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■ ■ CO NSUM ER C O O P E R A T IV E S STA TES I N T H E U N I T E D Recent Developments •v V B u lle tin U N ITED S T A T E S J a m e s B U R E A U % f ■■ y * . $ ?#*; i E w a n - , 1 ■*Sv- V- = . D E P A R T M E N T P. OF M itc h e ll, L A B O R C la g u e , N o. OF 1158 LA BO R S e c r e t a r y S T A T I S T I C S C o m m i s s i o n e r CONSUMER COOPERATIVES IN THE UNITED STATES Recent Developments Bulletin No. 1158 UNITED STATES DEPARTMENT OF LABOR Ja m e s P. M itchell, S e c r e t a r y BUREAU OF LABOR STATISTICS Ewan C la g u e , C om m ission er L e tte r of T ra n s m itta l U n ite d S ta te s D e p a rtm e n t B u re a u W a s h in g to n , The S e c re ta ry I have C o o p e ra tiv e s in g w ith p rin te d o f in th e T h is O f f ic e of re p o rt B u re a u in th a t Labor was D e p a rtm e n t and C . R e v ie w under to w ith in by th e Je a n S* and Ja m e s P« 20, 19$3* A* th e on o f of Consum er re p o rt, r e t a il tra d e d e a l was F le x n e r, of of F a it h th e M* B u re a u ’ s W illia m s . a s s is ta n c e o f a s p e c ts c o n s u m e rs ' of in te re s t, of o f. F e d e ra l a n d W e lf a r e , and o th e r s p e c if ic a lly A g ric u ltu r e , C r e d it th e th e U n io n s , in F e d e ra l A gency* M it c h e ll, S e c re ta ry on t h is 1953* D e p a rtm e n t B u re a u E d u c a tio n re p o rt and d ir e c tio n f ie ld s U . a Ewan Hon* L a b o r, S ta tis tic s , D ecem ber o f August in fo rm a tio n t h e ir A d m in is tra tio n H e a lth , fa r a c k n o w le d g e S e rv ic e , Home F in a n c e h e re w ith A p o r tio n w h o le s a le p re p a re d w is h e s f a ll of in f u rn is h in g F a rm e r C o o p e ra tiv e H o u s in g tra n s m it S ta te s * e n g a g in g M o n th ly S o c ia l S e c u r ity th e honor to U n ite d a g e n c ie s c o o p e ra tio n th e th e th e L a b o r E c o n o m ic s , The F e d e ra l D. of Labor L a b o r: c o o p e ra tiv e s in o f L a b o r. i l l C la g u e , C o m m is s io n e r. CONTENTS *«8 « I n t r o d u c t i o n .................................... ............ ...................... ......... 1 Cooperatives 3 Credit in Distributive F i e l d ...................... U n i o n s ................................................................................ Electricity and Telephone Cooperatives 10 ................................................ 12 Housing C o o p e r a t i v e s ...... ....................................................................1$ Medical Care Cooperatives .......................................................... 18 Ta b le s 1 . S u p p lie s d is trib u te d 1 9 111 a n d by 2 . O p e ra tio n s 3 . S u p p lie s 1 . D e ta il 5 . A n n u a l e le c tr if ic a tio n 6 . D u ra l r e t a il o f fa rm and d is trib u te d R u ra l 8 . P ro g re s s Ju n e A H o f N a tio n a l w h o le s a le fa n n e rs ' s to re s 30, t e le p h o n e n o n fa rm by e le c t r if ic a t io n 7. re g io n a l fa rm c o o p e ra tiv e w h o le s a le s , c o o p e ra tiv e s , a s s o c ia t io n s , 5 7 1 9 1 1 - 5 1 .............. 1 9 5 0 -5 1 , n o t o r ................................... .. .......................................................................... .• • • • • • • • • * • b u s in e s s s a le s : e n d in g m a jo r 1 9 5 1 .............................................................................................................................................................. c o o p e ra tiv e b o rro w e rs 1935 s y s te m s c o o p e ra tiv e B o u s in g and p ro g ra m s A c t, th ro u g h H 8A , fin a n c e d 1953 b o r ro w in g h o u s in g by U n ite d S t a t e s ,1918 REA, p r o je c t s REA, fis c a l 1 9 5 0 -5 ? under 10 ............................................ .................. 1 5 y e a rs ......................................................................... .................. ... fro m M ay 1953 s to re s , 1 9 1 5 -1 9 5 3 . . . . . . . . . . . . . . . . . s e c t io n 213 15 1)6 of • • • • ........................................................................................ ... 18 Appendix A S u m m a ry o f p r in c ip le s la y -s p o n s o r e d a d o p te d by v o lu n ta ry A m e r ic a n M e d ic a l A s s o c i a t i o n , h e a lth p la n s . A p p e n d ix S u m m a ry o f S ta te le g is la tio n , (1 9 l9 )« fo r * ...................................................... 2 1 B 1 9 5 2 .......................... .................................................................................... ... 23 Appendix C R ecent d e v e lo p m e n ts in consum er c o o p e ra tiv e s v in o th e r c o u n trie s ...• • • • • • 21 CONSUMER COOPERATIVES IN THE UNITED STATES IN TRO DUC TIO N A S t a t e s * fro m r e v ie w in th e o f r e c e n t d e v e lo p m e n ts y e a r s * R o c h d a le p r in c ip le s T h e p r in c ip le s w e re f o r a f a c t o r y g ro u p c e n tu r y . U n ite d w a n ts th e o f T h e c o o p e r a tiv e t r ib u t iv e an d th e ( a ) th e f i e l d d e g re e ( b ) c o m p e tito r s ; b e w ith som e an d a n a s h a l l No p e rs o n s b e know n z a tio n ; s h a ll s h a ll m on ey w ho p a tr o n iz e th e U s u a lly ta k e n b y g ro u p o ft e n b e e n an d th e b y la b o r c o o p e r a tiv e s ; s u p p lie s an d a n s e l l th e in o r g a n is a tio n s s m a ll d e v e lo p e d g r o c e r y s t o r e m id d le o f th e T o d a y i n th e s . l a s t d iv e r s if ie d co n su m e r c o u n t r ie s , in o th e r o u ts id e h o u s in g , o f p r in c ip le s u n d e r p e rfo rm w h ic h an d th e c a p i t a l . c o o p e r a tiv e o f th e d is c o n s u m e r -c r e d it m ay v a r y w ith : c o o p e r a tiv e s a r e p r a c t ic e s t h e i r I n i s e a c h fo u n d c o o p e r a tiv e s ta te d jo in a th u s : c o n tr o lle d ; f o r in th e w h ic h o f a o f o f th e f i e l d s o p e r a tin g , fo r m -s o m e co n su m e r s h a l l b e c o n su m e rs ' o f s o c ie t y , s h a ll s o c ie t y th e "A th e r e p u rp o se c o o p e r a tiv e b a s is th e a n d f o r n o t m ak es am ou n t a t s p o n s o r o n a to p r o f i t o f i f i t m o re h arm to r e c e iv e n e t th a n to u n le s s th e i t o r g a n i i n t e r e s t , th e p r o f i t p u r c h a s e s s o m e m b e r s h ip . c o o p e r a tiv e d o in g b e a c o o p e r a tiv e o p en b y f o r a n d C o o p e r a tiv e s , o r o f g r o c e r s an d T h e o f I n c ., o f M ay l i k e m ay fo rm p r e v a ilin g t h a t th e p r o f i t co n su m e rs d w e llin g s 19U 7* - 1 - a i s n o n -c o n su m e r C o o p e r a tiv e s h a v e o r g a n iz a tio n s th e A . l a t e to P r e s s C o o p e r a tio n E . w h ic h t h e i r c o o p e r a tiv e s C o n su m er c o o p e r a tiv e b y c o o p e r a tiv e b u ild e r s A s s o c ia te d b u s i n e s s m e n 's M e th o d s c o n t r o l. o r g a n iz a tio n p r iv a te g ro u p o w n e rs. a s fo rm s c o n su m e rs ' o th e r p h ila n th r o p is t s u s e s h o u se b y a S p o n s o r s h ip r e ta in in g a s s is t e d w h o le s a le ; o r o r g a n iz in g th e m s e lv e s . in d e p e n d e n t l i s t e d to o r ig in a l b e e n co n su m e rs a p a rtm e n t P r in c ip le s la w s a t t r a c t in g c o o p e r a tiv e fo u n d a r e / R o c h d a le