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The greatest improvements in marketing are being effected through coöperation. We have indicated that willingness to work together for the common good and loyalty to this principle are essential for successful coöperative enterprises. As these same attitudes are the basis of community life, it seems obvious that to the extent that membership in coöperative associations becomes general throughout a community, the stronger will be the community life. Indeed, the very etymology of the two words, _coöperate_--to work together, and _community_--having in common, indicate that community activities are essentially a form of coöperation--of working together. Inasmuch as coöperative enterprises are rapidly increasing and that they must, therefore, exercise a powerful influence upon community life, it is necessary to gain a clear idea of just what is involved in the principle of coöperation and to what types of organization the term is applicable.

In a general way there has always been a certain amount of coöperation between neighboring farmers in the exchange of work in barn-raisings, threshing, silo-filling, slaughtering, etc. Out of this have grown such coöperative organizations as threshing rings, and groups for the common ownership and use of all sorts of more expensive machinery, the coöperative ownership of sires, cow-test associations, and many other forms of organization for mutual aid in farm operations. All of these are coöperative associations in the common usage of the word coöperation, but in recent years the term has come to have a more technical meaning to denote a form of organization in contrast to the corporation or stock company, which has been the most prevalent type of business organization in recent years.

The coöperative association differs from the corporation or stock company in three essentials. First, it is democratic in its control; all true coöperative organizations employ the principle of "one man, one vote," the influence of each member of the association being equal as far as the legal control of its administration is concerned. The individual members and not the amount of stock owned controls the policy of the association. Coöperation is democracy applied to business. Second, the coöperative association is organized to secure more efficient service rather than to exact profits. This is a point upon which there is much misunderstanding upon the part of those starting coöperative enterprises and which requires further explanation. Third, the earnings or savings of the association (commonly thought of as "profits") are distributed among the members or patrons of the association _pro rata_ according to the volume of the business which they have transacted with the association, so that although its control is democratic its benefits accrue according to the amount of financial interest involved. There are certain other principles of business procedure which have been found essential to the successful operation of different kinds of coöperative associations, but these three--individual voting, service rather than profits, and pro-rating the earnings--are fundamental to all truly coöperative associations, and it is to this combination of business methods to which the term coöperation has now come to be applied in a technical sense.

Exclusive of associations formed for coöperation in the general sense of the term, i.e., for various purposes of farm operation as mentioned above, farmers' coöperative associations may be divided into three general groups: for buying, for selling, and for finance.

Garden City, KS, grain elevator IMG 5871

Coöperative buying has been most successfully developed by industrial workers in towns and cities and is commonly known as "consumers' coöperation." Starting with a few poverty-stricken workers who pooled their meager savings so that they could buy at wholesale and share in the profits of the retailer, the Rochdale system has grown until the wholesale coöperative societies of England and Scotland are probably the largest general merchandising corporations in the world, doing a business of approximately a billion dollars a year.

Coöperative buying of farm supplies, fertilizers, machinery, spraying materials, feeds, binder twine, etc., is one of the first forms of coöperative effort ordinarily undertaken by farmers' associations, and is carried on by numerous methods. In most cases the services rendered in the business management of such buying is at first largely on a voluntary basis or is but poorly paid. Only in a few sections of the country has the coöperative buying of agricultural supplies assumed a permanent or stable form of organization, and in those cases it is very frequently a department of a coöperative selling association, such as a fruit exchange. From an educational standpoint there is much to be said for commencing coöperation through organization for buying agricultural supplies, for through it farmers are trained in the principles of coöperation with the greatest possibility of advantage and the least risk of loss. There is little probability of loss in judicious coöperative purchases of carload lots with orders in hand, while in coöperative selling, unless marketing facilities are so bad as to force him to take the risk, the chance of loss is a serious consideration to the farmer. This point has been well stated by Edwin A. Pratt, a leader of agricultural organization in England, who says:

      "Inquiry into the conditions under which organization of agriculture has been successfully carried out in other countries showed that a beginning had invariably been made with the simplest form of combination for the joint purchase of agricultural necessaries. In this way the advantages of coöperation could be brought home to cultivators, who were gradually educated in the theory and practice of combination without having their suspicions aroused and their mutual distrust stimulated by proposals that they should at once alter their old conditions of trading in accordance with that system of combination for transport or sale which really constitutes not the beginning of agricultural organization, but one of the most difficult and most complicated of all its many phases."[30]

