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J a m e s





E w a n C la g uo , C o m m is s io n e r




B u lle t in N o . 1211
James P. Mitchell, Secretary
Ew an Clagua, Commissionar

January 1957

For sale by the Superintendent of Documents, U. S. Government Printing Office
Washington 25, D. C. - Price 50 cents (Paper cover)



The Bureau of Labor Statistics wishes to acknowledge
assistance rendered in the preparation of this bulletin)
particularly in respect to the tables, by the following:
Bureau of Federal Credit Unions, Department of Health,
Education, and Welfare; Farmer Cooperative Service, U. S.
Department of Agriculture; Rural Electrification Adminis­
tration, U* S. Department of Agriculture; Federal Housing
and Home Finance Agency; Social Security Administration,
Division of Research and Statistics, Medical Care Insur­
ance Studies Section, Department of Health, Education,
and Welfare; and to the Washington Office of the Coopera­
tive League of the U. S. A*
This bulletin attempts to
cooperatives as of 1956, where
in some cases, particularly in
Abroad, the data refer to 1955

review the status of consumer
data are available. However,
the section on Cooperatives
and earlier*

The bulletin was prepared by Jean A* Flexner and AnnaStina Ericson of the Office of Labor Economics, under the
direction of Faith M. Williams.

January 1957



Part I:

Consumer Cooperatives in the United States

Introduction - - - - - - - - - - - - - - - - - - - - - —
- - - 1
Cooperative principles - —
- -- ------Cooperative structure - —
- - - - - - - - - - - - - - 3
Government assistance, to cooperatives - - ----- ----- --------U
Cooperative contributions to family b u d g e t s ------- -----------6
Cooperatives in retail trade - - - - - - - - - - - - - - - - - - 7
Farm supply cooperatives ----------- -------------- ---------- ---- 8
Cooperatives serving urban consumers - --------- -- ll
B i b l i ography------- - —
------------- --------------- -------- 15
Credit unions - - - - - - B i b l i o g r a p h y --------

- —

- -- --

-- --






Electricity and telephone cooperatives - - - - - - - - - - - - - Telephone program - - - - - - - - - - - - - - - - - - - - - - B i b l iography------------- ------------ -- - - --------- -------- --


Medical care cooperatives ------------------------ ------------ -- Union health centers - - -- -- -- -- -- -- -- -- -- B i b l iography--------- —


Cooperative housing - - - - - - - - - - - - - - - - - - - - - - Trade union cooperative housing developments - - - - - - - - - Bibliography - - - - - - - - - - - - - - - - - - - - -- - - - -


Part II:
Introduction -------—



Consumer Cooperatives Abroad

---------------- ------------ ---------- 55

Cooperatives in trade - —
- - - - - - - - - - - - - - - - - - $6
Service cooperatives----------- ---------- ------ ------ ------ ---- 60
Credit unions - - - - - - - - - - - - - - —
- -- -- -- -60
Bibliography - -----_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ----61*
Great Britain - - - - - - - - - - - - - - - - - - - - - - - - - - 65
Bibliography - --------- ------ ------------ ------ ---- ------------ 73





S c a n d i n a via ------------- -------- ----------------------- —
Scandinavian Joint Cooperative Activities - - - - - —

-------- 7k
- - - - 76

Retail s o c i e t i e s ------------- —
-------- ------ -------- -Wholesale socieites - - - - - - - - - - - --- - - - - - - - - Cooperative housing in Sweden - - - - - - - - -- —
- -- Funeral societies —
- -- - —
--- -- - —
- - - — - -


Cooperative retail societies - - - - - - - - - - - - - - - - Agricultural cooperatives - - - - - - - --- —
- - - - - - - Fish marketing cooperatives - - - - - - - - - - - - - - - - - -


Cooperative activity in D e n m a r k ------- --- —



- --

- —


Finland - - - - - - - - - - - - - - - - - - - - -- -- -- -Credit cooperatives - - - - - - - - - - —
- - - - - - - - - -




- --



-- --



-- - -


-- --




Retail Trade




Supplies sold to patrons b y local farm supply cooperatives,
1953-5U - - ........................- - ...................-


Supplies sold to local cooperatives or to individual patrons
by 23 major regional farm wholesale cooperatives, 1955 - -


Indexes of farm supplies purchased through cooperatives com­
pared with farm income, 19 U 9-5 U - - - - - - - - - - - - - -


Retail sales and establishments of cooperatives and all
retailers, by type of shop, 1951* -----—
- —
- —


- -

Credit Unions

Number, membership, and assets of credit unions, 1939 and
1 9 U 7 - 5 5 ------------



Savings of individuals in credit unions and certain financial
institutions, 191*0-55 - - - - - - - - - - - - - - - - - - -



Share capital and dividends on shares of credit unions,
1950-55 -----------------------------------------------------



Federal credit unions by type of membership, December 31>1955



Instalment credit by type of holder in 1955 - - - - - - - - -


Electricity and Telephone Cooperatives


Cooperatives in REA electrification loan program, 191*5 and
1955 ........................................................


REA telephone program, 1 9 1 * 9 - 5 6 --------- -- —


----------- --

Medical Care Cooperatives

Medical care prepayment plans, "with consumer voice," 19l*9
and 1951* —
- --------------------- -------------- —


Cooperative Housing

Cooperative housing projects under Section 213 of National
Housing Act, 1950, May 1953 and December 1956 - - - - - - -



T a b le s



Cooperatives' retail trade, 195U-55 - - - - -


Cooperatives' wholesale trade, 195U-55

16 .

Credit unions - - - - - - -


--- —

- - - -




- - - - - - - - - - - - - - -


Great Britain

Cooperative societies' activities, retail and wholesale,
1938, 1 9 5 0 - 5 5 ------------------------------------------------- 66


Retail sales by type of shop and b y major commodity, as per­
cent of all retail sales, 1950 and Jarruary-October 1956 - -


Retail sales by type of shop, for cooperatives and all
retailers, 1950, 1955, and January-0ctober 1956 - - - - - -


Cooperative societies, gross value of production, 1950,
1953-55 .....................................................







Sweden: Sales, production, and patronage refunds of consumer
cooperative societies, 1950, 1951, and 19Sh - - - - - - - -


Norway: Sales, production, and patronage refunds of consumer
cooperative societies, 1950, 1951, 1951:, and 1955 - - - - -


Denmark: Cooperative retail societies, membership, sales,
and patronage refunds, 1951-55 - - - - - - - - - - - - - -




Comparison of savings and instalment credit: credit unions
and other financial institutions, 1939-55 - - - - - - - - -


Consumer instalment credit b y type of financial institutions,
1950 and 1955 -----------------------------------------------




Part I: C O N S U M E R






Reviewing the developments in consumers' cooperation in the
United States during the middle years of the 20th century gives
striking evidence of the vitality of those principles of cooperation
on which the Rochdale pioneers founded a small shop dealing in a few
simple staples in the early 19th century. It is a far cry indeed
from that Toad Lane store in England to the American cooperatives'
supermarkets of today. Many things besides the inventories have
changed— including consumer buying habits, demands, and standards of
living. In the United States, competition from the chain stores,
and among the various chains makes it increasingly difficult for the
cooperative store to offer its membership any substantial advantage
or inducement.
In addition to retail trade, there are many other fields in
which consumer groups have been formed to carry on business or pro­
vide services along cooperative lines: Small personal loans (through
credit unions); medical services (through health and medical care
cooperatives); housing; provision of electric current and telephone
services in rural areas; nursery schools; students' boarding houses
and book shops; numerous service establishments operated by consumer
groups; and automobile, fire, casualty, and life insurance.
The principle of cooperative ownership by users of a service
run at cost, without profit, has also been utilized by commercial
businesses. Thus, the Associated Press is cooperatively owned by
more than 1,700 American newspapers, and 1,25>0 radio and TV stations.
The Railway Express Agency is cooperatively owned b y the railroads.
Retailers in many lines— groceries, drugs, lumber, bakery goods—
have formed their own cooperative organizations to buy merchandise
at wholesale, and manufacturers have set up underwriters' labora­
tories to test and inspect supplies. Private builders have built
apartment houses which are subsequently sold to tenant owners.
Labor unions have sponsored cooperative housing developments, to
provide housing for their members, or for other members of the
wage-earning or middle-income groups.

424950 0 - 5 7 - 2

-1 .

Cooperative Principles
The distinguishing characteristics of a true Rochdale-type
cooperative have been stated thus: MA consumer cooperative society
shall be democratically controlledj there shall be open membership.
No persons shall be denied membership in a consumers’ cooperative
unless it be known that they wish to join for the purpose of doing
harm to the organization; money invested in a cooperative soceity,
if it receives interest, receives a fixed percentage which shall
not be more than the prevailing current rate; and if a cooperative
society makes a net profit,that profit shall be returned on the
basis of the amount of purchases to the consumers who patronize
the society." = J
In organizing a true consumers' cooperative, the initiative is
often taken by the ultimate consumers themselves. In the process
of organizing, operating, and expanding the business from its very
inception, a loyal and active membership is attracted, and this is
an important element in the success of the enterprise. Sponsorship
of a cooperative by a nonconsumer group may result in the sponsor
retaining control either because he does not wish to relinquish it,
or because it is difficult to arouse consumer interest in the later
stages of organization.
Strict adherence to the Rochdale principles is sometimes
impeded by the provisions of laws under which cooperatives are
organized; for example, certain State corporation laws do not per­
mit limiting a member to 1 vote, regardless of the number of shares
held. It is also sometimes difficult to reconcile the Rochdale
principles with the function which the organization seeks to per­
form (particularly difficult in housing and medical care), or with
the need for attracting capital. Cooperatives have made use of
preferred shares whose holders have special voting rights as well
as priority claims on earnings. The transfer of full control from
the preferred stockholders to the membership may be delayed until
the members have built up their equity to a certain percentage.
Examples of this procedure may be found in the retailing field.
Because of these and other difficulties, there is no simple
way of identifying true consumer cooperatives and this makes sta­
tistical measurement or estimates of cooperatives' membership and
volume of business, or volume of expenditures for such benefits as
medical care, imprecise.

Ellis Cowling, Principles and Methods of Consumer Coopera­
tion, National Cooperatives, Inc., May 19U7# Democratic control is
generally construed to mean only 1 vote per member regardless of the
number of shares held.


In almost every field that cooperatives have entered, slightly
different forms of organizations are found which resemble coopera­
tives either in their objectives, or in structure. I n this bulle­
tin, for example, the projects undertaken by unions to assist their
members in solving housing and health problems are considered to be
closely allied to the consumer cooperative, and a sharp demarcation
between the true cooperatives and the near cooperatives has not
been attempted*

Cooperative Structure
As cooperatives have grown both vertically and horizontally,
the cooperative leadership has been faced with the problems of
sustaining local membership interest and developing membership con­
trols over activities that are carried on at some distance from the
ultimate consumer* Business efficiency must not be lost in the
Examples of vertical expansion are found among farmers* supply
cooperatives which have set up plants to manufacture fertilizers,
or milking machines, or to refine petroleum products. These plants
may be owned by several cooperatives. In 195$, 16 oil refineries
with a capacity of 175,000 barrels of crude oil a day were operated
by farm cooperatives. Farmers* cooperatives have gone further than
urban cooperatives in processing and manufacturing, because capital
can be borrowed b y farm cooperatives for these purposes from the
banks for cooperatives, under the supervision of the Farm Credit
Administration. wBy the early 1950* s about half the supplies
regional /""farm/ cooperatives furnished to their locals were proc­
essed in cooperative plants,** reports the Farmer Cooperative
Service. 2/ A few cooperatives have carried vertical integration
back, through refineries to production of crude oil, and from
fertilizers back to mining phosphate rock.
Overall federations embracing all types of societies, devoted
to educational activities and providing member societies with ser­
vices such as auditing, management consulting, and aid in financing,
such as exist in most European countries, is still in the process
of development here. The Cooperative League of the U.S.A., now in
its hist year, is composed of regional wholesale cooperatives, and
a national buying and manufacturing agency called National Coopera­
tives, Inc* These organizations are owned b y local or district
cooperative associations with predominantly farm memberships* 3/

~2j Fanner Cooperatives in the United States, Bull. 1, U.S*
Department of Agriculture, Farmer Cooperative Service
(pp. 22 and 150).
The regional farm wholesale cooperative engages principally
in buying at wholesale farm supplies which are sold at retail to
farmers through their local associations.

Also affiliated with the League are several mutual insurance compa­
nies# the Credit Union National Association, the National Rural
Electric Cooperative Association, and a regional Group Health Mutual
Association. Seventeen associations belong as regular members, 3 as
associate members; also directly affiliated with the League are 7
State cooperative groups and more than 100 local cooperatives. A
sister league, the Cooperative Health Federation of America, perforins
similar services for a group of 20 health snd medical cooperatives.
The League estimates that nonduplicated membership of all coopera­
tives includes approximately 13 million U.S. families.
With an eye to further expansion of its services to its
affiliates, the Cooperative League, in an effort to promote more
adequate financing of cooperatives, at its 19th Biennial Congress
in 1952, agreed to subscribe $500,000 in basic capital for the
Cooperative Finance Association of America, an organization already
chartered in Illinois at that time. In July 1956, the Association,
still seeking new ways to finance cooperatives, hired a financial
expert to conduct a pilot study of the financial needs and methods
of financing one of the larger m i d w e s t e m wholesale cooperatives
which is currently expanding its facilities and services.

Government Assistance to Cooperatives
A comprehensive wholesaling and banking service (like that
furnished by the Swedish Kooperativa Forbundet, or the English
Cooperative Wholesale Society) is not available to consumer coop­
eratives in the United States. Farm supply cooperatives may borrow
from the 13 banks for cooperatives, which were organized by the
Federal Government as part of the cooperative farm credit system,
but the Government has not attended similar aid to the nonfaim
societies. On June 30, 1955, loans totaling $92 million were out­
standing, borrowed b y 602 farm supply cooperatives (seme of which
sell consumers’ as well as producers' goods). About half of these
funds went for operating capital and half for financing new facilities.
Rural electric and telephone cooperatives also receive Government
loans, -through the Rural Electrification Administration. Without
these programs the cooperatives would not be as numerous or widespread
as they are in the United States and far fewer farms would today have
telephones and electric current connected to central stations.
Regarding Federal income taxation, cooperatives, whether farm
or nonfarm, are not taxed on earnings distributed to patrons in
proportion to purchases. These returns to patrons do not constitute
income to the cooperative. The distribution may be in the form of
cash or a certificate to the patron-member showing the amount of
the cooperatives' earnings allocated to him. There must be an

obligation, prior to sales, to make these returns to patrons. Any
business, if it chooses to enter into such a contract with its
patrons, may qualify for this deduction but in practice few busi­
nesses other than cooperatives do so. Farm cooperatives qualifying
for "exempt" status may also deduct from their gross taxable income
the amounts paid as interest or dividends on their capital stock.
However, very few farm purchasing cooperatives qualify for the
exemption, because the law stipulates that such qualification
depends on all customers (both cooperative members and nonmembers)
being treated alike in regard to patronage refunds,and a permanent
record of the patronage and equity interests of both members and
nonmembers must be maintained by the cooperative. U/
The patron, however, does pay income tax on the refunds he
receives from the cooperative.
Consumer cooperatives in the United States are not subjected
to many of the restrictions that have been imposed on them in other
countries, such as laws prohibiting trading with nonmembers, or
limiting their operations to single stores in each municipality.
Nevertheless, they have not developed in this country as fast as
in some of the countries with such restrictions.
The editor of a farm cooperative paper (there are about two
dozen cooperative periodicals circulating) gave the following
explanation for the lag in cooperative development in the United
States as compared with Europe:
1. Abuses of commercial films were not as great
in America when cooperation started as they were in
Industrial changes here already were empha­
sizing mass production and distribution. American
capital operated, in general, on low unit margins
and mass output to make profits.
2. This same principle meant large quantities of
capital were required to enter most enterprises. The
mass production method was one reason great sums were
reeded. Other factors were greater distances for trans­
portation, less concentrated population to support
efficient trading centers, more highly developed tech­
nology based on continuing research.
3. Government encouraged cooperation only among

5 / For a complete discussion of tax treatment and qualifica­
tions for exempt status, see Farmer Cooperatives in the United
States, op. cit. (pp. 28-31).

U. Cooperation was less attractive here than in
Europe because individuals here enjoyed more economic
freedom in a less class conscious society* 5/

Cooperative Contributions to Family Budgets
The contribution made by a cooperative retail store to the
income and expenditures of member families may equal 2 to 5 percent
of family purchases of food and a few household items— allowing both
for patronage refunds and for somewhat better buys in respect to
price and quality. Few, if any, retail cooperatives pay patronage
dividends higher than 3 percent on purchases, and their pricing
policies are usually aimed at meeting chain store prices rather than
underselling them. However, they make a strong appeal on the basis
of standards and grade labeling.
Compared with retail savings, the savings effected in medical
care may be a very important contribution to family welfare. When
the results of adequate medical diagnosis and care are also taken
into account,the effect both on expenditure and earning capacity
may spell the difference for certain families between disaster and
a comfortable level of living.
The effect of cooperative housing on family budgets is diffi­
cult to measure because of differences in quality as well as price,
and because differences in costs may be accounted for in part by
provisions of housing legislation available both to cooperative
and noncooperative projects. Nonprofit cooperative dwelling units
(costing $13,000) built under New York1s limited dividend housing
act, save their owners an estimated $52 per month, according to
New York State's Commissioner of Housing. Limited profit rental
projects, built under the same act, save the renters an estimated
$37 per month. The $15 difference between these amounts may be
ascribed to use of the cooperative form of housingj the rest of
the benefit to the act. 6/ In general, owners of cooperative
dwellings expect to gain, not only a cheapness but in quality of
housing, use of community facilities, and continued assurance of
congenial neighbors and surroundings*
Electricity and telephone cooperatives have made a distinct
contribution to raising levels of living in rural areas, providing
services that would not otherwise have been available, at reason­
able prices. As in the case of housing, however, the whole of the
savings cannot be attributed to the cooperative itself. Government


Midland Cooperator, Oct. U, 195U.
Report to Governor on Middle Income Housing in New York
State, Jan. 26, 1956, b y Commissioner, Division of Housing (p. 18).


-6 .

loans at low interest rates, with deferred payments, made the pro­
gram possible ; the channeling of these loans to cooperatives on a
priority basis assured ultimate consumers of receiving the electric
current, or telephone service, without profit and thus, at lower
Rates charged by mutual insurance companies are lower than
those charged by stock companies when the annual rebates to policy­
holders are taken into account. In the case of Nationwide Insurance
Companies, the outstanding cooperative in the insurance field, re­
funds are deducted from annual premiums, and the terms of the poli­
cies are liberalized.
The savings that may be effected by borrowing from a credit
union instead of from another source, will vary depending upon the
family* s resources, location, and knowledge of credit sources. If
the family desirous of borrowing can establish credit with a bank,
they can do as well as or better than at most credit unions. If
that is not possible (and it seldom is for wage earners), and the
choice rests between typical agencies specializing in small loans
to needy wage earners, the credit union can offer as saving the
difference between interest at 1 percent a month on the unpaid
balance, and 3\ percent a month on the balance,or much more. "In
States without adequate laws to protect consumers, rates under
many disguises range as high as 1,000 percent cr more a year,"
reports the Bureau of Business Research of Western Reserve Univer­
sity. A number of State laws regulating interest rates charged by
consumer finance companies, set the rate permitted at 3 percent a
month on the unpaid balance.

Cooperatives in Retail Trade
Gradually the picture of nonfarm consumer cooperation is
undergoing great change. The hundreds, or thousands, of small
societies, each with a store doing a few thousand dollars' worth
of business annually, are giving way to fewer, but much larger
societies and stores , Only those cooperative retail stores whidi
have a large annual turnover can hope to compete with chain-store
prices and variety of merchandise. It takes a really big coopera­
tive supermarket to achieve the cooperative goal of giving the
consumer carefully selected and graded merchandise at prevailing
prices in a wide range of commodities, with hope of a modest
patronage dividend at the end of the year. In small towns and
villages, the entry of the chain groceries, meat markets, variety
and drug stores, the greater mobility of the local population by


car, and the spread of urban advertising have diverted patronage
from the small stores? cooperatives affected have either combined,
enlarged their operations,or dissolved.
In certain areas, leadership in mergers and reorganizations of
local cooperatives and in store modernization has been taken by the
regional wholesale cooperative serving the member societies of the
area. The Cooperative League has promoted these trends through
forums on business management conducted annually for board members
of local cooperatives and store managers, and through surveys of
business operations of cooperative supermarkets, financed by the
League. Recommendations based on the surveys have directed atten­
tion to weak departments or practices. The League has also con­
ducted numerous training institutes for officials and employees of

Farm Supply Cooperatives
Farmers' cooperatives do their principal supply business (about
6U percent of the total) in feed, fertilizer, and other business
supplies needed by farmers, dairymen, cattle-raisers, and poultrymen
(table l). Petroleum products accounted for almost one-fourth of
total sales in 1953-5U, with between UO and U5 percent of these petro­
leum products consumed in household uses, as distinguished frcm farm
operations,according to a Department of Agriculture estimate. In
1953-5U, meats, groceries, and other consumer goods constituted less
than 10 percent of farm cooperative supplies sold to patrons? trade
in meats and groceries amounted to only 2 percent and was valued at
$1*8 million. About half of the meat and grocery business was done
b y farmer cooperative stores in Minnesota, Michigan, and Wisconsin,
an area served by the Central Cooperative Wholesale, with head­
quarters in Superior, Wis.
Only a comparatively small part of the local farm cooperatives'
consumer goods are bought through regional wholesale cooperatives?
most of the consumer goods are purchased either from National Coop­
eratives, Inc., or from noncooperative sources of supply. Ten
regional wholesale cooperatives still purchase groceries and meats
for their local member associations, but several others have in
recent years discontinued these lines. In 1955, only 2 out of 23
major regional wholesale cooperative associations (i.e., those with
an annual volume of business exceeding $1* million) carried groceries,
and in only 1— Central Cooperative Wholesale— was the volume of
grocery sales preponderant. The proportion which groceries consti­
tuted of total sales b y the group of major regional wholesale
cooperatives declined frcm 0.8 percent in 19hl and 1951, to 0.7 in
1953 and to 0.6 percent in 1955 (table 2).