s e e k ty p e f i n a n c i a l l y w ay 1 th e f o r i n i t i a t i v e a te te n a n ts N a tio n a l t h e s e A s u t i l i s e d f o r U n ite d s o c ie t y * " p r o s p e c tiv e C o m p a ry in th e e . g . , p u rc h a s e h ig h ly th e h a s th e ite m b u s in e s s * b e e n a i n s t a p le e * g ., F e d e r a l p e r c e n ta g e o n an d h a v e o f o f o p e r a tin g E n g la n d s a t i s f y h a s m e m b e r s h ip to a u n io n s , m en o f d e n ie d r e s u lt s s p o n s o re d B u s in e s s n e e d h a v e i f th e u ltim f u n c t io n i n w h ic h b a s i s . w is h f ix e d r e tu r n e d t o n e e d s to R o c h d a le in v e s te d an d o f s im p le , f i e l d s th e y d e m o c r a tic a lly a r a t e ; b e th e th e b e fe w , an d f u n c tio n th e y r e c e iv e c u r r e n t S t a t e ( c ) s h a l l c o u r s e R o c h d a le , o th e r a d h e re n c e p r in c ip le s t h a t an d v a r ia t io n s e r v ic e s . n o n p r o fit b e a fo rm o r g a n iz a tio n m o d ific a tio n s T h e se c i e t y o f o f th e th e in c o o p e r a tiv e s c o n s id e r a b le e n d e a v o r s a t i s f y o f c o n s id e r e d , g e th e r an d t o p r o v is io n s o r g a n iz e d ; to fo rm , c o n su m e rs 1 b o th c o m p e titiv e p r o f e s s io n a l T he in c o o p e r a tiv e s in t e n s iv e ly in w o rk e rs tr a d e d in th e in e v o lv e d s t o r e S t a t e s in sh o w s ow n m ay a F ile n e . r e s e m b le u n d e rta k e c o o p e r a tiv e an d in b y th e th e E th e c o o p e r a tiv e to fo rm e d A m e r ic a n 195>2 l l i s to b u ild Y e a r b y R a il B o o k C o w lin g . o f th e e r a l C o o p e r a tiv e o f th e th a n o th e r s , m en t p o l ic i e s o f t h e i r L e a g u e , c o o p e r a tiv e in C o o p e r a tiv e s i c e ) . S u b s id ia r ie s , t h i s t h a t a g e to p r in c ip le d iv id e n d s s t a t io n s T h e re t i v e . how i s in c lu d e : m e a ls ; lo d g in g , th e c r e d it e r a t iv e m e d ic a l o r d e r , s m c a r e w ith a lle r f a m a r e ilie s S t a t e s .* / in t h e i s t e r T h e c o v e ra g e c o u n tr ie s n a tio n a l a s w e ll 2/ L o o ? to o f a s e n g a g in g T he t o , 1 9 5 2 Y e a r A h ea d , b y a w h ic h in B o o k , J e r r y a te s t o b a s is a n p a r t o f o f c o o p e r a tiv e s in v e s im e n t. a S o m e tim e s c a n n o t p a y n u m b er o f r a d io b y o th e r o w n e r s h ip a th e s e r v c h a r a c t e r is o w n in g c o o p e r a tiv e w id e f o r a u d itin g R o c h d a le th e s t a t io n p a tr o n p r in c ip le s . c o n su m e rs ' v a r ia t io n s , to c o o p e ra d e p e n d in g o f o f a s m o re o n w h o le s a lin g in o f m em b ers r u r a l i s e l e c t r i c an d h e a lth g ro u p g o o d s a r e c o o p e r a tiv e s . a v a ila b le , m any Som e i n to ( C H JS A ) h a s p a r t i a l o n ly a - 2 - p o lic y -m a k in g f o r b e n e f it m em b ers A ., P a m p h le t a r e p . N o. o f an d 3 2 , th e in t o fu n c t io n s , t h e r e g io n a l 2 , in p y r a m id e d an d S . r e g a g e n c y . n e a tly U . illio n c o o p e r a tiv e s a r e o f m c o u n tr ie s — c o o p e r a tiv e s A f f a ir s i n U n ite d c o u n te r p a r ts L e a g u e n e x t 1 0 th e s in c e co o p M ic h i t s b a n k in g c o o p e ra w ith r e s p e c t iv e ly . in an d fo u n d c o m p a n ie s co n su m er a r e r e c r e a t io n ; lo c k e r s u n lik e c o n t r o llin g P u b lic th e S t a t e s e d u c a tio n a l an d fo o d c o o p e r a tiv e s g o v e rn m e n ta l th e fr o z e n in s u r a n c e th e a c t i v i t i e s d is t r ib u t io n ; r u r a l c a r e ; n u m b er a r e th e y U n ite d an d C o o p e r a tiv e b u r ia l o r m e m b e r s h ip , p e rfo r m C o o p e r a tiv e n e x t, m u tu a l m e m b e r s h ip w h ere r e g u la r , s tu d e n ts ; in T h e se s c h o o l m e m b e r s h ip s , a n d th e c o o p e r a tiv e s g e n e r a tio n n u r s e r y d is t r ib u t in g o n e c e n t r a l V o o r h is , c o n su m e rs' t h e r e q u ir e d — L e a g u e L e a g u e 's to i;, $ 0 0 ,0 0 0 . e d u c a tio n , E u ro p e , f e d e r a tio n s th e g r e a t e s t c la im e d c o o p e r a tiv e w e s te rn th e r a d io c o o p e r a tiv e s d iv e r s i f i c a t i o n . 1 9 $ 1 ); in a b o u t n o t o f T h e in b e lo n g e s tim a r e co n su m e r m an ag e c h a n n e llin g ( e . g . , t o d e f in it io n c o lle g e s e r v ic e s . h o u s in g , C o o p e r a tiv e s o c i e t i e s . f o r n u m b er r e p o r t to f u r t h e r lo a n s ; $ 0 0 ,0 0 0 ro u g h o th e r N e v e r th e le s s , e l e c t r i c i t y s m a ll c o o p e r a tiv e s o r o f h o u s in g ; ( $ ,1 9 6 ,3 9 3 S t a t e s a o n t o g r e a t e r a n d O n ly in s e r v ic e p r o p o r tio n s u b je c t a n d U n ite d a c o n fo rm in o f s e v e n t e r p r is e s . e . g . , a c t i v i t i e s P o lic y h o ld e r s b e lie v e d in in v e s t s im p le a r e p la n s , th e w ith , o r 6 0 0 ,0 0 0 .a r e d is c u s s io n an d p a tr o n a g e . to w a rd s u p p lie s a f f i l i a t i o n s , th e d is tr ib u te d th a n d e s ig n e d in s u r a n c e ; u n io n s in h o ld e r s , o r c o o p e r a tiv e s , th e la u n d r y ( 3 ,$ 0 0 ,0 0 0 ) . n o t g o n e c l a s s i f i e d . te n d e d a n d a n d n o s in g le a r e o r s c r a p p e d ; i s b e n o d o r a t h e r b e up s u p p ly , u s u a lly m e a s u re m e n ts c a r e ; s e r v ic e ; u n d e r ta k e r s ' t i v e s to s e t o f a r e p o lic y c o o p e r a tiv e c o u r s e , p ro g ra m s y e a r s h a v e m e d ic a l te le p h o n e i n o f th u s r e c e n t S t a t e s o th e r t h e r e a s s o c ia t io n s I n U n ite d o f p a r t ic ip a t io n t h e i r s o u rc e m u st c la im o r S t a t i s t i c a l th e a A ll a c t iv e b y p a tr o n a g e a ls o to d a y f u r t h e r e a r n in g s s in c e c o o p e r a tiv e s , h a v e fr e q u e n tly o b ta in in g p r o p o r tio n c o m p a n ie s h a v e in to o f in in s u r a n c e c o m p a n ie s p r o b le m s in v e s tm e n ts e x c e p t U .S . A . e n c o u r a g in g an d p u rp o se t i c s , m u tu a l c h a r a c t e r i s t i c s — som e l o c a l w h o le s a le C o o p e r a tiv e s 1 9 $ 2 . c o o p e r a t i v e s (o w n e d t io n s in c lu d in g c i a t i o n , a n d i n d i r e c t , d a ta b u s in e s s e s t i s r a t h e r th a n s te p s s a le ) b y a to s to c k o f y e t g e n e r a l. h a s in a te v o lu m e b e e n a s a a n p a tr o n a g e d iv id e n d s . N e t c r i t e r i o n o f r a t h e r I t f a r e i s f i e l d s l e s s ; e .g . , m e m b e r s h ip t i s t i c a l su c h d i f f i c u l t w h ere in s t a t i s t i c s d o n o t s e r v ic e s th a n a b y n e t (s u c h an d an d I t b e t h i s d o lla r th a n n e t an d a r e v o lu m e o f c o o p e r a tiv e s a s n e t s h o u ld b e o f n o t A lth o u g h a r e im a llo c a t io n h e r e i n e a r n in g s ) I n o n ly a s o f th e s o c i a l a r e th e s e f i e l d s , s t a h o w e v e r, c o m p a r a tiv e w e l m e a n in g p o s s ib le r e c o g n is e d , th e i s b u s in e s s . o f th e h a v e W h o le la r g e g a in . ta k e n r e c r e a t io n . a e a r n in g s f o r i n t e r r e p la c in g p r a c t ic e