concern, sixteen district exchanges and 104 local associations. The
locals elect the directors of the district exchanges, which in turn elect
the directors of the central body. The fruit is gathered and packed by
the local associations, which are independent units and usually own their
packing houses. It is shipped through the district exchange. The routing
and sale is in the hands of the central exchange.
It is worthy of especial note that the California Fruit Growers’ Exchange
has succeeded by the merit of its business methods. It does not now and
it never has had a monopoly of the California crop. It began with less
than a third of the crop, and for some years handled less than half of
it. It now ships about 75 per cent of the oranges and lemons grown in the
state.
It should also be stated in this connection that there are a large number
of men in the business of growing fruit in California, who have had
extensive business experience before becoming tillers of the soil. They
were not afraid to unite, not afraid to adopt modern business methods,
not afraid to pay large salaries for the skill necessary to succeed. I
understand that the manager’s salary is upward of $10,000 a year.
Viewed in the large, the coöperative movement in America is making rapid
strides. It is handicapped by lack of knowledge of coöperative methods,
and by lack of adequate laws governing the organization and conduct of
societies.
The most crying need is a more widespread knowledge among coöperators
themselves of the true principles of coöperation. There are hundreds of
so-called societies in which coöperation is by the many for the benefit
of the few. In some instances they are actually controlled by the
concerns which buy their products; in many more an excessive profit is
secured by a small coterie, usually in the form of dividends on stock.
Stock dividends are the rock on which many promising coöperative efforts
come to grief. It has been customary in many states to organize under the
corporation laws, the members taking stock. Where no restrictions are
placed upon the number of shares which one person may hold, or upon the
dividends that may be paid, the tendency is for the stock to concentrate
in a few hands, when dividends on stock are likely to be more sought than
profits for members. I know of instances where so-called coöperative
enterprises have paid as high as thirty per cent per annum in dividends
to a small ring of stockholders.
A CALL FOR CONSTRUCTIVE STATESMANSHIP.
Where special statutes are enacted providing for the formation of
coöperative societies, there is often a lack of wise restrictions in the
interests of the average member. The laws are sometimes excellent in what
they permit coöperators to do but inadequate in what they require them to
do. The enactment of laws adequately fostering coöperative enterprises
and safeguarding the interests of the coöperators calls for the best
constructive statesmanship of the Nation.
Among the provisions that should be inserted in every state law
authorizing the formation of coöperative associations are the following:
That no person shall hold more than a stated number of shares
of a stated aggregate value.
That dividends on stock shall be limited to a fair interest
return.
That all profits, in excess of interest on capital and such
reserve as is deemed necessary, shall be distributed equitably
among members in accordance with business done or work
performed.
That an annual report be made to the Secretary of State showing
the nominal and paid-up capital, the assets and liabilities,
the dividends paid on stock, the profits and how they are
distributed.
That the word “coöperative” shall be made a part of the name
of any concern licensed to do business under the provisions of
this act.
That all concerns doing business in the state at time of this
enactment which use the word “coöperative” in their titles
shall be required to reorganize under this act or change their
name.
A great stride forward will have been made when in every state of the
Union there are laws requiring the equitable distribution of the profits
of coöperative endeavor, control of societies by members, publicity of
all important acts, and confining the use of the word “Coöperative” to
concerns that meet these requirements.
Good laws alone will not solve the problem. Some associations are
eminently successful under the ordinary corporation laws, some will fail
under any legal system that can be devised. The successful conduct of a
coöperative society requires intelligence, business capacity and honesty.
I know of no plan of coöperation that is “fool proof” nor do I know of
any legal safeguards that will render it safe from those whose methods
are of the dark lantern and the jimmy.
WHAT A COÖPERATIVE SOCIETY IS NOT.
The coöperative society in its best sense is not a revolt against
oppression or unjust exactions. It is a business system. Its purpose is
the promotion of the three big “Es”: economy, efficiency and elimination
of waste.
Coöperation is not a cure-all; it will not solve every problem; it will
not solve any problem unless it is handled properly and wisely.
Successful coöperation does not mean monopoly. Few attempts by
coöperators to monopolize their product have been successful; I know of
none that have been successful for an extended period.
Coöperation is not communism. It does not mean collective ownership of
property, but collective activity by individual owners of property.
A coöperative society resembles a corporation in that the capital and
services of a number of persons are united for the purpose of carrying
on a business. It differs from the corporation in two very important
particulars as follows: First, the recruit in a coöperative enterprise
is the man and not the dollar; second, the purpose of the coöperative
society is not to build a profitable business, but to add to the profit
of the individual businesses of its members.
CAUSES OF FAILURE.