-8 .

Table 1.— Supplies sold to patrons by local farm supply cooperatives,


All commodities - Producers* supplies
Feed - - - - - Fertilizer - - Seed - - - - - Insecticides, etc.
Farm machinery and equipmentcontainers
Petroleum products

Net amount






9h,h& 7




- - - - - -

Other supplies - - Building materials
Meats and groceries
Other supplies - -



- - - - - - - - - - - - - - j



Number of














Because of duplication, subtotals cannot be obtained by
Source: U,S. Department of Agriculture, Farmer Cooperative
Service, Reports are received from local farm supply cooperatives in
which farmers constitute a majority of the members.

4 2 49 50 0

-5 7 - 3


Table 2,--Supplies sold to local cooperatives or to individual patrons
by 23 major regional farm wholesale cooperatives, 1/ 1955


All commodities - - - - - - - - - - Producer goods ------------------- Feed - - - - - - - —
- - - - - Fertilizer —
----------- ------ -Seed - —
- - - --------------- -Farm machinery and equipment - - Package materials (including twine)
Steel products — . - —
------- -Insecticides, etc. - - - - - - - -

j Percent
thousands) j

\ 100

580,218 j
380,U10 |
116,591 i
3U,830 |
18,728 I
2,1*26 j
13,831 1
13,U02 [


! Number of
| associa\ tions
*.j--- JZ



Petroleum products and auto
accessories - - - - - - - - -


Lumber, paint and maintenance
materials - ----------------- -Other - - - - - - —
Electrical equipment Groceries - - - - - - Coal- - - - - - - - - Miscellaneous - - - - -

- --------- .
- - - - - - ;
- - - - - - - - - - -







21*,1*51* !


16 ,2 11 \





1/ Includes associations doing more than $1* million worth of busi­
ness, each*
2/ Less than 0*5 percent*
Sources Handbook on Major Regional Farm Supply Cooperatives,
General Report No* 25, September 1956, U, S. Department of Agriculture,
Farmer Cooperative Service (p. 55)*

•1 0 .

A comparison is made over a 5-year period, in table 3, between
the trend in fanners* net realized income and the volume of farm
supplies purchased through cooperatives. The farm cooperatives*
supply business increased between 19k9 and 1953, but showed a slight
drop in 195k, the latest year for which data are available. This
growth contrasts with the irregular course of fanners' net income#
Farm income was highest in 1951, but cooperative purchasing was
highest in 1953# The sharp declines in income in 1950 and in 195k
were not paralleled in the supply business of the cooperatives. In
other words, the farmers spent a larger portion of their reduced
incomes at cooperatives.
However, that part of the cooperative supply business concerned
with meats, groceries, and household goods has not held up as well
as the trade in producers* goods or petroleum products. Consumer
goods have been reported separately only since 1952 and have declined
in both of the following years for which data are available. They
declined as sharply as farmers* income in 1953 and 195k# While all
retail sales increased k percent between 1952 and 195k, and the farm
supply cooperatives’ retail (or net) sales were up 3 percent, the
consumer goods items in those sales declined by 16 percent. Sales
of petroleum products by farm cooperatives to their patrons increased
6.3 percent, compared with an increase in sales b y all gasoline
stations of 3.6 percent, in the same period.

Cooperatives Serving Urban Consumers
Except for the city stores affiliated with Central Cooperative
Wholesale, the statistics on farm supply cooperatives collected and
published by the U.S. Department of Agriculture, Farmer Cooperative
Service, do not include nonfarm consumer cooperatives. In
this field, comprehensive annual reporting is lacking. It is pos­
sible to glean information on the operations of seme stores from
the pages of the cooperative press, but news is apt to be weighted
with reports frem the successful associations. New cooperatives
forming, old ones dissolving, and those which are declining may be
under-reported. Time-to-time comparisons cannot be made, except
from Census data relating only to the years 19k8 and 195k. Even
for these years, the Census data are probably not comparable because
of differences in the method of enumeration.
In 19k8, the Census of retail trade for the United States showed
sales b y cooperatives totaling slightly over $1 billion, or #8.17 per
$1,000 of all retail sales. About two-thirds of the cooperative
sales consisted of feed, farm, and garden supplies. The 195k Census
of retail trade showed an increase in cooperative sales to $1.7
billion (or $10 per $1,000 of all sales)• Feed, farm, and garden
supplies in 195k accounted for 77 percent. The proportion of coop­
erative food store sales to all food store sales was 0.k5 percent
in 19k8, but was down to 0.28 percent in 195k (table k).

-1 1 -

Table 3.— Indexes of farm supplies purchased through cooperatives
compared with farm income, 1 9h9~ 5k
| 19U9
1950 | 1951
Farm supplies purchased |
through cooperatives:
81 !
Gross total
- - 88
Net total 2 ( - ----- |
- i
•» !
Petroleum products
Consumer goods ^/- j
- |


Realized net income from
farming - - - - - - - -


100 1

1953 ! 1951s



97 1
92 | 105 | 100
95 f
l ----i-----1/ Gross includes transactions between cooperatives*
Net is actually the retail sale to the farmer*
2 / Meats, groceries, household appliances, clothing, paint,
and fuel*

Note*--Farm Supply Cooperative statistics are for crop years
ending with year shown; farm income is for calendar years*
Sources Statistics of Farmer Cooperatives, Farmer Cooperative
Service; The Farm Income Situation, FIS-156, December 1955, Agri­
cultural Marketing Service, U. S. Department of Agriculture*


T a b le 1*.— R e t a i l s a l e s

and e s t a b lis h m e n t s o f c o o p e r a t i v e s and a l l r e t a i l e r s ,


R e ta il tra d e




1 ,7 2 1 ,6 5 0

Food, t o t a l
---------------------------------------------- G r o c e r y s t o r e s - - ------------------------- - M e a t and f i s h m a r k e t s ----- ------------ F r u i t and v e g e t a b l e m a rk e ts - B a k e r y p r o d u c t s -------------—
- - E a t i n g and d r i n k i n g , t o t a l
- - - - - E a t in g p l a c e s i n c l u d i n g r e fr e s h m e n t ;
s t a n d s - ---------------------------------------------i
D r i n k i n g p l a c e s ------------- —
- ---------;
G e n e r a l m e r c h a n d is e , t o t a l - ----------------D e p artm en t s t o r e s - - - - - - - - V a r ie t y s to re s
- - ------------------------G e n e r a l m e rc h a n d ise 1/ ----- ------------ A p p a r e l , t o t a l - --------- -------------------------------Shoe s t o r e s - - ----- - - - - - - Women* s c l o t h i n g s t o r e s - ----------------F u r n it u r e , t o t a l
- - - - ----- - - F u r n it u r e s t o r e s -------------------------------------H o u se h o ld a p p li a n c e s t o r e s --------- ---- - !
A u to m o tiv e , t o t a l - --------------------------------P a s s e n g e r c a r s , f r a n c h i s e d - --------- P a s s e n g e r c a r s , n o n f r a n c h is e d - - - ;
T i r e and b a t t e r y d e a l e r s ------------- - r
G a s o l i n e , t o t a l ------------- - —

3 8 U ,6 l6

T otal

L u m ber, t o t a l - - -


C o o p e ra tiv e r e t a i l tra d e

T o tal
| T otal
num ber o f J
s a le s
e s t a b l i s h ­ ■j
f tho usan ds)
m ents

Type o f sh o p

- - - - -



Farm e qu ip m en t d e a l e r s ----- ----------------*
Lu m ber, b u i l d i n g m a t e r i a l d e a l e r s P lu m b in g ,p a in t .,a n d e l e c t r i c a l
sto res - - - - - - - - - - - H a rd w a re s t o r e s - - —
- ------------- ’
D ru g s, t o t a l
- - - - - ----- - - ----O t h e r r e t a i l , t o t a l 1/--------- -------------------L iq u o r s t o r e s - - - - - - - - - - F u e l and i c e d e a l e r s - - - ----- - - F e e d , fa r m , and g a rd e n s u p p l i e s - J e w e lr y s t o r e s ----- --------(
Book and s t a t i o n e r y s t o r e s
- - ----S p o r t i n g g ood s and b i c y c l e s - - ----F lo r is t s
- - - - - ----- - - - - G i f t s and n o v e lt y s t o r e s
- - - - N o n sto re r e t a i l e r s , t o t a l 2 / - - - - D ir e c t s e ll in g

1 1 6 9


1 3,13 6
3 1 9 ,6 57
1 9 5 ,1 2 8


6 7

, 7 1 *8

3 9 , 7 6 2 ,2 1 3
2 ,1 2 8 ,1 1 7 f
1*81*,503 ;
8 6 2 ,2 9 0 |
1 3 ,1 0 1 ,0 5 1 ;


2 0,91 7

1 ,8 1 3 ,9 8 9

1 0 0 ,5 1 9
1 8 ,6 8 9
30,17 7

1 3 ,1 2 3 ,5 2 8

1 6 ,5 0 1

1 ,1 1 5 ,1 9 7
2 , 6 9 I * , 3 1 *8
5 ,2 5 1 ,7 9 1

2 ,8 0 l*,5 3 2
6 ,5 0 2 ,8 6 1

5 6 ,0 0 9
2 2 6 ,9 0 3

2 7 ,0 7 0

3 ,1 8 0 ,7 6 9

2 3 ,7 9 2
21*, 266
8 ,1 1 5
1 0 ,0 1 3





5 ,3 7 3 ,9 1 9
3 ,2 3 7 ,3 2 3

8 5,95 3


3 , 0 6 6 , 631* i
1 1 ,0 7 8 ,2 0 9
1 ,8 9 5 ,2 5 2
8 , 6 1 9 ,0 0 2

, 7 1 *3
91,79 7
5 0 ,7 2 9

1 1 9

6 ,1 3 5


7 3 1

1* , 3 6 0

3 ,8 8 8

5 7 5 ,6 2 0

3 ,5 7 5



1 6 ,2 7 9
7 8 ,5 0 8

h ,5 1 3 ,8 7 5



2 8 2 ,9 6 6

T otal
s a le s
th o u san ds)

T otal
num ber o f
e s t a b lis h ­
m ents

, 1 *0 9 |
, 381* I
1 7 ,8 7 2 ,3 8 6 ,

1 2 3 ,8 8 7
7 6,19 8
2 ,7 6 l

b y t y p e o f s h o p , 1951*


S a le s
; Percen t
: o f to ta l
r e t a il
: t r a d e 2/


1 .0 0

1 1 1 ,6 8 9
1 0 l* , 0 0 6

.2 8
.3 0

: Percent
: of to ta l
c o o p e ra tiv e
tra d e
1 0 0 .0 0

6 .5 5
6 .1 0

291* ;
2 7,66 7

.0 3

.0 8
.0 2
.0 2

.2 1

1 .6 2


.2 3

7 ,3 2 1
3 ,7 7 9

.1 7

1 .1 9
1 .6 7
.2 2

1 ,3 0 9

.0 6
.0 6

.1 6

.0 2

.0 7
.1 8
.0 8
.0 9
.0 5
.0 9
.0 9
.2 9

1 8 ,2 6 8

2 ,0 8 2
1 ,6 9 2
3 1 ,5 3 6



.2 5
.3 1

3 ,2 1 9
1 ,3 5 9 ,0 2 7
1 9 ,6 9 5
1 ,3 1 7 ,7 5 5

.0 6

8 .5 0
.0 8
.6 9
3 2 .1 9
.0 8

1 ,0 6 9

7 ,1 3 9
1 ,1 9 9

5 ,1 5 8
3 ,3 73

1 .0 7
.1 2


.0 2
.0 9
.1 1
.1 5

.1 0

1 .8 5

.6 1

8 ,2 6 0


.3 8
.2 9
.0 9
1 .3 0

.6 9

39,97 6


1 .0 7
.0 8

.1 6

1 8 ,1 7 3
7 ,9 7 3
6 ,5 3 3
1 ,5 7 6
2 2 ,1 0 8


5 .3 3
2 .3 5
.1 6

.1 9
7 9.73
.1 5
1 .1 6

7 7 .3 1
.0 6

.0 1
.0 2
.3 0
.2 0

________________________________________________________ ;________________ !____________________ :________________ i___________________,_______________ [______________ „
1/ The f i g u r e s w i l l n o t add u p t o t h e t o t a l s b e c a u s e d a t a h ave b e e n e x c lu d e d w h e re t h e y w o u ld have d i s c l o s e d
an i n d i v i d u a l c o o p e r a t i v e o r o t h e r t y p e o f r e t a i l s a l e s o u t l e t .
2/ P e r c e n t means p e r c e n t i n e a ch c a t e g o r y .
N o t e ls e w h e r e c l a s s i f i e d .

U n i t e d S t a t e s B u re a u o f t h e C e n s u s , 1951* C e n su s o f R e t a i l T r a d e .

-1 3 -

The declines occurred mainly among smaller societies in rural areas*
Scattered reports indicate that urban supermarkets operated by coop­
eratives have greatly increased their business. An identical group
of urban cooperative stores, for which sales data were available to
the U* S. Department of Labor*s Bureau of Labor Statistics, both for
1953-5U, and 195U-55, showed an overall increase in sales of about
2l* percent between these years*
Principal centers of urban consumer cooperation today are in
the metropolitan areas of San Francisco, Chicago, Washington, D*C*,
New York City, and in New England. If plans of Central Cooperative
Wholesale materialize, a group of cooperative centers with super­
markets, variety stores, and filling stations may be developed in
a number of medium-size towns in Wisconsin and Minnesota. In this
territory, business of the smaller cooperative nonfarm stores has
been declining.
Greeribelt Consumer Services (GCS), largest of the urban local
societies, expanded in the period 1953-56 by setting up new shopping
centers and buying the assets of one small nearly society. GCS
operates four shopping centers and will soon add two more. 7/ An
annual volume of business of $9.3 million is transacted by its food,
general variety and drug stores, and gasoline service stations.
Membership reached 11,000 at the end of 1956. The size and disper­
sion of its membership led to the development of a new type of coop­
erative government structure which resembles that of some Western
European cooperatives. A congress consisting of 1 delegate for each
200 members, elected by annual area membership meetings, nominates
candidates for the board of directors from the congress membership.
The congress also serves in an advisory capacity, transmitting
membership viewpoints to the board, and vice versa. The congress
meets four times a year with members of the board to hear reports
and discuss business. Area delegates may meet more frequently at
the call of their chairman. An all-membership meeting is called
once a year to elect the GCS board of directors i&ich have been
nominated b y the congress, and to transact other business as
required by the charter and bylaws*
Several large cooperative organizations, including Greenbelt
Consumer Services and Midland Cooperatives, are building stores and
gas service stations at promising sites in anticipation of develop­
ing cooperative memberships through local store patronage* In the
spring of 1956, Midland, which is a regional wholesale cooperative
serving mainly farm supply cooperatives, opened a large and well
equipped service station near Minneapolis to be operated by its
retail department. Every patron received an account number; patron­
age refunds will be cumulated towards ownership of a share of com­
mon stock. Thus, the station may ultimately be bought and operated
by the patrons. In the meantime, patrons will be invited to elect
an advisory committee to suggest operating policies to the management*

2 j Greenbelt, Takoraa Park, Wheaton, Westminister (as of Sept. 1,
1956), Piney Branch, and Rockville, all in Maryland.

-1 1 * -


Cooperative League of the U.S.A.
— Yearbook, 1952, 195U (biennial)
— Cooperative Fact Book, 1956

U.S. Department of Agriculture, Fanner Cooperative Service,
— Farmer Cooperatives in the United States
FCS Bulletin 1, December 1955
— Statistics of Farmer Cooperatives, 1953-5U
General Report 23, June 1956
— Handbook of Major Regional Farm Cooperatives,
General Report 18, June 1955* for 1953-5U
General Report 25, September 1956, for 195U-55

U.S. Department of Commerce, Bureau of the Census,
Census of Business, 19U8 and 195U, Retail Trade

Midland Cooperative (weekly)
Midland Cooperatives Inc., Publishers, Minneapolis, Minn.

Cooperative Builder (weekly)
Cooperative Publishing Assn., Publishers, Superior, Wis.

Cooperator (monthly)
Eastern Cooperatives Inc., Publishers, Palisades Park, N.J.

Parker, Florence E. The First 125 Years. A History of
Distributive and Service Cooperation in the United States,
1829-195U. The Cooperative League of the U. S. A., 1956


Chart 1.



(1947-49=100 )



5 00












Source: 1955 Report of Operations of Federal Credit Unions,
U.S. Department of Health, Education,and Welfare;
1952 and 1956 Statistical Abstract, U.S. Department
of Commerce.


Credit Unions
Credit unions are formed among persons with a common bond such as
an employer, a neighborhood, or a church, for the purpose of making
small loans to members at low rates, and to encourage thrift. Members'
savings, in the form of credit union shares or deposits with the credit
union, constitute the funds to be loaned. Credit union funds may be
invested in certain types of securities permitted by the law under
which the credit union operates, but the main purpose is to make loans,
not investments.
Credit unions may be chartered either under the Federal law,
passed in 193U, or under State laws which exist in all States except
four, and in the District of Columbia and Puerto Rico. y
The average credit union has slightly less than 500 members, with
average assets per member of about $300, and loans outstanding per
member of $237. The average size of each loan made by Federal credit
unions in 1955 was $UU7. About half of the membership did not borrow
from the credit unions. Loans made b y Federally-chartered unions
averaged a little below those in State-chartered groups in 1955. The
State average was raised by long-term loans secured by real estate.
State-chartered credit unions in half of the States report loans
based on real estate, but those chartered b y the Federal Government
are not permitted to make loans for more than 3-year terns, and this
in effect precludes real-estate or mortgage loans. Real estate loans
in 19 $ h accounted for about 10 percent of the total volume of State
and Federal credit union loans*
Table 5 shows the number, size, and volume of business of State
and Federal credit unions from 1939 to 1955, omitting the war years.
It also makes a comparison of the credit union loans with all loans
made by financial institutions. Table 6 shows growth of savings in
credit unions and other savings institutions with which they compete.
Chart 1 presents data from tables 5 and 6.
During’World W a r II, credit unions experienced some setbacks,
because of restrictions on the extension of credit. After World War
II, credit unions started to grow at an accelerated pace. All forms
of consumer credit increased rapidly during this period, but the loans
extended by credit unions showed a steeper rise than other types. The
ratio of credit union loans outstanding at the end of each calendar
year, to the loans made consumers by financial institutions, increased
from U.3 percent in 1939 to 6.9 percent in 1 951* and 1955. 9/

8/ Delaware, Nevada, South Dakota, Wyoming, Alaska, and Hawaii
have no credit union laws.
9/ Credit union loans secured by real estate are not included
in the Federal Reserve Board data for instalment credit. This emis­
sion accounts in large part for differences in loan volume reported
for credit unions by the Federal Reserve Board and b y the Bureau of
Federal Credit Unions*
424950 O - 57 - 4

Table 5.— Number, membership, and assets of credit unions,
1939 and 19U7-55

19U8 l 19U9

1939 ! 19U7


Number of reporting credit unionss|
T o t a l ----------------------- |7,81+9 8,9U2 j 9,329
State ...................... iU,677
5,097 i5,271
Federal .................... '3,172 3,81:5 ' U,058




12,21:9! 13,561:
5,925 | 6,578






985.0 : 1,307.5






7h k . 6 : 901.1 1,081.6 11,355.8 1,691.1:

2 ,036.2









279*9 398.U
188*6 260.7
91.U ;137.6

3,035 :
2,853 ;




679.9 1
329.U . 1:1 6 .1 j
186.2 . 263.7 j

7U7.1 1
UU7.3 1
299.8 ;

5.0 1

5.2 !





Savings of members:
Total (in million dollars)---- j180.2 538.8 633.7
S t ate......................:136.9 3U6.U 398.7
Federal.................. - I 1:3.3 •192.U '235.0

2,1+61+ |


Ratio to total financial insti­
tutions’ instalment credit l/
(percent)--- -

1953 |


Number of members:
Total (in t h o u s a n d s ) ---- - - i2,309 3,3UO 3,71:9
S t a t e ......................i1,1+59 1,891: 2,121
Federal-------- ----------- j 850 1 , 1 M ,1,628
Amount of loans outstanding,
end of year:
Total (in million dollars)- —
S t a t e---------- --------- Federal..............






539.2 i 62U.2 j 758.U
361.9 ! U57.U ! 597.U


Based on Federal Reserve Board data.

Source: Bureau of Federal Credit Unions, UJC. Department of Health, Education and Welfare} data prior to 1952
for State-chartered credit unions published by Bureau of Labor Statistics, U.S. Department of Labor.

Table 6.--Savings of individuals in credit unions aid
certain other financial institutions, 191*0-55


Total of : Credit j Savings
Mutual ! Postal
selected : unions
and loan | savings i savings
items 1/
t associa- J banks
| tions



Savings (in million dollars)
191*0------- j
191*5------- !!
1950 ------1955 -------

61*, 820




[ 1,31*2
i 3,013
: 3,035
! 1,990

Percent distribution
191*0------191*5------1950 ------1955 -------




[_—.. **
191*0-1*5----- 1
1915-50----- !
1950-55----- \
191*0-55----- i






-3U .1*


Percent change




1/ Not including time deposits in conmercial banks, savings
bonds, and other securities, and life insurance reserves.
Source: Federal Home Loan Bank Board (in U.S. Statistical
Abstract, 1956, table 53U, p. 1*57).


Table 7.— Share capital and dividends on shares of credit unions, 1950-55






Total: Federal and State:
Share capital - - - - -!$850,207,501: $1,01*0,1*37,231* $1,308,521,505 $1,638,007,350
27,928,866 |$ 35,11*3,633 $ 1*7,291*,099
Dividends - - - - - - - |$ 22,73U,063 $
Rate per share- - - -j
2.7 j
2.7 i




Share capital - - - - - \$ 361,921:,778 $
Dividends - - - - - - - $ 10,161,109 •$
Rate per share- - - -!

1*57,1*02,121* $
12,619,61*3 ;
2.8 j

597,371*,117 I $
16,596,1*30 j $
2.8 j



i $
; $

711 ,11*7,388
18 ,51*7,203





767,571,092 1$
22,577,1*30 |$
2.9 !