b e c a u s e o f i t i a l C o o p e r a tiv e r a t h e r a r e i n p e r io d ic a lly , fu n d s m em b er v o lu m e c o o p e r a tiv e s M id la n d s u c h , o r fa r m s . fro m t o r e p r e s e n t A sso C U IS A *S o n ju d g e d e a r n in g s m ay l o s s c o s t s in d ic a tio n o f in d ic a t o r a s s a le s e d u c a tio n , p e r c e n t) c a n n o t s to c k g o o d s u c c e s s s e r v e d , ( 8 0 H o w ev er, m e m b e r s h ip th e a n y o f o r g a n is a A s s o c ia tio n * d is t r ib u t iv e in v e s tm e n t p e r s u c c e s s . g iv e N a tio n a l ( e . g . , p r o f i t s in d ic a to r s c a r e , o f o f ju d g e n u m b ers m e a s u re m e n ts p r o f e s s io n a l to m e d ic a l n o t in e a r n in g s e c o n o m ic f ig u r e s , Som e a c c o m p a n ie d b o th la r g e r a t io is s u e s . i s i n t e r e s t o th e r U n io n M e m b e r s h ip b lo c k s new a lo n e s o u r c e s u c c e s s , th e m em b ers r e t i r e w ith an d C r e d it C o o p e r a tiv e c o o p e r a tiv e s u n le s s a c c o u n t. t o th e p r e p o n d e r a n tly p a tr o n a g e . is s u e d is c la im th a n i s in a c t iv e fu n d s o m e tim e s to in t o c o n tin u in g S a le s E l e c t r i c b u s in e s s , ta k e n e a r l i e r c o o p e r a tiv e s R ir a l s o c i e t i e s ) con q> any, d is t r ib u t iv e o f r e v o lv in g th e p o r ta n t o f e lim d i s t r i c t m e m b e r s h ip v o lu m e a ls o o r in s u r a n c e N a tio n a l s u c c e s s o r ta k e n v o lu m e t h e l o c a l m u tu a l in d iv id u a l T h e s h ip b y a t h a t q u a lit y o f th e re n d e re d . COOPERATIVES IN D IS TR IB U TIV E F IE L D T h e in th e la r g e s t U n ite d c h i e f l y i n m em b ers an d o th e r fa rm an d co n su m e r an d f u n c t io n . o r e . g . , th e t iv e s a r e w h o le s a le th e o f o f th e a w ith som e la w s ); fa rm a r e e r s ' f id e ( 1 ) o n ly ow ned w h ic h b y s e l l th e y e n g a g e th e y a ls o s u p p ly w ith to a r e th e b o th c o m m o d itie s c o m b in e e n g a g e a s s o c ia t io n s c o m m o d itie s i n s e l l i n g g e n e r a lly l o c a l a t b o th th e p r o d u c e r s u p p ly c o m m o d itie s o b ta in e d s o c i e t i e s . r e t a i l t h e i r n e e d e d a n d a t t o th ro u g h T h e re a r e w h o le s a le ; ( O I F ) . m a r k e tin g , A c t an d c o o p e r a tiv e s W h ile m em b ers, o r g a n is a tio n s l o c a l b y c o o p e r a tiv e n a m e ly : d is t r ib u t iv e s e r v ic e s o r g a n is e d th e s e p u b lis h e d C a p p e r -V o ls te a d a n t i - t r u s t a r e F e d e r a tio n fa r m an d b o n a M any o f t h e i r v a r io u s s o c i e t i e s L e a g u e o n an d g ro u p o r g a n is a tio n s . f o r c o o p e r a tiv e s , c e n t r a lis e d c o lle c t e d e r s ' p r o d u c ts u s e . r e t a i l ; S t a t i s t i c s m e n ts p a tr o n s s u c c e s s f u l fa r m c o o p e r a tiv e s a t O ran g e d e f in it io n fa rm h o u s e h o ld T h e se la r g e t h e f u n c t io n s ; m em b ers r e g io n a l som e m o st i s m a r k e tin g f o r t h e i r an d S t a t e s s e r v ic e , th e F a rm u s e d (w h ic h h o ld p u r c h a s in g c o o p e r a A d m in is tr a tio n . FCA b a s e d e x e m p te d F a rm e rs 3 b y an d C r e d it i s s u c h th e o n th e o r g a n iz a tio n s c o n t r o llin g T h e r e q u ir e fro m i n t e r e s t in th e a s s o c ia t io n ; v o te o r , r e g a r d le s s th e e x c e s s u c t s ( 2 ) o f a s s o c ia t io n o f o f 8 n o th e m em ber am o u n t d o e s p e r c e n t p e r n o n -m e m b e rs n o t o f o f p a y y e a r ; to a n o r u r b a n , th e a s s o c ia t io n s to c k o r i s a llo w e d m o re m e m b e r s h ip c a p i t a l h e d iv id e n d s an d am ou n t ( 3 ) th e g r e a te r o n s to c k o r a s s o c ia t io n i n v a lu e th a n ow ns m e m b e r s h ip d o e s th a n i t n o t o n e th e r e in * c a p i t a l d e a l h a n d le s in f o r in p ro d i t s m em b ers* T h e th a n to th e m e e t k e e n r e q u ir e s o f n o n fa rm , fa rm g ro u p , c o m p e titio n h e a v y an d m e r c h a n d is e ; c a n n o t s a le s b e p r o v id e d lo w an d lim it e d . T h e f a c tu r in g c o m p a n ie s som e a rra n g e m e n ts m ade to co o p b ra n d t h e i r o r t iv e s a c c o u n t la r g e tu r n o v e r b e a r e a T he h ig h am ong b e e n b y m re fu n d s b y th e an d b y f a c in g s o c i e t i e s in m anu to to h a v e b e lo w w ith p r o d u c ts . ( I n p r o d u c ts s o ld u n d e r d is t r ib u t iv e c o m p a r a tiv e ly c o o p e r a tiv e m a r g in s n e c e s s a r ily c o m p e titio n c o o p e r a tiv e s p r o d u c e r s , T h e se h ig h -g r a d e w h o le s a le s o f w e ll-a d v e r tis e d d i f f i c u l t i e s an d r is k s an d i s h ad g o o d s d is p la y s f o o d s t u f f s , c o o p e r a tiv e b y h a v e co n su m e r f u l l m an ag em en t p a tr o n a g e n u m ero u s an d f a c i l i t i e s . in m ade o r ta lity co n su m e r e x p e r t c o m m e r c ia l g r e a t tu r n o v e r ; p a r k in g o f r e a liz e d h a v e r a p id l e s s o f p a r t ic u la r ly d iv e r s if ie d s p e c if ic a t io n s f o r s o ld , a r e a s s is t a n c e , R e t a ilin g w ith c a p i t a l , o u tw e ig h e d h a v in g l a b e l .) an d p o s s i b i l it y to e s ta b lis h e d c a s e s , ite m s th e g o o d s r e t a i l e r s . lo c a t io n s , la r g e c o o p e r a tiv e s g o v e rn m e n t in v e n to r ie s , m any e c o n o m ie s co n su m e r o th e r s t o r e w ith o u t On r e c e iv e d fro m g o o d th e r e f o r e d is t r ib u t iv e n o t v a r ie d a n d p e r s o n n e l. a r e h a v e e a r n in g s . c o m p lic a te s th e c o o p e ra T he s t a t i s t i c a l r e p o r tin g . W h o le s a le o f t h e i r T ra d e . s u p p lie s a s s o c ia t io n s , s o m e tim e s fro m w h ic h o p e r a te d r e p o r ts an d la r g e s t o f w h ic h c id e s , 2 7 p e r c e n t fa rm o e r c e n t 3 p e rc e n t o f b y s a le s w as f o r p e tr o le u m m is c e lla n e o u s ite m s . ( S e e d e c lin e d 7 s o ld w as m u ch le s s w fro m som ew h at th a n an d f i e l d p e tr o le u m 3 / h ad g o o d s s a le s p r o d u c ts m a in te n a n c e 19 U l, in c lu d e s o th e r ite m s . T he th a n 1 9 U l, 1 9 5 1 g o o d s. c o o p e r a tiv e o r n o t in a t e r ia ls , a s f in d o f th e e v e n 1 9 $ 1 , m illio n , i n s e c t i s t e e l p r o d u c ts ); a c c e s s o r ie s ; p e r c e n t w h ic h th e w ith o f e q u ip g o o d s in c r e a s e p ro s p e ro u s in f o r h ad e l e c t r i c a l r a t e to th e s e e d , m is c e lla n e o u s e x p a n s io n co m p a red U g ro u p , g o o d s— v o lu m e b u t and a u to m o b ile co n su m er w h o le s a le s I n $ 8 0 2 .2 an d h av e a c c o r d in g f e r t i l i z e r , m is c e lla n e o u s a r e s in g ly . a s s o c ia t io n s 1 9 U 1 -5 1 , a t e r ia ls ; A p p a r e n tly , a t t r a c t i v e , fa rm an d m in in m w h o le s a le a s s o c ia t io n s t o t a l l i n g ( f e e d , p r o p o r tio n e n te r p r is e s A d m in is tr a tio n .3/ p a c k a g in g The l o c a l la r g e th e p r o d u c e r o f M a jo r ( C ir c u la r R e g io n a l C -lli8 , P u r