Failures in coöperative enterprises have usually been due to too much
confidence and too little actual knowledge of the business undertaken.
Men engaged in production have undertaken the business of distribution on
a large scale without any previous knowledge of distributive methods. In
many cases coöperators have expected too much and have been dissatisfied
with moderate returns; in others there have been no returns because
the business was neither well conceived nor well conducted. In many
instances success at the outset has led to unwarranted expansion that
spelled disaster. Personal likes and dislikes and petty jealousies have
led to disruption; a good manager has been discharged to make room for
a favorite of a dominant faction, or a poor manager has been retained
because the membership did not know he was a failure. There is a strong
tendency among coöperators to resent high salaries, and low grade
managers are often the result. Members are frequently disloyal and weaken
the society by doing a portion or all of their business with its rivals.
Members of marketing associations frequently coöperate as some men
pray—only in times of impending disaster.
A coöperative enterprise, to be successful, must be one for which there
is a place and an opportunity. Sound business judgment must characterize
its management. There must be a responsible head and a definite policy.
The manager must be capable and experienced and the one test of his
work must be the results he is able to show. There must be a system of
accounting that will show these results in detail. Dependence for success
must be upon the merits of the methods employed, never upon the mere
right of coöperators to do their own business in their own way. Most
important of all, the membership must be intelligent and willing, on
occasion, to suffer temporary loss for the greater gain to be secured
by loyalty to the concern. It must be borne in mind that a coöperative
enterprise in entering a competitive field has got to compete, and its
strength lies in the loyalty of its membership.
SHOULD BE TAUGHT IN THE SCHOOLS.
The American people need to be educated regarding the principle and
practice of coöperation. It should be taught in the schools, especially
in the agricultural schools, as it is now in some of the agricultural
schools of Europe. There should be state and national conventions for
the discussion of coöperative principles and methods. There should be
organizations of coöperators for the consideration of mutual problems and
mutual interests. Every great library contains the history of all of the
coöperative movements down to the present time, and the experience of the
world is available to those who will use it.
What Americans most need is the coöperative point of view. We are
accustomed to extravagance and speculation, but the time is at hand
when we must practice the virtues of economy. We have been a nation of
individualists, each sufficient unto himself; we must learn to unite with
our fellows and consider their welfare as a part of our own.
Do we need coöperation? Consider the wide margin between the price on the
farm and at the kitchen door! Consider the difference in cost between the
boot at the factory and on your foot! Consider the enormous wastes and
duplications of our system of distribution! Consider the fortunes that
have been amassed by the concentration of profits that would have been
widely diffused under coöperation!
We complain of the concentration of capital in the hands of a few; here
is a system of business that will keep the profits of the people’s
business in the people’s pockets where they belong.
We are concerned about the resources of Alaska lest they pass into
the control of trusts and syndicates and serve to enrich a few at the
expense of the many, as well we may be; but here is a wealth more vast,
a tangible, visible, present wealth, many times greater than that of
all the mines and forests of the Territory of Alaska, that is slipping
through our fingers day by day and accumulating in the coffers of those
who already have too much. The American citizen everywhere is paying a
tribute from which there is but one avenue of escape—the adoption of
coöperative methods of doing business.
During the reading of Mr. Beard’s paper Mr. J. B. White assumed the Chair.
Chairman WHITE—Mr. B. A. Fowler, chairman of the resolution committee,
desires to make an announcement.
Mr. FOWLER—Members of the resolutions committee having been selected,
the first meeting of the committee will now be held, and I invite the
members selected for that committee to meet in the room back of the
platform. This meeting will be for the organization of the committee,
and I suggest to the chairman that if nothing has been said on that
particular point, this a working committee, and you get results. Those of
you who have resolutions to present should present them at the earliest
possible moment. I will leave to you the lateness of the hour when they
may be presented, but it would seem as if they all ought to come in to
the committee some time today. I also suggest that anybody who desires to
present a resolution should not send it up to the committee unsigned,
and in the crudest sort of way; but that you prepare your resolution as
you would like to have it presented, sign your name and send it to the
committee.
President WALLACE—If I were the chairman of the committee I would not
consider any resolution offered after this evening. It is unfair to the
committee to throw resolutions at them at the last moment. Now, we must
have a report of this committee the first thing after dinner tomorrow.
Therefore, get your resolutions in.
We want the members of the committee on resolutions to go up to this room
at once.
Gentlemen, we will now hear an address from Mr. Herbert Quick, of
Madison, Wisconsin, editor of the Farm and Fireside of Springfield,
Mass., on the subject, “The Farmer and the Railroads.”