931,1*07,1*56 !$ 1 ,135 ,161*,876
28,1*25,599 i $
3.1 |




■$1,981,965,873 $2,380,172,201*
60,1*1*3,738 $



! $




Share capital - - - - - $ 1*88,282,726
Dividends - - - - - - - i $ 12,572,951*
U aw u
p tJ i
D i l c U t3™ *
• 1



870,1*36,258 j $1,01*6,233,073
21*,716,669 |$
2.8 (



! $

.J # *




Source: Bureau of Federal Credit Unions, U.S. Department of Health, Education, and Welfare; data prior to 1952 far
State-chartered credit unions published by the Bureau of Labor Statistics, U. S. Department of Labor.

Strengthening of the movement in recent years is indicated b y
the fact that memberships and loans increased more sharply than the
number of credit unions. The rate of dividend paid on share capital
to credit union members has also risen steadily, indicating a
stronger financial position (table 7).
The amount of individual savings accumulated in credit unions
increased more rapidly in the postwar period than savings in other
comparable institutions, but the total amount thus held is still
low compared to the savings and loan associations and mutual savings
banks; it is a little higher than deposits in postal savings accounts
(table 6).
The State-chartered credit unions had a head start, since the
first State law was passed in 1909 in Massachusetts, and have main­
tained a diminishing lead over the Federal credit unions in numbers,
members, loans made, and members' savings. In 1955, Illinois led
in number of State-chartered credit unions, and also in membership
and loans, followed by Massachusetts, Michigan, and California.
Federal credit unions exist in all States and territories and
in the District of Columbia. Pennsylvania, New York, California,
Texas, and Michigan lead in terms of numbers of credit unions, but
California stands first in membership, assets, and loans outstand­
ing, because of the great size of the credit unions in the aircraft
and petroleum industries.
More information is available on Federal credit unions since
the Federal groups must report to the Bureau of Federal Credit
Unions, which collects and publishes information on the credit
unions to which it issues charters; the State-chartered unions
report to Ult different State Banking Commissioners, with varying
regulations and reporting requirements, and no specified obligation
to assist the credit unions.
Information on federally chartered credit unions is diown in
table 8* Among these organizations, 90 percent of the membership
is found in groups of employees working for a common employer or
under the roof of one establishment. Almost half of those with
occupational or industrial ties are in manufacturing industries.
Metal manufactures, automotive products, petroleum production and
refining, electrical products, and aircraft are the industries with
the largest credit union memberships. Together, the credit unions
in these enumerated industries reported 1.1 million members; credit
unions in Government (Federal, State, or local) reported 76ii,000;
in transportation, 252,150; and in educational institutions, l5ii,000.
Over 1,000 Federal credit unions, with a combined membership of
37U,000, have been formed by labor unions, churches, and religious,
fraternal, or professional organizations, or by cooperatives. These
"associational" credit unions serve members, or patrons and employ­
ees of the associations. A small number of credit unions, with
about 50,000 members, serve residential groups, chiefly in rural areas.


Table 8.— Federal credit unions by type of membership,
December 31, 195$


Number of



Total --------------------------





Occupational or industrial groups





Associational groups - - - - - Cooperatives - - - - -- - -Fraternal and professional
organizations - -------- Religious organizations - - - Labor unions - - - - - - - - -

1,16 6








Residential groups - - - -- - Rural community - - ---- - - Urban community - -- --------




16 $



Source: 19$$ Report of Operations of Federal Credit Unions (tables 10 and
17), Bureau of Federal Credit Unions, U.S. Department of Health, Education,
and Welfare*

- 2 2 -

Loans are made by credit unions in varying amounts, and with
security such as cosigner or collateral required for the larger
loans but no collateral required for the smaller loans. The inter­
est rates charged are usually the maximum permitted by the credit
union laws, these being for the most part, 1 percent a month on
the unpaid balance of the loan.
These rates are lower than rates charged by commercial credit
agencies, although higher than the rates of seme banks which main­
tain personal loan departments. However, banks can make a profit
on their personal loan business at these lower rates only by elim­
inating the small loans and by setting high credit standards for
their borrowers. Low-income families are generally ineligible for
bank loans. 10/
The reasons credit unions can charge as little as 1 percent a
month for the type of loans they make is that they do not aim to
make a profit, but only to cover expenses and pay interest on shares*
Their expenses are held down by the fact that free space is often
provided on the employers’ premises, or in the headquarters of the
group among which the credit union operates. Often only one officer
is paid and bonded, other officers serving without compensation.
However, some of the largest credit unions employ staffs and have
even constructed their own quarters. Expenses are held down by
absence of formal investigations, or credit ratings (replaced by
personal acquaintance among members); loan collections are aided
by scheduling repayment in instalments due on paydays.
constitute about half of all expenses, borrowers protection insur­
ance 17 percent, examination and supervisory fees 5 percent. Credit
union league dues, insurance bond premiums,and interest on borrowed
funds are 8 percent. Miscellaneous expenses, including rent and
social security taxes, supplies, and losses amounted to about 20
percent. Federal credit unions devote approximately UO percent of
their income to expense. These figures relate to 1955.
In spite of their lower interest charges for small unsecured
loans, credit unions have by no means pre-empted the field of consumer
credit as is shown by table 9. Their share of all instalment consumer
credit issued by financial institutions and retail outlets was 5.8
percent in 1955; according to the Federal Reserve Board, and their
share of instalment credit issued by financial institutions only was

10/ For a discussion of cooperative lending rates by different
types of consumer credit agencies, see Consumer Credit Facts for You,
Educational Pamphlet 1, Bureau of Business Research, Western Reserve
University, 1955. The lowest rates shown in the pamphlet are those
charged by credit unions (p. 17).


Table 9.— Instalment credit by type of holder in 1955


Type of holder

Total instalment consumer creditRetail outlets - - - - -

-- --

Institutional credit - - - - - Commercial banks - - - - - - Sales finance companies - - - |
Consumer finance companies - - j
Credit unions l/ - --------- - j
Other ................. . .......

■■ ■■ ... ----- .—

of total
i credit










•Percent of
total credit
issued by
; financial
! institutions





.... 4----------------------- i--------------------- ------------------------

1/ Loans extended by State-chartered credit unions secured by real
esTate are not included.

Federal Reserve Board Bulletin, December 1956 (p, 1352)

Chart 2.



Source: Based on Federal Reserve Board data.

united states department of labor

424950 0-57-5

-2 5 -

6.9 percent.
(See chart 2.) The total instalment consumer credit
does not include debts owed for professional and other services,
single-payment loans, and regular charge accounts, because such
debts are usually liquidated by a single payment. Mortgage and
real estate loans are also excluded from these computations, both
from the totals and from the credit union loans.
The reasons why individuals borrow more from other sources than
from credit unions are in park lack of access to a credit union,
the lower rates of interest which banks charge eligible borrowers,
and the greater impersonality of the commercial agency. Borrowers
may prefer not to discuss their personal or family affairs with
Promotion of credit unions has, in recent years, devolved upon
the Credit Union National Association (established in 1 9 3 k ) , a
cooperative voluntary federation with headquarters in Madison, Wis.,
composed of State or provincial leagues of credit unions. Credit
unions in Canada and other western hemisphere countries may affil­
iate. The leagues, which exist in k5 States, the District of Colum­
bia, Hawaii, Puerto Rico, and in 8 Canadian provinces, carry on
legislative work; hold conferences, schools, and clinics for credit
union officers; make available low-cost bookkeeping supplies, forms,
and advertising material; and render assistance on bonding and on
various operating problems.
The Credit Union National Association organized another coop­
erative, CUNA Mutual Insurance Society, to provide three types of
insurance at group rates to members of credit unions which elect
(l) Insurance of the loan in case the member-borrower
dies or is permanently totally disabled before repayment (the
credit unions pay for this insurance out of earnings); (2) life
savings insurance, which may be purchased b y a credit union on
the lives of its eligible members in proportion to their savings
held by the credit union, up to a maximum of $1,000 (again the
individual pays no premium; this feature has furnished members with
an added thrift incentive and has helped credit unions increase
their loan capital); (3) life insurance policies which may be pur­
chased direct from CUNA Mutual by individual credit union members.
At the end of 1955, loan protection insurance in force under CUNA
amounted to $1,U33 million; life savings insurance, $876 million;
and individual policies, $U2 million. Together, these insurance
policies had increased 27 percent over 195U* In the case of consumer
credit furnished by other types of agencies, the borrower or instal­
ment buyer is frequently required to carry loan-protection life
insurance, and must pay for it as an added credit charge.



Consumer Credit Facts for You, Educational Pamphlet #1,
Bureau of Business Research, Western Reserve University.


U.S. D e p a r t m e n t of Health, Education,and Welfare,
Bureau of Federal Credit Unions
— Federal Credit Union Operations (annual) 1955, and earlier issues
— State Chartered Credit Unions (annual) 1952-55

Credit Union National Association
The Credit Union Year Book (annual) 1956

CUNA Mutual Insurance Society, 20 Years of Pioneering.


The Federal Credit Union-Policy and Practice, John T. Croteau*
New York, Harper and Brothers. 1956

Federal Reserve Board, Federal Reserve Bulletin,
Instalment Credit b y Type of Holder (monthly statistics)


Electricity and Telephone Cooperatives
The Rural Electrification Act of 1936 (amended in 19h9) estab­
lished an agency authorized to make "loans for rural electrification
and the furnishing of electric energy to persons in rural areas who
are not receiving central station service, and for the purpose of
furnishing and improving telephone service in rural areas." Coop­
eratives, public authorities, and limited dividend associations
were to have priorities on the loans made* As table 10 shows, more
than 90 percent of the Rural Electrification Administrations (REA)
electricity program has been carried out by cooperatives; coopera­
tives have built 95 percent of the powerlines through which electric
current now flows and have connected 95 percent of the consumers
now receiving current from REA-financed systems* Over U million
consumers were served b y the electricity cooperatives at the end
of 1955, including 2*3 million farms— over half of all farms
The REA cooperatives are responsible for most of the great
progess made since 1936 in bringing central station electric current
to the rural population* In 19U0, only 30 percent of all fanus
were electrified; in 1950, the percentage had risen to 77 percent,
and in 195U, to 93 percent* Large as the rural program is, the
electric current supplied by those systems financed b y REA amounted
to only 8 percent of all residential current consumption in the
United States in 1955*
Practically no REA borrowers are delinquent in loan repayments
and some of them are repaying ahead of schedule. At the end of
June 1956, payments on loans in advance of the date due were 3*5
percent of the principal advanced to active borrowers, compared to
3*3 percent a year earlier* The amounts overdue more than 30 days
were less than one-tenth of 1 percent of the amounts due* After
the initial development periods, during which interest and principal
are deferred, the schedule of repayments increases* The total
amounts paid on the loans rose from 20*5 percent of total active
loans in mid-1955 to almost 2U percent in mid-1956*
A comparison of the relative status of cooperatives in the REA
program in 1955 with earlier years indicates that there has been an
extension of facilities for which funds were approved some time ago,
but that the proportion of funds currently approved and advanced to
cooperatives is lower than in former years; therefore, the propor­
tion of mileage built and consumers connected by them may fall in
the next few years* Table 10 shows a comparison between 1955 and
19 l£. in 19U5, the proportion of funds advanced to cooperatives was
at a peak, although the amount was low*


Table 10•— Cooperatives in REA electrification loan program,
191*5 and 1955



Cooperatives borrowing - - - - - - - - - - - Percent of all REA borrowers - ------- -----j

Cooperative borrowers energized - - - - - - Percent of all energized REA borrowers - - Distribution-type cooperatives - --- - - - Power-type cooperatives - - - - —
- -- -



883 ?
92.0 j


776 j


9 i

Loans outstanding to cooperatives December 31
(thousands)- - ------- : ! $315,281 | $2,103,961
Percent of all REA loans o u t standing----- - j
95.8 |
Funds advanced to cooperatives in year
(thousands)- - - - - - - - - - - - --- - Percent of all REA funds advanced- - - - - -


Cooperatives* operating revenues (thousands) Percent of all REA borrowers* revenues - - -



$55,161* j
96.8 ii




$70,188 !
95.1* i








Miles of line energized by cooperatives - - Percent of all mileage energized under REA
program - - - - - - - - - - - - - - - - -

Consumers connected by cooperatives - - - - Percent of all consumers connected by REA
b o r r o w e r s ------------- -- —
- -- -- -


REA Statistical Services Division.


[1,325,1*1*8 | 1*,017,287


9l*.6 [



The electric current distributed by REA borrowers in 1955
originated as follows:



from private companies;
from Federal authorities;
from other public authorities; and
by REA borrowers.

Host of REA lending has been for distribution lines, only a
small proportion of the funds has been loaned for building powerplants, or for electric facilities at the consumers' end* Most of
the loans for building powerplants have been made to cooperatives*
In order to strengthen those borrowing systems which were
facing financial difficulties because their electricity sales had
not yet reached their planned load capacity, REA administrators
during 195U and 1955 increased their emphasis on programs to
develop the use of power in rural homes and on farms. Consumer
loans for home and farm electrical equipment are made b y some coop­
eratives direct, out of revolving funds. During 1955, one North
Carolina cooperative financed 300 refrigerators, 301 electric
ranges, 359 television sets, 179 washing machines, 66 home freezer's,
70 water heaters, U milking machines, 1 milk cooler, lit water systems
for farm use, and 32 farmstead wiring installations.
On the other hand, some REA borrowers have found that customer
demand has exceeded load capacity aid they are searching for additional
sources of power. In these cases, questions have arisen as to
whether the added power should come from private or public sources,
or from cooperatively owned generating plants. Such questions have
not been resolved on their technical merits alone, because of dif­
ferences of opinion as to the relative theoretical advantage of
public power vs. private power, and cooperatives vs. other forms
of business organizations.
In searching for new potential power sources, cooperatives have
not overlooked the possibilities of atomic energy, but have assid­
uously sought to enter the field. In 1956, the Wolverine Electric
Cooperative, Big Rapids, Mich.; the Chugach Electric Association,
Anchorage, Alaska; and the Rural Cooperative Power Association,
Elk River, Minn., started to explore with the Atomic Energy Commis­
sion the feasibility of developing atomic power production in these
areas. By the end of 1956, the Elk River Cooperative had passed
the preliminary stages, but it was still negotiating with AEC in
an effort to find the most economic and practical means of building
an atomic reactor.


T he r u r a l e l e c t r i c c o o p e r a t i v e s b e lo n g t o a n a t i o n a l a s s o c i a ­
t i o n , t h e N a t i o n a l R u r a l E l e c t r i c C o o p e r a t iv e A s s o c i a t i o n (NHECA),
o r g a n iz e d i n 1 9 U 2 , w h ic h c l o s e l y f o l l o w s g o v e r n m e n ta l m o v es a f f e c t t i n g i t s c o n s t i t u e n t s , i n c l u d i n g t h e i r a c c e s s t o f u n d s and p o w er
s u p p l i e s , and t e c h n i c a l a s s i s t a n c e . I t i s a m em ber o f t h e C o o p e r a ­
t i v e L e a g u e o f t h e U . S . A . , a n d h a s b e e n a v ig o r o u s p r o p o n e n t o f
f e d e r a l p o w er d e v e lo p m e n t , a n d o f REA*
T h u s f a r , C o n g r e s s h a s t a k e n n o a c t i o n o n r e c o m m e n d a tio n s b y
t h e H o o v e r C o m m issio n o n O r g a n iz a t io n o f t h e E x e c u t iv e B r a n c h o f t h e
G o v ern m en t w h ic h , i n t h e v ie w o f NRECA and t h e C o o p e r a t iv e L e a g u e ,
w o u ld s h a r p ly c u r t a i l t h e REA p rogram * 1 1 / N o tin g t h e h ig h p e r c e n t ­
a g e o f fa r m s now e l e c t r i f i e d , t h e C o m m issio n s a i d t h a t " th e tim e h a d
a r r i v e d t o r e o r g a n i z e REA i n t o a s e l f - s u p p o r t i n g i n s t i t u t i o n s e c u r ­
i n g i t s own f i n a n c i n g fr o m p r i v a t e s o u r c e s ." C o o p e r a t i v e s , and o t h e r
b o r r o w e r s f o r r u r a l e l e c t r i f i c a t i o n , h a v e b e e n a b le t o b o r r o w a t 2
p e r c e n t p e r y e a r fr o m REA, a n d h a v e h a d an i n i t i a l 5 - y e a r d e l a y o n
p a y m en t o f i n t e r e s t . M e a n w h ile a l l i n t e r e s t r a t e s h a v e r i s e n , a s
t h e m o n ey m a r k e t h a s t i g h t e n e d . T he C o m m issio n e s t i m a t e d t h a t c u r ­
r e n t g r o w th and r e p la c e m e n t r a t e s w o u ld c a l l f o r d o u b lin g t h e p r e s e n t
in v e s t m e n t i n t h e n e x t d o z e n y e a r s . T he p u b l i c u t i l i t y i n d u s t r y
a l s o e s t i m a t e s a g r e a t i n c r e a s e i n in v e s t m e n t i n t h e n e a r f u t u r e .
New u s e s o f p o w er o n fa r m s and i n fa rm h o m es r e q u ir e h e a v i e r
i n v e s t m e n t i n g e n e r a t in g e q u ip m e n t, p o w er t r a n s m i s s io n l i n e s , and
i n a p p li a n c e s an d f a c i l i t i e s u s i n g e l e c t r i c c u r r e n t . T h is m ea n s
t h a t t h e dem and f o r REA l o a n s w i l l c o n t in u e *
Som e r e a p p r a i s a l o f t h e a c t and i t s r e l a t i o n t o t h e r u r a l e c o n ­
omy w o u ld , h o w e v e r , a p p e a r t o b e i m p l i c i t i n P r e s i d e n t E is e n h o w e r ’ s
p r o g ra m f o r r e h a b i l i t a t i o n o f d e p r e s s e d r u r a l a r e a s . T h e u s e o f
REA p o w e r t o p r o m o te r u r a l i n d u s t r i e s and d i v e r s i f i c a t i o n o f t h e
r u r a l eco n o m y h a s b e e n d i s c u s s e d and i s t o som e e x t e n t now b e in g d o n e*
T e le p h o n e P ro g ra m
B e tw e e n O c to b e r 19h9 (w h en t h e p ro g ra m s t a r t e d ) , a n d N ovem ber
1 9 5 6 , REA h a d a l l o c a t e d a lm o s t $3U 0 m i l l i o n i n l o a n s f o r new o r
im p r o v e d d i a l t e l e p h o n e s e r v i c e t o o v e r 7 5 0 ,0 0 0 s u b s c r i b e r s i n r u r a l
a r e a s . A b o u t h a l f w e r e p r e s e n t an d h a l f w e r e e v e n t u a l b e n e f i c i a r i e s .
T he r o l e o f c o o p e r a t i v e s h a s n o t b e e n a s p r e d o m in a n t i n e x t e n d in g
t e le p h o n e s e r v i c e a s i n fa r m e l e c t r i f i c a t i o n . On t h e b a s i s o f l o a n s
a l l o c a t e d , num ber o f b o r r o w e r s , fu n d s a d v a n c e d , and num ber o f s u b ­
s c r i b e r s , t h e c o o p e r a t i v e s fo rm a b o u t h a l f o f t h e r u r a l t e l e p h o n e
p r o g ra m s o f REA. ( S e e t a b l e 1 1 . ) O n ly a b o u t 1 0 p e r c e n t o f fa rm
N l l / L e n d i n g A g e n c ie s . A R e p o r t t o t h e C o n g r e s s M arch 1 9 5 5 b y
C o m m issio n o n O r g a n iz a t io n o f t h e E x e c u t iv e B r a n ch o f t h e G o v ern m en t
(p p . 7 1 - 7 6 ) .

-3 1 -

T a b le 1 1 . — HEA t e l e p h o n e p r o g ra m , 191*9-56
N ovem b er

I te m
A m ount o f l o a n s a l l o c a t e d ( t h o u s a n d s )
To c o o p e r a t iv e s (th o u sa n d s) - - - P e r c e n t o f a l l lo a n s a llo c a te d -

$ 3 3 8 ,0 6 9
$ 1 7 5 ,1 7 1 *

T o t a l n u m b er o f REA t e l e p h o n e b o r r o w e r s
C o o p e r a t iv e s - - - - - - - - - - - P ercen t o f a l l borrow ers - - - - -


Funds ad van ced to b o rrow ers (th o u sa n d s)
To c o o p e r a tiv e s (th o u sa n d s) - - - - P e r c e n t o f a l l fu n d s a d v a n c e d - - -

$ 1 8 3 ,2 1 1

$ 1 0 l* ,l* 1 9

Nxurfcer o f p r e s e n t s u b s c r i b e r s - - - - C o o p e r a t iv e s - - - - - - - - - P e r c e n t o f t o t a l p r e s e n t s u b s c r ib e r s

3 8 7 ,9 8 2


S u b s c r ib e r s t o b e a d d ed (o n b a s i s o f a p p r o v e d l o a n s ) - - C o o p e r a t iv e s - - - - - - - - - - - - - - - - - - - - P e r c e n t o f t o t a l t o b e a d d ed - - - - - - - - - - - -


k ,66$

1 8 0 ,8 8 5

P r e s e n t p o le m ile s o f l in e - - - - - - - - - C o o p e r a t iv e s -- -- - ------------------ ---- -- — - P e r c e n t o f t o t a l p r e s e n t p o le m ile s o f l i n e
P o le m i l e s o f l i n e t o b e a d d ed (o n b a s i s o f a p p r o v e d lo a n s )!
C o o p e r a t iv e s -- -- -- - ------------- ---- - - - — - - - - !
P e r c e n t o f t o t a l t o b e a d d ed - - - - - - - - - - - -

2 2 ,3 8 0
5 ,6 2 1


1 9 1 ,8U2
1 2 3 ,1 2 1


S o u r c e : REA M o n th ly S t a t i s t i c a l B u l l e t i n , R u r a l T e le p h o n e P r o g r a m ,
N ovem b er and D ecem b er 1 9 5 6 .