c h a s in g D ecem b er h C o o p e r a tiv e s , 1 9 5 ? ) • F a im w as an d co n su m er g o o d s p r e d ic t s . O p e r a tio n s A dm Tnis t r a t i o n fa rm d e ca d e and p r o d u c e r s ' d i f f i c u l t , l o c a l in th e a c o o p e r a tiv e s e r v ic e m a in ly 1 ) . la r g e r f o r e ll- e s ta b lis h e d g o o d s c o a l, an d t a b le p e r c e n t g r o c e r ie s , an d o b ta in n a tio n a l b y C r e d it e q u ip m e n t, p a in t , m e n t, F arm p r o d u c e r lu m b e r , o r s e ld o m w h o le s a le s in an d s e r v in g b u s in e s s th e fa rm w e re m a c h in e r y f o r w h o le s a le s , t h e ir is s u e d c o o p e r a tiv e s d i s t r i c t , M a n u fa c tu r in g w h o le s a le s c o o p e r a tiv e 6 5 l o c a l ow n. th e e x p a n d ed r e c e n t ly 21 th e y b y C o o p e r a tiv e p r o s p e re d M o st r e g io n a l, C r e d it T a b le 1 . S u p p lie s D is tr ib u te d try W h o le s a le s ,i / M a jo r 1 9 4 1 R e g io n a l an d S a le s Ite m s N um ber A ll o f P ro d u c e r F e e d . . g o o d s . • • • • • . . . . . . .......................................................... . • S e e d . F a rm m a c h in e r y an d . • . • . • . S t e e l m • . » . • • . . . lu m b e r* p a in t , m a n d . . . . C • • ^ I n c l u d e s y e a r , in S o u r o e : C ir c u la r . • • . G -2 4 8 , . . • an d • $ 2 C r e d it t a b le 1 0 0 .0 4 3 .5 4 3 .9 1 5 *6 8 4 . 7 1 ,2 2 1 9 .2 8 .9 4 ,8 5 0 3 0 ,0 9 4 2 .8 3 .8 2 ,8 6 5 2 7 ,9 8 0 1 .7 3 .5 9 ,7 8 2 1 7 ,7 8 1 5 .8 2 .2 2 ,6 8 0 1 4 ,5 1 6 1 .6 1 .8 2 ,7 1 9 1 0 ,3 9 7 1 .6 1 .3 4 2 ,0 0 1 2 1 8 ,9 7 3 2 4 .7 2 7 .3 2 ,9 7 0 2 4 ,6 9 4 1 .7 3 .1 1 2 ,4 8 5 3 4 .1 0 4 7 .4 4 .2 1 ,3 4 2 8 ,8 7 9 1 .5 1 .1 2 ,5 0 9 6 ,2 7 7 0 .8 0 .8 918 1 ,7 1 9 0 .5 0 .2 1 7 ,2 2 9 4 .6 2 .1 • . . . . . . . . . . . • • a s s o c ia t io n s 1 9 5 1 * F a rm • 1 0 0 .0 3 5 2 ,4 4 3 . . . . o a l ......................................................................................... O th e r p e r e q u ip m e n t . — 7 3 ,7 9 5 M is c e lla n e o u s G r o c e r ie s — m a in te a te r ia ls E l e c t r i c a l 21 1 9 5 1 a n d a c c e s s o r ie s n a n ce 1 7 1 9 a 6 5 .4 .................................................. p r o d u c ts 1 9 5 1 6 6 .2 I n s e c t ic id e s a u to 1 9 4 1 5 2 4 .4 3 2 ................................. a te r ia ls p r o d u c ts P e tr o le u m P e r c e n t 1 1 2 .3 7 5 .......................................... e q u ip m e n t P a c k a g e in * 1 6 9 -8 3 1 • F e r t i l i z e r C o o p e r a tiv e th o u sa n d s a s s o c ia t io n s c o m m o d itie s F a rm 1 9 5 1 m • 7 ,7 1 6 • d o in g illio n a t in l e a s t $ 5 m illio n w o rth o f b u s in e s s 1 9 U l. A d m in is tr a tio n * 4 -* - 5 - U , S . D e p a rtm e n t o f A g r ic u ltu r e , In s a le a d d itio n d o m in a n tly n o n fa rm c o o p e r a tiv e ^ / m ade s a le s p e r c e n t o f O v er s u ffe r e d t a i l o f n o n fa rm p r ic e H o w ev er, c a r r ie d T h e p a tr o n a g e b u s in e s s 3 d e f la te d f o r p r ic e o n new y e a r s , ex p a n d ed l i n e s u n d e r ta k in g o r t o to p i l e 191* 9 * ( I n n o n e o f f o u r o f 1 9 l| l 2 w e re o n ly a fo u r th e c o m m e r c ia l "g o o d " r i s e w as a s s u m in g w a r b a s is in 3 3 1 9 U 5 y e a r s w a r th e b y o f c o m b in e d r e b u i l t ex p a n o f 191*5 w h en th e n o n fa x m ta k f u n c t io n o r g a n iz a tio n s * th a n an d s a le s a c t i v i t i e s , p u b lis h in g m o re n e t m a jo r 191*5} E a c h o th e r t o t a l th e w e re b e tw e e n a b o v e an d y e a r s — in 191*6. n o n c o m m e r c ia l b o rn e h ad th e f o r s a le s c o o p e r a tiv e r e s e r v e s an d o f w h o le s a le s y e a r s * ch a n g e s p e r c e n t* c o m b in e d 2 d o u b le d e d u c a tio n a l c u m u la tiv e i n f o r p e r c e n t an d p r e v io u s ly a 7 5 n o n fa rm 1 som e o r g a n iz a tio n s a v e ra g e d c h a n g e s , c o s t s an d m o d est w h o le s a le n o n fa rm d u r in g a d ju s t e d p a id , p e r fo u r o n e 3 .U f a i n 2 * $ 6 * 7 2 an d o r m a jo r h ad p r o s p e re d w h en 2 1 $ 1 0 0 1* y e a r s , w h o le e v e n th e t o w h o le s a le s : in p r e a s s o c ia t io n s $ 2 8 3 ,0 0 0 c o o p e r a tiv e s th e w h o le w ith d is t r ib u t in g n o n fa x m t a b le $ 3 * 1 0 o f f o r w ith in w h o le s a le o r g a n iz a tio n s th e r e a c h in g fa rm 1 9 5 1 fro m fa rm th e 1 9 1 *6 -1 *8 , th e o f n e t p e r c e n t e x p e r ie n c e fo rm e d i t s 5 * 5 t o fa rm th e th e s e o f w ith b o th u p , th e T h e se a y e a r s , d e p a rtm e n ts , p a y b e g a n e v e n o f v o lu m e th e i c i t s D e f $ 7 0 0 ,0 0 0 e a r n in g s i n re a c h e d $ 1 0 0 ,0 0 0 .) t i o n s , b y e a c h an d n e e d s * 1 9 5 1 , d iv id e n d s s u c c e s s e s b y m a n u fa c tu r in g e a r n in g T h e o n r e g io n a l c o o p e r a tiv e s in ra n g e d r a p id ly , th r e e to co n su m er th e o f 1 1 w h o le s a le s f o r o r g a n iz a tio n s o r t h a t th e o f g o o d s n a tio n a l o p e r a tio n s w h ic h 5 a y e a r s p e r io d , y e a r w ith th e s e o u t th e w h o le s a le s , co n su m e r co m p a re s th e in c r e a s e d l e v e l , s io n 191*6 a n d in s a le s an d r e s p e c tiv e ly * s h a r p ly u p . in g e v e r y 1 9 UU, o f f o r 1 1 -y e a r in lo s s e s T h e v o lu m e sh ow n a n d illio n , r e tu r n c o m p a r is o n th e an d c o n tr a s te d fa rm m T h is e a r n in g s 1 9 l* 9 b o th s a le s * i s c o o p e r a tiv e m a in ly $ 8 .2 a t A a r e fa rm m e m b e r s h ip s , s e r v e s c o o p e r a tiv e s in th e v a lu e d w h o le s a le s * n e t t o c o o p e r a t iv e s lj/ d is t r ib u t e T h e s it u a t io n an d liq u id a t io n 1 9 5 0 ; f o u r th th r e e in b e e n o f d r a s t ic B a la n c e g a in s . c u r ta ilm u n e c o n o m ic o r g a n iz a tio n s 1 9 5 1 * c o u r a g in g fo r c e d sh ow ed s h e e ts H o w ev er, th e f o r e n t o f a c t i v i t i e s * p r o f it a b le 1 9 5 1 an d a c c u m u la te d o p e r a tio n s , o p e r a tio n s f o r r e o r g a n iz a R e tre n c h m e n t 1 9 5 2 d e f i c i t s in w as t h a t c o n tin u e d h a v e n o t c o m p le te d y e a r , to y e t th e sh ow in e n a l l c a s e s e lim in a te d * I t c o v e ry n o n fa rm U i s / 5/ th e e a r ly d e c lin e c o o p e r a tiv e A s s o c ia te d I l l i n o i s } c e r i e s to o fro m E a s te r n N a tio n a l an d d iv is io n o th e r w as (m id -1 9 5 3 ) w h ic h t o assu m e fo llo w e d w h o le s a le s * T h e p o s tw a r C o o p e r a tiv e s , C a lif o r n ia } C o o p e r a tiv e s , I n c * , C o o p e r a tiv e s , c o m m o d itie s , liq u id a te d in H ew C h ic a g o * a n d p e rm a n e n ce p o s tw a r 1 9 5 0 * -6- th e c y c le r e v e a le d C e n tr a l S t a t e s a p p a r e n t o f a n t h e r e m a jo r u n s o lv e d C o o p e r a tiv e s , Je r s e y * I t s m ilk in g in o v e r -e x p a n s io n d e p a rtm e n ts m a c h in e s } th e in 1 9 5 1 c e r e a l w e re g r o p r o d u c ts Table 2. Operations of farm and nonfarm wholesale cooperatives, 19U1-51 1950 1951 M a jo r r e g i o n a l f a r m in 191*6 191*7 191*5 1910* 191*3 191*2 191*1 s u p p ly c o o p e r a t i v e s : Number o f a s s o c i a t i o n s ^ / .................................. S a le s , 19U 8 191*9 th o u s a n d s • • .................................. N e t e a r n i n g s ................................................... 