, the capacity of the washer being +one-fourth that of the ironer; they had insufficient capital, half of it +borrowed; they employed an inexperienced manager and a green bookkeeper; +and for the first eight months the supervision was almost entirely +carried on by volunteers, hard working, but without the foresight and +power of control so essential to a new organization. Under these +handicaps the cooperative laundry lost money every month. +</p> +<p> +It existed through those months due largely to two things. First, they +were forced almost immediately to employ a new manager who consistently +turned out high grade work, and secondly, a small group of volunteers +put all their energy into making the thing a success. +</p> +<p> +Then the causes of the continued failure were one by one eliminated. A +business manager who had an intense interest in cooperation was hired to +supervise general operations. He took over much of the work of the +volunteers and for the first time the laundry developed a well thought +out policy. The inexperienced bookkeeper was eliminated and all +supervision headed up in the new manager. Better service brought more +work, and new machinery made greater output possible without additional +labor. The manager found labor cost too high and introduced methods +which saved both labor and money. He found the machinery badly arranged. +When the plumber told him it would cost twenty-five dollars to rearrange +it he spent a dollar and forty cents and did it himself. After a +discussion in the Board of Directors which nearly wrecked the +organization, a Board policy of leaving all details of management to the +manager and chairman of a managing committee was determined upon, while +the Board devoted itself to the determination of general policies. +</p> +<p> +The results of these changes were soon apparent. For the first time the +dead line between losses and earnings was crossed and net earnings +gradually began to mount. In September, 1921, the amount of business +wavered around a hundred dollars a week. In March, 1922, it averaged +about $330 per week, and net earnings have run as high as $75 per week. +</p> +<p> +The laundry is still small and is located in quarters for which it pays +a regular commercial rent. It has expanded several times and now has +three power washers, an ironer or mangle, a dry room and other +equipment. It employs a business manager, who supervises the plant and +does everything from keeping the books to collecting the laundry in a +pinch, a work manager, a washer, a sorter and marker, four ironers and a +delivery boy. It still holds hard to the policy of putting out the very +best kind of work and economizing in every particular. +</p> +<p> +Its very success has in a way embarrassed the laundry. The manager has +been offered special inducements to leave. The delivery system has been +tampered with. There has even been acid thrown on the clothes by +outsiders jealous of its business. But this has only stimulated the +whole membership to fight harder to realize their aim of getting their +own laundry work done the way they want it, and without profit. +</p> +<hr> + +<b>The Finnish Cooperative Societies of Brooklyn.</b> + +<p> +What is it that makes the Finns so successful at Cooperation? Industry +and cleanliness. At any rate those are the striking characteristics of +the Finns of Brooklyn. +</p> +<p> +Up to the present time they have never paid any dividends. It has been +explained to them, as their manager says, that if the business is to +serve them properly it must grow, and in order to grow it needs all the +surplus earnings for expansion. And so, because the members are +industrious and far-sighted, they have foregone their dividends. The +cleanliness of their stores, too, is an inspiration not only to their +membership but to hundreds of others who have visited their plant. This +is one of the biggest business assets they possess. +</p> +<p> +These virtues have enabled the Finnish group in Brooklyn to build +cooperatively a three-story modern business block, to run therein a +wholesale bakery, a retail bakery, a meat shop and grocery store, a +cooperative restaurant and a cooperative pool room, to build adjacent to +this two modern cooperative apartment houses and to lay the foundations +for a third now under construction. Outside of the housing venture the +business done last year was $175,000 and today there are nearly two +thousand members. +</p> +<p> +Although these undertakings are practically a part of the same group +there are three separate corporations. The largest of these is the +Finnish Cooperative Trading Association, Inc. The restaurant is operated +as the Workers' Cooperative Restaurant, Inc., and the housing +association as the Finnish Homebuilders' Association, Inc. +</p> +<p> +The restaurant is the oldest. Seven years ago a group of Finns in this +locality boarded together. Their capital was a hundred dollars which +some one had loaned to them. They ran their little business on a +cooperative basis, paying for the meals and putting back any surplus +into a reserve. No one contributed anything, but before long they paid +back the one hundred dollars. Early in 1922 they incorporated. They then +owned a fine modern restaurant, had done $70,000 worth of business in +1921, and had three thousand dollars in the bank. And no one had ever +paid a cent into the business. With all this they sell their food at +unusually low prices, well cooked, wholesome, and clean. +</p> +<p> +In 1917 a larger group determined to have a bakery which came up to +their standards. In 1919 they had raised enough money to start +construction. Then they faced their first test Their money gave out. +Undaunted they organized a money raising "army," as they called it, of +thirty or forty men. The money was raised. By the time the new bakery +was opened they had fourteen hundred members and had raised $140,000. +The total organization expenses for three years came to $400, less than +three-tenths of one per cent for promotion expenses. +</p> +<p> +The new business block was opened in May, 1920. All but the restaurant +was under one general manager. He was bonded for $10,000. He had had +business experience in running a cooperative bank in Wisconsin. To him +was delegated a large degree of freedom, but he was held strictly +accountable to the Board of Directors. A thorough and comprehensive +system of bookkeeping and accounting was installed. Each separate +business, the bakeries, the pool room, the meat shop, was put on a cost +accounting basis and the manager knew just which one was making or +losing money. +</p> +<p> +All the branches of the business, however, have made money. Over $12,000 +in net earnings, after allowing for interest on the investment, have +been made since the business started. Last year the bakery did business +to the extent of $135,000, the meat market and grocery $58,000, and the +pool room $12,000. Already the business has outgrown its quarters. A new +oven has been added to the bakery. The third floor, which was used +exclusively as a pool room, has been invaded and the thirteen pool +tables rearranged and put closer together so that more room may be had +for bakery products. Adjacent land has been purchased so that the +building itself may be added to. The membership of the Trading +Association alone is eighteen hundred and forty. +</p> +<p> +The employees of the association work among almost ideal conditions. The +twelve bakers are all union men and members of the cooperative +association as well. They work seven and one-half hours a day and are +paid from forty-five to fifty dollars per week. The light, airy bakery +is always kept spotless. Adjacent to it is a commodious room with +lockers for each man and two shower baths make it easy to keep clean. +Down on the first floor the retail bakery is so immaculately clean that +you would be willing to defy anyone to find one speck of dust in the +place. Every article of food is under shining glass. The floor is white +tiled. But the food is what attracts one. The pies swell out as if about +to burst. To look at the bread and rolls makes one hungry and to smell +them hungrier still. This, you are told, is because only the purest +ingredients are used. Many bakers use powdered eggs for baking, commonly +imported from China; this cooperative uses only fresh eggs. They buy a +better grade of flour than their competitors do. The same thing is true +of the meat shop next door. They do not aim to make money on their meat. +Their sole aim is to sell only the best. This policy has been so popular +that the quantity sold the first three months of 1922 was almost treble +that for the same months in 1921. And the meat store, too, has made +substantial net earnings. +</p> +<p> +The two cooperative apartments which lie adjacent to the business block +house thirty-two families. The apartments contain five rooms and bath +and are thoroughly modern. They are light and airy with high ceilings +and hardwood floors. Needless to say their tenant-owners keep them in +the most immaculate condition. Recently a group of business men, several +of them builders, went through the buildings and many expressed the wish +that they could get similar apartments for three times the money that +these cooperators were paying. For the best apartments the rent has +recently been raised to $31.50 per month. But out of this amount the +tenant-owner is not only paying all upkeep but is paying off the +mortgage at the rate of $1,000 per year. Similar apartments in the +locality rent from $75 to $80 per month. The tenant-owners, of course, +run their apartments on the cooperative plan of one vote per member. +</p> +<p> +The members of the Finnish Cooperative Societies of Brooklyn are fast +becoming independent of the middlemen, for cooperation touches them on +many sides. They have learned to serve themselves and they get what they +want, honest goods—and clean. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_4"><!-- RULE4 4 --></a> +<h2> + COOPERATIVES THAT FAILED +</h2> + +<p> +When one has made mistakes the importance which is attached to them +depends upon the gravity of the consequences. This being the case, the +stones of cooperatives which follow are worth attention, for, as a +result of their mistakes, they are now dead. One of the most pitiful +aspects of cooperative failures is that one group after another will go +on making the identical mistakes that have brought ruin to others. +Sometimes it is the result of sheer ignorance, and sometimes of shameful +negligence. In either case the result is the same—the stockholders lose +their savings and cooperation feels the blow. +</p> +<p> +Two years ago the State authorities were called upon to investigate a +cooperative that was about to fail. Several members made the claim that +the officers had defaulted with property of the association. An +accountant was called in to examine the books. After considerable +coaxing the secretary-treasurer unearthed them and turned them over. +They consisted of an old black bag full of all the bills, vouchers and +other scrap paper for the previous six months! Those were his books. He +had sold the store without taking an inventory. When an inventory was +finally made it was found that some of the stock had not turned over for +a year. On one top shelf two hundred pepper shakers full of pepper +stretched half the length of the room. Full value had been paid for this +dead stock and several hundred dollars to boot for "good will." From the +cooperative standpoint the most dangerous thing was that half the +directors had become disgruntled and, though remaining on the Board, +refused to attend meetings. A quorum could not be obtained and for +months the president and treasurer had run the business without +reference to directors or stockholders. The cooperative society failed +and every cent of the four thousand dollars of the cooperators was lost. +</p> +<p> +Another cooperative store, this time in the Bronx, was taken over by the +manager within one year. Upon inquiry its directors proudly exhibited +its books. It was a beautiful set costing, they said, nearly +seventy-five dollars. The store had started in November. For November +and the first three days of December everything was kept in good shape. +But during the entire next year not an entry had been made. The +directors had the books, but the manager had the store. The stockholders +lost all their capital. +</p> +<p> +A thriving business was being done by still another cooperative store in +New York. At the outset the directors had voted to bond the manager. But +the matter was put off and put off. One day the manager disappeared and +with him two thousand dollars belonging to the cooperative. After a few +months the manager was found, but the money was gone. The loss of the +total sum was more than the cooperative could stand, however, and after +struggling along for a few months, it closed its doors. +</p> +<p> +A clever organizer two years ago started organizing a cooperative store +in New York. On the society's letter heads he had printed a picture of +the world and across the world the word "BIG." He was going to start a +whole chain of stores. In three months the first and only store was put +into the hands of an assignee and the man left the city. An audit of his +accounts showed that he had collected $3,600. One-fourth of this had +gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving +only $350 for operating expenses. Where the Finns spent three-tenths of +one per cent for promotion he had spent twenty-five per cent. This had +forced the association to start with so small an operating capital that +it was soon badly embarrassed for lack of funds and could do nothing but +close its doors. +</p> +<p> +It would be possible to go on with many other illustrations. Such +failures as these are not really a test of genuine cooperation. Any +ordinary business with such management would also have failed. But it is +significant that most of the recent cooperative failures have been among +grocery stores. In this particular business the margin of profit is so +small that only the most skillful and economical management can bring +success. A recent survey of all the private grocery stores in one city +showed that the average annual profit was only $400 per grocer. +</p> +<p> +There is no longer any excuse for cooperatives to follow the blind into +the pit. There are many sources of information and advice available to +cooperatives that should be fully utilized before any money is spent in +a cooperative enterprise that promises only failure. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_5"><!-- RULE4 5 --></a> +<h2> + FALSE COOPERATIVES +</h2> + +<p> +The impractical cooperative which fails is bad enough, for it +discourages many people from making a second attempt, but the false +cooperative is a greater menace to the cooperative movement. The private +promoter with his selfish interests rigs up a scheme to look like +cooperation, but the actual purpose is to provide a channel whereby +thousands of dollars will flow from the pockets of the working people +into those of the promoter. Inasmuch as New York State has a law which +forbids the use of the word cooperation by any concern which is not +organized under the Cooperative Law, such promoters have to be +uncommonly shrewd. +</p> +<hr> + +<b>The Glynn System.</b> + +<p> +Early in 1920 a group of three or four private business men in Buffalo +established a promoting corporation and then set out to organize a +cooperative wholesale which was to be a separate concern from their +promoting enterprise but was to be controlled by it. The promoters sold +shares in the Buffalo Wholesale to individuals in fifteen or twenty +cities and towns all the way across the central part of the State. They +opened up six or seven stores and handled goods in large quantities +through their wholesale plant. +</p> +<p> +The capital was solicited chiefly through labor unions. Elaborate +promises were made to prospective shareholders: they were to have a +local store in their neighborhood, dividends were to be paid regularly, +goods could be bought at prices below those prevailing at the chain +stores and the local group was to have local autonomy. As a matter of +fact the ultimate control was always in the hands of the few promoters +in Buffalo. +</p> +<p> +These men had two large sources of revenue from the many transactions +carried on. They exacted from each member five dollars "for organizing +expenses," and they took a commission on all the business handled +through the wholesale. +</p> +<p> +By the spring of 1921 some of the members in one or two centers became +suspicious, and began an investigation. They found that stores were in +many cases grossly mismanaged. One manager had absconded with $600. +Organizing or promoting expenses in some places were as high as +thirty-three per cent. The weekly newspaper was discontinued for lack of +funds. Some wholesale merchants finally refused to give further credit +to the Buffalo headquarters and at the end of the first year of +operation one of the office force confided to a friend that there was a +ten thousand dollar deficit. When bankruptcy was finally declared in +midsummer, the promoters were not to be found. The principal organizer, +an ardent friend of labor for many years, had been completely duped by +these promoters and was left penniless and alone to face hundreds of +investors. Cooperation was put in disrepute for thousands of men and +women in dozens of cities and towns throughout the State. +</p> +<p> +Cooperation cannot be developed downward from a central wholesale +organization with a corps of organizers, nor will it grow when built +upon mercenary motives. In this case organized labor in the state was +partly to blame for not heeding the warning of a few groups of +cooperators who were aware of the nature of the concern early in its +history. But the ultimate blame lies with the individual men and women +who joined the corporation without looking carefully into its +organization. +</p> +<hr> + +<b>The Cooperative Society of America.