•3 2 -

f a m ilie s w ith te le p h o n e s i n J u ly 1 9 5 5 , w ere se r v e d b y c o o p e r a t iv e s
and m u tu a ls * T he o t h e r 9 0 p e r c e n t w e r e s e r v e d h a l f b y t h e B e l l
S y s te m and h a l f b y in d e p e n d e n t c o m p a n ie s* 1 2 /
REA *s r u r a l t e le p h o n e p ro g ra m i s s t i l l v e r y y o u n g , a n d t h e
m a j o r i t y o f b o r r o w e r s a r e j u s t b e g in n in g t o m ake p a y m e n ts o n t h e i r
lo a n s * D u r in g t h e d e v e lo p m e n t a l s t a g e o f b o t h e l e c t r i c a n d r u r a l
t e l e p h o n e c o o p e r a t i v e s , REA d e f e r s a s u b s t a n t i a l p a r t o f t h e i r d e b t
s e r v i c e * (T h e d e fe r m e n t p e r io d o n t e le p h o n e l o a n s , h o w e v e r , i s
o n l y 2 t o 3 y e a r s , co m p a red w i t h a 5 - y e a r d e f e r r a l p e r io d o n
e l e c t r i c i t y lo a n s * )
T he num ber o f s u b s c r i b e r s s e r v e d b y c o o p e r a t i v e s w i l l r i s e a s
l o a n s now a l l o c a t e d a r e t r a n s l a t e d i n t o p o l e s an d l i n e s , b u t t h e
s u b s c r i b e r s o f t h e c o o p e r a t i v e s a r e i n m ore s p a r s e l y s e t t l e d a r e a s
t h a n t h o s e s e r v e d b y t h e c o m m e r c ia l c o m p a n ie s* T h e r e w i l l b e o n l y
1 * 5 s u b s c r i b e r s f o r e v e r y p o l e - m i l e t o b e a d d ed b y t h e c o o p e r a t i v e s ,
co m p a red t o 2 * 7 i n t h e d e v e lo p m e n ts p la n n e d b y c o m m e r c ia l c o m p a n ie s
w it h REA lo a n s *
I n 1 9 5 3 , b o t h t h e C o n g r e s s and t h e REA A d m in is t r a t o r a n n o u n ced
a p o l i c y o f e x t e n d in g t e le p h o n e s e r v i c e i n r u r a l a r e a s i n c o o p e r a ­
t i o n w i t h t h e e x i s t i n g c o m m e r c ia l t e le p h o n e i n d u s t r y . O n ly w h e re
t h e s e c o m p a n ie s w e r e u n a b le o r u n w i l l i n g t o e x p a n d , w o u ld REA lo a n s
and p e r s o n n e l t r a i n i n g p r o g r a m s b e u s e d t o a i d l o c a l c o o p e r a t i v e s
i n m e e t in g t h e n e e d *
T he C o o p e r a t iv e L e a g u e b e l i e v e s t h a t i n t h i s p r o g r a m , n o t
e n o u g h e m p h a s is h a s b e e n p la c e d o n t h e c o o p e r a t iv e s * On t h e o t h e r
h a n d , t h e REA s t a f f p o i n t s o u t t h a t i n m o s t s e c t i o n s o f t h e c o u n t r y ,
t h e c o m m e r c ia l c o m p a n ie s h a v e w o r k e d c l o s e l y w i t h t h e REA an d w i t h
t h e REA b o r r o w e r s i n d e v e lo p in g m o d e m t e l e p h o n e s e r v i c e * M a n u fa c­
t u r e r s and s u p p l i e r s o f t e le p h o n e e q u ip m e n t a r e a l s o c o o p e r a t in g b y
d e v e lo p in g l i n e and o t h e r m a t e r i a l s e s p e c i a l l y a d a p te d t o t h e n e e d
f o r lo w i n s t a l l a t i o n c o s t s i n r u r a l a r e a s , and t o t h e s p e c i a l m a in ­
t e n a n c e an d o p e r a t io n s p r o b le m s o f fa rm s e r v i c e * REA t e l e p h o n e
b o r r o w e r s m ay t a k e a d v a n ta g e o f j o i n t - u s e c o n t r a c t s f o r t h e u s e o f
p o l e l i n e s c o n s t r u c t e d b y t h e r u r a l e l e c t r i c i t y c o o p e r a t i v e s and
o th e r u t i l i t i e s t o rea ch d is t a n t o r w id e ly sp a ced s u b s c r ib e r s ,
t h e r e b y r e d u c in g t h e c o s t o f l i n e c o n s t r u c t i o n * A s a r e s u l t o f a l l
o f t h e s e f a c t o r s , t h e r e h a s b e e n a n i n c r e a s e i n th e nu m b er o f fa r m s
w i t h t e l e p h o n e s s i n c e t h e d e p r e s s i o n , w h en marry o f t h e s m a ll r u r a l
t e le p h o n e c o m p a n ie s w e n t o u t o f b u s in e s s * A c c o r d in g t o t h e U .S *
C e n su s o f A g r i c u l t u r e , a lm o s t h a l f o f a l l U *S* fa r m s (U 8 ,8 p e r c e n t )
h a d t e l e p h o n e s i n 1 9 5 U , co m p a red w i t h 3 8 02 p e r c e n t i n 1 9 5 0 , and
2 5 * 0 p e r c e n t i n 19U 0* 1 3 /
1 2 / “A g r i c u l t u r a l M a r k e tin g S e r v i c e S u r v e y , J u l y 1 9 5 5 * A c c o r d ­
i n g t o t h e sam e s u r v e y , a b o u t 5 l p e r c e n t o f fa r m e r s w i t h t e l e p h o n e s
had d i a l s e r v i c e , co m p a re d t o U5 p e r c e n t i n J u l y 195U *
1 3 / T h e R u r a l T e le p h o n e L o a n P r o g r a m , an REA S t a f f a r t i c l e ,
P u b l i c U t i l i t i e s F o r t n i g h t l y , O c to b e r 1 1 , 1 9 5 6 ( p . 5 9 9 ) *
424950 0 - 5 7 - 6

-3 3


U .S . D e p a r tm e n t o f A g r i c u l t u r e , R u r a l E l e c t r i f i c a t i o n A d m in is t r a t io n
--A n n u a l S t a t i s t i c a l R e p o r t . 195U a n d 1 9 5 5
REA B u l l e t i n 1 - 1 . R u r a l E l e c t r i f i c a t i o n B o r r o w e r s
— M o n th ly S t a t i s t i c a l B u l l e t i n s
E l e c t r i c P rogram a n d T e le p h o n e P ro g ra m
R u r a l E l e c t r i f i c a t i o n M a g a z in e (m o n th ly )
N a t i o n a l R u r a l E l e c t r i c C o o p e r a t iv e A s s o c i a t i o n , W a s h in g to n ,D .C .
Farm P o w e r ( m o n t h ly ) , f o r m e r ly C oop P o w er
Ith a c a , N. Y .

-3 U -

Medical Care Cooperatives
E f f o r t s t o p r o v id e c o m p r e h e n s iv e m e d ic a l c a r e on c o o p e r a t iv e
l i n e s tin d e r con su m er-m em b er c o n t r o l h a v e e n c o u n t e r e d m any o b s t a c l e s
i n t h e c o n s e r v a t i v e a t t i t u d e o f t h e m e d ic a l a s s o c i a t i o n c o n c e r n in g
m e d ic a l p r o f e s s i o n a l s t a n d a r d s , and i n t h e la w s b a r r in g t h e c o r p o r a t e
p r a c t i c e o f m e d ic i n e . T h e m e d ic a l p r o f e s s i o n s d e s i r e t o p r e s e r v e
p r o f e s s i o n a l s t a n d a r d s fr o m c o m m e r c ia lis m i s u n d e r s t a n d a b le . T he
p r o f e s s i o n * s u n w i l l i n g n e s s t o p u b l i c i z e t h e n am es o f c o o p e r a t in g
p h y s i c i a n s h a s h o w e v e r i n t e r f e r e d w i t h t h e p r o m o tio n a l c a m p a ig n s
f o r m e m b e r sh ip s t a g e d b y t h e h e a l t h c o o p e r a t i v e s . T h e A m erica n
M e d ic a l A s s o c i a t i o n a l s o o b j e c t e d t o c o n s u m e r - c o n t r o l o f c o o p e r a ­
t i v e m e d ic a l c a r e p r o j e c t s , w h ic h i s a b a s i c R o c h d a le p r i n c i p l e .
G r a d u a lly , h o w e v e r , o p p o s i t i o n r e c e d e d a s i t b eca m e c l e a r t h a t th e
d o c t o r s r e t a i n e d f u l l c o n t r o l o f t h e p r o f e s s i o n a l and t e c h n i c a l
s ta n d a r d s i n t h e c o o p e r a t i v e s ! m any la y - g r o u p s s o u g h t and o b t a in e d
d o c t o r c o o p e r a t io n fro m t h e o u t s e t .
T he d i s t i n g u i s h i n g f e a t u r e s o f c o o p e r a t iv e m e d ic a l c a r e p l a n s
m ay b e summed u p i n t h e f o l l o w i n g p r i n c i p l e s : P r e p a y m e n t, com p re­
h e n s i v e c a r e , g r o u p p r a c t i c e , o w n e r s h ip and m anagem en t o f f a c i l i t i e s
b y a v o lu n t a r y m e m b e r - a s s o c ia t io n , and d e m o c r a tic c o n t r o l o f t h e
e c o n o m ic a id b u s i n e s s a s p e c t s ( l e a v i n g t o t h e p h y s ic i a n s t h e d i r e c ­
t i o n o f t h e m e d ic a l s e r v i c e s ) . N o t a l l c o o p e r a t iv e m e d ic a l c a r e
p la n s p r o v id e a t t h e o u t s e t f o r g r o u p p r a c t i c e , a lt h o u g h t h e y g e n ­
e r a l l y a im t o d o s o u l t i m a t e l y . N o r a r e a l l g r o u p - p r a c t ic e p la n s
c o o p e r a t iv e i n fo r m , i . e . , c o n t r o l l e d b y t h e i r e n r o l l e d m e m b e r sh ip .
Sem e a r e s p o n s o r e d and c o n t r o l l e d b y p h y s i c i a n s ( f o r e x a m p le , th e
K a is e r F o u n d a tio n H e a lt h P la n o n t h e W e s t C o a s t ) .
T h e v a r i o u s t y p e s o f p r e p a id s e r v i c e p l a n s , i n w h ic h c o n s u m e r s
h a v e som e v o i c e , a r e sh o w n i n t a b l e 1 2 . I n 1 9 5 U , th e t o t a l num ber
o f p l a n s " w ith co n su m e r v o ic e " w a s 2 7 9 ; t h e n u m b ers e l i g i b l e f o r
c a r e , o v e r 8 m i l l i o n ; an d som e $ l8 2 .U m i l l i o n i n b e n e f i t s w e r e p r o ­
v i d e d . T h e s e t o t a l s s h o u ld b e c o n s id e r e d i n t h e p e r s p e c t i v e o f
a l l p e r s o n s c o v e r e d b y som e t y p e o f h e a l t h p r o t e c t i o n . I n 1 9 5 U ,
a c c o r d in g t o t h e H e a lt h I n s u r a n c e C o u n c i l, $ 2 . 7 b i l l i o n w a s p a id
o u t f o r h o s p i t a l , m e d ic a l , an d s u r g i c a l b e n e f i t s o r c a r e b y t h e
m e d ic a l e x p e n s e in d e m n ity p l a n s o f th e in s u r a n c e c o m p a n ie s , t h e
B lu e C r o s s an d B lu e S h i e l d p l a n s , and a l l o f t h e in d e p e n d e n t h e a l t h
s e r v i c e p l a n s , i n c l u d i n g t h o s e show n i n t a b l e 1 2 . T he nu m ber o f
p e r s o n s c o v e r e d a s e s t im a t e d b y t h e C o u n c il w a s o v e r 1 0 1 m i l l i o n
f o r h o s p i t a l i z a t i o n , 8 6 m i l l i o n f o r s u r g i c a l , and h7 m i l l i o n f o r
m e d ic a l e x p e n s e s . }h/
I n 1 9 5 U , t h e r e w e r e 2U h e a l t h p la n s r e g a r d e d a s c o n s u m e r m anaged c o o p e r a t i v e s , w h ic h m ade r e p o r t s t o t h e U .S . D e p a r tm e n t o f
H e a l t h , E d u c a t io n ,a n d W e lf a r e , T he nu m ber o f p e r s o n s e n r o l l e d i n
1 h/ The E x t e n t o f V o lu n t a r y H e a lt h I n s u r a n c e C o v e r a g e a s o f
D ecem b er 3 1 , 1 9 5 U , T h e H e a lt h I n s u r a n c e C o u n c i l, N ovem b er 1 9 5 5
(p p . 8 , 9 , 2 7 ) .
-3 5 -

T a b le 1 2 , - - M ed ica l c a r e prepaym ent p la n s , " w ith consum er v o i c e , ” 19l*9 and 1951*

Type o f a s s o c ia t io n


Number o f
Number o f : E x p e n d itu r e s
a s s o c ia tio n s : members f o r b e n e f i t s
th o u sa n d s)

Number o f : Number o f E x p en d itu res
a s s o c ia t io n s members f o r b e n e f it s
th o u sa n d s)
U 82.U O O
," 7,768,1*51

T o ta l ----------------------------------------------------


3 ,1 2 8 ,6 3 0

1 5 0 ,7 0 0

Consumer managed ( c o o p e r a t iv e ) -



U ,8 oo


3 3 3 ,U 5 l

6 ,8 0 0

U nion sp o n so red - —

- -- --


1 3 3 ,6 5 0




6 5 ,2 0 0

F r a te r n a l sp o n so red - - - - - -


(2 /)


2 2 1 ,9 0 0

2 ,0 0 0

E m p loyer-em p loyee sp o n so red - -

(1 /)




7 2 7 ,0 0 0

Em ployee sp o n so red - - - - - -


8 6 8 ,1 0 0 j'

1 8 ,3 0 0




E m ployer sp o n so red - - - - - -


2 3 3 ,8 0 0




1 5 2 ,0 0 0 J

Com m unitywide 2/~ -------


86U ,3 0 0

1 0 ,3 0 0



51*,io o

j 3,351*,n*3
1/ Some p la n s r e p o r t d ep en d en ts c o v e r e d , o th e r s do n o t* HEW e s tim a te s th a t a p p r o x im a te ly 6 2 5 ,0 0 0 d ep en d en ts
a re se r v e d b y t h e s e p la n s on a red u ced f e e b a s is * T h ese a re n o t en um erated i n t h i s ta b le * T h e ir in c lu s io n
w ould r a is e th e t o t a l shown t o a lm o st 8.U m illio n p erso n s*
2 / N ot r e p o r te d s e p a r a t e ly .
2/ S p o n so red o r m anaged b y b o a rd s r e p r e s e n tin g th e p u b lic *
S o u rce: U*S* D epartm ent o f H e a lth , E d u ca tio n ,a n d W e lfa r e , D iv is io n o f Program R e s e a r c h , O f f ic e o f th e
C o n m issio n er o f S o c ia l S e c u r ity *

s u c h p l a n s w a s l a r g e r I n 195k t h a n i n 1 9 U 9 , a lt h o u g h fe w e r p la n s
r e p o r t e d . T he num ber o f p e r s o n s e n r o l l e d f o r b e n e f i t s o f v a r i o u s
t y p e s i n 1 9$h w e r e : 3 2 3 * 0 0 0 h o s p i t a l , 3 1 9 ,0 0 0 s u r g i c a l , 1 5 5 ,0 0 0
m e d i c a l , 8 2 ,0 0 0 d i a g n o s t i c ( o n l y ) , a id l l i , 0 0 0 d e n t a l c a r e . The
u n d u p lic a t e d e n r o llm e n t w a s a b o u t 3 3 3 ,U 5 0 .
T h e C o o p e r a t iv e H e a lt h F e d e r a t io n o f A m erica (C H F A ,fo u n d ed 1 9 1 :6 ),
h a d 2 0 m em ber p l a n s i n 1 9 5 5 i n t h e U n it e d S t a t e s and C a n a d a . Sem e
o f t h e s e w e r e t h e d i r e c t s e r v i c e t y p e , o t h e r s w e r e t h e in s u r a n c e
t y p e , and s t i l l o t h e r s co m b in e d d i r e c t s e r v i c e and i n s u r a n c e . T h e
F e d e r a t io n a l s o h a d a s a s s o c i a t e m em bers 6 5 c o o p e r a t i v e , f a r m e r ,
and l a b o r o r g a n i z a t i o n s . 1 5 / I t s p ro g ra m i s t o a s s i s t i n t e r e s t e d
g r o u p s i n s e t t i n g u p c o n s u m e r -s p o n s o r e d m e d ic a l c a r e p l a n s ; t o
u r g e f a v o r a b l e l e g i s l a t i o n an d t h e r e m o v a l o f r e s t r i c t i o n s , l e g a l
o r o t h e r ; t o c o l l e c t fu n d s t o a id g r o u p s i n v o l v e d i n l i t i g a t i o n ;
t o r e n d e r t e c h n ic a l a d v is o r y s e r v ic e on o r g a n iz a tio n a l and o p er a ­
t i o n a l p r o b le m s ; an d t o s e t s t a n d a r d s f o r c o n s u m e r -s p o n s o r e d h e a l t h
p l a n s . CHFA s e e k s t o rem ove r e s t r i c t i v e l e g i s l a t i o n a g a i n s t fo r m a ­
t i o n o f c o n s u m e r -s p o n s o r e d h e a l t h p l a n s , and t r i e s t o e l i m i n a t e
d i s c r i m i n a t i o n a g a i n s t d o c t o r s w ho a s s o c i a t e t h a n s e l v e s w i t h g r o u p
h e a lth p la n s .
I n a d d i t i o n , t h e CHFA p r o m o te s h e a l t h e d u c a t io n b y d i s t r i b u t i n g
a r t i c l e s a b o u t h e a l t h ; b y p u b l i s h i n g m o n th ly n e w s l e t t e r s c o n t a i n in g
i t e m s o f i n t e r e s t o n c o o p e r a t i v e , u n i o n , and o t h e r g r o u p h e a l t h
p l a n s , a n d b y a c o lu m n i n w h ic h d o c t o r s d i s c u s s p e r s o n a l h e a l t h
p r o b le m s * S i n c e 1 9 5 0 , t h e F e d e r a t io n h a s a l s o c o n d u c te d a n a n n u a l
G rou p H e a lt h I n s t i t u t e , w h ic h b r i n g s t o g e t h e r r e p r e s e n t a t i v e s o f
g r o u p m e d ic a l p la n s i n t h e U n it e d S t a t e s and C a n a d a . I n 1 9 5 6 , t h e
a n n u a l m e e t in g v o t e d t o c h a n g e t h e nam e o f CHFA t o G roup H e a lt h
F e d e r a t io n o f A m e r ic a , i n o r d e r t o b r in g w i t h i n i t s s c o p e v a r io u s
p r e p a y m e n t g r o u p p r a c t i c e p l a n s w h ic h a r e n o t c o m p l e t e ly c o n s u m e r c o n t r o l l e d , b u t w h ic h a r e o r g a n iz e d u n d e r t h e n o n p r o f i t c o r p o r a t io n
la w s .
T h e common la w p r i n c i p l e p r o h i b i t i n g t h e p r a c t i c e o f m e d ic in e
b y a c o r p o r a t io n , w h ic h w a s in c o r p o r a t e d i n som e S t a t e m e d ic a l p r a c ­
t i c e l a w s , w a s in t e n d e d t o p r e v e n t i n j u r y t o t h e p u b l i c b y com m er­
c i a l e x p l o i t a t i o n and d e b a s e m e n t o f p r o f e s s i o n a l s t a n d a r d s . T he
d o c t r i n e h a s b e e n s e t a s id e i n f a v o r o f g r o u p - p r a c t ic e p la n s u n d e r
s a f e g u a r d in g c o n d i t i o n s , i n som e S t a t e s b y s p e c i f i c p e r m is s iv e
s t a t u t e , and i n o t h e r s ( n o t a b l y W a s h in g to n and C a l i f o r n i a , and t h e
D i s t r i c t o f C o lu m b ia ) b y c o u r t d e c i s i o n s , w h e r e i t w a s show n t h a t
g r o u p p r a c t i c e o f m e d ic in e w a s n o t o p e r a t e d f o r p r i v a t e p r o f i t , and
c o m p lie d w i t h p r o f e s s i o n a l s t a n d a r d s . T h u s , a b o d y o f la w t h a t
w o u ld e x c e p t n o n p r o f i t c o r p o r a t e h e a l t h o r g a n i z a t i o n s fro m t h e r u l e
1 5 > / A s s o c i a t e m em bers a r e i n d i v i d u a l s and o r g a n i z a t i o n s sym pa­
t h e t i c t o t h e p r i n c i p l e s o f p r e p a id g r o u p m e d ic a l c a r e and p r a c t i c e
b u t w h ic h a r e n o t t h e m s e lv e s s o o r g a n i z e d .