One of the allurements of coöperative buying has been to at once establish a coöperative store for a general merchandising business. The history of such stores started by granges in the 70's and 80's is instructive in this connection. A few of them survive, but most of them were failures. Only after years of experience and education in coöperative purchasing and other coöperative enterprises have the aims and methods of operating coöperative stores been sufficiently appreciated by most rural communities to ensure their successful establishment. We have already considered (page 48) some of the considerations which should govern the attempt to compete with local merchants. Generally the successful operation of a coöperative store is more difficult for an average group of farmers to manage than the simpler forms of coöperative purchasing, or coöperative credit or selling associations.[31] Moreover, a coöperative store will seriously affect the solidarity of a small community unless a goodly majority, both from farm and village, are convinced of the necessity of competing with local retailers and will give the store their patronage. Except in the buying of agricultural supplies, which may be considered rather as the raw materials and equipment of the farm as a manufacturing business and which are therefore entitled to wholesale prices, consumers' coöperation as usually conducted through coöperative stores is not a distinctively agricultural problem, but is the same for the farmer as for the villager or industrial worker, and its desirability and limitations are determined by similar considerations.

With the change to a commercial type of farming and with the higher price of land, the American farmer has had to make larger use of borrowed capital and his business has been seriously hampered by a lack of credit facilities to meet his needs. Probably in no field of coöperative effort have the benefits been more apparent than in that of the rural credit banks which are found throughout Europe and which have thoroughly demonstrated their usefulness. Attention has been called to the fact that our best farm lands are more and more operated by tenants, and that this is inimical to strong community life. One of the reasons for this tendency has been the inability to secure long-term loans on farm real estate by the man who has little capital of his own. As lands rose in value this became increasingly difficult. To meet this situation a commission representative of all sections of the United States visited various countries in Europe in the spring of 1913, and as a result of their report, in 1916 Congress finally enacted the Federal Farm Loan Act establishing a system of farm land banks. Under this system one-half of the value of a farm and buildings up to $10,000 may be borrowed and paid off under the amortization plan in from five to forty years at a low rate of interest. The details of the system do not concern our present discussion, but the essential feature of the system is the local land bank through which the loans are made and collected. The local land bank is strictly a coöperative society organized to secure long-term credit facilities for its members under the terms of the federal act through the regional land banks of which each local bank is a member. Like other coöperative associations, the area in which the local bank does business is not necessarily that of a community, it may be a whole county where there are but few members, or there may be more than one bank in a single community, but more commonly it is located at a village center and tends to become a community institution.

Equally important for financing the current expenses of farming operations and to make possible the orderly marketing of crops, is the farmer's need for short-time credit. Our banking system has been developed to meet the needs of the business world, and the period for which loans can be made is too short to meet the needs of the farmer, who often requires credit for six months to a year. In some ten states legislation has been passed authorizing the formation of local credit associations, which are really local coöperative banks, but the number of credit associations established in rural communities has been insignificant, thirty-three out of a total of thirty-six being in North Carolina.[32] The tremendous losses suffered by American farmers during 1921 and their inability to secure sufficient credit from their local banks has shown the necessity for better short-time credit facilities, and bills are now before Congress which will enable the local land banks to also handle short-time loans in coöperation with the Federal Reserve Banks. If this is done, the amount of business done by these local banks will be greatly increased and the coöperative principle in banking will be greatly strengthened.

Coöperative selling associations have had a rapid growth in the United States during the past decade. In 1919 the federal Bureau of Markets estimated that agricultural products worth one and a half billions out of a total of nearly nineteen billion dollars sold from farms were marketed through coöperative associations, and the total has greatly increased since then. The California Fruit Growers' Exchange, probably the largest coöperative selling association, does a business of over $50,000,000 annually and has one of the most efficient distributing systems in the country.

At the present time some very ambitious programs of national organizations for coöperative marketing are being started, such as the United States Grain Growers, Inc., which is modeled after the successful Canadian Grain Growers, Inc. One of the chief obstacles to all such plans of effectively organizing the marketing of various agricultural products is the fact that a strong central organization can be developed only by the federation of local associations whose members understand the purposes of the organization and are loyal to them. The history of all coöperative movements shows that those which have been permanently successful have arisen through the federation of strong local associations, and numerous failures of well-intentioned efforts at large-scale coöperative marketing have been due to the fact that numerous local associations cannot be organized by the parent association with any assurance that they will function effectively.