</b> + +<p> +In 1920 The Cooperative Society of America was doing a flourishing +business in Chicago and vicinity. One of the leaders of the enterprise +went to Europe in 1921 and convinced most of the leading cooperators of +those countries that he was the greatest power in the cooperative +movement in the United States. By the summer of 1921, the agents of the +principal promoter of this scheme, Harrison Parker, were operating in +New York City, and scores of salesmen were covering the various boroughs +selling stock. Within two weeks all the agencies interested in +protecting cooperation were organized to fight this fraud. The matter +was placed in the hands of the Attorney General and a special deputy +appointed to prosecute. The leading newspapers ran an expose of its +operations. At this juncture, the Chicago headquarters suddenly went +into the hands of a receiver and the New York office closed its doors. +</p> +<p> +Late in the year federal action was instituted against Harrison Parker +in Chicago. The entire business of the so-called cooperative was +disclosed to the courts. It was found that 81,000 people had invested +fifteen millions in this gigantic fraud. Here in New York there were +many hundreds, if not several thousands, of men and women who lost large +sums of money in the ensuing bankruptcy. These people were taken in by +the dramatic appeal to their selfish interests. The Chicago organization +showed them photographs of the "massive buildings" in Chicago in which +it was doing business, spoke glibly of its banking and insurance +departments, and then promised them a share in the spoils if they would +pay $75 for their certificates which were worth only $25 or $50 at their +face value. +</p> +<p> +That so many people could be duped by these "get-rich-quick" methods is +an indication of the amazing lack of cooperative understanding which +prevails in the United States. It is a part of the purpose of this +Bulletin to correct the misunderstanding which prevails because of the +fraudulent use of the word cooperation. In the case of a suspected false +cooperative, test it by the Rochdale principles. If it fails to measure +up to them take the matter up directly with the State authorities or the +Cooperative League of America. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_6"><!-- RULE4 6 --></a> +<h2> + HOW TO START A COOPERATIVE ENTERPRISE IN NEW YORK STATE +</h2> + +<p> +In starting a cooperative enterprise two things must be considered: +first, the kind of business to go into and, second, the method of +organization. Any group desiring to engage in a cooperative venture +should first of all, through a committee and by consultation with +experts, determine what type of enterprise will serve them most +effectively. Where competition is unusually keen and profit margins are +low, cooperation is less likely to be of service than where the opposite +is the case. Whatever enterprise is started men experienced in that +business should be consulted as to the location of the business, the +stock and equipment needed, the operating capital necessary, etc. +</p> +<p> +Preliminary organization should likewise be handled by a committee which +might estimate the number of persons who would become members, the +service each could contribute to the society, etc. Meetings should be +held to educate the group in both cooperation and the special need of +the undertaking. For this purpose many educational bulletins may be +obtained from the Cooperative League of America and other reliable +sources. +</p> +<p> +Actual organization of the society consists of incorporation, election +of officers, the adoption of by-laws, and the immediate adoption of a +sound system of bookkeeping. No action undertaken before incorporation +has any legal effect on an incorporated body, so early incorporation is +desirable. The New York State law requires that all firms using the word +"cooperation" incorporate under one of the three state cooperative laws. +Outside of farmers' cooperatives practically all cooperative societies +are incorporated under the Stock Law known as Article III. Copies of +these laws may be obtained from the State Department of Farms and +Markets. The Department has prepared simple forms for incorporation +under this law. When these are filled out and sworn to and the papers +filed with the Secretary of State and the County Clerk, the society may +legally begin business. The fee of the Secretary of State is $30. A +board of directors is named in the incorporation papers and this board, +through a paid manager, will transact the society's business. Model +by-laws, upon which the by-laws controlling the organization may be +based, may be obtained from the State Department of Farms and Markets or +from the Cooperative League of America. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> + +<a name="RULE4_7"><!-- RULE4 7 --></a> +<h2> + THE PRESENT TREND OF COOPERATION +</h2> + +<p> +There have been significant developments in the cooperative enterprise +in New York in the last two years. In the first place while a number of +small groceries closed their doors, the larger cooperatives have grown +larger and more prosperous. At last there appear to have developed +cooperatives which have passed that critical stage connected with the +life of a newly-organized business. One of these larger cooperatives, +which did over $200,000 worth of business in 1921, has turned its +surplus into its business ever since it started and is now buying more +land to erect a second business block in order to take care of expansion +which is forced upon it by the growing trade. Another cooperative has +established two prosperous branches and is now doing a business of a +quarter of a million dollars a year. A third, following a profitable +year in which its business amounted to $205,000, is likewise building a +new plant. The balance sheets of each of these associations would be the +envy of most business undertakings. +</p> +<p> +A second development is the appearance of a new type of management. A +group of younger men and women with a broad background, an intense +interest in cooperation and a capacity of growing up with the business +is working now to make these cooperatives even more successful. The +cooperative movement is likely to grow in pretty close proportion to the +ability of these leaders and the men and women they can attach to +themselves. Heretofore the greatest handicap of the cooperative movement +in this country has been the lack of trained and able leaders. +</p> +<p> +A third significant development is the adoption by cooperatives of the +best methods of management and accounting. Until this had been done the +cooperatives had small chance of succeeding. It is probable that +cooperatives which lack some of the incentives of the ordinary +commercial business will be compelled constantly to adopt the most +efficient and advanced type of machinery. In setting this up as a +definite standard they will escape the inertia and conservatism that +ordinarily characterize large groups, a condition which at the present +time is retarding the British cooperative movement. Two years ago +accurate accounting was an unusual thing among cooperatives. At the +present time practically all the cooperatives in the State have their +books gone over periodically by trained public accountants. +</p> +<p> +A still further trend in the cooperative development is the extension of +the movement into new lines of business. To this extent the failure of +cooperative grocery stores has had a beneficial effect since it has +forced groups to undertake different kinds of cooperative business. In +New York City at the present time cooperatives are engaged in such +diverse business as that of restaurants, cafeterias, bakeries, coal +associations, pool rooms, printing establishments, meat stores and +laundries. This means that the cooperatives are not following tradition +but are thinking for themselves and are selecting that enterprise which +will serve them most effectively. In going into these businesses where +profits are greatest they are not only prospering themselves but they +are performing one of their most legitimate functions, that of +protecting the consumer from extortionate profits. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> +<a name="BIB"><!-- BIB --></a> +<h2> + BIBLIOGRAPHY +</h2> + +<center> +<B>Books</B> +</center> +<p> +Bubnoff, J.V. The Cooperative Movement in Russia. 162 p. Manchester, +1917. +</p> +<p> +Faber, Harold. Cooperation in Danish Agriculture. 176 p. London, 1918. +</p> +<p> +Gebhard, Hannes. Cooperation in Finland. 190 p. London, 1916. +</p> +<p> +[<a href="#note-A">A</a>] Gide, Charles. Consumers' Cooperative Societies (trans. from the +French). 251 p. Manchester, 1921. +</p> +<p> +[<a href="#note-A">A</a>] Harris, Emerson P. Cooperation, The Hope of the Consumer. 328 p. New +York, Macmillan Company, 1918. +</p> +<p> +Howe, Frederick C. Denmark, A Cooperative Commonwealth. 203 p. New York, +Harcourt, Brace and Company, 1921. +</p> +<p> +Johns Hopkins University Studies, Vol. VI. History of Cooperation in the +United States. 540 p. Baltimore, 1888. +</p> +<p> +Nicholson, Isa. Our Story. 80 p. Manchester, 1918. +</p> +<p> +Powell, G. Harold. Cooperation in Agriculture. 327 p. New York, +Macmillan Company, 1913. +</p> +<p> +Redfern, Percy. The Story of the Cooperative Wholesale Society. 439 p. +Manchester, 1913. +</p> +<p> +Redfern, Percy. The Consumer's Place in Society. 107 p. Manchester, +1920. +</p> +<p> +Smith-Gordon and Staples. Rural Reconstruction in Ireland. 279 p. +London, 1917. +</p> +<p> +[<a href="#note-A">A</a>] Sonnischsen, Albert. Consumers' Cooperation. 223 p. New York, +Macmillan Company, 1919. +</p> +<p> +[<a href="#note-A">A</a>] Webb, Catherine. Industrial Cooperation. 278 p. Manchester, 1917. +</p> +<p> +[<a href="#note-A">A</a>] Webb, Beatrice and Sidney. The Consumers' Cooperative Movement. 504 +p. London, 1921. +</p> +<p> +[<a href="#note-A">A</a>] Woolf, Leonard. Cooperation and the Future of Industry. 141 p. +London, 1918. +</p> +<p> +Woolf, Leonard. Socialism and Cooperation. 