a g a i n s t c o r p o r a t e p r a c t i c e i s b e in g b u i l t u p . A r e c e n t c a s e i n
p o i n t i s t h e C a l i f o r n i a Su p rem e C o u r t d e c i s i o n , J u l y 1951+, i n
C o m p le te S e r v ic e B u r e a u v . S a n D ie g o C o u n ty M e d ic a l S o c i e t y , 1 6 /
w h e r e in t h e c o u r t fo u n d f o r t h e C o m p le te S e r v i c e B u r e a u , a g r o u p
m e d ic a l and h o s p i t a l s e r v i c e p la n *
I n 1 9 5 5 , t h e I o w a D i s t r i c t C o u r t d e p a r t e d fro m t h i s t r e n d i n
a r u l i n g w h ic h m ay h a v e s e r i o u s i m p l i c a t i o n s f o r g r o u p h e a l t h p la n s
and c l i n i c s , an d w h ic h h a s b e e n a t t a c k e d b y sp o k esm a n o f c o o p e r a t iv e
h e a l t h p l a n s an d u n i o n s . T he c o u r t d e c id e d t h a t i t i s i l l e g a l f o r
h o s p i t a l s t o e m p lo y p h y s i c i a n s p e c i a l i s t s o n a s a l a r i e d b a s i s , and
to c h a r g e p a t ie n t s f o r t h e ir p r o f e s s io n a l s e r v ic e s . The c o u r t con ­
c lu d e d t h a t t h e s e r v i c e s o f t h e s e s p e c i a l i s t s ( e . g . , p a t h o l o g i s t s ,
r a d i o l o g i s t s ) c o n s t i t u t e m e d ic a l s e r v i c e s , a n d u n d e r " . * * Io w a
1 su t h e p r i v i l e g e o f p r a c t i c i n g m e d ic in e i s a p e r s o n a l o n e r e q u i r i n g
q u a l i f i c a t i o n s w h ic h c a n n o t b e m et b y a c o r p o r a t io n ," i . e . , h o s p i t a l
o r c l i n i c . T he c o u r t r e a l i z e d t h a t t h e f a c i l i t i e s o f p a t h o lo g y and
X - r a y l a b o r a t o r i e s a r e e s s e n t i a l p a r t s o f m o d ern h o s p i t a l s , and
s ta te d t h a t w h ile i t i s l e g a l f o r th e h o s p it a ls to ch arge p a t ie n t s
f o r t h e i r u s e , t h e p a t i e n t s m u s t b e b i l l e d i n t h e nam e o f t h e p h y s i ­
c ia n f o r th e p r o f e s s io n a l s e r v ic e s o f th e p a t h o lo g is t and r a d i o l o g i s t * 1 7 /
T h is d e c i s i o n a p p l i e s e q u a l l y t o n o n p r o f i t c h a r i t a b l e h o s p i t a l s and
o t h e r h o s p i t a l s * S p o k esm en f o r c o o p e r a t iv e h e a l t h p l a n s a n d f o r t r a d e
u n io n s i n t e r e s t e d i n m e d ic a l c e n t e r s h a v e v o i c e d t h e i r f e a r s l e s t
t h i s d e c i s i o n i n t e r f e r e w i t h t h e o p e r a t io n o f t h e s e p l a n s , i n Io w a
and e l s e w h e r e , s h o u ld o t h e r c o u r t s f o l l o w t h e d e c i s i o n .
M o n p r o fit g r o u p h e a l t h p la n s c o n t r o l l e d b y p h y s i c i a n s ( t h e B lu e
S h i e l d p l a n s ) a r e p e r m it t e d , o r a u t h o r iz e d b y s t a t u t e , i n 2 8 S t a t e s ,
b u t t h e s e la w s h a v e b e e n l a b e l e d a s h o s t i l e t o l a y - o r g a n i z e d p la n s *
H o w e v e r , a c c o r d in g t o t e s t im o n y p r e s e n t e d t o C o n g r e s s i n 195U b y
CHFA, o n l y 1 5 o f t h e s e la w s w e r e s o r e s t r i c t i v e a s t o p r e c lu d e
a t t e m p t s b y la y m e n t o o r g a n iz e g r o u p h e a l t h p l a n s . I n 1 1 S t a t e s
t h e p o s s i b i l i t y o f o r g a n iz in g a c o n s u m e r -s p o n s o r e d p la n u n d e r o t h e r
s t a t u t e s e x i s t e d , a lt h o u g h t h e p la n m ig h t t h e n e n c o u n t e r a d v e r s e
r u l i n g s b y c o u r t s o r in s u r a n c e c o m m is s io n e r s . E le v e n S t a t e la w s
w e r e d e s c r ib e d a s o p e n t o e i t h e r t y p e o f p l a n , and 3 S t a t e s h a d
s e p a r a t e a c t s a u t h o r i z in g c o n s u m e r -s p o n s o r e d p l a n s . T he l e g i s l a t i v e
s i t u a t i o n c a n b e s t b e d e s c r ib e d a s u n c l e a r . H o w e v e r , c o n s u m e r s p o n s o r e d c o o p e r a t iv e p l a n s , f o r e x a m p le , G rou p H e a lt h i n W a s h in g to n ,
D .C ., an d v a r io u s g r o u p h e a l t h p l a n s i n M in n e s o t a , h a v e fo u n d i t
p o s s i b l e t o o r g a n iz e w it h o u t s p e c i f i c e n a b lin g a c t s , w h e r e n o s t a t u t o r y
p r o h ib itio n e x i s t s .
1 6 / 2 7 2 ( 2 d ) 1+97, C a l i f o r n i a , 1951+.
1 7 / D i s t r i c t C o u r t o f P o lk C o u n ty , I o w a . D e c i s i o n o f N ovem b er 2 8 ,
1 9 5 5 , J u d g e C . E d w in M o o re$ Io w a H o s p i t a l A s s o c i a t i o n , e t a l . v . Io w a
S t a t e B o a r d o f M e d ic a l E x a m in e r s , e t a l .

-3 8 .

Although Minnesota still lacks a law authorizing cooperative
health plans, a number of plans have been organized* During 1955
and 1956, notable expansions were underway in subscriber-owned
health clinics in Minnesota* 18/ Group Health Association of St*
Paul financed both the Arrowhead Health Center (West Duluth, Minn.)
which opened in April 1955, and a new Group Health Building housing
a medical and dental center for its membership in the Twin Cities,
completed in 1956. Local medical society opposition delayed the
staffing of these centers. In Milwaukee, plans for 1 or 2 health
centers for labor union members and for the members of the Coopera­
tive Health Insurance Plan were launched. The Two Harbors (Minn.)
Health Cooperative collected $115,000 out of an estimated $130,000
needed for construction of a clinic to provide physicians' offices
and laboratories. Each of the centers built is expected to serve
as a nucleus for extending prepaid medical care programs to surround­
ing areas.
A suit entered b y the Two Harbors (Minn.) Health Cooperative
against the St. Louis County Medical Association in 1952 was dis­
missed, at the instance of the plaintiffs, in June 1956. Greater
mutual understanding of the problems on both sidesj recognition of
good faith and sincerity of both parties; alterations in the manner
of operating the medical care plan; and separation of clinic facil­
ities, records, and funds from those of the adjoining hospital laid
the basis for reconciliation and the request to dismiss the suit.
In addition to those medical care plans operated by and far a
membership association formed for the particular purpose, seme plans
are sponsored by unions, fraternal organizations, and employer-employee
groups (table 12)• Certain organizational differences between these
groups and the pure Rochdale-type cooperatives do not seem sufficiently
important to warrant omitting a very extensive segment of the medical
care organizations from this study. Groups of potential patients
with a common bond of membership in a pre-existing association, or
of common employment would seem to qualify as consumer cooperative
Communitywide plans sponsored or operated by philanthropic
boards have also been included with the consumer-sponsored plans in
this study, for example, the Health Insurance Plan of Greater New
York (HIP), covering U71,U78 persons in 1956. HIP grew out of the
experiences of the municipal employees' credit union, which found
medical debts the most frequent cause for loan applications. The
18/ Minnesota has a "Blue Shield" law; however, this law,
"designed for the exclusive use of professional-controlled plans
does not require that all prepayment, medical care plans must be
organized under this act," according to the CHFA*


plan was started by a citizens' group, headed b y Mayor LaGuardia,
with the financial assistance of philanthropic foundations*
loan has since been repaid*) The organization is governed by a
board of directors representing large groups of users, although
not elected by them. It operates under the New York State insur­
ance laws* Groups enrolled in HIP include employees of the muni­
cipal departments and the city's transportation systems; employees
of the United Nations, and of certain State and Federal agencies
with offices in New York City; employees of almost 500 private
industries and businesses; members, and their families, of 2b local
unions, including hotel and restaurant workers, department store
workers, and painters; and tenants in certain cooperative housing
projects* Half of the premium is paid b y employers,except for
State and Federal employees. The entire premium for union members
is paid out of union welfare funds to which employers contribute;
the tenants pay their premiums along with their rent*
General medical care in a clinic, at heme, or in a hospital,
as well as surgical and maternity care, are provided through health
centers and panels of physicians and surgeons. For those living in
outside areas served by HIP clinics, cash indemnity payments are
made. At the end of 1955, subscribers were served by 30 affiliated
medical groups with 950 physicians. Hospitalization is taken care
of through additional premiums paid to Blue Cross. Dependents are
eligible for coverage.

Union Health Centers
In 1955, about 50 union-operated health centers, serving their
own members and frequently their families as well, were providing
diagnostic services and medical treatment for ambulatory patients.19/
Very few, however, provided home and in-hospital medical care. The
centers may be prevented from furnishing complete and comprehensive
care because of the difficulty of obtaining and keeping a full-time
medical staff, the opposition of local medical groups, and the dif­
ficulty of obtaining the large fluids required to finance the expen­
sive capital equipment and construction necessary for broader care.
Moreover, it is reported that members of group health centers often
do not fully utilize all the facilities of the clinic, preferring
the family physician, thus making it uneconomical to carry certain

19/ Writing about all types of group health centers, not only
union health centers, E. R. Weinerman, in Americal Journal of Public
Health, March 1956 (p. 305),reported that less than one-third of all
health center enrollments are made up of family dependents, although
family dependents incur some 75 percent of the average worker's over­
all medical costs.

Funds to operate union health centers are now usually provided
by the health and welfare funds to which employers contribute under
labor-management agreements. About 12 million workers were covered
by collectively bargained health and welfare plans in 1951*, accord­
ing to Bureau of Labor Statistics estimates. Not all those workers
had access to union health centers. Most of them were covered by
some type of insurance for hospitalization or medical and surgical
care, or both, or received cash indemnity.
The health centers were in many cases operated by local unions,
or groups of local unions, but sometimes by an international union.
The executive board usually appoints the Medical Director, after con­
sultation with an advisory medical committee. Union members through
their local meetings or international conventions receive reports on
the health centers and have an opportunity to voice suggestions or
criticises, in much the same manner as do the members of a Rochdaletype health cooperative. However, since a great deal of other busi­
ness is also transacted at such meetings, and the membership attend­
ing the centers may not coincide with the members or delegates attend­
ing these meetings, the consumer-control is not as direct as in the
case of the Rochdale groups. Benefits and savings may, however, be
very similar.
The International Ladies' Garment Workers* Union (ILGWU) pio­
neered in developing a union health center, when it established a
diagnostic clinic in New York City in 1913, only shortly after the
union itself had been organized, as a part of its drive to eliminate
insanitary workshops and to control tuberculosis. Starting with
free health examinations for new entrants into the union, and cer­
tification of members receiving sickness pay, the Union Health
Center in a few years added medical and diagnostic services, at a
nominal charge* In 1935* the center moved to 6 floors of a 27-story
structure owned by the International on Upper Broadway. In 191*5,
employers started making contributions (from 1 to 5 percent of pay­
rolls) to a collectively bargained health and welfare plan. This
plan then took over financing the center. Fees for most services
were abolished and new facilities and equipment (costing over $3*5
million) were added. In 1955, the center served 50,000 patients
among the union's 200,000 members in New York City, at a total cost
of $1,750,000, through examinations, physical and X-ray therapy,
various kinds of tests and diagnoses, nutrition services, and a
In addition to the center in New York, the ILGWU and its local
organizations operate 12 other diagnostic centers in the United
States and 1 in Canada on premises which they own; most of these
have been established in recent years. In 7 other cities in the
United States, diagnostic services are provided for the union mem­
bership in centers which are operated either jointly with other

unions (e.g., Associated Medical Center of Baltimore), or byarrangement with a private clinic (Minneapolis), or with a panel of
doctors and technicians on a fee-for-service basis (San Francisco),
or b y other arrangements. In August 1956, the ILGWU outfitted a
35-foot long custom-built mobile health unit, at a cost of $U0,000,
to provide medical services to garment workers in Puerto Rico.
Until a health and welfare fund is established, the union will meet
the costs of operating the unit.
The Amalgamated Clothing Workers of America operates U health
centers, 2 in New York, 1 in Chicago, and 1 in Philadelphia; the
2 oldest were set up in 1951. Management and labor shared in finan­
cing the construction of the Sidney Hillman Medical Centers in New
York and Philadelphia, and management contributes a percentage of
payrolls towards maintaining the services. The health centers*
board of trustees are composed of equal numbers of union and employer
representatives. A medical advisory council, composed both of staff
and outside physicians, sets the standards for the professional and
technical services, reviews physicians* qualifications, and makes
recommendations on appointments to the board of trustees. Ambula­
tory patients are provided with complete general medical, diagnos­
tic, and therapeutic care. Medication is furnished at nominal charge.
Workers and their wives are eligible for treatment. In New York,
each worker pays $10 per year or $20 for himself and wife, after
his local has voted to join. Clothing workers in Rochester, N.Y.,
and Allentown, Pa., are making plans for health centers to be opened
in the near future.
Other unions which have furnished diagnostic and ambulatory
medical care for their members and their dependents are the Central
Labor Union of Philadelphia, which sponsored the AFL Medical Center
in Philadelphia for 32,000 members of 27 unions and their 20,000
dependents; the Ladies Garment Workers' locals and several other
unions in the Baltimore area, which are sponsoring a new Associated
Medical Center of Baltimore; the Amalgamated Laundry Workers, who
operate a Health Center in New York City, in April 1956, extended
the services of this Center to pensioners covered by the Clothing
Workers retirement plan; and 76 local unions in Arkon, Ohio, which
opened an optical clinic to supply lenses and frames at substantial
savings to members and their families— the clinic adjoins the
cooperative supermarket.
The Labor Health Institute of St. Louis is one of the very few
labor health centers that provides free comprehensive medical, sur­
gical, and dental care in its clinic, at home, or in the hospital,
for union members and their dependents. It serves 6,500 members of
a teamsters' local (mainly warehouse workers) and 7,600 dependents.
It is chiefly financed by employer contributions to a health and
welare fund of 5 percent of gross payrolls. This covers the cost of
service to both employees and family dependents. A few companies
have agreements providing for a contribution of 3 i percent of gross
payrolls, but this covers employees only; family dependents are
charged for services to them. Responsibility for formulation of

policies governing LHI, for general administration, and for super­
vision of all affairs of the corporation rests with the Board of
Trustees, which is elected by the union membership* The Board may
include representatives of management, labor, and the general public.
The union is also planning to build a health and rehabilitaion
center for its members on a 218-acre tract near St. Louis, to be
financed by the same fund.
The United Mine Workers Welfare and Retirement Fund, collected
through a royalty on every ton of coal mined, pioneered in bringing
m o d e m medical service to the remote and backward communities in
the coal fields. From the start of its operations in 19U7, the fund
sought the advice and cooperation of leading physicians and of the
American Medical Association as well as its local societies* Local
opposition and friction incidental to the program were gradually
overcome. In June 1956, a chain of 10 new hospitals was dedicated.
They were built, equipped, and staffed by the fund, to serve coai­
ming communities in the Appalachian region stretching from south­
eastern Kentucky through Virginia and West Virginia, an area almost
devoid of proper medical and hospital facilities. The receipts of
the hospitals will be used to retire the loans made by the fund to
build the hospitals.
All of the medical activities of the Mine Workers* health and
welfare fund are directed b y Dr. Warren F. Draper, former deputy
surgeon general of the U.S. Public Health Service. In-hospital
medical and surgical care (either in these hospitals or outside of
the area in other hospitals), and certain limited services and drugs
for outpatients, are provided by the ftrnd for working miners, unem­
ployed miners, or retired miners, provided the last employment was
in a "classified" job in mines belonging to an operator who had
signed the agreement; for their wives, children up to age 18, or 21
if physically or mentally incapacitated; for parents of the miner
or of his wife if living with and dependent on the miner; andfbr
widows and survivors while receiving authorized special monthly
benefits. Employment outside the coal industry terminates eligi­
bility and reemployment requires reinstatement subject to the rules
and regulations of the fund.
The 195U-55 expenditures by the fund for medical aid in-hospital
care totaled $h2,77U,000 for 95,800 beneficiaries; 23 percent were
working or temporarily unemployed miners who received 31 percent of
the benefits. About half of the total expense was occasioned by care
for dependents. The remainder was spent for care of permanently dis­
abled and retired miners and their dependents, as well as widows and
orphans. The fund had already (in July 1950) discontinued ambulatory
office medical care, and heme treatment for miners and their families
because of the great expense.
The fund has 3 trustees, 1 each selected by the union and the
operators, and 1 neutral member selected by the other 2. The present
neutral trustee, Josephine Roche, also serves as director of the fund


U.S. Department of Health, Education,and Welfare,
Social Security Administration, Division of Research and Statistics,
Social Security Bulletins:
— The Growth of Voluntary Health Insurance 19U8-51;. December 1955
— Independent Plans Providing Medical Care and Hospital
Insurance: 195U Survey, by Agnes W, Brewster. April 1955
— Voluntary Insurance Against Sickness: 19U8-53 Estimates.
December 1951:
Independent Plans Providing Medical Care and Hospitalization
Insurance in 19U9 in the United States, 1950 Survey.
Bureau Memo. 72

U.S. Department of Labor, Bureau of Labor Statistics,
--Digest of One-Hundred Selected Health and Insurance Plans
under Collective Bargaining, 195U. BLS Bull. U 8 0
— Health, Insurance, and Pension Plans in Union Contracts,
October 1955. BLS Bull. 1187

U.S. House of Representatives, Committee on Interstate and Foreign
— 83d Congress, Hearings on Health Inquiry (Voluntary Health
Insurance), Part 6, Available health plans and group
insurance programs, January-February 195U

U.S. Senate, Committee on Labor and Public Welfare
— 83d Congress, Hearings before the Subcommittee on Welfare
and Pension Funds, Parts 1, 2, 3. March, April, July,
November, and December 1955

The Health Insurance Council, The Extent of Voluntary Health
Insurance Coverage in the United States, as of December 31, 195U.
Published November 1955

The Cooperative Health Federation of America and Its Member Plans,
Chicago, 1950, 1955

American Medical Association
— Journal of the AM A. Various issues, 1955-56
— A Survey of Union Health Centers, AMA. Committee on Medical
Care for Industrial Workers of the Council on Medical
Service and Council on Industrial Health, 195U


American Journal of Public Health
— Brumm, John M., Some Issues Raised b y Union Health and
Welfare Plans, February 1955
— Weinerraan, E. Richard, An Appraisal of Medical Care in
G^oup Health Centers, March 1956

Chamber of Commerce of the United States
— Major Medical Expense Insurance, February 1956.
— A Look at Modern Health Insurance, 1955

Davis, Michael Marks, Medical Care for Tomorrow.
New York. 1955

33 pp.

Harper & Brothers,

Amalgamated Clothing Workers of America
— General Executive Board Report, 20th Biennial Convention,
May 1956
— The Amalgamated Welfare Plan, Biennial Report, 1951^-55
— Ever Forward:
Forty Years of Progress, A Short History
of the Amalgamated Clothing Workers of America
— Health Security by Union Action, A Report on the Sidney
Hillman Health Center of New York, May 1952
— Brand, Morris A., The Medical Service Program of the Sidney
Hillman Health Center of New York, October 2U, 1952
— The Picture that Came to Life, A Story of the Sidney
Hillman Medical Center of the Male Apparel Industry of
Philadelphia, December 1951

International Ladies' Garment Workers' Union
— Report of the General Executive Board to the 29th Convention,

M ay 1 9 5 6

— Financial and Statistical Report, April 1, 1953, to March 31, 1956
— The Thread of Life. ILGWU Health aid Welfare Services, May 1956
— Financial Report of the Health, Welfare and Retirement Funds,
January 1, 195U,to December 31, 1951:

Union Health Center, International Ladies' Garment Workers' Union
Industrial Medicine and Surgery, October 1953 (p. U89)


Labor Health Institute, St* Louis, Mo.
— Goldman, Franz and Graham,Evarts A*, Hie Quality of Medical
Care Provided at the Labor Health Institute, 19 5 k
— Simon, Nathan M. and Rabushka, Sanford E., A Trade Union and
Its Medical Service Plan, 195U
— Annual Report of the Labor Health Institute, July 1, 195>3>to
June 30, 19 5 k

American Federation of Labor.
April 5, 195U

Medical Service Plan of Philadelphia,

United Mine Workers of America
— Welfare and Retirement Fund. Report for the Year Ending
June 30, 1 9 5 5
— Press Information. March 30, 1956,to June 2, 1956

Hospital and Medical Care Plans.
Washington, D. C.