21 21 20 18 18 16 18 18 18 17 17 $ 8 0 2 ,2 0 3 $ 6 9 3 ,6 0 8 $ 6 3 6 ,2 0 0 $61*7,1*1*2 $5U *, 727 $ 1 * 2 3 ,9 6 3 $ 3 6 0 ,7 5 5 $ 3 1 * 8 ,7 5 9 $ 2 7 6 ,3 7 9 $ 2 2 0 ,9 0 2 # 1 6 9 ,8 3 1 $ U * ,0 S 7 $ 3 0 ,8 2 2 $ 1 9 ,8 1 9 $ 3 8 ,3 2 0 $ 2 1 ,0 9 5 $ 1 7 ,8 1 1 $ 2 3 ,1 * 3 3 $ 1 7 ,7 1 * 2 $ 1 3 ,5 2 7 $ 9 ,5 1 * 8 1* It It It 3 3 $ 2 9 ,0 3 ? N o n farm w h o l e s a l e s : Number o f a s s o c i a t i o n s ^ / .................................. S a le s , in th o u s a n d s 1* ............................................. 1* 1* It 1* $ 8 ,2 0 9 $ 1 5 ,6 8 0 $ 1 7 ,0 1 5 $ 2 1 ,2 6 7 $ 1 9 ,5 7 5 $ 2 1 *, 8 1 5 $ 1 2 ,1 * 6 6 $ 1 1 ,6 3 5 $ 8 ,0 1 * 7 $ 3 ,2 5 0 # 2 ,5 3 0 $283 $52 -$ 2 3 l* -$ 1 * 8 6 $121* -$ 1 9 $91* $72 $17 $70 $50 F a rm a s s o c i a t i o n s ........................................................ $5-1*9 $1*.1*1* $ 3 .1 0 $ 5 .9 2 $ 5 .3 3 $ 1 * .9 7 $ U .9 1 t $ 6 .7 2 $ 6 .1 * 2 $ 6 .1 2 # 5 *6 2 N o n farm a s s o c i a t i o n s $ 3 .3 7 $ 0 .3 3 -$ 1 .3 8 -$ 2 .2 9 $ 0 .6 3 -$ 0 .0 8 $ 0 .7 5 $ 0 .6 2 $ 0 .2 1 $ 2 .1 5 # 1 .9 8 N et e a r n in g s or lo s s N et e a r n in g s o r lo s s (-), (-) in th o u sa n d s. p er $100 o f s a le s ........................................ . I n d e x n u m b e rs ( 1 9 ii5 = 1 0 0 ) U n a d ju s t e d s a l e s v o lu m e : F a rm a s s o c i a t i o n s ........................................................ N o n fa rm a s s o c i a t i o n s S a le s in • • • • ........................... 2 2 2 .lt 1 9 2 .3 1 7 6 .3 1 7 9 .2 1 5 0 .1 1 1 7 .5 1 0 0 .0 9 6 .7 7 6 .6 6 1 .2 U 7 .1 6 5 .9 1 2 5 .8 1 3 6 .5 1 7 0 .6 1 5 7 .0 1 9 9 .1 1 0 0 .0 9 3 .3 6 1 * .6 2 6 .1 2 0 .3 1 5 3 .1 * 1 1 *3 *5 1 3 3 .6 1 2 5 .3 1 1 2 .9 1 0 l* .9 1 0 0 .0 9 5 .7 7 9 .8 6 9 .5 6 2 .8 1 * 0 .3 8 5 .6 9 1 *. 1 1 1 2 .9 1 1 2 .8 1 7 3 .6 1 0 0 .0 9 5 .t 6 5 .2 2 9 .3 2 6 .8 c o n s t a n t (1 9 U 5 ) p r i c e s : F a rm a s s o c i a t i o n s ^ / ................................................... 1 N o n fa rm a s s o c i a t i o n s - ' . ........................................ 1 / F ro m 1 9 U l t o 1 9 L £ , a s s o c i a t i o n s h a v in g an . a n n u a l f a r m s u p p l y b u s i n e s s o f a t l e a s t $ 2 m i l l i o n e a c h w e re i n c l u d e d ; i n 1 9 h 7 , t h e m inim um v o lu m e o f b u s i n e s s w as r a i s e d t o $ 5 m i l l i o n . 2 / A l l know n c o o p e r a t i v e w h o le s a le s o u ts id e th e fa rm f i e l d s r e in c lu d e d . I n 1 9 U 3 , N a t i o n a l C o o p e r a t i v e s w e re f i r s t i n c l u d e d . P r io r t o t h a t tim e i t o p e r a te d a s a b ro k e ra g e a g en cy . 3/ A d ju s t e d b y m ea n s o f a s p e c i a l l y co m p u te d w h o l e s a l e p r i c e i n d e x w e ig h t e d i n a c c o r d a n c e w i t h t h e t y p e s o f g o o d s s o l d b y t h e c o o p e r a tiv e w h o le s a le s i n 19U 5. h / A d ju s t e d b y m ea n s o f C P I f o o d c o m p o n e n t, s i n c e f o o d i s m a jo r i t e m o f b u s i n e s s . 1 9 5 2 ), S o u rces: O p e r a t i o n s o f M a jo r R e g i o n a l P u r c h a s i n g C o o p e r a t i v e s 1 9 1 * 1 - 5 1 , F a rm C r e d i t A d m i n i s t r a t i o n and B u re a u o f L a b o r S t a t i s t i c s f i l e s . ( C i r c u l a r C -lU fl, D ecem ber d ile m m a : t io n o n b o th c r e a s in g b u y in g a n o t m ade th e b y th e th e y e a r p o s e . la r g e g ra n d t o t a l s u p p ly th e m ean s c r e d i t a r e dem and e r a t iv e w h o le s a le s . y e t p o se d a s w as i n p a r t s a le s a s i n o f g ro u p , fa c e d o f m o re s e t 3 0 , to $ 8 0 1 9 5 3 v o lu m e i s th e to o n e -th ir d fin a n c e fa rm w as o v e r fa r m e r s ’ a s s o c ia t e d to g o v e rn m en t o f s u p p ly lo a n e d $ 1 0 2 .7 e s t a b lis h e d , b y t s u p e r lo a n s h is illio n . Ju n e c o o p e r a tiv e s o n do b u s in e s s . f o r m an d an d th e in w ith c a r r y c o o p e r a tiv e s , b y m o p e ra c o s t s r e q u ir e d fa rm u p illio n s u c c e s s f u l r a is e s a v in g s c r e d it u n lik e w e re to th e to m ay C lo s e w e re o f T h e a d o p t C e n tr a l in D o n e c e n t r a l s ig n o f I n p u r B e tw e e n 1 9 5 2 , a f o r t h e i r a w o v e rco m e t e n d to b eco m e i n 1 9 5 3 b y CCW a c t i v i t i e s a s a lis h in g th e p ro p a g a n d a a h a s t h e i r W w as th e th e I n tw o co n su m er n u m b ers g ro u p to r e t a i l n o n fa rm i s ( in c lu d in g co o p d o e s s u p p o rt p r in c ip le s n o t la r g e o ft e n p r o p u b lic a tio n s ) fa rm c o o p e r a tiv e o r d e r to som e m e e t o f a s s o c ia t io n s u n if ie d a c t i v i t i e s s to r e fro m an d la r g e p o l i c i e s , c o m m e r c ia l s u f f i c i e n t l y k e e n t o sam e p r o b le m s fa rm in to w h o le t h e th e s e c o o p e r a tiv e s — b o th an d an d s y s an d a c t i v i t i e s . in flu e n c e 1 9 5 1 w ith i t s e r v in g l o c a l s o c i e t i e s M ic h ig a n , a f t e r e x p e r im e n tin g a n d 1 9 5 2 , p ro p o s e d f o r a r e a a n tic ip a te d in s to r e t o o f e x p e r ie n c e d lo c a l b e e n a n t i c i c o o p e r a tiv e c a s e la r g e h a v e o f h o le s a le , d u r in g s e p a r a te fro m o f th e m e th o d s. is c o n s in b ra n c h th e l e v e l , d e f i c i t s . w h o le s a le n o n p a y in g I t u rb a n p ro g ra m s p o stw a r s to r e s c o o p e r a tiv e s ta k e n s u c h p u r c h a s in g c o n tr a c t s o r g a n iz a tio n . m e rg e rs o f s t o r e s d i s t r i c t i n o r g a n iz a tio n s . o f th e c o o p e r a tiv e p r o s p e r ity b u lk W a t w h o le s a le s w h o le s a le c o n c e n tr a te d in o f la r g e C o o p e r a tiv e o f an d r e g io n a l som e th e f a c t o r o r g a n iz a tio n s n o n fa im i s t r i c t s o c i e t i e s c o r p o r a te th e c h a in a t c o o p e r a tiv e ly -m in d e d e x p e n se m ark ed c o o p e r a tiv e a te r ia liz e la r g e n o n p r o d u c tiv e , S u p e r io r in t e g r a t io n f o r c e r t a i n t o m E d u c a tio n in t e g r a t io n th e u rb a n im p o r ta n t th e w ith o f e x p a n s io n a c t iv e b u t th e fro m c o o p e r a tiv e s a n s t o r e s . o p e r a tio n s s e p a r a tio n m em ber w as th e u r g in g C o m p e titio n a r a t e w ere lo a n e d to in d iv id u a l b y m a n a g e m e n ts te m a tiz e d f a i l s A n re m ed y , s p it e u rb a n — a r e s te p w as f in a n c e r e s p o n s ib le a p r o b le m s w o u ld Ju n e s u f f i c i e n t l y r e t a i l th e I n t o f a i l u r e e x i s t c o o p e r a tiv e th e B a n k s c o o p e r a tiv e s illio n s o m e tim e s S u c h L a k e o n f o r d i f f i c u l t i e s fo u n d l e v e l . th e h a n d , a lm o s t n e c e s s a r y tp w p r e v e n tin g A d m in is tr a tio n . 