129 p. London, 1921. +</p> +<p> +Transactions of American Cooperative Convention. New York, Cooperative +League of America, 1918 and 1921. +</p> +<p> +People's Year Book, Annual of the English and Scottish Wholesale +Societies. London, 1921. +</p> +<p> +<a name="note-A"><!-- Note Anchor A --></a>[Footnote A: Best books on the subject.] +</p> + +<center> +<B>Magazines</B> +</center> + +<p> +Cooperation. The Cooperative League of America, New York, N.Y. +</p> +<p> +The Canadian Cooperator. Brantford, Ontario, Canada. +</p> +<p> +The International Cooperative Bulletin. 14 Great Smith Street, +Westminster, London, England. +</p> + +<center> + <B>Pamphlets</B> +</center> + +<p> +<b>Historical</b> +</p> + +<p> +Consumers' Cooperation in New York City. Bulletin of the Division of +Foods and Markets for May, 1920. Prepared in cooperation with The +Consumers' League of New York City. +</p> +<p> +An Idea That Grew. Genevieve M. Fox. National Board, Young Women's +Christian Association, 600 Lexington Avenue, New York City. +</p> +<p> +The following are pamphlets of the Cooperative League of America: +</p> +<p> +Story of Cooperation. +</p> +<p> +British Cooperative Movement. +</p> +<p> +A Baker and What He Baked. +</p> +<p> +The Control of Industry by the People through the Cooperative Movement. +</p> +<p> +Cooperative Consumers' Movement in the United States. +</p> +<p> +Cooperative Movement (Yiddish). +</p> + +<p> +<b>Technical.</b> +</p> + +<p> +Credit Union and Cooperative Store. Arthur Ham. The Russell Sage +Foundation, 130 East 22nd Street, New York City. +</p> + +<p> </p> + +<p> +The following are pamphlets of the Department of Farms and Markets: +</p> +<p> +Cooperative Housing. +</p> +<p> +Article 3, Stock Cooperative Law. +</p> +<p> +By-laws for Cooperative Associations organized under Article 3, Stock +Cooperative Law. +</p> +<p> +Article 21, Membership Cooperative Law. +</p> +<p> +By-laws for Cooperative Associations organized under Article 21, +Membership Cooperative Law. +</p> +<p> +Article 13 A, Farmers' Cooperative Law. +</p> +<p> +By-laws for Cooperative Associations organized under Article 13 A, +Farmers' Cooperative Law. +</p> + +<p> </p> + +<p> +The following are pamphlets of the Cooperative League of America: +</p> +<p> +How to Start and Run a Rochdale Cooperative Store. +</p> +<p> +System of Store Records and Accounts. +</p> +<p> +A Model Constitution and By-Laws for a Cooperative Society. +</p> +<p> +Cooperative Education. Duties of Educational Committee Defined. +</p> +<p> +How to Start a Cooperative Wholesale. +</p> +<p> +Why Cooperative Stores Fail. +</p> +<p> +Cooperative Housebuilding. +</p> +<p> +Cooperative Housing for Europe's Homeless. +</p> + +<p> </p> +<p> </p> +<p> </p> +<p> </p> +<p> </p> +<p> </p> + + + + + + + +<pre> + + + + + +End of the Project Gutenberg EBook of Consumers' Cooperative Societies in +New York State, by The Consumers' League of New York + +*** END OF THIS PROJECT GUTENBERG EBOOK COOPERATIVE SOCIETIES OF NY *** + +***** This file should be named 10808-h.htm or 10808-h.zip ***** +This and all associated files of various formats will be found in: + https://www.gutenberg.org/1/0/8/0/10808/ + +Produced by David Garcia and the Online Distributed Proofreading Team. + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Consumers' Cooperative Societies in New York State + +Author: The Consumers' League of New York + +Release Date: January 23, 2004 [EBook #10808] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK COOPERATIVE SOCIETIES OF NY *** + + + + +Produced by David Garcia and the Online Distributed Proofreading Team. + + + + + + + + + + +CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE + +_Published April 1922_ + +_by_ + +The Consumers' League of New York + +289 FOURTH AVENUE + +NEW YORK CITY + + * * * * * + +This study was originally prepared for the Consumers' League of New York +in 1921 by Mr. Cedric Long. It has been revised by the League in April, +1922. The Consumers' League wishes to express its appreciation of the +valuable advice and assistance given by Mr. Louis B. Blachly of the +Bureau of Cooperative Associations of the State Department of Farms and +Markets both in the original preparation of the material and in its +revision. + + * * * * * + + + + +COOPERATIVE PRINCIPLES + +The principles established by the Rochdale Pioneers in England in 1844 +and observed consistently by successful societies since that time are as +follows: + +1. Earnings of capital stock limited to legal or current rate of interest. + +2. Surplus earnings to be returned to members in proportion to patronage. + +3. One vote for each member regardless of amount of stock owned. No +proxy voting permitted. + +In addition, the majority of societies adhere to the following principles: + +1. Business to be done for cash. + +2. Goods to be sold at current market prices. + +3. Education given in the principles and aims of cooperation. + + + + +CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE + +The Extent of Consumers' Cooperation. + +The Tenth International Cooperative Congress, held in Switzerland in +1921, disclosed the fact that since the last Congress, in 1913, the +number of cooperators in the twenty-five countries represented had +increased from approximately eight million to thirty million and that +cooperative trade had increased correspondingly. + +Today in Great Britain the cooperative societies number more than four +million members, nearly one-third of the entire population being +represented in these societies. Switzerland, in 1920, boasted three +hundred and sixty-two thousand members and a third of the Swiss people +bought goods through their own societies. Cooperation is still alive in +Russia in spite of its unsettled economic conditions. In 1920 there were +twenty-five thousand societies with twelve million heads of families. In +the same year the German cooperative societies were two million seven +hundred thousand members strong. + +In the United States cooperation has had an erratic development. Within +the past seven years, however, there has been a rapid increase in new +societies until today it is estimated that there are about three +thousand with a membership of half a million. In number of societies New +York is far behind most of its sister states. It has one hundred and +twenty-five genuine consumers' cooperative associations, seventy-five of +which are among farmer groups and the remaining fifty among city +consumers. There are in addition some twenty cooperative buying groups +connected with large commercial organizations. No complete tabulation +has been made of the total business of all these cooperative groups, but +in 1921 the five largest cooperative societies among the city consumers, +with an average membership of 1,800 persons, all located in New York +City, did a total business of approximately one million dollars. These +societies and many others are prospering. On the other hand there are +many cooperatives which have failed. Whether they have failed or +succeeded more knowledge of practical cooperation can be gained from +their experience than can ever be learned from books. + +The Consumers' League feels that the experience of these societies +should not be wasted. For this reason it is telling the stories of +several cooperatives in New York, some of which are successfully +established and some of which have fallen by the roadside. In these +brief stories are written a hundred lessons that cooperatives should +heed. + + + + +SUCCESSFUL COOPERATION + +The Utica Cooperative Society. + +At the corner of Court and Schuyler Streets in Utica stands a grocery +store which is different from an ordinary store. It is different because +it is a cooperative store and it belongs to those who buy as well as to +those who serve. There is no need for the purchaser to be on guard lest +the bargain be to his disadvantage, for he is dealing with friendly +clerks who are there to help him find what he wants, not to sell him +something he cannot use. In this store the purchaser can find all the +articles carried by a first-class grocer, canned goods, green goods, +dairy products and, in addition, a complete supply of baked goods, baked +by the cooperative society itself. + +The bakery is to be found behind the grocery. Large, high windows throw +a flood of light into the mixing room. The oven is of a modern type, +large, easily controlled and economical. Five men work at the baking and +a boy wraps bread in waxed paper with a mechanical device which +automatically folds and seals. The three delivery wagons bear the +cooperative motto, "Each for All, and All for Each." They are used in +the morning for the delivery of baked goods and in the afternoon for the +delivery of groceries. It keeps three boys busy all day covering the +territory between the cooperators' homes. The delivery system is +essential because the membership is scattered throughout the entire +city. + +There are fourteen employees in the grocery and bakery. Hitherto they +have received wages higher than those generally prevailing throughout +the city for the same kind of work, but recently on their own initiative +they voted themselves a ten per cent decrease. In a cooperative all +members may know the financial status of the business and the employees +found that, due to the diminishing margin of profit, the business could +not support such a high scale of wages. Their wage cut followed because +as members of the cooperative they were interested not only in their own +wages but in the good of the society as a whole. + +The