Miners Memorial Hospital Association,

Cooperative Housing
Housing developments built and owned by groups of cooperators
are still rare in the United States. The costs in time spent by
members, and the risks involved in planning and execution of a
housing project from the ground up, are high for inexperienced
would-be homeowners. In order to take full advantage of legislation
passed to encourage middle-income housing at low cost, and in order
to ensure a well-designed project, the services of architects,
engineers, draftsmen, and legal experts must be employed. These
expenses can be included in the cost of construction and covered
by the mortgage. However, a sponsor must assume responsibility and
provide experienced leadership. Such sponsors are frequently private
builders, and also unions, civic and educational groups, veterans'
organizations, or other cooperatives (e.g., certain very large credit
unions). Assistance in organizing and in obtaining the technical
services needed is provided on a nonprofit basis by the United
Housing Foundation with its allied Community Services Inc., and by
the Foundation for Cooperative Housing.
Legislation in aid of cooperative housing has been passed by
Congress and by the State of New York. Section 213, added to the
National Housing Act in 1950, and amended in 195U and in 1956,
authorizes the Federal Housing Administration to insure long-term
mortgages made by lending agencies to cooperative corporations or
trusts to provide housing for members; the Federal National Mort­
gage Association was authorized to purchase cooperative mortgages
up to $5 million per State, or a total of $50 million to be used
as a revolving fund.
In New York State, cooperative housing projects have been built
under the urban redevelopment law (19U3) or the limited-dividend
housing companies acts (1926 and 1955). Under these laws, condemna­
tion powers could be exercised and tax reductions or exemptions
granted for a period of time, provided the project was supervised
by a public authority.
In disposing of wartime housing projects, after World W a r II,
preference was given, at the direction of the Congress, to groups
of veterans organized on a mutual ownership or cooperative basis.
More than 20 housing projects were sold b y the Government to vet­
erans' mutuals, as well as the town of Greenbelt, Md.
Of all of the cooperative projects with mortgages insured
under Section 213 as of December 1956, sales-type cooperative
projects, in which dwelling units are sold outright after construc­
tion to individual owners, accounted for 37 percent of both the
dollar volume of mortgages and of the number of dwelling units.
Management-type cooperative projects, in which a residents' coop­
erative manages the property (usually an apartment house), accounted

Table 13•— Cooperative housing projects under Section 213 of National Housing Act, 1950,
May 1953 and December 1956

Number of

Percent change in—










$1,198.1 i





l[ 36,269


3l£.9 j


Mortgages insured since 1950Eligibility statements
expired since 1950 - - - Cases withdrawn since 1950 Cases rejected since 1950- Commitments outstanding - - !
Applications in process - s


211 i 17,501
173 i 1,619
197 j 18,032

1------ I______ l--------


Mortgage value
(in millions)

Total applications received
since 1950 - - - - - - - -

Number of
dwelling units

Federal Housing Administration


25,865 I 165.3
5,20ii ! 16.3
12,166 ! 171.1



units \ Value


187.2 < 393
209.3 i
65.5 1,630



U7 .... |






1 33U
! 52
! 302
| -19

for the other 63 percent of mortgage value and dwelling units. The
sales type units were heavily concentrated in California. Over 85
percent of the mortgage volume of the management-type was located
in New York.
The cumulative status of the nationwide cooperative housing
program under Section 213 as of the spring of 1953 and as of Dec­
ember 31, 1956, is diown in table 13. Mortgages worth $3^6 million
have been insured since 1950 on projects with 36,269 dwelling units.
Mortgages and dwelling units increased 78 and 73 percent, respec­
tively, since May 1953*
In 1955, new regulations were promulgated following amendments
to the law in 195U, which were expected to assist labor and other
groups to form cooperatives which will then negotiate with builders.
But this has not yet occurred. The number of sales-type projects
increased much more than the management-type, between May 1953 and
December 1956.
A council of presidents of FHA Section 213 cooperatives, now
owning and managing properties which were built under privatebuilder sponsorship, reports that the occupants of these apartments
are well satisfied with the benefits they have derived from the
Section 213 program,"even though the builders made considerable
profits by building under that program." Builders’ profits under
Section 213 have been subject to more rigid controls, however,
than those applicable to other sections of the act.
In the great majority of projects up to May 1953, the builder
was the sponsor. A few projects, with about 10 percent of the
dwelling units, financed under Section 213,were initiated or spon­
sored by consumers themselves, or by builders and consumers together,
according to testimony presented by the Cooperative League of the
U.S.A., in May 1953. 20/ Since that time, union and other nonprofit
groups have come forward in increasing numbers as sponsors of largescale cooperative developments; most are not under Section 213.
Many of these cooperatives sponsored by nonprofit groups are
located in and around New York City. By October 1956, cooperative
apartment developments built in the New York metropolitan area,
under New York State’s housing acts, could accomodate approximately
9,700 families. 21/ Cooperative projects still in the planning

20/ (J.S. Senate Committee on Banking and Currency,Hearings
on Housing Act of 1955, 8Uth Cong., 1st sess. Statement of Wallace
J. Campbell, May 13, 1955 (pp. 210-221).
21/ See p. 50.


stage are expected to house about ll*,000 additional families. 22/
A novel development is the sponsoring of a $6 million cooperative
apartment for 1*00 middle-income families by the Municipal Credit
Union (New York City) and the State Credit Union League. The credit
union has 1*0,000 members and assets of $11 million. The project
will be of the slum-clearance redevelopment type.
In addition, a total of 87 multdfamily projects, with mort­
gages insured under Section 213 of the Federal Housing Act (1950),
were built in and near New York City between 1950 and April 1956,
housing l8,i>00 families. Extensive as were the completed coopera­
tive projects, in the spring of 1956 they contained only about 20
percent of the 11*0,000 dwelling units in New York City which at
that time had received sane type of Federal, State*or city aid.

2 l / T h e following list of cooperative apartment developments
in the New York metropolitan area in 1956 may be incomplete, partly
because different sources do not agree on which projects should be
described as cooperative:
Number of
dwelling units
Amalgamated Clothing Workers of America - - - International Brotherhood of Electrical Workers,
Local #3* Electchester project - - - - - - International Ladies' Garment Workers' Union- Veterans' mutual housing - - —
--------- -Harry Silver - - - - - - - - - - - - - - - - Ridgewood - - - - - --- - - - - - - - - - - - Queensview - - - - - - - - - - - - - - - - - Kingsview - - - - - - - - - - - - - - - - - - Total dwelling units - - -


Source: Annual Report, New York State, Commissioner of
Housing, 1951*$ New York Times, various issues; and United
Housing Foundation, Coop Contact, October 10, 1956.

Proposed cooperative apartment projects, in 1956:

New York Building Trades Council (5 projects) 9,000
Bakery and Confectionery Workers' International
Union (12 apartment houses)- - - - - - - - 2,000
International Brotherhood of Electrical Workers,
Local #3* Switchboard operators branch project
Credit unions - - - - - - - - - - - - - - - - 1*00
Queensview W e s t ------- ------------------ —
Park-Reservoir Housing Corporation - - - - - 289
Seward Park - ----------- ---------- ---------- -l,70l*
Total dwelling units - - Source:

New York Times, various issues.


Trade Union Cooperative Housing Developments
The Amalgamated Clothing Workers of America and the HosieryWorkers pioneered in sponsoring and planning housing for wage earners
and middle-income families, in New York City and Philadelphia, in
the 1920*s. Financing was provided b y individuals, insurance com­
panies, savings banks, and the Amalgamated Bank of New York.
Tenancy in the projects is not limited to the union membership,
and in the course of time either family or industry migrations have
radically altered the occupational composition of the tenants* Slum
clearance and provision of low-cost housing for wage and salary
earners have been the primary considerations, with housing for the
union membership secondary. Each of the 3 Amalgamated projects 23/
is a true tenants’ cooperative, the tenants owning shares represent­
ing their equity investment but exercising 1 vote each regardless
of the number of shares held. The 3 projects have as manager a
long-time leader in cooperative housing and urban development—
Abraham E. Kazan. The Amalgamated Housing Consumers' Society
(Bronx, N.Y.) operates a retail store, laundry service, milk dis­
tribution, a nursery school, and summer day camps for children.
There is also a tenants' credit union.
The International Ladies' Garment Workers' Union Cooperative
Village, in the Corlears' Hook section of lower Manhattan, was
officially dedicated in October 1955. It houses 1,668 families
(of whom about one-third are families of garment workers) in U
structures 20 or 21 stories high, with its own playground and
shopping center. The ILGWU holds a mortgage for $15 million, and
the owner-tenants provided about $H*5 million. This project and
the Hillman Houses of the Amalgamated were constructed under New
York's urban redevelopment law, which provides for certain realestate tax concessions in order to promote slum clearance.
The Industrial Union of Marine and Shipbuilding Workers
sponsored a number of housing projects, of which a project at
Camden, N.J., has been in operation since 19Ul; the United Rubber
Workers, in conjunction with the Veterans of Foreign Wars, com­
pleted a 315 home unit in 1950 in Mishawaka, Ind.
The International Brotherhood of Electrical Workers, Local #3,
together with their principal employers in the New York City area,
through the industry's joint board, provided mortgage financing
for a $22 million housing development in Flushing, of which various
sections were completed between 1950 and 195lu The New York limited
dividend mutual-ownership housing program provided the project
partial tax emption. The apartment s are tenant-owned. Covering
60 acres, some of the buildings are 3-story walk-ups, others are
6-stories with elevators? the project houses 2,200 families.
23/ Amalgamated Houses (Bronx, 1927 with later additions),
Amalgamated Dwellings and Sidney Hillman Houses (Grand Street).


Unions with pension, and health and welfare funds to invest
are showing increasing interest in cooperative low-cost housing
The Switchboard Division of Local #3 voted in January 1956
to sponsor a U00 apartment cooperative housing project, working
together with the United Housing Foundation, to be financed by
its pension fund*
The New York Building Trades Council in January 1956, announced
plans to build 5 cooperative apartment housing projects— 1 each in
Manhattan, Brooklyn, and Queens, and 2 in the Bronx— out of union
health and welfare funds. The building unions have well over $100
million in their pension and welfare funds. The units are to
accommodate about 9*000 families*
The New York Millinery Workers Health and Welfare Fund, which
finances certain medical services to its members, has decided to
sell up to $7 million in presently held Government bonds and use
the money to develop cooperative housing in the New York City area*
The union is the United Hatters, Cap and Millinery Workers Inter­
national Union (AFL),
In March 1956, the Board of Estimates in New York City approved
a $27*5 million middle-income cooperative apartment housing project
in the Bronx sponsored by the Bakery and Confectionery Workers
International Union of America* The project, to be known as Sound
View Park Homes, will consist of twelve 13-story buildings housing
2,l8U families at approximate rental of $26 a room a month*
The investment of union health and welfare or pension funds in
housing programs presents several problems, which were discussed in
the 1956 Report on Pension Funds and Housing Investment by the New
York State Commissioner o£ Mousing: "Can a way be found by which
pension funds can be invested in housing at a rate of return high
enough to be attractive, with a proper degree of security, and
resulting in rents or monthly carrying charges low enough to enable
middle-income families to afford it," he asks* He has found that
many pension fund trustees are inexperienced in buying and servicing
mortgages and reluctant to enter the field, particularly when the
return on the investment is low, or when the project may benefit
only a limited portion of the union's membership. Moreover, many
of the funds are too small to finance large-scale housing projects,
and legal limitations restrict the rights of trustees to purchase
parts of mortgages or to pool such funds in order to invest in
large mortgages. 2k/
2k j Existing New York statutes limit trust funds to investing
in first mortgages and only up to two-thirds of the value of the


To help overcome some of these difficulties, the New York
State Housing Commissioner has recommended creating by special
statute some type of quasi-public financing institution which
would have the power to invest in mortgages up to 90 percent of
the project*s value and to combine its funds with those from other
sources. Trust funds could be authorized to invest in debentures
of this institution b y adding it to the list of legally authorized
investments, thereby encouraging the investment of these trust
funds, without legal and practical obstacles, in middle-income
In 1955, the State enacted a provision for direct loans to
limited-dividend housing companies, by either the State or a city,
of amounts up to 90 percent of actual costs.
The Cooperative League of the U.S.A. has repeatedly requested
similar federal legislation authorizing direct loans to housing
cooperatives. An amendment to the Federal Housing Act, introduced
in 1956, sponsored b y a group of Senators, proposed to create a
National Mortgage Corporation to borrow in the private money
market, and to lend to moderate-income families or to nonprofit
cooperatives composed of such families. Moderate-income families
were defined as those families unable to obtain (by rent or purchase)
conventionally financed new housing with monthly payments amounting
to 20 percent of their usual annual income.



Kazan, Abraham E., Union Cooperative Housing, in The House of Labor,
Hardman and Neufeld, eds., Prentice-Hall, Inc,, New York, 1951

U,S. Senate, Committee on Banking and Currency
— 83d Congress, Hearings on FHA Investigation, Parts 2 and 1*,
July-November 1951*
~81*th Congress, Hearings on Housing Act of 1955

U,S, House of Representatives, Committee on Banking and Currency
— 8lst Congress, Hearings on Cooperative Housing,
January-February 1950

New York State, Division of Housing, Commissioner of Housing
— Our Cities, Our Children and the Future,
195U Annual Report
— Report on Middle Income Housing in New York State,
January 26, 1956
— Report on Pension Funds and Housing Investment,
March 15, 1956

International Ladies' Garment Workers' Union. Report of the
General Executive Board to the 29th Convention, M a y 10, 1956

Amalgamated Clothing Workers of America, Twentieth Biennial
Convention, General Executive Board Report, May 21-25» 1956

Housing Cooperatives in the United States, 19U9-50
Joint Publication of the Division of Housing Research,
Housing and Home Finance Agency, and Bureau of Labor Statistics,
U,S. Department of Labor,
Bull. 1093, 1951

United Housing Foundation. What every cooperator should know.
A guide to Cooperative Housing. New York, N.Y, M a y 1955

Part H :





Cooperatives are found throughout the world* Comprehensive
coverage of foreign consumer cooperative movements was not fea­
sible in this report. Therefore, those selected for inclusion
were the ones with which the United States cooperatives have had
the closest economic and cultural ties, namely, those in Canada,
Great Britain, and the Scandinavian countries*
In other European countries cooperatives have also had a
long and significant history* In many countries of Asia, Africa,
and in Latin America, the cooperative form of business organiza­
tion is being put to economic and social uses in their developing
economies* In many of the less developed countries, credit coop­
eratives have been the first type of cooperative organized and
they are frequently the predominant form of cooperative organiza­
tion. Both the International Labor Organization (ILO) and the
Food and Agriculture Organization of the United Nations (FAO)
have given technical assistance to governments interested in
promoting cooperatives in Latin America, and the Far East. While
many of these cooperatives are producer or community-service
cooperatives, consumer cooperatives also have received attention.
Cooperatives in the United States are represented in the
International Cooperative Alliance (lCA),now in its 6lst year,by
the Cooperative League of the U.S.A. and b y the Consumer Coopera­
tive Association of Kansas City, one of the large farmers' whole­
sales. The ICA has 73 member organizations in 38 countries, with
total membership of 118 million persons. It holds triennial con­
gresses to discuss matters of common concern and to receive the
reports of committees appointed to study technical aspects of
cooperation. Among recent reports are those on international
trading by cooperatives,and national legislation and restrictive
practices hindering retail trade (with particular reference to
the trade of cooperatives).
The ICA was one of the first nongovernmental organizations
selected to be a permanent advisor to the United Nations, with
the right to propose items for the provisional agenda of the
Economic and Social Council (ECOSOC). It received similar recog­
nition from ILO, FAO, and UNESCO. It has worked with regional

-5 5 -

commissions of the UN, in bringing technical assistance on coop­
eration to •underdeveloped areas, and is aiding in the solution of
economic and social problems in many countries at varying stages
of development*
Cooperative leaders from the United States have participated
in several international technical conferences on cooperation,
and numerous teams of foreign cooperative administrators have
visited cooperative supermarkets and farm supply and service coop­
eratives in the United States under technical assistance programs
financed by the United States Government.
Through participation in the formation of an international
cooperative bank, the first institution of its kind, certain lead­
ing American cooperatives 25/ have provided more tangible assist­
ance to their counterparts in Europe. The bank was organized in
Switzerland, in July 1956, for the purpose of making loans to
member cooperatives to aid in more efficient distribution programs
and possibly in production of needed goods and services as well*

Cooperatives in Trade
Cooperatives for the sale of merchandise to members have
been organized chiefly by farmers in Canada* Overall statistics
on urban retail cooperatives are lacking* However, consumer goods,
such as food products and clothing, constituted almost one-third
of cooperative retail sales in Canada in 195U and 1955, a larger
proportion than in the United States* Farmers 1 productive supplies
accounted for 35 to I4.O percent, Petroleum products, fuel,hardware,
and electrical equipment (which are partly for household and partly
for farm use) accounted for approximately another 30 to 33 percent
of the Canadian farm cooperative retail sales (see table lU). In
all categories except petroleum products 1955 sales were slightly
below 195 U sales.
Among the leading urban consumer cooperatives in Canada, one
at Sydney Mines, Nova Scotia, has been in operation for half a
century* It serves its membership (U,300 in 1956) with 7 stores,
a bakery, a milk plant, and 2 service stations* It is estimated
that its sales for 1956 will reach the $3 million mark. Patronage
2 5 7 “"In addition to the central cooperative federations of 1 1
Western European countries, the Cooperative League of the U.S.A.,
Nationwide Insurance Co., Midland Cooperatives, Inc., the Mutual
Service Insurance Co., and Group Health Mutual of the U.S., have
subscribed to the bankfe capital stock of $ 300,000,

-5 6 -

Table lli.— -Canada:

Cooperatives’ retail trade, 195U and 1955





Total --------------------


! Number
Volume l
thou- fPercent associa­







Food products- - - - -- -


61 ,1*62



Clothing - - - - - - - - -





Hardware, electrical
equipment, etc. - - - - - |
Petroleum products - - - - 1









1 32,127 j 13.7

Feed, seed, and fertilizer






J 77,063 ( 32.8

Machinery- - - - - - - - -






f 12,088

Coal and wood






| 17,985 !


* 21,682 |




- - -

9,780 |


- —







Cooperative stores handled 58 percent of all cooperative sales in 1951*.
The other 1*2 percent were handled chiefly by bulk distribution, or delivered
from gasoline depots or coal yards.
Source: Canada Department of Agriculture, Marketing Service, Economics Divi­
sion, Co-operation in Canada, 1951* and 1955 (Annual Summary).


refunds paid over a period of 50 years averaged 6.6 percent of
sales annually.
(This society also paid one-half million dollars
in interest on invested capital during the same period.) Another
leading urban consumer cooperative, located in Timmins, Ontario,
also a mining community, reported 1951* sales of $1 million for
its central and 1* branch stores.
The total volume of Canadian cooperatives* retail sales, for
which data are collected, is shown below for selected years:
Sales by
(in thousands) 1 /
1939 ---3.91*6---1 9 U 7 ---1950 ----




1 9 5 1 ---1952 ---1 9 5 3 ----


1951*---1955 ----


Current Canadian dollars. The rate of exchange has
always been close to $ 1 C * $ 1 US.

The elevenfold increase in cooperative sales since 1939 should be
deflated by a change in price level. The prices of goods and services
used by farmers increased 1 ^ times in the interval, leaving a five­
fold increase in cooperative sales, in terms of constant dollars.
Sales by cooperatives constituted the following proportions of
all retail business in Canada in 1951*: Sales of feed, seed, and
fertilizer, 2l* percent; gasoline and oil used in farm operations, 17
percent. Total sales of cooperative stores in Canada were 5 percent
of the sales of all grocery and general stores.
There are 9 cooperative wholesales in Canada; all of them sell
groceries, but only 3 handle clothing and dry goods. Most of them
handle petroleum products, automotive and tractor supplies, farm
machinery and other farm equipment, feed, fertilizer and sprays.
Table 15 shows volume of business and its proportions, in 1951* and
1955* There was a slight increase in each category of sales over
195 U, in spite of a reduction in the number of organizations.


Table 15.--Canada:

Cooperatives' wholesale trade, 195U and 1955 y



Groceries - - - - - - - - - -

thou| sands)

Clothing, dry g o o d s ------- --



Total - - - - --- - - - - - -


j Volume
Percent 1 (in
• thoui sands) j

\$96,850 l 100.0
| 12,873 ;

1 3 .3




I 22,167


37,756 !


1 35,661:


13,711 |


7,981 !


Miscellaneous - - - - - - - -

1,023 i




Retail branch outlet sales- -







Gas, oil, automotive supplies


Flour, feed, fertilizer,
spray materials - - - - - Machinery, hardware,
equipment - - ----------- -Coal, wood, building material




13,630 |


7,1:08 |



Nine cooperatives in 1955, eleven in 195U«

Source: Canada Department of Agriculture, Marketing Service,
Economics Division, Co-operation in Canada, 1951: and 1955 (Annual

Service Cooperatives
Besides retailing, cooperatives in Canada serve such con­
sumers1 needs as housing, medical care insurance, transportation,
recreation facilities, telephone service, restaurants, and board­
ing houses* The combined revenue of 1*18 service cooperatives
(including such services as printing, custom grinding, seed clean­
ing, and trucking) was $11.1* million in 1955, and their membership
was about 200,000. These figures show an increase over 1951*,
whereas purchasing by cooperatives had declined. Medical care
insurance was provided b y 1*2 associations. In addition, life insur­
ance was provided b y 3 organizations,and 1*03 farmers' mutual fire
insurance companies wrote policies amounting to $3*3 million net
(1953)* In the province of Alberta there are 213 rural electrifica­
tion cooperatives, for which data are not available.

Credit Unions
The credit union movement in Canada has maintained a contin­
uous growth since 1939 (table 16). Between 1939 and 195U the
value of loans per credit union member rose by 112 percent (from
$61* to $ 136 ), and the value of shares and deposits per member rose
b y 151* percent (from $129 to $327). In 1955, the volume of loan
business declined sharply, both total and per member. The value
of shares and deposits, however, increased almost 6 percent over
the year to $ 31*6 per member, an increase since 1939 of 169 percent.
The proportion which credit union loans bear to all types of con­
sumer credit in Canada, increased from 3 percent to about 12 per­
cent from 1939 to 1951*, but declined in 1955 to 9 percent. This
comparison is more meaningful than the increases in current
dollar value of loans and savings, shown on table 16 , because
prices, on the average, almost doubled in Canada during this period.
Expansion after World War II was rapid, and continuous,
although with some reduction in loan volume »in 1955. Between 191*5 and
1955, over one million new members joined credit unions, bringing
the total to almost 1,750,000. Canadian credit union membership
equals31 percent of the Canadian labor force, two and one-half
times as high as the participation rate in the United States.
Quebec, the first province in which credit unions were formed,
still led the other Canadian provinces with 55 percent of total
membership, 38 percent of all credit unions, and 1*1 percent of
the total loans made in 1951*. (1955 data by province are not
yet available.)
Credit unions still serve chiefly rural areas in many parts
of Canada, but with the increase in mobility during the past
decade and the increased industrial activity, particularly in
Ontario, Alberta, and British Columbia, credit unions are gaining
ground in urban areas through the organization of credit unions
in industrial establishments.

Table 1 6 .--Canada: Credit unions

Number of
: unions






1939 -----






1 9 U 6 -----






191*8-----: |



19l*9 l/ - ~



1 9 5 0 -----


1 9 5 1 -----


! $




9,710,627 \ # 19,508,525


1*1,205,637 j


53,219,1*19 5

178,701*, 909

80,633,705 1



90,285,237 j




99,5 37,166





108,538,265 j




1 ,137,931

125,088,91*9 |


1 9 5 2 -----



1 ,260,1*35



1 9 5 3 -----


1 ,1*31*,270

203,189 ,01*5



1 9 % -----



212,906,551 j


1 9 5 5 -----



186,967,1*21 ;



Percent increase
1953-51* - -





1951-55 - -






Newfoundland included for the first time.

Source: Credit Unions in Canada, 191*9-51*, Canada Department of
Agriculturej Canada Tear Books, 191*0-1*8. Ottawa.