1 9 5 3 , i s c o o p e r a tiv e s , C o o p e r a tiv e 3 0 , m $ 6 0 0 b y o th e r c o o p e r a tiv e s Ju n e b a n k s o f th e an d U rb a n v o lu m e r e t a i l s , b u s in e s s . p a te d a s On C r e d it to s a le s m em ber o v e rh e a d o u ts ta n d in g th e W hen an d to b a n k s L o a n s w hen la r g e an d tr a d e . F a rm e n d in g 1 9 3 3 , o f l o t s . o f a c c e s s b y h a n d , b u rd e n v o lu m e h a v e v is e d o n e w h o le s a le s th e i n la r g e th e b y th a t e a c h o f r a t h e r s e t up C o o p e r a tiv e b e a n s " , in th e m e r c h a n d is in g th e th e th a n a l l th a t n e x t s te p a r e a s . a n T h e P u b lis h in g w o rd so f a l l th e w ith o f i t s s e r v ic e b y w o u ld in v a lv e l o c a l c o o p e r a tiv e in d e p e n d e n t e d u c a tio n a l, in u n it . A n o th e r p r o m o tio n a l an d p u b A s s o c ia tio n * — " to se p i t s o rg a n , "C o o p e r a tiv e B u ild e r ." T h e t io n am ong a c t i v i t i e s c o o p e r a tiv e th e o ld e r an d in w h o le s a le s ’ m em b ers in d e p e n d e n t w ho c e n t r a liz a t io n h av e ta k e n v o lu n ta r y g r e a t p ro g ra m p r id e n e ig h b o r h o o d - 8 • h a s in g ro u p s a ro u s e d t h e i r o p p o s i e d u c a tio n a l fo r m in g an d fin a n cin g t h e ir own s o c ie tie s to meet lo c a l needs. However, such groups are becoming le s s ra th e r than more common, as immigrant groups experienced in consumer cooperation in Europe lo se coh esiveness, and as the population be comes more prosperous and m obile. As fa m ily incomes r is e , and ownership of autom obiles g ives consumers a w ider shopping range, thqr appear to p re fe r v a rie ty of goods over the p o s s ib ilit y of re ce iv in g sm all patronage d ivid en d s. Even in r u r a l communities, a recen t U n iv e rsity of Minnesota study found, "the opportunity f o r the cooperative so c ie ty to hold patronage has le s se n e d ." ^ The study concluded th at a new type of consumer cooperative may emerge "very d iffe re n t in id e a ls and p rin c ip le s from the so -c a lle d t ra d itio n a l organiza tio n ." Another p o s s ib ilit y I s th a t cooperatives may concentrate more on f ie ld s other than r e t a il tirade. lo c a l A sso ciatio n s ( R e t a il) . The volume of business done by the w holesales i s only a rough in d ic a tio n of the b u sin ess done by the r e t a il co o p e ra tiv e s, sin ce i t is not known whether the proportion of the goods so ld by the r e t a il co o p eratives, obtained through cooperative w h o lesales, has been in cre a sin g o r d ecreasin g . Fa m a sso cia tio n s do the major p a rt of co o p eratives’ r e t a il b u sin e ss. Although fe e d , f e r t i l i z e r , and farm su p p lies comprise th r e e - fifth s of the farm co o p eratives’ s a le s , they a lso do a la rg e proportion of cooperative re t a i l business in gas, o i l , and consumer goods (in c lu d in g g ro ceries and a p p li ances) . According to s t a t is t ic s of th e Farm C re d it A d m in istratio n , r e t a il sa le s by fa m cooperatives in 1950-51 to ta lle d $ 1.6 b illio n , of which 60 per cent was fa m su p p lie s, 22 percent was petroleum products (o f which over h a lf i s used on the f a m ) , and 18 percent was g ro ce rie s, hardware, b u ild in g ma t e r ia ls , and other consumer goods (se e ta b le 3 ) . Although the 1950-51 data are not s t r ic t l y conparable w ith those fo r e a r lie r y e a rs,7 /th e re i s evidence th a t the fa m a sso cia tio n s have been s te a d ily expanding tK e ir volume of supply-p u rch asin g b u sin e ss. o/ Consumer Cooperatives in M innesota, by P ro fe sso r Helen 0. Canoyer ( In B usiness News Notes, U n iv e rsity of Minnesota School of B usiness Adminis tra tio n , November 1952) . 7/ Beginning w ith the crop y e a r 3950- 51 , the F a m C re d it A d m inistration rev ise d i t s method of com piling and tab u latin g d ata. F o r the f i r s t tim e, data were published f o r the t o t a l number of fa m cooperatives engaged in supplying t h e ir members ( 7, 335) . Fo rm erly, only those a sso cia tio n s whose main b u sin ess was supply were shown. A lso in 1950- 51, su p p lie s so ld to members were shown w ith a commodity breakdown f o r the f i r s t tim e. In view of the g reater d e ta il now obtained in Farm C re d it Adm inistra tio n schedules on commodities so ld by fa m cooperatives to t h e ir p a tro n s, i t was deemed ad v isab le to summarize these data fo r a l l fa m co o p eratives, in the same fo n t as repo rted . The present data are not comparable w ith e a r lie r s e r ie s fo r fa m cooperatives published by the Fam C re d it A d m inistration and the Bureau of Labor S t a t is t ic s . The BIS s e r ie s fo r nonfarm a sso cia tio n s has been discontinued because of the p resen t im p o s s ib ility of obtaining both a s a tis fa c to ry benchmark fig u re fo r th e t o t a l number of nonfam cooperatives in a given y e a r, and an accurate measure of y e a r-to -y e a r turno ver. - 9 - Table 3 . S u p p lies d istrib u te d by farm ers* a ss o c ia tio n s, 19 50 - 5 1 , net or r e t a i l business Net S a l e s j/ Amount Percent of t o t a l (thousands) Commodity A ll commodities • • • • • • • • • Producers* goods • • .................. Farm m achinery and equipment Feed • F e r t iliz e r • • • • • • • • • Seed • • • • • • • • • • • • A 644,206 989 J2 BK"” 63,152 6 8 3 ,2 6 8 153,538 89,248 10 0 60 4 42 9 5 Petroleum products 3 6 6 ,0 1 3 22 Other su p p lies^ /. 2 8 8 ,9 8 9 18 %/ Includ es purchases by marketing a sso c ia tio n s; d u p lica tio n of tra n s a ctio n s between cooperatives e lim in a ted , 2 / In clu d es b u ild in g m a te ria ls, in s e c t ic id e s , c o n ta in e rs, automotive sup p lie s , hardware, p la n t equipment, as w e ll as g ro ceries and consumer goods. So u rce: Farm C re d it A d m inistration M iscellaneous Report 169 , March 1953 , ta b le A* Table A* R e t a il s a le s : A ll sto re s and cooperative s ta r e s , United S ta t e s , 1948 [ R e t a il sa le s (in thouCoopera sandii L tiv e s a le s _____ A ll sto re s Coopera per $1 ,0 0 0 t iv e s of a l l s a le s A ll types « • « , , , « • « • • « • Z Z EU zZ ” Grooery sto re s and other food s to r e s , , 4.52 139,863 30 , 965,674 E a tin g and d rin kin g p laces ...................... 7,862 10 , 683,324 0.74 G eneral sto re s and g eneral merchandise group , ............................................................. 37,001 17 , 134,718 2.16 F u rn itu re , fu rn ish in g s, and appliance group ................................................................ 0 .3 0 6 , 914,179 2,024 Automotive g ro u p ............................... 0 .3 8 20 , 104,054 7,724 G aso line se rv ic e sta tio n s • • • • • • • 6 , 483,301 16.67 107,941 F u e l, fu e l o i l , and ic e • • • • • . • • 2 .6 2 2 , 424,397 6,348 Lumber, b u ild in g and hardware group (in clu d in g farm m achinery) , , , , , 11 , 151,470 4 .0 0 44 , 4M Feed , farm and garden su p p lies • . . • 3 , 146,859 707,264 224.75 A l l other r e t a i l ....................................... .... 21 , 512,572 6 ,4 0 0 0 .3 0 Type o f operation So u rce: U, S , Bureau of the Census; R e t a il Trade, 1948 ( B u ll, N o .l-R - 0 ) , 10 - The t o t a l volume of goods so ld by cooperatives ( farm and nonfarm) to patrons a t r e t a il In 19L 8 ( the la t e s t y e a r f o r w hich comprehensive Census data are a v a ila b le ) was s lig h t ly over $1 b illio n (ta b le h ). 8 / Of each $1 ,0 0 0 spent In r e t a il s to re s , cooperatives took $ 8. 