Utica Cooperative Society was organized in 1915 by a group of +Germans. Half a dozen nationalities are now represented, although +Americans predominate. Although they had only ninety-two members and +$1,250 to start, they bought out a private store and began cooperative +business. Their bakery was originally in the cellar under the store. The +former owner was employed as manager. For three or four years they +experienced many difficulties. Within two years two managers proved +inefficient and had to be replaced. Only the tenacious loyalty of a few +kept the society alive. But they had the foresight and determination to +fight through those lean years. + +Now for five years they have had the same manager. He insists upon +scrupulous bookkeeping methods, careful buying, close supervision of his +work by the board of fifteen directors, strict regard for the needs and +desires of the membership, and exceptional precautions against waste and +leakage. The president, a man having a private business of his, own, has +an idealism almost religious in quality. These two men cooperate closely +on matters of policy and provide much of the leadership which has +brought success. + +The membership is now 380. The capital stock has increased from $1,250 +to $27,594. The business in 1921 amounted to $105,598, forty per cent of +which was done by the bakery. Since 1915 the rebates to members on +patronage have totaled $8,207, fluctuating from nothing at all in some +years to eight per cent and ten per cent in other years. During this +period the lump sum saved to purchasers, including rebates, the earnings +on stock shares, and reserve fund, amounted to $12,642. This sum would +have gone into the pockets of private storekeepers except for the +cooperative store. + +The Utica Society has succeeded because it has met the prime +requirements for effective cooperation. The greater part of the +membership was loyal during critical times when the easy way would have +been to withdraw and trade at chain stores. The management worked +unceasingly to put the business on an economical basis. Finally they won +out because they put Service over Profit and carried out that rule in +the most practical and businesslike way they could find. + + * * * * * + +Our Cooperative Cafeteria. + +If you should drop in for lunch at any one of the three branches of our +Cooperative Cafeteria in New York City the first thing that would strike +you would be the friendly spirit of those back of the serving tables. +Before you paid your check you would observe further that the food had a +variety and flavor not found in the ordinary restaurant. If you were +discerning you would detect that a complex machinery was at work which +had nearly escaped you because of its smooth operation. + +That genial spirit which infects the whole place and those subtle things +which appeal to your eye and palate explain the success of the +cafeteria. But there are some underlying causes for these things that we +must get hold of and to do that we must go back to the year 1919. In +October of that year a private cafeteria was started by two women with a +record of successful cafeteria experience behind them. The experiment +proved successful and the following April a momentous step was taken. It +was proposed that the persons who ate there become the owners. A +cooperative society was formed and in two weeks shares were sold to the +value of two thousand dollars. The new owners took over the cafeteria +and the former owners became their hired employees. This was the +beginning of Our Cooperative Cafeteria. + +The cafeteria had from the outset advantages which are gained by many +cooperatives only after bitter and costly experience. They had skillful +and experienced management to which they immediately gave over all +technical control, holding them responsible through an active Board of +Directors and an accounting system devised by experts. The management +justified the confidence of the shareholders. On April 1, 1921, after +one year of operation they had outgrown the first plant and a new branch +had been running for two months. There were in all 379 members. The +year's business had been $96,000, of which $6,000 were net earnings. The +stockholders had received six per cent on their investment, a reserve +fund had been laid aside, and every month the member-patrons had +received rebates on the food eaten of from six per cent to sixteen per +cent. At the end of the second year the third branch, larger than either +of the others, located in the Wall Street business section, had been in +operation for three months. The membership of the society had increased +to 750. The business for the year had been $190,000 and the net earnings +were $12,000. + +The cafeteria now employs sixty-eight workers, most of whom are +shareholders and vote as such in membership meetings. The worker +receives the same food as the patrons, served at the same counter. +Against all restaurant traditions the worker is served before the meal +so that she may have the best there is and have it before she is too +tired to eat it. The minimum wage is higher than the customary rate for +restaurant workers in New York. The forty-eight hour week is the +standard, although as yet some of the help work over that time. Overtime +is one thing that the management has not yet been able wholly to +eliminate. + +It has been found that the policy determining function of the +stockholders and Board of Directors cannot operate independently of the +plans of the management. The two in a business organization must be +closely inter-related. The stockholders have not tried to supervise the +details of the business, as has sometimes been done to the disaster of +cooperatives. The general manager instead has gone to the Board of +Directors and sits there practically as a full member. As a result the +policy function of the Board and the management function are closely +linked together as they must be in a business that is to be permanent. + +The stockholders are not idle, however. Through their committees, they +have amended the by-laws. They have recently called a general meeting +for the consideration of labor policy, and they publish monthly a little +paper known as "The Cooperative Crier." The average attendance at the +shareholders' monthly meetings is sixty or sixty-five. + +To an unusual degree the success of Our Cooperative Cafeteria is bound +up with its management, not only because it is technically expert, but +because it is thoroughly imbued with the cooperative spirit. Around the +first nucleus has grown a staff of intelligent young men and women, +usually college bred, who are devoting all their brains and energy to +see that this cooperative cafeteria succeeds. They seem to find a +peculiar satisfaction in knowing that their efforts will not enrich a +few individuals at the expense of patron and employee alike, but will +increase the common welfare of the community itself. + +Like other cooperatives, the cafeteria has found the need for expert and +trained workers in place of the hard-pressed volunteer. Much of the work +on education and cooperative organization is carried on by trained +members of the staff. This interest of the paid employees in things +other than mere technical efficiency contributes much to that friendly +spirit which makes Our Cooperative Cafeteria unique among the +restaurants of New York. + + * * * * * + +The Village Cooperative Society, Inc. + +After nearly two years of discussion and meetings and after long +consultation with experts a group composed largely of the housewives in +Greenwich Village in the heart of New York City started in January, +1921, a cooperative laundry. The second-hand machinery which they +purchased was not a laundry unit, the capacity of the washer being +one-fourth that of the ironer; they had insufficient capital, half of it +borrowed; they employed an inexperienced manager and a green bookkeeper; +and for the first eight months the supervision was almost entirely +carried on by volunteers, hard working, but without the foresight and +power of control so essential to a new organization. Under these +handicaps the cooperative laundry lost money every month. + +It existed through those months due largely to two things. First, they +were forced almost immediately to employ a new manager who consistently +turned out high grade work, and secondly, a small group of volunteers +put all their energy into making the thing a success. + +Then the causes of the continued failure were one by one eliminated. A +business manager who had an intense interest in cooperation was hired to +supervise general operations. He took over much of the work of the +volunteers and for the first time the laundry developed a well thought +out policy. The inexperienced bookkeeper was eliminated and all +supervision headed up in the new manager. Better service brought more +work, and new machinery made greater output possible without additional +labor. The manager found labor cost too high and introduced methods +which saved both labor and money. He found the machinery badly arranged. +When the plumber told him it would cost twenty-five dollars to rearrange +it he spent a dollar and forty cents and did it himself. After a +discussion in the Board of Directors which nearly wrecked the +organization, a Board policy of leaving all details of management to the +manager and chairman of a managing committee was determined upon, while +the