-6 1 -

Credit unions are classified according to bond of association:
such as membership in a parish,lodge, or labor union, employment
in a plant or department, or residence in a rural or well-defined
urban community. In 1951+, the common bond was occupational for 1+3
percent of all credit unions, but in Ontario , 63 percent. In Quebec,
the Maritime provinces, and in Saskatchewan, rural credit unions
In Canada, credit unions are authorized to make loans exclu­
sively for nprovident or productive purposes," i.e., for purposes
that would benefit the prospective borrowers. Loans are made to
farmers, fisherman, and others for the purchase and repair of
producers* equipment and tools, including trucks, tractors, boats,
automobiles, and for farm operating expenses. Lending for con­
sumption purposes has played a minor role. However, the increase
in instalment purchasing has called attention to a new need for
credit union services.
While local credit unions are designed to provide primarily
short-teim loans to members, they accept applications for mortgage
loans more freely as their assets increase. An example of this
is Quebec, where the credit unions have made more mortgage loans
than those of any other province, with approximately 80 percent
of the loans made in 1951+ granted on the security of mortgages.
In part, the credit unions have filled local gaps in the
Canadian banking system. In Quebec and certain parts of the
West in Canada, depositors may draw checks against their credit
union deposits. Under 1951+ legislation, the Government guaran­
tees loans to fishermen made by credit unions, as well as those
made b y chartered banks. Similar provisions already apply to
The average size of a credit union loan for the Dominion
in 1951+ (based on 8 of the 10 provinces reporting) was $1+38,
$3 higher than the previous year.
(In the United States,loans b y
Federal credit unions, which make only short-term loans, averaged
close to $1+00.) One of the Quebec federations led with $831,
reflecting its higher proportion of mortgage loans. Saskatchewan
followed with $678 , which represents borrowing b y the farm popula­
tion for building, improvement, purchase of repair of machinery,
autos and trucks, land payments, and purchase of livestock, since
8I1 percent of the credit unions in this province are rural. Credit
unions sometimes lend to other cooperatives, and in Quebec these
loans often are large.


Information on share dividends is not reported annually
the Canadian Department of Agriculture. However,the usual rate
of return was reported as 3 percent in 191+5, which is similar to
the average rate in the United States,


Canadian credit unions are linked in two types of federations:
(l) Promotional and educational leagues, which also perform audit­
ing and legal services for their members, and (2) central credit
societies with banking functions. The oldest and strongest of the
central credit societies are the 10 regional unions of Bcaisses
populaires Desjardins" in Quebec, and the Saskatchewan Central
Credit Society. The central societies receive deposits from
credit unions with surplus funds, and in turn lend to credit unions
and to other cooperatives.
Because some Canadian credit unions provide checking accounts,
several of the provincial centrals provide a clearing house service
for checks. Since the experience of the thirties, a great deal of
emphasis has been placed by the centrals on maintaining the liquid­
ity of the credit union funds, and surpluses are therefore invested
chiefly in Government and municipal bonds.
There are 26 central credit societies in all Canada with com­
bined membership of approximately 3,800, of which 3>300 were credit
unions and $ 0 0 were cooperative societies. The amount of loans
and mortgages outstanding b y all centrals at the end of the fiscal
year in 19 $h was $lii.6 million, and the amount of other investments
(chiefly Government and municipal bonds) was $39 million, repre­
senting respectively 23 and 6l percent of the total assets. Shares
and deposits held by all centrals in 195U amounted to $55.9 million,
shares representing 15 percent and deposits 72 percent of total
In 1953> steps were taken for the first time to set up overall
dominionwide credit union organizations, designed to strengthen provin­
cial credit unions in performance of their banking functions. Two
laws were passed by the Dominion Parliament (the first Federal laws
in this field), one authorizing interprcvincial credit associations,
and the other incorporating a Canadian Cooperative Credit Society,
Ltd. Membership in the society is composed of U provincial central
credit societies, the Saskatchewan Wheat Pool, and 3 other inter­
provincial cooperatives. The society may borrow money from member
associations and banks, invest funds in bonds, debentures, and
other securities, and make loans, but only to member societies.
No loans may be made by this central society on the security of
real-estate mortgages. The society’s operations are subject to
inspection b y the Superintendent of Insurance and an annual report
to the Minister of Finance is required. In the fall of 1956, the
society was reported to be still in the organizational stage*

-6 3 -


Report of Royal Commission on Cooperatives.



Canada. Department of Agriculture, Marketing Service,
Economic Division. Ottawa
— Cooperation in Canada, Annual Summary, 1955 and earlier issues
--Credit Unions in Canada, 195U and earlier issues

Croteau, John T.
— Cooperative Central Banking in Canada.
(In the Canadian
Journal of Economics and Political Science, November 1951,
voi. xvrr, No. U, p p . 523-537.)
— The Caisses Populaires Desjardins of Quebec, A M o d e m
System of People’s Banks.
(In Agricultural History,
October 1950, Vol. 2 h , pp. 227-238.)


Great Britain
Membership in retail cooperative societies in Great Britain
has continued to grow, increasing U5 percent from 1938 to 1955 ,
when it exceeded 12 million, compared to a 7 -percent increase in
population in the same period.
(See table 17.) While the number
of societies has been shrinking, average membership per society
has grown. There has also been an increase in the number of sales
outlets operated by the societies. In 1955, there were 2U,500
fixed shops and U ,000 mobile shops run by retail cooperatives,
each society averaging 26 sales outlets.
The cooperatives’ share of all types of retail trade in Great
Britain was about 13 percent during the first 10 months of 1956.
In 1950, at the time of the last retail trade census, it was 12
percent (table 18). Cooperative trade continues to be predom­
inantly in foods. In 1956, as in previous years, the cooperatives
accounted for 21 percent of total food sales.
(See table 19.)
The value of total food sales by all retailers has increased since
1950 more than any other commodity group; an increase in which
each type of retailer— the independent retailers, the chainstores,
and the cooperatives— shared proportionately.
The increases are
attributable to decontrols of food and to price rises.
Outside of the food field, cooperatives account for only small
proportions of total sales, although percentagewise they have made
striking gains. The sales of household goods departments of the
cooperatives were 69 percent higher, in the first 10 months of 1956 ,
compared to the year 1950 , whereas the increase for all retailers
was Ult percent, yet the cooperative share of total trade in house­
hold goods rose only from 6 to 7 percent in the same period (table 19 ).
Over the 16-year period from 1938 to 195U (including World
War II and the postwar adjustment), cooperative sales more than
kept pace with growth in the economy, when translated into con­
stant prices. In 195U, sales as reported by retail cooperatives
were almost 3 times as high as 1938 sales, and expressed in con­
stant prices, they show an increase of about 15 percent. This is
a little more than the increase in national consumer expenditures
on food, tobacco, coal, clothing, and household goods during the
same period, which was 13 percent (in constant prices). 26/ Similar
comparisons for other retailers cannot be made because sales data
are not available for the whole period.

26/ Central Statistical Office, National Income and Expendi­
tures, 1955, table 22, Consumers' expenditures at 19U8 market prices.
(Using this table and table 23, index numbers of consumers' expen­
ditures at market prices, an index number for food, tobacco, coal,
clothing, and household and other goods was computed, which was used
in adjusting actual cooperative sales to sales in constant prices
for the years 1938 and 1950-5U.) (Continued on p. 67 .)


Table 17.~0 r e a t Britain:

Cooperative societies' activities, retail and wholesale
1938, 1950-55

Type of society






1,109 1 1,107 ; 1,10 1
8,358]1 10,528! 10,71:5 ; 10,932
262,1:00 ]i 599,865!! 61:9,772 !70U,2i:5 71:7,910
23,600j 38,202j
i 38,169! 35,625
9.0 j
6.1* ]
5.9 j

i 1,091*
! 11,316
I 39,1*96

| 1,077
} 12,31:3
f 1:3,639

; 161,1:98 1:18,672 ' U66,U56 ! 511:,709 539,325
8 ,0 0 1 : 6,51*1*
3 ,3 2 1 : 8,977
1.7 j
j 125,016 321,61*2!
! 359,1U2 f 398,3W: U20,888
5,778 | U,171
6 ,6 6 3
1.6 {

| 8,826
i 6,171:





Retail societies:
N u m b e r --------------------- - - Members (thousands)----------- -- Sales (B thousands)- - - - - - - Patronage refunds (B thousands)l/»
Percent of sales - - - - - - - Wholesale societies:
Sales (fc thousands)- - ----------Patronage refunds (B thousands)l/Percent of sales - - - - - - - Cooperative Wholesale Society (CWS)
Sales (B thousands)----------- - Patronage refunds (t thousands)l/Percent of sales - - - - - - - -


1 ,168 !



; 9,295

f 6,521:


In Britain, referred to as dividend on sales*



Reports of Chief Registrar of Friendly Societies, 1952-55, Part 3, Industrial and Provident

Table 18,~-Great Britain: Retail sales by type of shop and
major commodity, as percent of all retail sales
1950 and January-October 1956 1/


All kinds


: Clothing : Household :: Other
; footwear :

A H retailers - —
Independent retailers Chainstores - - - - - Cooperatives- - - - - - i
Department stores - - January-October 1956





All retailers - - - - - Independent retailers - 5
Chainstores - - —
- -l
Cooperatives- - - - - - }
Department stores - - - l



























: 21*
|: 5





(1/) !i (2/) ! (i/) ; Q/)

i -------------------------------- L

1/ The volume of trade has been calculated by applying Board of Trade index
numbers to 1950 sales as shown in Board of Trade Journal, May 5, 1956, The per­
centage distribution of trade has been computed from the sales thus obtained,
2/ Less than 1 percent,
3/ Not available.
Sources Board of Trade Journal, May 5, 1956 (p, 562)j December 8, 1956
(pp. 1201— 120U).


Table 19.— Great Britain: Retail sales b y type of shop, for cooperatives
and all retailers, 1950, 1955, and January-October 1956 1/
■ ■
All kinds




j Food
: shops

| shops

j Household

(B millions)
Retail sales:
All retailers Cooperatives-


: 2,095



Indexes of retail sales:
1 9 5 5 1 ----------------All retailers - —
- Cooperatives- - - - January-October 1956:
All r e t a i l e r s ----- -- Cooperatives--------



..... •











Cooperatives* sales as percent of all sales in each
type of shop:
1950 - - - ------------- -1955 2 / ............... J anuary-October 1956 2/ -






1/ Statistics cover total sales of the shops concerned but do not
cover sales of goods by establishments not classified as one of the types
2/ The volume of trade has been calculated b y applying Board of Trade
incfex numbers to 1950 sales as shewn in Board of Trade Journal, M a y 5,
1956. The percent of cooperative trade has been computed from the sales
thus obtained.
Source: Board of Trade Journal, May 5, 1956 (p. 562); July 7, 1956
(pp. 13-17); December 8, 1956 (pp. 1201-1201:).


The average rate of patronage refund paid by the retail socie­
ties has been close to 5 percent in each of the years 1952, 1953*
195U, and 1955, whereas it was about 6 percent in 1950 and 1951,
and had averaged 9 percent in 1938.
In Britain, cooperative wholesalers supply the retail cooper­
atives with a large volume of their supplies, and the proportion
was higher in the post-World W a r II period than formerly.
However, the business of cooperative retail societies main­
tained a steady growth from 1950 to 1955, whereas the wholesalers*
business dropped off in 195U and recovered in the next year, but
scarcely surpassed 1953* The patronage refund 27/ paid b y whole­
salers has dropped, although not as much as that of the retail
societies. Throughout the period from 1938 to 1955, it was at a
much lower level than the retail rate, varying from 1.3 to 2.1
percent on the average. (See table 17.)
Both retail and wholesale cooperatives engage in production,
the wholesalers on a larger scale.
(See table 20.) Both operate
principally in the food and tobacco industries, and in farming and
dairying. To a lesser degree, they also engage in building and
woodworking, in production of clothing, and in metal fabricating.
Some wholesale cooperatives also operate textile mills. Retail
and wholesale societies together produced 36 percent more goods
(based on gross value 28/) in 1955 than in 1950, and the goods
produced constituted a larger proportion of cooperative trade.
More than four-fifths of the cooperative wholesale trade and
over half of the cooperatives* own production in Great Britain is
concentrated in the English Cooperative Wholesale Society (CWS),
which sells to about 1,000 member societies. The CWS, with its
complex of production, insurance and banking enterprises, has been
generally considered a "king-pin11 in the British cooperative

26/ (Con.) Comparisons with prewar for cooperative trade are
made on the basis of returns filed annually with the Chief Registrar
of Friendly Societies.
Sales data for cooperatives reported by the Chief Registrar for
Friendly Societies do not exactly agree with those in the Census of
Distribution; data on sales, membership, and number of societies
reported in the Coopeative Review (on the basis of reports gathered
by the Cooperative Union), also do not always agree with official
data. The Government data have been utilized here.
27/ In Britain, patronage refund is called dividend; share
capital receives interest, not dividend.
28/ Includes cost of materials and processing; corresponds to
"value of shipments" in U. S. Census terminology.


GWS produces, in its factories and farms, one-third of the
goods which it distributes, including almost 30 percent of the gro­
ceries and provisions sold to the retail societies, 86 percent of
the drapery, and nearly 30 percent of the housefurnishings. 29/
It acts as a banker for its members, for trade unions and other
organizations, and for individuals who choose to deposit funds
with it. CWS is controlled by the member societies, and votes
at the quarterly meetings are weighted by the value of purchases
each member society has made.
The Scottish Cooperative Wholesale Society (SOWS) performs
similar functions on a smaller scale for the Scottish retail coop­
eratives. The English and Scottish Cooperative Wholesale Societies
have together formed a joint society, which owns tea plantations
and engages in import trade for various items. Other small whole­
sale and productive societies, numbering 180 in 1955, together did
about 6.6 percent of the wholesaling business done on a cooperative
basis in Britain in 1955.
An Inquiry Commission was established by the 1955 Cooperative
Congress to examine and report on the productive and marketing
problems of the cooperative movement. Reasons for the appointment
of the Commission were concern over the falling rate of patronage
refund, the failure of the retail cooperatives to patronize coop­
erative factories sufficiently to keep them operating at capacity,
and thus at lowest cost, and the failure of wholesaling, even at
market prices which were quite stable in 1953 and 1951*, to expand
since 1953. The wholesale price level in Britain started a gradual
rise in 1955.
The Commission of 8 members, with the Rt. Hon. Hugh Gaitskell
as chairman, was asked to submit to the Central Executive, not later
than 1958, a report and recommendations designed to secure the
greatest possible advantage to the movement from its manufacturing,
wholesale and retail resources, and to propose such methods and
organization as may be thought best suited to achieve this. All
membership societies will be invited to submit written statements
on the problems to be studied and will also be given an opportunity
for oral submissions.
The role of the cooperatives in Great Britain has been limited
by resale price maintenance practices which in Britain have hitherto
been enforceable b y trade associations, as well as b y individual man­
ufacturers through contracts with retailers and wholesalers. Patron­
age refunds on "fair-traded” goods have been, construed as illegal
price rebates.
(Cooperatives in the United States have encountered

29/ See Questionsfor the Co-ops (in The Economist, London,
Augusu27, 1955, p. 713) for table on supplies sold and produced by
CWS by commodity, 1952-5U.


Table 20,— Great Britain: Cooperative societies,
gross value of production, 1950 and 1953-55

Sales (i*1 £ thousands)








Production (gross value)- j 217,001*
Retail societies- Wholesale societies
"The Big 3" j / - -



I lU5,l63
| 123,667

! 152,81*9



9 6 ,1 * 1 1
92,193 i
186,671 j 199,278
157,706 | 168,801*




1/ Cooperative Wholesale Society (CWS), the Scottish Co-operative
Wholesale Society (SOWS), and the English and Scottish Joint Co-operative
Wholesale Society (E&SJCWS).
Source: Reports of Chief Registrar of Friendly Societies, Part 3*
Industrial and Provident Societies.


similar problems raised by the State Fair Trade Laws and have in
some cases not been able to stock '’fair-traded" items* However,
collective action by trade associations to maintain prices, in
this country, encountered obstacles in the antitrust laws which
do not exist in Great Britain.)
When an antimonopolies commission was set up in Britain after
World W a r II, the cooperatives hoped for legislation ending these
restrictive practices. But neither the Labor nor the Conservative
Government was willing to go all the way. The latest in a series
of governmental moves designed to curb restrictive trade practices
in the public interest was a bill passed in Parliament in 1956.
The bill, among other provisions, prohibits collective enforement
of resale price maintenance, e.g., by trade associations or similar
groups, but it permits individual manufacturers and other suppliers
to continue to set prices at which their own products shall retail.
It also permits a supplier to take civil action against retailers
selling his product for less, even though there is no contractual
relationship between supplier and retailer. This feature of the
bill may actually strengthen the restrictive practice, and has
caused loud complaints to be voiced by the cooperatives' represent­
atives in Parliament and outside. They fear that the cooperative
trade in price-fixed items may be even more hampered than it now
is, b y the threat of law suits over patronage refunds based on
such sales. However, there is a possibility that an order may be
issued b y the Restrictive Practices Court, created by the same
bill, declaring that cooperatives' refunds lie outside the intent
of the law.
Relationships between unions and cooperatives in Great Britain
have been close, because of overlapping memberships and organiza­
tional ties. Union ftmds are to some extent deposited in the CWS
banking department; during the strikes and lockouts of the 1920's,
unions obtained financial help from the cooperatives— as was re­
called at a recent cooperative Congress. Both the Cooperative
Union and the Cooperative Party are represented, together with the
Trades Union Congress and the Labor Party, in the National Council
of Labor, as equal partners, sharing a common philosophy and common
aims. Differences have arisen, however, concerning the extent of
nationalization of industry~the cooperatives resisting state inva­
sion of the fields which they have penetrated; the cooperatives
emphasize what they call "socialization" which allows for various
types of social ownership, e.g., municipal ownership or ownership
by cooperatives.
Cooperative membership is more extensive than union member­
ship in Britain, and not all union members belong to cooperatives.
The salaried and professional group constitute a more important
element in the British cooperatives than in the unions, and this
has perhaps tended to weaken the earlier close ties.


Cooperatives as employers bargain with the distributive and
other trade unions, to which their employees, up to and including
the managerial grades, generally belong. The cooperatives are
represented on 2k statutory Wages Councils, which set minimum
rates for practically every phase of retail distribution. Nego­
tiations and representation on Wages Councils are carried on by
a labor department of the Cooperative Union.


Great Britain. Chief Registrar of Friendly Societies,
Annual Reports. Part 3: Industrial and Provident Societies

Great Britain. Ministry of Labor Gazette (monthly)
Numbers, M e m b e r s h ip , Transactions, Etc., of Co-operative Societies
— October 1955 (p. 3U8)
— November 1956 (p. UOO)

Great Britain. Board of Trade Journal (weekly),various issues
Index Numbers of Value of Sales per W e e k — All Retailers


Cooperative Union. Manchester
The Cooperative Review (monthly), 195U-56 various issues
Census of retail shops operated by cooperatives in 1955
Report of the 86th and 87th Cooperative Congresses, 1955 and 1956

The Economist. London,
(weekly) Vol. CLXXVI,August 27, 1955
— Questionsfor the Co-ops (pp. 713-715)


Cooperatives are highly developed in all of the Scandinavian
countries, both among farmers and city dwellers* Farmers have
purchasing as well as marketing cooperatives* In the cities,
consumer cooperatives run food and general merchandise (depart­
ment) stores, operate bakeries, and build and operate apartment
houses* A central federation and wholesale cooperative, in each
country, supplies the member associations with a large part of
their stock in trade and manufactures in its own factories seme
of the commodities which the member associations sell. These
centrals also assist member societies with auditing and banking
facilities and conduct educational classes and programs.
Consumer cooperatives in Norway, Sweden, Denmark, and Finland
continued to increase their membership and their sales in 19 $ h and
1955 (1955 data are not yet available for all of the countries).
Retail sales of consumer cooperatives have increased since 1951 by
about 13 percent in Norway, Sweden, and Denmark, and ty about 10
percent in Finland, after taking price increases into account.
The share or retail trade handled b y the consumer cooperatives
in Norway, Sweden, and Denmark varied from 10 to 12 percent in the
early 1950*s. In Finland, where the cooperative movement is some­
what more widespread, consumer cooperatives handled 33 percent of
total retail trade in 1952, compared with over 26 percent of all
wholesale trade handled by Finnish wholesale cooperatives. (Finland
is the only Scandinavian countrv for which this proportion can be
calculated for wholesale trade.)
Between 1951 and 195U, membership in consumer cooperative
societies increased almost 13 percent in Sweden (there was an
8-percent increase in the societies affiliated with the central
cooperative wholesale society), over 6 percent in Norway and Den­
mark, and 3 percent in Finland. 30/
Taxation of cooperatives differ considerably among the Scan­
dinavian countries. With respect to taxes on property, cooperative
and private enterprises are subject to roughly similar provisions.
It is with respect to income tax that the differences materialize.
"Norwegian legislation entitles the co-operatives to
deduct from their taxable income that part of the surplus
which is due to their trade with members. In Sweden that
part of the surplus which is refunded to members according
to the volume of their purchases has been tax exempt since
1920. Danish co-operatives which traded exclusively with

3 0 / The data for both Norway and Denmark refer only to member­
ship in societies affiliated with the central cooperative wholesale


members were originally tax-free while co-operatives
which also accepted non-members as customers were
taxable on the basis of their entire surplus. However,
legislation adopted in 19l*0 provided for taxation of
all co-operatives. A reform in 19U9 introduced a
quite new principle whereby taxes on co-operatives are
no longer based upon their surplus but solely upon
their net capital (share capital plus reserves). 31/
In Finland the co-operatives were, until 19U3» enti­
tled to a tax-free deduction of fifty per cent of
their surplus, but a tax reform in that year abol­
ished this rightj refunds to members are, however,
still tax-exempt.
" As regards the right to deduct refunds to members,
it should be noted that in Finland, Norway, and Sweden
private traders enjoy the same right where they pay
their customers a rebate on their total purchases at
the end of the year. Particularly in Sweden this
practice is very widespread. " % /
M o d e m methods of retailing have been hampered in many Euro­
pean countries, including the Scandinavian ones, b y legal restric­
tions adopted on sanitary or hygienic grounds which now appear to
be obsolete. 33/ In Denmark and Norway, regulations provide that
milk and meat shall only be sold in special shops with a limited
range of other foodstuffs. This restriction is also placed on the
sale of fish in Norway. In Sweden, if a shop has a selling area
of over 70 square meters, there is no restriction on the assort­
ment of goods— food or nonfood— but if the area is less than 70
square meters, the store is restricted to selling foods only.
Danish legislation forbids a retailer to operate more than
one shop within the same municipal area. Norwegian regulations
prohibit any form of traveling shops, e.g., a boat-shop (a hand­
icap in the areas of Norway where water provides the best means
of access to the sparse rural population) j Swedish regulations
restrict shopping hours, and prevent the cooperatives from sched­
uling evening hours for the benefit of working housewives.
31/ For income tax purposes a certain percentage of the soci­
eties’ capital is considered as income. The Danish Co-operative
Movement, Danish Information Handbooks, Copenhagen, 1950 (pp.78-79)•
32/ Freedom and Welfare, Social Patterns in the Northern
Countries of Europe, Ch. Ill, The Cooperative Movement. Sponsored
by the Ministries of Social Affairs of Denmark, Finland, Iceland,
Norway, and Sweden; Copenhagen, 1953*
33/ Review of International Cooperation, June 1956, Vol. 1*9,
No. 6 T p p . 135-139).