17. The proportion fo r vario u s commodities ranged from 30 cen ts fo r fu rn itu re , fu rn ish in g s, and a p p lia n ces, to $221*. 75 fo r fe e d , fa m and garden su p p lie s. Cooperative s a le s in food amounted to $U.!>2 p e r $ 1,000 of r e t a il food s a le s . Tw o-thirds of cooperative r e t a il trade was accounted fo r by fe e d , farm , and garden su p p lie s, and only 18 percent by item s th a t were c le a r ly consumer goods. To a s s is t consumer cooperatives in improving t h e ir r e t a il o p eratio n s, the Cooperative League holds An annual forum a t which sto re p o lic ie s and re la tio n sh ip s between managers, boards of d ire c to rs , and members are d iscussed by p a rtic ip a n ts representing these groups. The May 1953 conference heard a p resen tatio n o f a com parative survey of the b u sin ess operations of 26 coop e ra tiv e urban r e t a il superm arkets, which had beeen made by Consumer D is t r i bution Corporation. The survey showed th a t f o r the 26 repo rting sto re s the g ross margin was 1 5 .6 p ercen t, expense 1 3 .8 p e rce n t, and net earnings 1 .8 percent o f s a le s . F iv e rep o rtin g cooperative sto re s had net earnings exceed in g 3 percent of s a le s . Some sto re s w ith la rg e gross margins had high ex pense r a t io s . A la rg e proportion of sa le s f o r th e whole group were in gro ce ry items on which the margin tends to be lower than th a t on produce and m eats. The operating ra tio s compare ra th e r unfavorably w ith those compiled f o r combination grocery sto re s owned by co rp o ratio n s. 9/ Recommendations of the survey to in cre a se net earnings were! ( 1 ) in cre a se saTes of meat and produce; ( 2 ) Improve margins on meat; ( 3 ) improve produce margins of the sm aller mar k e ts ; and ( U) p o ssib ly to pay higher wages, in order to a t tr a c t more e f f i c ie n t p erso n n el. CREDIT UNIONS C re d it unions are the most numerous of any type of consum er-lender. Membership i s lim ite d to groups having a community of in t e r e s t ; e .g ., common employer, o r r e lig io u s , fr a t e r n a l, union, o r p ro fe ssio n a l groups. T h eir funds are obtained s o le ly through purchase of investm ent sh ares by members and accum ulation of re se rv e s. T h eir a sse ts may be used only to make loans to members o r to in v e st in government s e c u r it ie s . Loans are made fo r fa m ily em ergencies, fo r home improvement, or f o r durable goods p urchases. 8/ Data published by the Farm C red it A d m inistration fo r r e t a i l sa le s o f fa m coo peratives make i t appear probable th at the Census understated the t o t a l volume of cooperative r e t a il trad e in 19U8 . However, i t i s not known whether the under-reporting a ffe cte d m ainly fa m or nonfam co o p eratives, o r both e q u a lly . 9/ Comparable ra tio s fo r 769 sto re s in the f i r s t 10 months of 1952 (w ith 195T fig u re s in parentheses) compiled by the Accounting Corporation of America were: gross margin l i +.8 ( 15 . 22 ) , operating expense 9 .6 3 ( 9 . 72) , and net p ro fit 5*17 ( 5 . 50 ) . Source: Mail-on-Monday Barometer of Sm all B u sin e ss, Accounting Corporation of Am erica. - 11 - C re d it union loans have r is e n more sh arp ly sin ce 19U0 than t o t a l in stallm en t c r e d it, r e fle c tin g ra p id postwar growth in number of c re d it unions, membership, and re so u rce s.10/ More re c e n tly , the volume of c re d it union loans outstanding ( excluding r e a l e sta te lo an s) in creased 28 percent between December 1951 and December 1952, and U2 percent between December 1951 and May 1953 according to rep o rts published monthly by the Fe d era l Reserve Board* C re d it union loans in May 1953, co n stitu ted 5*2 percent of in sta llm e n t c re d it held by a l l types of fin a n c ia l in s t itu t io n s rep o rtin g , approxim ately the same percentage as in December 1951*“ / Membership of c re d it unions in th e United S ta te s reached 5, 196,393 in with 2*7 m illio n members in c re d it unions chartered under vario us S ta te laws and 2*5 m illio n members in c re d it unions chartered under the Fe d era l C re d it Union Act* Loans outstanding a t the end of 1951 to ta lle d $ 7U7 ,U 76, 131, as reported to th e Bureau of Labor S t a t is t ic s * 1951, Between 19U9 and 1951 membership in S ta te chartered c re d it unions in creased by 20 p ercen t, and in fe d e ra lly chartered c re d it unions by 36 percent* The form er, w ith 52 percent of t o t a l membership, made 60 p ercent of a l l loans outstanding. This predominance a r is e s , in p a rt, because sense S ta te s pezm it c re d it unions to make loans on r e a l e sta te , thus ra is in g the average lo an p er member* F e d e ra l c re d it unions are re s tr ic te d by law to loans covering a max imum 3-y e a r p e rio d . In 1952 Congress passed a law—w ith the approval of the c re d it union le a d e rs— fin a n cin g the f u l l co st of fe d e ra l su p erv isio n of fe d e ra lly char tered c re d it unions by means of a graduated sc a le of fe e s , in cre a sin g w ith s iz e of a s s e ts . P re v io u sly fe e s had been c o lle c te d to cover only the co st of annual exam ination of books* The C re d it Union N ational A sso ciatio n takes p rid e in the fa c t th at w ith in 20 years of passage of the F e d e ra l C re d it Union A ct, these o rg anizatio ns had become f in a n c ia lly s e lf - s u f f ic ie n t . In 1952, Congress a lso extended the Fe d era l C re d it Union A ct to the V irg in Is la n d s , thus perad-tting c re d it unions to be chartered th e re . M assachusetts and New Y o rk, in 1952 , ra ise d the le g a l c e ilin g on c re d it union loans which some other S ta te s had done p re v io u sly . Hie e a r lie r c e ilin g s had become too r e s t r ic t iv e in view of advances in the general p ric e le v e l. New York a lso in 1952 required c re d it unions to m aintain su rp lu s ac counts proportionate to t h e ir l i a b i l i t i e s . M assachusetts, in 1953, ra ise d the p erm issive lim it on t h e ir bank stock investm ents. 10/ Adapted from B usiness C o n d itio n s, J u ly 1953, F e d e ra l Reserve Bank of Chicago, pp. 12- 13 * 11/ Fo r more d e t a il on S ta te s see ta b le s in Operations o f C re d it Unions in 1951, in Monthly Labor Review, February 1953, pp* 155- 158 . The fig u re (thereg iven) of 12 percent of consumer in sta llm e n t loans i s not comparable w ith the 5*2 percent fig u re (here quoted) because the F e d e ra l Reserve Board has changed i t s s e r ie s on in sta llm e n t c r e d it , to in clu d e both d ire c t loans and paper purchased by fin a n c ia l in s t itu t io n s (form erly o nly d ire c t loans were rep o rte d ); and to cover new types o f fin a n c ia l in s t itu t io n s * Fo r in fo r mation on subsequent y e a rs w rite to Bureau of Fe d era l C re d it U nions, U. S . Department of H ealth, Education and W elfare. - 12 - Puerto R ico , in 1951, strengthened i t s Fed eratio n of C red it Unions and e sta b lish e d a Cooperative Bank to provide a source of c re d it fo r coopera t iv e s , in clu d in g c re d it unions. ELECTRICITY AND TELEPHONE COOPERATIVES E le c t r ic it y cooperatives are organized c h ie fly in r u r a l communities by farm ers, fo r the purpose of b u ild