Board devoted itself to the determination of general policies. + +The results of these changes were soon apparent. For the first time the +dead line between losses and earnings was crossed and net earnings +gradually began to mount. In September, 1921, the amount of business +wavered around a hundred dollars a week. In March, 1922, it averaged +about $330 per week, and net earnings have run as high as $75 per week. + +The laundry is still small and is located in quarters for which it pays +a regular commercial rent. It has expanded several times and now has +three power washers, an ironer or mangle, a dry room and other +equipment. It employs a business manager, who supervises the plant and +does everything from keeping the books to collecting the laundry in a +pinch, a work manager, a washer, a sorter and marker, four ironers and a +delivery boy. It still holds hard to the policy of putting out the very +best kind of work and economizing in every particular. + +Its very success has in a way embarrassed the laundry. The manager has +been offered special inducements to leave. The delivery system has been +tampered with. There has even been acid thrown on the clothes by +outsiders jealous of its business. But this has only stimulated the +whole membership to fight harder to realize their aim of getting their +own laundry work done the way they want it, and without profit. + + * * * * * + +The Finnish Cooperative Societies of Brooklyn. + +What is it that makes the Finns so successful at Cooperation? Industry +and cleanliness. At any rate those are the striking characteristics of +the Finns of Brooklyn. + +Up to the present time they have never paid any dividends. It has been +explained to them, as their manager says, that if the business is to +serve them properly it must grow, and in order to grow it needs all the +surplus earnings for expansion. And so, because the members are +industrious and far-sighted, they have foregone their dividends. The +cleanliness of their stores, too, is an inspiration not only to their +membership but to hundreds of others who have visited their plant. This +is one of the biggest business assets they possess. + +These virtues have enabled the Finnish group in Brooklyn to build +cooperatively a three-story modern business block, to run therein a +wholesale bakery, a retail bakery, a meat shop and grocery store, a +cooperative restaurant and a cooperative pool room, to build adjacent to +this two modern cooperative apartment houses and to lay the foundations +for a third now under construction. Outside of the housing venture the +business done last year was $175,000 and today there are nearly two +thousand members. + +Although these undertakings are practically a part of the same group +there are three separate corporations. The largest of these is the +Finnish Cooperative Trading Association, Inc. The restaurant is operated +as the Workers' Cooperative Restaurant, Inc., and the housing +association as the Finnish Homebuilders' Association, Inc. + +The restaurant is the oldest. Seven years ago a group of Finns in this +locality boarded together. Their capital was a hundred dollars which +some one had loaned to them. They ran their little business on a +cooperative basis, paying for the meals and putting back any surplus +into a reserve. No one contributed anything, but before long they paid +back the one hundred dollars. Early in 1922 they incorporated. They then +owned a fine modern restaurant, had done $70,000 worth of business in +1921, and had three thousand dollars in the bank. And no one had ever +paid a cent into the business. With all this they sell their food at +unusually low prices, well cooked, wholesome, and clean. + +In 1917 a larger group determined to have a bakery which came up to +their standards. In 1919 they had raised enough money to start +construction. Then they faced their first test Their money gave out. +Undaunted they organized a money raising "army," as they called it, of +thirty or forty men. The money was raised. By the time the new bakery +was opened they had fourteen hundred members and had raised $140,000. +The total organization expenses for three years came to $400, less than +three-tenths of one per cent for promotion expenses. + +The new business block was opened in May, 1920. All but the restaurant +was under one general manager. He was bonded for $10,000. He had had +business experience in running a cooperative bank in Wisconsin. To him +was delegated a large degree of freedom, but he was held strictly +accountable to the Board of Directors. A thorough and comprehensive +system of bookkeeping and accounting was installed. Each separate +business, the bakeries, the pool room, the meat shop, was put on a cost +accounting basis and the manager knew just which one was making or +losing money. + +All the branches of the business, however, have made money. Over $12,000 +in net earnings, after allowing for interest on the investment, have +been made since the business started. Last year the bakery did business +to the extent of $135,000, the meat market and grocery $58,000, and the +pool room $12,000. Already the business has outgrown its quarters. A new +oven has been added to the bakery. The third floor, which was used +exclusively as a pool room, has been invaded and the thirteen pool +tables rearranged and put closer together so that more room may be had +for bakery products. Adjacent land has been purchased so that the +building itself may be added to. The membership of the Trading +Association alone is eighteen hundred and forty. + +The employees of the association work among almost ideal conditions. The +twelve bakers are all union men and members of the cooperative +association as well. They work seven and one-half hours a day and are +paid from forty-five to fifty dollars per week. The light, airy bakery +is always kept spotless. Adjacent to it is a commodious room with +lockers for each man and two shower baths make it easy to keep clean. +Down on the first floor the retail bakery is so immaculately clean that +you would be willing to defy anyone to find one speck of dust in the +place. Every article of food is under shining glass. The floor is white +tiled. But the food is what attracts one. The pies swell out as if about +to burst. To look at the bread and rolls makes one hungry and to smell +them hungrier still. This, you are told, is because only the purest +ingredients are used. Many bakers use powdered eggs for baking, commonly +imported from China; this cooperative uses only fresh eggs. They buy a +better grade of flour than their competitors do. The same thing is true +of the meat shop next door. They do not aim to make money on their meat. +Their sole aim is to sell only the best. This policy has been so popular +that the quantity sold the first three months of 1922 was almost treble +that for the same months in 1921. And the meat store, too, has made +substantial net earnings. + +The two cooperative apartments which lie adjacent to the business block +house thirty-two families. The apartments contain five rooms and bath +and are thoroughly modern. They are light and airy with high ceilings +and hardwood floors. Needless to say their tenant-owners keep them in +the most immaculate condition. Recently a group of business men, several +of them builders, went through the buildings and many expressed the wish +that they could get similar apartments for three times the money that +these cooperators were paying. For the best apartments the rent has +recently been raised to $31.50 per month. But out of this amount the +tenant-owner is not only paying all upkeep but is paying off the +mortgage at the rate of $1,000 per year. Similar apartments in the +locality rent from $75 to $80 per month. The tenant-owners, of course, +run their apartments on the cooperative plan of one vote per member. + +The members of the Finnish Cooperative Societies of Brooklyn are fast +becoming independent of the middlemen, for cooperation touches them on +many sides. They have learned to serve themselves and they get what they +want, honest goods--and clean. + + + + +COOPERATIVES THAT FAILED + +When one has made mistakes the importance which is attached to them +depends upon the gravity of the consequences. This being the case, the +stones of cooperatives which follow are worth attention, for, as a +result of their mistakes, they are now dead. One of the most pitiful +aspects of cooperative failures is that one group after another will go +on making the identical mistakes that have brought ruin to others. +Sometimes it is the result of sheer ignorance, and sometimes of shameful +negligence. In either case the result is the same--the stockholders lose +their savings and cooperation feels the blow. + +Two years ago the State authorities were called upon to investigate a +cooperative that was about to fail. Several members made the claim that +the officers had defaulted with property of the association. An +accountant was called in to examine the books. After considerable +coaxing the secretary-treasurer unearthed them and turned them over. +They consisted of an old black bag full of all the bills, vouchers and +other scrap paper for the previous six months! Those were his books. He +had sold the store without taking an inventory. When an inventory was +finally made it was found that some of the stock had not turned over for +a year. On one top shelf two hundred pepper shakers full of pepper +stretched half