Scandinavian Joint Cooperative Activities
In addition to the individual national cooperative societies
organized within each of the Scandinavian countries, there were
two Scandinavian cooperatives which served all of these countries.
These are the Scandinavian Wholesale Society, and the Scandinavian
Cooperative Export Society.
The Scandinavian Wholesale Society, Nordisk Andelsforbund
(NAF), was organized in 1918 by a committee composed of two members
from each of the Scandinavian countries. This organization has
made it possible for the Scandinavian wholesale cooperatives to con­
solidate their transactions for similar commodities, and to take
advantage of the most favorable price. Individually, their foreign
transactions are too small or too infrequent to enable them always
to take advantage of the latest price developments.
NAF is administered by a general meeting composed of country
representatives, and by an executive board of directors, which is
also representative of the member countries. Chartered accountants
audit the books of the society, but each member may also appoint
his own auditor.
The capital of NAF consists of the shares paid by each member
organization— at the rate of 25,000 kroner for each 10 million
kroner, or part thereof, of its turnover. The reserves of NAF are
held as separate accounts for each member, so that in case the soci­
ety is dissolved, its assets can be distributed equitably and easily.
NAF has business connections with more than 600 foreign busi­
ness houses in all parts of the world, and operates through 2 sell­
ing offices, 1 each in Copenhagen and London, Member organizations
are not compelled to buy through NAF, and a large number of commod­
ities sold by the cooperative societies are not handled by NAF.
However, its volume of business has increased markedly since NAF
was founded.
Scandinavian Cooperative Export Society. In November 195U,
the Scandinavian consumer cooperative central organizations and
NAF established the Scandinavian Cooperative Export Society.
porarily it is managed by the representatives and officials of
NAF. By providing foreign markets for the products of cooperative
factories, and an outlet for any unsold commodities which the
wholesales may wish to dispose of, it is hoped that the export
society will stimulate production and contribute to lowering
prices in the member countries. This society handles both con­
sumer and producer goods, as well as farm products and supplies.


Retail Societies
Sales of Swedish cooperative retail societies increased from
slightly less than 2 billion kronor in 1951 to almost 2 \ billion
kronor in 19 $ h (an increase of 13 percent after adjustment for
rises in the retail price index)* The societies affiliated with
Kooperativa Forbundet (KF), the central cooperative wholesale
society, accounted for 98 percent of cooperative retail sales*
Although the independent societies increased their sales b y 31
percent between 1951 and 195U (after adjusting for price increases),
they did not increase their share (approximately 2 percent in both
years) of cooperative retail sales. The societies affiliated with
KF have paid refunds on purchases averaging 2.6 percent in recent
(See table 21.)
In 195U, there were 688 general retail societies affiliated
with KF, with a membership of 1,069,251. In addition, there were
101 general retail societies not affiliated with KF in 195U,
called independent societies. Their business is much smaller than
that of KF-affiliates, and their membership, generally drawn
entirely from a single enterprise, profession, or branch of
trade, numbered only 38,500 in 195U*
Many of these retail societies, both independent and KFaffiliated, carry on productive activities. For example, the
cooperative societies either singly or jointly operate bakeries,
meat processing plants, and mineral water bottling factories, as
well as caf/s and staff restaurants. The societies operate these
bakeries and plants jointly, because they found that it was unecon­
omical for each small cooperative to perform these functions
individually. KF also has numerous production facilities.
According to the Swedish Census of Production, Distribution
and Services, consumer cooperatives handled almost 12 percent of
all retail trade in 1950 (the latest date for which these data
are available). They handled 25.8 percent of all retail trade
in foodstuffs; 2.1 percent in textiles aid clothing; 5.5 percent
in shoes, leather, and luggage; 8.9 percent in glass and porce­
lain; 2.8 percent in fuel; 12.U percent of department and spe­
cialty store sales; and 0 ,k percent in all other fields of
retail trade except wines and spirits.
Within the food group, which is the area of greatest con­
sumer cooperative activity, the consumer societies handled 5l.9
percent of the trade in combined food and milk shops, 5U.8 per­
cent of groceries and meats, and 57.7 percent of other food


Table 21 •--Sweden: Sales, production, and patronage refunds of
consumer cooperative societies, 1950, 1951, and 195U


Total sales

-- -. •

Retail | k f y
socie­ i Whole­

KF 1/

1 Patronaf;e refunds
of r<jtail ,
sociellies 2/


| Retail
! socie| kronor)
! ties



j sales

(In million kronor ^/)
1950 ----1 9 5 1 ----1 9 5 1 -----


i 1,671+ 1
1 1,957
; 2,1+32



63 i



1950-51- 1951-51+- -

13 .U


Percent change
22.3 I

H+.2 !
29.1 ;

Percent change after adjusting for price rise
1950-51- 1951-51+- -


1 5/ 0.9


5/ 5.8
; i/io .9


1/ KF (Kooperativa Forbundet)•
2/ Affiliated with KF.
3/ 1 krona • 19*3 cents U.S. at official rate of exchange*
Tj/ Deflated by wholesale price index; between 1950 and 1951 W PI
rose 31 percent and has remained steady since then.
5/ Deflated b y consumer price index; between 1950 and 1951 CPI
rose 16 percent and 10 percent from 1951-51+.
Source: Swedish Official Statistics. Board of Trade, Cooperative
Activity 1950, 1951, and 1951+; Central Statistical Bureau, Statistical
Yearbook for Sweden 1955 (for price indexes).


The Royal Social Board publishes quarterly indexes of changes
in retail sales for various types of cooperative shops: Meat, milk
and bread, fish, and self-service stores selling groceries and
other items. Since 1953 » cooperative self-service markets have
been taking over more of the sale of bread, milk, and meat from
the small cooperative specialty stores. It is not known whether
this same development has occurred among independent retailers
because the quarterly index of changes in independent trade in
foods is published as a single index for food. In 1956, Swedish
cooperatives were operating nearly 1,000 supermarkets, an increase
of over U00 since mid-1955.

Wholesale Societies
The Swedish cooperative wholesale society, KF, increased its
sales from 1951 to 195U by lU percent, after adjusting for increases
in the wholesale price index, a slightly higher real increase than
the increase in sales of the retail cooperative societies.
table 21.)
KF's sales consist of (l) foodstuffs, (2) textiles and house­
hold goods, and (3) heavy goods (industrial and building materials,
and agricultural machinery). KF sells goods to: Affiliated soci­
eties (about 60 percent of all these societies* sales)j State and
other institutionsj and private Swedish firms for export.
One of the aims of the Swedish cooperative movement is to
lower prices through market competition, by setting low prices and
high quality standards on its own products. For example, in recent
years, KF has been successful in lowering nationwide prices on a
wide variety of products, from margarine, flour, and oatmeal, to
such consumer goods as galoshes, soaps and other washing materials,
and electric light bulbs, and to industrial goods such as agricul­
tural machinery, fertilizers and building materials. Only recently,
in early 1956, KF succeeded in establishing lower prices for rubber
tires and synthetic soaps.
In addition to its wholesale and manufacturing activities, KF
supplies advisory information to cooperatives, provides staff
training, and sponsors educational activities. It also performs
fairly extensive banking service for its affiliates* members. At
the end of 195U, the KF savings bank had deposits exceeding 229
million kronor. KF and its subsidiaries employed 13,622 persons
in that year.
At the end of 195U, KF had shares and reserves of 281 million
kronor. Dividends on purchases due the affiliated societies
(usually 1 percent) are transferred to the societies’ share accounts,
which contained 121 million kronor at the end of 195U. The share
capital of KF pays interest at the rate of 5 percent, which can be
withdrawn by the members.


KF, in collaboration with a specially organized society
(Svenska Hushallsforeningen), administers member societies which
are economically weak and assists them until they are able to
handle their own affairs. KF also assists in the establishment
of new societies*

Cooperative Housing in Sweden
In 1923, the Stockholm Tenants’ Union formed the Tenants’
Saving and Building Society (HSB), which, in 1921*, joined with
similar societies in other Swedish cities to form the National
Association of HSB Societies. At the end of 1951*, 180 local
societies (called parent societies), with a membership of 95*000,
were associated with the national IBB movement. Affiliated with
these parent societies were about 1,200 local housing groups,
which represent their owner-members. The national society super­
vises the administration and development of the local groups,
helps them obtain loans, conducts a savings bank, and directs
the actual building, which is done by private contractors.
Mortgages are insured by the State and the municipalities, and
the tenants, who must become members of the association, buy
their apartments,making an initial deposit of 5 to 10 percent
of the apartment’s value. The tenants receive full ownership
rights and elect a management committee to administer the build­
ings. HSB also owns and operates special buying agencies, a
number of factories producing building materials, and a marble
quarry. While most of the products from HSB factories are
utilized within the HSB movement, many of its prefabricated
houses are sold on the market and exported to foreign countries*
HSB, working closely with municipal authorities, has been
one of the chief instruments for building and administering lowcost city housing projects for large families* In addition to
building apartment houses, HSB has been active in developing
single-family housing in suburban areas, also available to large
families with low incomes, and through its town planning depart­
ment, has supported and initiated urban redevelopment projects*
The Swedish building workers' trade unions in 19l*l, organ­
ized a housing society, Svenska Riksbyggen (SR), which at the
end of 195U had about h 50 housing groups affiliated with it. This
organization was founded to help the building trade workers find
employment when the outbreak of World War II brought house con­
struction practically to a standstill, and at the same time to
help meet the demand for housing. Like HSB, SR also works with
municipalities in building low-cost housing for large families
and in building apartments for old-age pensioners. The buildings
are financed and administered in much the same way as those
belonging to HSB societies.

-8 0 -

Like HSB, Svenska Riksbyggen also has a production company
(it had 15 member companies throughout Sweden at the end of 195U)
with special departments for building, central heating, decora­
tion, electrical installation, etc. The company maintains a
common bookkeeping system and valuation principles to which all
of the member companies conform; a single auditing department
audits all the books of members. These and other low-cost oper­
ating methods have made it possible for the local production
societies to compete with private contractors and suppliers of
building materials*

Funeral Societies
The first Swedish funeral society was organized in Stockholm
in 19U6 to do three things: (1) To establish reasonable prices
for the services, (2) to influence traditional customs and habits
in order to abolish gradually certain costly and unnecessary serv­
ices, and (3) to seek the abolition of certain traditional
charges within the cemeteries and to provide municipal maintenance
and planning of cemeteries*
Since 191:6, 21 such societies have been founded by the con­
sumer cooperative movement and by other consumer groups. At the
end of 1 95U, the funeral cooperative societies handled 12 percent
of all funerals in Sweden. In the cities and towns where the
societies are located, they handle an average of 33 percent of
all local funerals in addition to many in their surrounding areas*

Cooperative Retail Societies
At the end of 1955, there were 1,11:8 cooperatives with 300,81:6
members affiliated with the Norwegian Cooperative Union and Whole­
sale Society (NKL), a small increase since 1951. Total sales of
the affiliated consumer and other societies amounted to about 990
million kroner in 1955* The societies had a surplus in 1951: of
almost 26 million kroner, of which 10*8 million kroner were repaid
to members as patronage refunds. This refund averaging l.U percent
of member sales was 6 percent higher than in 1951. (See table 22.)
Cooperative retail sales in Norway were a third higher in 19 $ h
than in 1951; even when allowance is made for increases in the
level of all retail prices, the gain was about lit percent. In 1955,
when prices remained steady, a further gain of 5.5 percent was
registered. Norwegian patrons of retail societies belonging to NKL


Table 22.— Norway: Sales, production, and patronage refunds of
consumer cooperative societies, 1950, 1951, 195U,and 1955


Patronage refunds by
retail societies 2/
on sales to members
NKL 1/ : Amount i Percent
: Retail :
| of
: socie- ! Wholesale : in
: kroner | sales
: ties
s society

Total sales

[NKL 1/







- ..................... ......



(In million kroner k / )
.— — - ---- --- ■— f—
— — — •—-f--— -— — ----

1950 ------- * H*1
1 9 5 1 ------- 167
1 9 5 U ------- 266
1 9 5 5 ------- 281

1 6l6
i 70U
i 938





38 .U

1 -18.7

Percent change


1950-51----- 18.1*
1951-5U----- E 59.3


S 1/5.5





Percent change after adjusting for price rises 6/


! -2.3
j 13.9
: 5.5




" - 20.!*'



r ~"..


NKL (Norges Kooperative Landsforening)•
Affiliated with NKL.
2 / Total sales by retail societies includes sales to nonmembers.
However, patronage refund is figured as percent of sales to members
k/ 1 krone ■ lii.O cents U.S. at official rate of exchange.
5/ Preliminary.
Sales of retail societies were adjusted by using the Norwegian
consumer price index excluding trade union dues, gas, electricity,
and rent; sales and production of NKL were adjusted by using the
wholesale price index.
Source: NKL Reports for 1950, 1951, 1951*, and 1955, and Coopera­
tive Activity in Norway, 1950, 1951, and 195U.

-8 2 -

received patronage refunds at a lower rate than either Swedish
or Danish patrons (1,1* percent as compared with 2.6 percent in
Sweden and 2.3 percent in Denmark). In addition to the societies
affiliated with N K L ,approximately 300 operate independently, most
of them in rural areas, for which sales data are not available.
The Norwegian wholesale cooperative (NKL) during this same
period, increased its sales by almost 60 percent (ii8 percent when
deflated by the wholesale price index).

Agricultural Cooperatives
The marketing and purchasing of agricultural products in
Norway is handled in large part by cooperatives. I n 195U, the
latest year for which data are available, there were 3*360 agri­
cultural cooperatives, of which 2,108 were purchasing associa­
tions, and 1,252 were processing and marketing associations,
with a combined membership of 359*233*
The agricultural marketing cooperatives handle a very large
proportion of the agricultural products marketed in Norway. In
seme cases, they market the whole crop, in others from 50 to 100
percent. The purchasing pool handled k3 percent of all sales of
commercial fertilizer and 6l percent of all sales of feed concen­
trates in Norway in 1952.
The agricultural and consumer cooperatives have separate
federations in Norway, but there is a close working relationship
among them. Consumer groups have occasionally become members of
the agricultural marketing associations. In an effort to delin­
eate more clearly the field of activity of each type of coopera­
tive, the federations of consumers and agricultural cooperatives
have elected a joint committee to arbitrate disputes and to define
the area of their activities, with the result that farmers'coop­
eratives have agreed to relinquish the grocery business, and NKL,
the consumers' federation, has agreed not to build more feed mills
or slaughterhouses.

Fish Marketing Cooperatives
The sale of fish in Norway is handled exclusively by coopera­
tives. In 195k, there were 33 such cooperatives which were given
exclusive rights to the sale of fish by special laws enacted in
1929 and later. These cooperatives, have established factories for
herring meal and for salting and processing codfish. The organiza­
tion of these societies has helped the fishermen obtain reason­
able prices for their catches, and has led to the elimination of
speculation and •unreasonable middleman profits, and to higher
earnings for the fishermen.


Cooperative Activity in Denmark
From 1951 to 1955, inclusive, the Danish consumer cooperative
societies handled between 11 and 12 percent of all retail trade.
The number of consumer societies has varied little since 1951, but
the membership and sales have grown. The increase in sales made
possible slightly larger patronage refunds.(See table 23.)
Danish consumers' societies purchase approximately 75 percent
of their goods from the central cooperative wholesale society,
Faellesforeningen for Danraarks Brugsforeninger (FDB)j 3U/ a small
percentage (3 to 5 percent) of these purchases are delivered direct
from the central's own factories and the remainder from outside
FDB. Half of the outside purchases are goods of types handled by
FDB: daily products, eggs, beer, etc., but many of these products
are obtained from farm marketing cooperatives.
In 1955, cooperative societies ran 2,2UU shops, of which 116
were self-service shops, compared with only 7U such shops in 195U
(UU societies had more than one shop).


The cooperative movement in Finland is larger than in any
other Scandinavian country, with membership numbering almost onefourth of the population* Since each member generally represents
a family, the proportion of the Finnish population belonging to
the cooperative movement is about 75 percent.
The Finnish consumer cooperative movement was formed at the
end of the 19th century as an instrument to promote national eco­
nomic independence. Unlike other Scandinavian cooperative socie­
ties, the initiative for establishing the Finnish movement came
from "above,” from a group of citizens interested in furthering
cooperative activities for social and national interests.
In 195U, there were U93 Finnish consumer cooperative socie­
ties, including those affiliated with the 2 major wholesale coop­
eratives and the independent consumer societies, with 1,023,295
members. This was an increase in membership since 1951 of over
3 percent. These societies increased their sales from 118.5
3U/ Information on sales and patronage dividends paid by FDB
is not available.

Table 23•— Denmark: Cooperative retail societies,
membership, sales,and patronage refunds, 1951-5?



Total sales
Million Percent increase
members kroner
Actual |iDeflated : on sales
: (percent)
sands) :
i ^


1 9 5 1 ------




1952 ------


; U53


[ 9.1

; 5.8


1953 ------


! U59


i 3.9

1 3.1*


1 9 5 U -------


j 1*68


1 U.3

I 2.9


1955 -------


f U76


| 18*3






! 3/2.5



One krone ■ lluU92 cents U.S. at the official rate of exchange*
Adjusted for increases in the consumer price index after rent,
fuel,and light have been taken out of the index.
3/ Not comparable with previous years, because a new system of
accounting was introduced in 1951*• Under the old system the refund
paid was 2.3 percent in 195U.

" ij



(annual), 1955 and earlier years*


billion raarkkaa in 1951 to over 135 billion markkaa in 195U, an
increase of lli percent, or about 10 percent after taking into
account a rise of almost h percent in the Finnish cost-of-living
index from 1951 to 1951w (At the official rate of exchange, one
markka was equivalent to $0.1i3U8 U.S. in 1951 and 195U.)
The Finnish cooperative wholesale society, Soumen Osuuskauppojen Keskuskunta (SOK), was formed in 190U. In 1916, the urban
branch of the Finnish Consumers* Cooperatives left the SOK and
subsequently established its own wholesale society, Osuustuokkukauppa (OTK)• The two societies compete vigorously with each other
Fanners dominate the SOK group and urban workers the OTK group;
however, even in the farmer-dominated SOK, wage earners comprise
two-fifths of the membership.
The two groups are about equally strong, with SOK leading in
number of affiliated societies and shops, while the number of mem­
bers and the sales are about the same in both groups. In 195U,
SOK had sales of UO billion markkaa and OTK had sales of 37*1 bil­
lion markkaa, increases since 1951 of 15,3 and 13,8 percent, respec
tively. During this period, the index of wholesale prices of domes
tically produced goods declined almost 5 percent.
An important feature of Finnish farmers' cooperatives is that
in most fields, activities are carried on by two distinct groups
of organizations, the larger one Finnish-speaking and the smaller
one Swedish-speaking.
Credit Cooperatives
In many rural districts, the credit societies are the princi­
pal financial institutions. A central credit cooperative was
first organized in Finland in 1902 by the founders of the Finnish
cooperative movement, who were concerned about the farmers' heavy
interest charges which often forced foreclosure. Local credit
societies as they were established affiliated with the central
society, which provided them with funds to lend their members.
These funds were obtained partly from the State and partly from
the sale of bonds. Today, the central society is a joint stock
company owned and managed b y the local credit societies, the
State still holding a portion of the capital.
Since World W a r H , the cooperative credit societies have
administered the main part of the large agricultural loans granted
by the State; this is a function which is unique to Finnish credit
societies. These loans comprise 30 to UO percent of the total
loans of these societies. Altogether, agricultural credit, both
from the State and from the credit societies, accounts for over
half of the total volume of business of the credit cooperatives.35/
35/ These societies are concerned primarily with short- and
medium-term credit, although long-term real-estate credit is also

-8 6 -


Sveriges Officiella Statistik.
1955 and earlier issues.
Kommersiella Meddelanden.
and June 1956.

Kooperativ Verksamhet (annual),

Kommerskollegium (monthly), January

Annals of Collective Economy (quarterly), Geneva. August-October 1955.
— Ames, J.W., Cooperative Housing in Sweden.
— Ames, J.W., Swedish Agriculture in Cooperative Enterprise.
— Wendel, Harry. The Last Service.

Norges Kooperative Landsforening (annual), 1955 and earlier issues.
Forbrukersamverket i Norge (annual), 1951; and earlier issues.
Norges Offisielle Statistikk.

Statistisk Arbok for Norge, 195U.

Osuustukkukauppa, Repoi*t of the Board of Directors for the 36th
year of activity, 1953*
Statistical Yearbook of Finland, 1955.

Brugsforeningerne (annual), 1955 and earlier issues.

Annals of Collective Economy (quarterly), Geneva, August-October 1955.
— Ames, J.W., The Scandinavian Wholesale Society (Nordisk
— Kooperativa Forbundet, Scandinavian Cooperative Export Society.
Review of International Cooperation, June 1956, International
Cooperative Alliance. Legal Hindrances to Efficient Retailing.
Freedom and Welfare, Social Patterns in the Northern Countries of
Europe, Ch. Ill, The Cooperative Movement. Sponsored by the
Ministries of Social Affairs of Denmark, Finland, Iceland,
Norway, and Sweden. Copenhagen, December 1953*


O — 429950