Mr. HERBERT QUICK—Ladies and Gentlemen of the Congress: It is rather a
difficult task which has been assigned to me, that of following such men
as have spoken in the last two or three addresses, and that, too, at
a time of day when the imperative calls of bodily sustenance begin to
make themselves manifest. I cannot undertake to emulate in the matter of
interest, in the matter of inspiration, any of these gentlemen who have
just preceded me and addressed you. It is utterly impossible to be very
interesting with reference to the subject of the railroads and the farmer
unless you trench on the subject of politics, and they are barred here;
therefore, ladies and gentlemen, I beg leave to be dull in my talk to you
today, very dull indeed. I am, however, hopeful of giving you something
to think about with reference to the very important matters of the
relation between the railroad and the farmer.
The relations between the farmers and the railroads are not always
amicable, but they are always close. When capital was first solicited
for the building of our railways the capital that responded was in large
measure that of the farmers. Enterprise came from the cities, but before
it could successfully appeal to the bond market, it was obliged to show
something in the way of local aid. The history of railway exploitation
in the Mississippi Valley, and in the whole country at the period of
most rapid development in railway building has not yet, so far as I am
aware, been adequately written. When it is written, it will show an
astonishing array of facts relating to the extent to which the farmers
of the land really built the railways—by stock subscriptions, by votes
of aid, by donations of right-of-way, and by outright gifts of cash. And
a depressing phase of the story will be the tales of bonds issued and
upheld by the courts, although no railway was ever built, and of the
almost automatic manner in which the farmer’s interests were closed out
by receiverships. During the time when investments in railway buildings
were uncertain, donations of public lands, gifts of rights-of-way, and
votes of bond issues in the way of local aid gave them standing in the
money markets. So to a great extent, the farmers built the railways—and
were then neatly beaten out of their interests.
That, however, is not the story of the farmers of today and the railways
of today. It belongs to the past. Our task relates to the future. In that
future, the relations between the railways and the farmers must continue
to be close, whether they are amicable or not. The two parties belong to
each other. One cannot exist without the other. When the farmers succeed
in wresting a good crop from the earth, stocks go up in Wall street.
A hot wind in Montana affects Great Northern and Northern Pacific on
’Change; and when the railway fails to furnish cars for the carrying
of the crop, that failure affects the notes of the farmer at the bank.
For better or for worse, the farmers and the railways are irrevocably
wedded. A little careful and dispassionate consideration of their marital
relations may assist in the maintenance of that peace which is necessary
to happiness—and as a mere outline of the broader principles governing
such consideration, this address has been prepared.
The great railway men of the United States have always felt the burden of
a duty towards the farmers, even when denying any legal claim back of it.
Fifteen years or so ago an enthusiastic believer in the semi-arid West
worked out a plan for moisture-conserving farming—one of the greatest
steps in conservation ever taken in this country. The management of the
Northern Pacific helped him educate the farmers in the principles of his
science. The managements of the Chicago, Milwaukee and St. Paul, the Soo
Line and the B. & M. in Nebraska also gave him assistance. They foresaw
the development which would come to Montana, Nebraska, the Dakotas and
all the semi-arid country if “dry farming”, as it has come to be called,
could be made to succeed. They saw a duty to the stockholders—saw it
clearly; and I believe there was not lacking to their vision a glimpse of
the duty they owed to the Nation through ministration to the prosperity
of its farmers.
HOW THE RAILROADS LEARNED.
The management of the Great Northern, though since enthusiastic, could at
that early time see nothing in the Campbell method of farming to enlist
its sympathy or its dollars, nor could the Northwestern line, though
both of these systems ran through hundreds of miles since reduced to the
settled state through dry farming. But at that very time Mr. Hill was
showing his interest in agriculture through the introduction of improved
breeds of livestock along the lines of his system. And the Northwestern
officials withheld their aid from Campbell, because it was believed on
their part that it was better to leave the semi-arid regions in the
condition of unbroken prairie from which they might receive trainloads of
cattle, than to encourage its opening to an agriculture which was likely
to be unsuccessful. Perhaps that was the controlling opinion in Great
Northern circles, too. In any case, the railways were exerting an almost
monarchical power over farming in their spheres of influence. Nothing, it
seems to me, more clearly shows the power of the railways over farms and
farming, than these instances of both action and inaction at the critical
stage of development. We do not see it so plainly in regions long settled
and in agricultural equilibrium, but the power is always there and always
exerted for all that.
Beginning, so far as I am informed, with Mr. Hill’s livestock activities,
and the aid of Mr. J. W. Kendrick to the great dry farming movement,
railway aid to agriculture has grown to a fashion. The Pennsylvania
maintains its demonstration farms on Long Island; the New York Central
strives to bring back to their old-time headship in farming the Empire
State’s half-abandoned farms. Scarcely a railway system can be mentioned
which has not run its educational trains for the purpose of bringing
agricultural science into touch with the farmers along its line.