The late G. Harold Powell, for many years the successful manager of the California Fruit Growers' Exchange, in his discussion of the fundamentals of coöperation emphasizes that coöperative associations must be born of a real need:

      "Among farmers, who under existing conditions are already prosperous, the need of business organization is not usually felt, even though the costs of marketing and extravagant profits of the middlemen or the railroads might be greatly reduced. They must feel the pressure of need before they can launch a successful business association. When the farmers buy their supplies at reasonable prices, and sell their products readily at a good profit, they do not feel the necessity of organization. It has been the experience of the past that they must feel the need of getting together to meet a crisis in their affairs, and the realization of the need must spring from within and not be forced upon them from without by the enthusiasm of some opportunist who seeks to unite the farmers on the principle that organization is a good thing.... In short, if an organization is to be successful, the investment of the farmer must be threatened by existing social and economic conditions before he can overcome his individualism sufficiently and can develop a fraternal spirit strong enough to pull with his neighbors in coöperative team work."[33]

The tremendous losses suffered by American agriculture in 1921 furnish exactly such a crisis as Mr. Powell suggests, and have given the strongest impetus to the coöperative movement. But even when the necessity exists and is recognized it takes time to build up a strong coöperative association.

The successful operation of a local coöperative association is a matter of slow growth, because it requires the education of the membership in the principles both of coöperation and of marketing, and what is equally essential, the development of a willingness to sometimes forego the advantage of larger profits by individual members in order to ensure the permanent success of the association. The local association has to learn how to conduct its business just as does the individual business man, and it has to compete with individuals and firms who are in business for profit and who have the advantage of experience in the existing marketing system and the financial backing of its business connections. In the attempt to create local selling associations rapidly so as to secure a sufficient volume of business to ensure the success of large marketing enterprises, there is always a tendency to encourage the local members to believe that they will secure a considerably larger share of the consumer's dollar, and when prices are not materially better than under the old system they readily become dissatisfied and withdraw. The best authorities and advocates of coöperative marketing insist that it will be successful only to the degree that it can become more efficient than the existing system and so effect savings and make legitimate earnings, but that there is little prospect for large "profits"; indeed, that the legitimate objective of coöperation is not profits, but savings. Professor Macklin summarizes the matter as follows:

      "The true coöperative organization seeks to establish and maintain a distributing system to provide adequately and dependably at minimum cost the essential marketing services of which the industry and its individual members have constant and vital need. Its justification lies in rendering these services at a lower cost and in bringing to farmers a higher proportion of the consumer's dollar."[34]

With the factors involved in successful coöperative selling associations we are not here concerned, except to insist upon the point that as the weakest link measures the strength of a chain, so the strength of the local association determines the strength or weakness of the central selling association. A joint stock company may afford more efficient management than a coöperative association, and unless the local membership is convinced of the superior equity and ultimate advantages of a strong coöperative system, there is little hope for the coöperative to compete with the stock company. Coöperation means working together, and its emphasis is more on duties and obligations than on rights and personal advantage. In coöperative enterprises the individual must be convinced that his best interest in the long run is bound up with the best interest of the whole membership, and unless he is sometimes willing to forego immediate personal advantage and unless he can learn how to work with others, sometimes without compensation or with less than he could secure otherwise, there is little chance for developing a strong organization. For coöperation is but democracy applied to certain phases of business, and, like democracy in politics or any other sphere of life, its highest sanction lies in belief and satisfaction in the collective well-being.

It seems obvious, therefore, that those attitudes which are essential for coöperation are the same which encourage community life, and that where the coöperative spirit dominates, community activities will be strengthened. Whereas, on the contrary, in those localities where family, political, or personal feuds, jealousies and suspicions are rife, coöperative enterprises will be difficult and the community will be weak.

That coöperation does develop those qualities which make for better communities is attested by all who have observed its effects. As a result of his long experience Sir Horace Plunkett says:

      "It is here, in furnishing opportunity for the exercise of education secured from the agricultural colleges, that the educational value of coöperative societies comes in; they act as agencies through which scientific teaching may become actual practice, not in the uncertain future, but in the living present. A coöperative association has a quality which should commend it to the social reformer--the power of evoking character; it brings to the front a new type of local leader, not the best talker, but the man whose knowledge enables him to make some solid contribution to the welfare of the community."[35]

So, likewise, a keen observer of Danish coöperation describes its influence in creating scientific and social attitudes:

      "Among the indirect, but equally tangible results of coöperation, I should be inclined to put the development of mind and character among those by whom it is practised. The peasant or little farmer, who is a member of one or more of these societies, who helps to build up their success and enjoy their benefits, acquires a new outlook. The jealousies and suspicions which are in most countries so common among those who live by the land fall from him. Feeling that he has a voice in great affairs he acquires an added value and a healthy importance in his own eyes. He knows also that in his degree and according to his output he is on an equal footing with the largest producer and proportionately is doing as well. There is no longer any fear that because he is a little man he will be browbeaten or forced to accept a worse price for what he has to sell than does his rich and powerful neighbor. The skilled minds which direct his business work as zealously for him as for that important neighbor."[36]

It is interesting to note that the three highest authorities on the coöperative movement in Ireland all lay great stress on its importance as a means of community organization and value its social effects as highly as its economic benefits. Thus Sir Horace Plunkett says:

      "Gradually the (coöperative) Society becomes the most important institution in the district, the most important in a social as well as an economic sense. The members feel a pride in its material expansion. They accumulate large profits, which in time become a sort of communal fund. In some cases this is used for the erection of village halls where social entertainments, concerts and dances are held, lectures delivered and libraries stored. Finally, the association assumes the character of a rural commune, where, instead of the old basis of the commune, the joint ownership of land, a new basis for union is found in the voluntary communism of effort."[37]

In the same vein Smith-Gordon and Staples in their account of the coöperative movement in Ireland, see it as the most important force for socialization because it makes the most immediate and practical appeal to men of all parties and sects and establishes a business system which develops the community attitude:

      "The present individualist system which takes care of the business interests of the farmer is a dividing and disintegrating force. It tends to destroy the natural associative character and to set each man against his neighbor.... But as a member of a society with interests in common with others, the individual consciously and unconsciously develops the social virtues.... The society is in miniature a community, and the community is but a part of the larger social group."[38]

George William Russell ("A.E."), the poet-prophet of Irish agriculture, bases his whole conception of a desirable polity for the Irish State upon coöperative communities, and considers coöperative societies as a prerequisite to rural organization. After describing the marked economic and social changes which have taken place in a typical Irish community as the result of coöperation, he says:

      "I have tried to indicate the difference between a rural population and a rural community, between a people loosely knit together by the vague ties of a common latitude and longitude, and people who are closely knit together in an association and who form a true social organism, a true rural community, where the general will can find expression and society is malleable to the general will. I will assert that there never can be any progress in rural districts or any real prosperity without such farmers' organizations or guilds. Wherever rural prosperity is reported in any country inquire into it, and it will be found that it depends on rural organization. Wherever there is rural decay, if it is inquired into, it will be found that there was a rural population but no rural community, no organization, no guild to promote common interests and unite the countrymen in defence of them."[39]

The same observations might be made upon the effect of coöperative enterprises in solidifying rural communities in the United States. It seems doubtful whether coöperative associations in the United States will develop a general social program as they have done in Ireland, Belgium, and Russia. On account of a different social inheritance and account of our facility in forming and belonging to numerous organizations, it seems probable that we will limit our coöperative societies to strictly economic functions, and will use the increased income secured through them in other organizations for social purposes.

Commercial farming is breaking down the old individualism of the farmer, for the exigencies of the economic situation are forcing him to market collectively through coöperative selling associations, and as he learns that his own best interests are bound up with those of the whole community, he becomes increasingly concerned for the common welfare; he commences to think in terms of "us" and "ours," instead of only "me" and "mine." The community becomes a reality to him.


[30] "Agricultural Organization," p. 99. London, P. S. King & Son, 1912.

[31] See Clarence Poe, "How Farmers Coöperate," Chap. III, p. 37. "Coöperative buying is good; coöperative merchandising may or may not be." New York, Orange Judd Co., 1915.

[32] V. N. Valgren and E. E. Engelbert, "The Credit Association as an Agency for Rural Short-time Credit." Department Circular 197, U. S. Dept. Agr., 1921.

[33] "Coöperation in Agriculture," pp. 22, 23. New York, The Macmillan Co., 1913.

[34] Theodore Macklin, "Efficient Marketing for Agriculture," p. 260. New York, Macmillan Co., 1921.

[35] "The Country Life Problem in the United States," p. 123.

[36] Harvey, "Denmark and the Danes," p. 146, quoted by F. C. Howe, "Denmark a Coöperative Commonwealth," p. 61.

[37] _Ibid._, p. 128.

[38] "Rural Reconstruction in Ireland; a Record of Coöperative Organizations." New Haven, Yale Univ. Press, 1919.

[39] "The National Being," p. 39.