the length of the room. Full value had been paid for this +dead stock and several hundred dollars to boot for "good will." From the +cooperative standpoint the most dangerous thing was that half the +directors had become disgruntled and, though remaining on the Board, +refused to attend meetings. A quorum could not be obtained and for +months the president and treasurer had run the business without +reference to directors or stockholders. The cooperative society failed +and every cent of the four thousand dollars of the cooperators was lost. + +Another cooperative store, this time in the Bronx, was taken over by the +manager within one year. Upon inquiry its directors proudly exhibited +its books. It was a beautiful set costing, they said, nearly +seventy-five dollars. The store had started in November. For November +and the first three days of December everything was kept in good shape. +But during the entire next year not an entry had been made. The +directors had the books, but the manager had the store. The stockholders +lost all their capital. + +A thriving business was being done by still another cooperative store in +New York. At the outset the directors had voted to bond the manager. But +the matter was put off and put off. One day the manager disappeared and +with him two thousand dollars belonging to the cooperative. After a few +months the manager was found, but the money was gone. The loss of the +total sum was more than the cooperative could stand, however, and after +struggling along for a few months, it closed its doors. + +A clever organizer two years ago started organizing a cooperative store +in New York. On the society's letter heads he had printed a picture of +the world and across the world the word "BIG." He was going to start a +whole chain of stores. In three months the first and only store was put +into the hands of an assignee and the man left the city. An audit of his +accounts showed that he had collected $3,600. One-fourth of this had +gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving +only $350 for operating expenses. Where the Finns spent three-tenths of +one per cent for promotion he had spent twenty-five per cent. This had +forced the association to start with so small an operating capital that +it was soon badly embarrassed for lack of funds and could do nothing but +close its doors. + +It would be possible to go on with many other illustrations. Such +failures as these are not really a test of genuine cooperation. Any +ordinary business with such management would also have failed. But it is +significant that most of the recent cooperative failures have been among +grocery stores. In this particular business the margin of profit is so +small that only the most skillful and economical management can bring +success. A recent survey of all the private grocery stores in one city +showed that the average annual profit was only $400 per grocer. + +There is no longer any excuse for cooperatives to follow the blind into +the pit. There are many sources of information and advice available to +cooperatives that should be fully utilized before any money is spent in +a cooperative enterprise that promises only failure. + + + + +FALSE COOPERATIVES + +The impractical cooperative which fails is bad enough, for it +discourages many people from making a second attempt, but the false +cooperative is a greater menace to the cooperative movement. The private +promoter with his selfish interests rigs up a scheme to look like +cooperation, but the actual purpose is to provide a channel whereby +thousands of dollars will flow from the pockets of the working people +into those of the promoter. Inasmuch as New York State has a law which +forbids the use of the word cooperation by any concern which is not +organized under the Cooperative Law, such promoters have to be +uncommonly shrewd. + + * * * * * + +The Glynn System. + +Early in 1920 a group of three or four private business men in Buffalo +established a promoting corporation and then set out to organize a +cooperative wholesale which was to be a separate concern from their +promoting enterprise but was to be controlled by it. The promoters sold +shares in the Buffalo Wholesale to individuals in fifteen or twenty +cities and towns all the way across the central part of the State. They +opened up six or seven stores and handled goods in large quantities +through their wholesale plant. + +The capital was solicited chiefly through labor unions. Elaborate +promises were made to prospective shareholders: they were to have a +local store in their neighborhood, dividends were to be paid regularly, +goods could be bought at prices below those prevailing at the chain +stores and the local group was to have local autonomy. As a matter of +fact the ultimate control was always in the hands of the few promoters +in Buffalo. + +These men had two large sources of revenue from the many transactions +carried on. They exacted from each member five dollars "for organizing +expenses," and they took a commission on all the business handled +through the wholesale. + +By the spring of 1921 some of the members in one or two centers became +suspicious, and began an investigation. They found that stores were in +many cases grossly mismanaged. One manager had absconded with $600. +Organizing or promoting expenses in some places were as high as +thirty-three per cent. The weekly newspaper was discontinued for lack of +funds. Some wholesale merchants finally refused to give further credit +to the Buffalo headquarters and at the end of the first year of +operation one of the office force confided to a friend that there was a +ten thousand dollar deficit. When bankruptcy was finally declared in +midsummer, the promoters were not to be found. The principal organizer, +an ardent friend of labor for many years, had been completely duped by +these promoters and was left penniless and alone to face hundreds of +investors. Cooperation was put in disrepute for thousands of men and +women in dozens of cities and towns throughout the State. + +Cooperation cannot be developed downward from a central wholesale +organization with a corps of organizers, nor will it grow when built +upon mercenary motives. In this case organized labor in the state was +partly to blame for not heeding the warning of a few groups of +cooperators who were aware of the nature of the concern early in its +history. But the ultimate blame lies with the individual men and women +who joined the corporation without looking carefully into its +organization. + + * * * * * + +The Cooperative Society of America. + +In 1920 The Cooperative Society of America was doing a flourishing +business in Chicago and vicinity. One of the leaders of the enterprise +went to Europe in 1921 and convinced most of the leading cooperators of +those countries that he was the greatest power in the cooperative +movement in the United States. By the summer of 1921, the agents of the +principal promoter of this scheme, Harrison Parker, were operating in +New York City, and scores of salesmen were covering the various boroughs +selling stock. Within two weeks all the agencies interested in +protecting cooperation were organized to fight this fraud. The matter +was placed in the hands of the Attorney General and a special deputy +appointed to prosecute. The leading newspapers ran an expose of its +operations. At this juncture, the Chicago headquarters suddenly went +into the hands of a receiver and the New York office closed its doors. + +Late in the year federal action was instituted against Harrison Parker +in Chicago. The entire business of the so-called cooperative was +disclosed to the courts. It was found that 81,000 people had invested +fifteen millions in this gigantic fraud. Here in New York there were +many hundreds, if not several thousands, of men and women who lost large +sums of money in the ensuing bankruptcy. These people were taken in by +the dramatic appeal to their selfish interests. The Chicago organization +showed them photographs of the "massive buildings" in Chicago in which +it was doing business, spoke glibly of its banking and insurance +departments, and then promised them a share in the spoils if they would +pay $75 for their certificates which were worth only $25 or $50 at their +face value. + +That so many people could be duped by these "get-rich-quick" methods is +an indication of the amazing lack of cooperative understanding which +prevails in the United States. It is a part of the purpose of this +Bulletin to correct the misunderstanding which prevails because of the +fraudulent use of the word cooperation. In the case of a suspected false +cooperative, test it by the Rochdale principles. If it fails to measure +up to them take the matter up directly with the State authorities or the +Cooperative League of America. + + + + +HOW TO START A COOPERATIVE ENTERPRISE IN NEW YORK STATE + +In starting a cooperative enterprise two things must be considered: +first, the kind of business to go into and, second, the method of +organization. Any group desiring to engage in a cooperative venture +should first of all, through a committee and by consultation with +experts, determine what type of enterprise will serve them most +effectively. Where competition is unusually keen and profit margins are +low, cooperation is less likely to be of service than where the opposite +is the case. Whatever enterprise is started men experienced in that +business should be consulted