“Dairy specials,” “corn specials,” “bacon specials,” “fruit specials,”
and dozens of other special trains have moved leisurely from station
to station with agricultural lecturers aboard and cars fitted up as
laboratories and auditoriums for the farmers. These are sure to be
increasingly frequent as the demand grows on the part of farmers for
accurate and authoritative teaching, and as the railway officials come
to understand that the most profitable thing to sow along the line is
knowledge, and that nothing gives such profitable crops as science. The
great Burlington system now hires one of the noted agricultural experts
of the world to work with the farmers, and another eminent agricultural
college professor has gone into the service of that system which, while
it may not reign, rules over the industrial destinies of “The Rock Island
States of America.” The railroads everywhere, are doing excellent work
in educating the farmers. This work is wise, and is sure to bring the
results the railroads desire. The introduction of good agricultural
methods, like the implanting of truth in any form, is one of those
germinal acts that go on of their own accord when once the initial
impulse is given. Dry farming will be practiced centuries hence better
than now, and the Northern Pacific will carry its tonnage.
THE DOMINANCE OF TONNAGE.
But all these fine things have been done and are still being done with
a eye single to tonnage. The railway officials who are doing them would
strenuously deny any other motive than that of filling trains with
agricultural produce. “What justification,” says the old-fashioned
stockholder at the annual meeting, “can be given for using money of the
railway for such new-fangled flub-dub as this special train filled with
college professors and farmers?” “It’s a cold business proposition,” says
the general manager. “If we can get the farmers to grow steers that will
weigh a ton as against the present ones that weigh a thousand pounds,
our livestock tonnage is doubled, and at the expense of a few special
trains and an agricultural department, we obtain on the present lines all
the results of a greater mileage. Better agriculture means more freight.
That’s the justification, and the only one. It’s a plain business
proposition!”
We may trust the enlightened selfishness of good business to push this
sort of activity to the limit of its profit; and it is a fine thing to
think that the railways cannot benefit themselves by spreading the light
of agricultural science without benefiting the farmers and the whole
nation. Favors of this sort bless him that receives quite as much as
him that gives. But does the duty of the railway end with tonnage? Can
we ask the railways to do anything for the farms and the farmers beyond
the things which mediately or immediately will fill trains of cars with
profitable freight? In the great task of conservation do the railways owe
any duty to the farms beyond what they are now performing? This phase of
the subject has yet to be worked out.
SOME HISTORIC PHRASES.
A few striking phrases have thrown on the screen of history the views of
the generation of railway men who denied, and some of them still deny,
anything in the way of duty of the sort hinted at. Some of these may
be apocryphal utterances, but they tell the truth for all that. It is
recorded that a Louisville & Nashville official, on being asked whether
or not the people on his lines had any alternative other than to pay
what the railway exacted, answered, “Yes! They can walk!” The historic
Vanderbilt aphorism is “The public be damned!” It has been related of
Jay Gould that his cynical rule for the making of rates on agricultural
produce was that the farmers should always be allowed to retain enough
for seed. Such opinions as these were the prevailing ones until recently.
They were based on the view that the railways were purely private things.
Under their sway railway men claimed the right to decide what cities
should flourish and what decline, where towns should be built and where
not, what shippers should be prosperous and what fail. They claimed
these rights and they exercised them. To men of that school the things I
shall say will seem like nonsense. They do not see that the control of
the highways of a nation carries with it the rulership of the people; or
if they do see it, they refuse to recognize the right of the people to
say how that rulership shall be exercised, how long it shall continue,
and when it shall end. And this is the lesson of the present and the
immediate future for the railroads of America. A railway official is
of right a public official, and he is nothing else. His duties to his
stockholders are important and call upon him for scrupulous fidelity,
but they are subject to his duties to the public. For on the highways
depend the welfare of the whole people; the stockholders are a part only
of the people; and the whole is greater than any part. In the last
analysis, the stockholders and bondholders of the railways must come to
a realization of the fact that they have placed their interests in the
keeping of the people of the Nation, and that their profits must depend
on the sense of justice of that people. Fortunately, there is no reason
to expect from the people the slightest failure to respect the real
rights of capital. But that modifications of railway policy are likely to
be insisted upon, is not only likely, but inevitable. These modifications
will be along the line of revisions of rates, the adoption of the
principle that the railway must be used as a tool in the development of
the Nation along rational and just lines, and not arbitrary ones, and in
the conservation of the national resources—among which one of the most
important, if not the most important, is the fertility of the soil.
RATES AND LIVING COST.