HOW COOPERATION STRENGTHENS THE COMMUNITY
The greatest improvements in marketing are being effected through
cooperation. We have indicated that willingness to work together for the
common good and loyalty to this principle are essential for successful
cooperative enterprises. As these same attitudes are the basis of
community life, it seems obvious that to the extent that membership in
cooperative associations becomes general throughout a community, the
stronger will be the community life. Indeed, the very etymology of the
two words, _cooperate_--to work together, and _community_--having in
common, indicate that community activities are essentially a form of
cooperation--of working together. Inasmuch as cooperative 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 cooperation and to
what types of organization the term is applicable.
In a general way there has always been a certain amount of cooperation
between neighboring farmers in the exchange of work in barn-raisings,
threshing, silo-filling, slaughtering, etc. Out of this have grown such
cooperative organizations as threshing rings, and groups for the common
ownership and use of all sorts of more expensive machinery, the
cooperative ownership of sires, cow-test associations, and many other
forms of organization for mutual aid in farm operations. All of these
are cooperative associations in the common usage of the word
cooperation, 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 cooperative association differs from the corporation or stock
company in three essentials. First, it is democratic in its control; all
true cooperative 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. Cooperation is democracy applied to business.
Second, the cooperative 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
cooperative 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 cooperative associations, but these three--individual
voting, service rather than profits, and pro-rating the earnings--are
fundamental to all truly cooperative associations, and it is to this
combination of business methods to which the term cooperation has now
come to be applied in a technical sense.
Exclusive of associations formed for cooperation in the general sense of
the term, i.e., for various purposes of farm operation as mentioned
above, farmers' cooperative associations may be divided into three
general groups: for buying, for selling, and for finance.
Cooperative buying has been most successfully developed by industrial
workers in towns and cities and is commonly known as "consumers'
cooperation." 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 cooperative 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.
Cooperative buying of farm supplies, fertilizers, machinery, spraying
materials, feeds, binder twine, etc., is one of the first forms of
cooperative 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 cooperative buying of agricultural supplies assumed a
permanent or stable form of organization, and in those cases it is very
frequently a department of a cooperative selling association, such as a
fruit exchange. From an educational standpoint there is much to be said
for commencing cooperation through organization for buying agricultural
supplies, for through it farmers are trained in the principles of
cooperation with the greatest possibility of advantage and the least
risk of loss. There is little probability of loss in judicious
cooperative purchases of carload lots with orders in hand, while in
cooperative 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
cooperation 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 cooperative buying has been to at once
establish a cooperative 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
cooperative purchasing and other cooperative enterprises have the aims
and methods of operating cooperative 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 cooperative store is
more difficult for an average group of farmers to manage than the
simpler forms of cooperative purchasing, or cooperative credit or
selling associations.[31] Moreover, a cooperative 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'
cooperation as usually conducted through cooperative 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
cooperative 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 cooperative 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 cooperative 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 cooperative 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 cooperation with the Federal Reserve
Banks. If this is done, the amount of business done by these local banks
will be greatly increased and the cooperative principle in banking will
be greatly strengthened.
Cooperative 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 cooperative associations, and the total has greatly
increased since then. The California Fruit Growers' Exchange, probably
the largest cooperative 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 cooperative 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 cooperative 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 cooperative 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 cooperation emphasizes that cooperative 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
cooperative 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 cooperative movement. But even when the
necessity exists and is recognized it takes time to build up a strong
cooperative association.
The successful operation of a local cooperative association is a matter
of slow growth, because it requires the education of the membership in
the principles both of cooperation 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 cooperative 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 cooperation is not profits, but
savings. Professor Macklin summarizes the matter as follows:
"The true cooperative 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 cooperative 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 cooperative association, and unless the local
membership is convinced of the superior equity and ultimate advantages
of a strong cooperative system, there is little hope for the cooperative
to compete with the stock company. Cooperation means working together,
and its emphasis is more on duties and obligations than on rights and
personal advantage. In cooperative 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 cooperation 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 cooperation are the same which encourage community life, and that
where the cooperative 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, cooperative enterprises will be difficult and the community will
be weak.
That cooperation 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 cooperative 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 cooperative 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 cooperation describes its
influence in creating scientific and social attitudes:
"Among the indirect, but equally tangible results of
cooperation, 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
cooperative 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 (cooperative) 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
cooperative 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 cooperative communities, and considers cooperative 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 cooperation, 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 cooperative
enterprises in solidifying rural communities in the United States. It
seems doubtful whether cooperative 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 cooperative
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 cooperative 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.
FOOTNOTES:
[30] "Agricultural Organization," p. 99. London, P. S. King & Son, 1912.
[31] See Clarence Poe, "How Farmers Cooperate," Chap. III, p. 37.
"Cooperative buying is good; cooperative 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] "Cooperation 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 Cooperative Commonwealth," p. 61.
[37] _Ibid._, p. 128.
[38] "Rural Reconstruction in Ireland; a Record of Cooperative
Organizations." New Haven, Yale Univ. Press, 1919.
[39] "The National Being," p. 39.