as to the location of the business, the +stock and equipment needed, the operating capital necessary, etc. + +Preliminary organization should likewise be handled by a committee which +might estimate the number of persons who would become members, the +service each could contribute to the society, etc. Meetings should be +held to educate the group in both cooperation and the special need of +the undertaking. For this purpose many educational bulletins may be +obtained from the Cooperative League of America and other reliable +sources. + +Actual organization of the society consists of incorporation, election +of officers, the adoption of by-laws, and the immediate adoption of a +sound system of bookkeeping. No action undertaken before incorporation +has any legal effect on an incorporated body, so early incorporation is +desirable. The New York State law requires that all firms using the word +"cooperation" incorporate under one of the three state cooperative laws. +Outside of farmers' cooperatives practically all cooperative societies +are incorporated under the Stock Law known as Article III. Copies of +these laws may be obtained from the State Department of Farms and +Markets. The Department has prepared simple forms for incorporation +under this law. When these are filled out and sworn to and the papers +filed with the Secretary of State and the County Clerk, the society may +legally begin business. The fee of the Secretary of State is $30. A +board of directors is named in the incorporation papers and this board, +through a paid manager, will transact the society's business. Model +by-laws, upon which the by-laws controlling the organization may be +based, may be obtained from the State Department of Farms and Markets or +from the Cooperative League of America. + + + + +THE PRESENT TREND OF COOPERATION + +There have been significant developments in the cooperative enterprise +in New York in the last two years. In the first place while a number of +small groceries closed their doors, the larger cooperatives have grown +larger and more prosperous. At last there appear to have developed +cooperatives which have passed that critical stage connected with the +life of a newly-organized business. One of these larger cooperatives, +which did over $200,000 worth of business in 1921, has turned its +surplus into its business ever since it started and is now buying more +land to erect a second business block in order to take care of expansion +which is forced upon it by the growing trade. Another cooperative has +established two prosperous branches and is now doing a business of a +quarter of a million dollars a year. A third, following a profitable +year in which its business amounted to $205,000, is likewise building a +new plant. The balance sheets of each of these associations would be the +envy of most business undertakings. + +A second development is the appearance of a new type of management. A +group of younger men and women with a broad background, an intense +interest in cooperation and a capacity of growing up with the business +is working now to make these cooperatives even more successful. The +cooperative movement is likely to grow in pretty close proportion to the +ability of these leaders and the men and women they can attach to +themselves. Heretofore the greatest handicap of the cooperative movement +in this country has been the lack of trained and able leaders. + +A third significant development is the adoption by cooperatives of the +best methods of management and accounting. Until this had been done the +cooperatives had small chance of succeeding. It is probable that +cooperatives which lack some of the incentives of the ordinary +commercial business will be compelled constantly to adopt the most +efficient and advanced type of machinery. In setting this up as a +definite standard they will escape the inertia and conservatism that +ordinarily characterize large groups, a condition which at the present +time is retarding the British cooperative movement. Two years ago +accurate accounting was an unusual thing among cooperatives. At the +present time practically all the cooperatives in the State have their +books gone over periodically by trained public accountants. + +A still further trend in the cooperative development is the extension of +the movement into new lines of business. To this extent the failure of +cooperative grocery stores has had a beneficial effect since it has +forced groups to undertake different kinds of cooperative business. In +New York City at the present time cooperatives are engaged in such +diverse business as that of restaurants, cafeterias, bakeries, coal +associations, pool rooms, printing establishments, meat stores and +laundries. This means that the cooperatives are not following tradition +but are thinking for themselves and are selecting that enterprise which +will serve them most effectively. In going into these businesses where +profits are greatest they are not only prospering themselves but they +are performing one of their most legitimate functions, that of +protecting the consumer from extortionate profits. + + + + +BIBLIOGRAPHY + +Books + + Bubnoff, J.V. The Cooperative Movement in Russia. 162 p. Manchester, + 1917. + + Faber, Harold. Cooperation in Danish Agriculture. 176 p. London, 1918. + + Gebhard, Hannes. Cooperation in Finland. 190 p. London, 1916. + + [A] Gide, Charles. Consumers' Cooperative Societies (trans. from the + French). 251 p. Manchester, 1921. + + [A] Harris, Emerson P. Cooperation, The Hope of the Consumer. 328 p. + New York, Macmillan Company, 1918. + + Howe, Frederick C. Denmark, A Cooperative Commonwealth. 203 p. New + York, Harcourt, Brace and Company, 1921. + + Johns Hopkins University Studies, Vol. VI. History of Cooperation in + the United States. 540 p. Baltimore, 1888. + + Nicholson, Isa. Our Story. 80 p. Manchester, 1918. + + Powell, G. Harold. Cooperation in Agriculture. 327 p. New York, + Macmillan Company, 1913. + + Redfern, Percy. The Story of the Cooperative Wholesale Society. 439 p. + Manchester, 1913. + + Redfern, Percy. The Consumer's Place in Society. 107 p. Manchester, + 1920. + + Smith-Gordon and Staples. Rural Reconstruction in Ireland. 279 p. + London, 1917. + + [A] Sonnischsen, Albert. Consumers' Cooperation. 223 p. New York, + Macmillan Company, 1919. + + [A] Webb, Catherine. Industrial Cooperation. 278 p. Manchester, 1917. + + [A] Webb, Beatrice and Sidney. The Consumers' Cooperative Movement. + 504 p. London, 1921. + + [A] Woolf, Leonard. Cooperation and the Future of Industry. 141 p. + London, 1918. + + Woolf, Leonard. Socialism and Cooperation. 129 p. London, 1921. + + Transactions of American Cooperative Convention. New York, + Cooperative League of America, 1918 and 1921. + + People's Year Book, Annual of the English and Scottish Wholesale + Societies. London, 1921. + +[Footnote A: Best books on the subject.] + + +Magazines + + Cooperation. The Cooperative League of America, New York, N.Y. + + The Canadian Cooperator. Brantford, Ontario, Canada. + + The International Cooperative Bulletin. 14 Great Smith Street, + Westminster, London, England. + + +Pamphlets + +Historical + + Consumers' Cooperation in New York City. Bulletin of the Division of + Foods and Markets for May, 1920. Prepared in cooperation with The + Consumers' League of New York City. + + An Idea That Grew. Genevieve M. Fox. National Board, Young Women's + Christian Association, 600 Lexington Avenue, New York City. + + +The following are pamphlets of the Cooperative League of America: + + Story of Cooperation. + + British Cooperative Movement. + + A Baker and What He Baked. + + The Control of Industry by the People through the Cooperative Movement. + + Cooperative Consumers' Movement in the United States. + + Cooperative Movement (Yiddish). + + +Technical. + + Credit Union and Cooperative Store. Arthur Ham. The Russell Sage + Foundation, 130 East 22nd Street, New York City. + + +The following are pamphlets of the Department of Farms and Markets: + + Cooperative Housing. + + Article 3, Stock Cooperative Law. + + By-laws for Cooperative Associations organized under Article 3, Stock + Cooperative Law. + + Article 21, Membership Cooperative Law. + + By-laws for Cooperative Associations organized under Article 21, + Membership Cooperative Law. + + Article 13 A, Farmers' Cooperative Law. + + By-laws for Cooperative Associations organized under Article 13 A, + Farmers' Cooperative Law. + + +The following are pamphlets of the Cooperative League of America: + + How to Start and Run a Rochdale Cooperative Store. + + System of Store Records and Accounts. + + A Model Constitution and By-Laws for a Cooperative Society. + + Cooperative Education. Duties of Educational Committee Defined. + + How to Start a Cooperative Wholesale. + + Why Cooperative Stores Fail. + + Cooperative Housebuilding. + + Cooperative Housing for Europe's Homeless. + + + + + + +End of the Project Gutenberg EBook of Consumers' Cooperative Societies in +New York State, by The Consumers' League of New York + +*** END OF THIS PROJECT GUTENBERG EBOOK COOPERATIVE SOCIETIES OF NY *** + +***** This file should be named 10808.txt or 10808.zip ***** +This and all associated files of various formats will be found in: + https://www.gutenberg.org/1/0/8/0/10808/ + +Produced by David Garcia and the Online Distributed Proofreading Team. + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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