in g e le c t r ic power or telephone lin e s and, sometimes, power-generating p la n ts . They are organized under S tate la v s , e ith e r under a s p e c ific enabling a ct fo r t h is type of co o p erative, a g eneral enabling a c t fo r th is type of co o p erative, an a c t au th o rizin g in co r poration of n onp ro fit a ss o c ia tio n s , or in the absence of such sta tu te s , under the general corporation law . The s p e c ific enabling a c ts g e n e ra lly give the cooperative g reater freedom to d eal w ith the le g a l, eng ineering , and economic problems p e c u lia r to the p u b lic u t i l i t y f ie ld . The F e d e ra l R u ra l E le c t r if ic a t io n A ct (1936) authorized s e lf - liq u i d ating government lo an s fo r the purpose of extending e le c t r ic power lin e s ; by a 19 4 9 amendment, loans were authorized fo r extending telephone lin e s in r u r a l areas not re c e iv in g c e n tra l s ta tio n s e rv ic e . Such loans could be made to persons, co rp o ratio n s, S ta te s and T e r r it o r ie s , m u n ic ip a litie s , p u b lic power d is t r ic t s , co o p erativ e s, and n o n p ro fit or lim ite d dividend a sso cia t io n s . In making loans fo r e le c t r if ic a t io n , preference was to be given to p u b lic bodies and n o n p ro fit o rg a n iza tio n s. The p rin c ip a l REA borrowers in both programs have been co o p eratives. They have rece iv e d a ssista n ce and su p erv isio n from the R u ra l E le c t r if ic a t io n A d m inistration in accounting and a u d itin g , on management and engineering problems, as w e ll as guidance in o rg a n iza tio n a l and le g a l m atters. The N atio nal R u ra l E le c t r ic Cooperative A sso c ia tio n , e sta b lish e d by these cooperatives in 1942 , reported 9 00 -member system* a t i t s 1951 conven t io n . E le c t r ic it y and telephone coo peratives d epart from the t y p ic a l Bachdale p a ttern in th a t patronage refunds are seldom p aid members do not have to provide c a p it a l. Charges are based on co sts of o p eratio n, p in s payments on loans made by REA, provided the A d m inistrator i s s a t is f ie d th a t th e p ro je c t w ill be s e lf- liq u id a t in g . Any su rp lu s i s used fo r e a r lie r retirem ent of the lo a n , in stead of f o r patronage o r sto ck d ivid en d s. The cum ulative record of HEA, through the f i s c a l y e a r 1953, shows 1 , 3 m illio n m iles of e le c t r ic a l lin e s energized, servin g alm ost k m illio n r u ra l consumers. Among the 1,079 borrowers were 98U co o p eratives. (See ta b le s 5 and 6 ) . Close to 90 percent of a l l farms in the United S ta te s are re ce iv in g c e n tra l s ta tio n e le c t r ic cu rre n t, more than h a lf of them from REA-finaneed system s, according to REA. There has been a d e clin e in loans authorized and m iles of lin e energized, sin c e the peak war y e a r 1950 (Tab le 5 ) . T h is i s a ttrib u te d by the A d m inistrator of REA to attainm ent of th e prim ary objective!, - 13 - namely “providing backbone c e n tra l sta tio n f a c i l i t i e s T h e Execu tive Mana ger of the N atio nal R u ral Cooperative A sso cia tio n , however, a n tic ip a te s a continuing need fo r m odernization, re co n stru ctio n , and expansion to keep up w ith in cre a sin g consumption of e le c t r ic it y on farms as farm ers add v a rio u s types of e le c t r ic a l equipment. Household uses account fo r 80-90 percent o f power consumption on farms according to surveys made by the Bureau of A g ric u ltu ra l Economics* D a iry farms and p o u ltry farm s, which use heaters and brooders, consume alm ost as much as the farm home when equipped w ith sto v e s, hotwater h e a te rs, lau n d ry, or other household a p p lia n ces. An in cre a se in d a iry or p o u ltry farm ing therefo re might g re a tly in cre a se the r u r a l demand fo r cu rre n t. In g e n era l, farm ers tended to purchase household appliances e a r lie r than e le c t r ic farm equipment. They a lso tended to in cre a se t h e ir power-consumption from year to year as e le c t r ic home ap p liances and farm equipment were added, REk borrowers assumed in cre a sin g r e s p o n s ib ility fo r the operation o f th e ir systems in 1952 as d e ta ile d fe d e ra l co n tro ls were reduced or e lim in a te d . Repayment o f p rin c ip a l and in te r e s t continued to exceed scheduled payments— by as much as 27 percent in 1952, However, beginning w ith 1954-', the borrow ers1 scheduled payments w ill r is e more ste e p ly . In 1956, they w ill be alm ost tw ice as high as in 1952. These in cre a se s w ill occur because most borrowers were allowed a 2- t o - 5-year development period during which in te r e s t and p rin c ip a l payments were d eferred , to be spread over succeeding years a t a heavier ra te . The telephone program of REA, in e ffe c t o n ly sin ce 194-9 , has made le s s p ro g ress. In 1952 , REA personnel was being sh ifte d from the r u r a l e le c t r i f i catio n to the telephone program. As of June 30 , 1952, there were 190 borrow e rs — 80 were cooperatives and 110 were commercial telephone companies, the la t t e r g e n e ra lly servin g fewer su b scrib e rs than the co o p eratives, (See ta b le 7 ) No inform ation on loan repayment i s a v a ila b le fo r the telephone program. In 1953, 42,5 percent of the n atio n *8 farms had telephones - o n ly s lig h t ly more than in 1920, Many of the magneto phones in s t a lle d a ft e r World War I d eterio rated and were not re p la ce d . The number of telephone a sso cia tio n s servin g r u r a l areas has been su b s ta n tia lly reduced sin ce the 1930* s by co n so lid a tio n , which connected iso la te d se rv ic e lin e s w ith companies or a sso cia tio n s operating c e n tra l sw itchboards, REA has a ss is te d r u r a l t e le phone a sso c ia tio n s in t h e ir management, te c h n ic a l, and p erso n n e l-tra in in g problems. - lH - Table 5. Annual e le c t r if ic a t io n programs REA, M iles of lin e energized F is c a l y e a r ending Jane 30 Cum ulative through 19 U5 . . . . ...................... 194.6......................................................................... 1 9 4 7 ......................................................................... 1 9 4 8 ......................................................................... 1 9 4 9 ......................................................................... 1950 ......................................................................... 1 9 5 1 ......................................................................... 1952 ......................................................................... 1953 ......................................................................... Cumulative through 1953 .......................... .... Source: Consumers oonnected 424., 072 50,765 71,944 119,375 173,529 178,651 1 1 6 ,1 6 2 75,975 60,970 1 , 287,347 2 6 1 ,7 1 0 294,294 420,538 534,311 473,607 295,536 222,103 382,534 1 , 271,443 3 , 951,940 REA Monthly S t a t is t ic a l B u lle t in , Table 3 . Table 6 . R u ra l e le c t r if ic a t io n borrowers financed by REA, f i s c a l years ending June 3°> 1935 through 1953 T o tal number Type of borrower T o ta l 1.079 .............. Cooperatives . . . . . P u b lic power bodies . . Power companies . . . . 984 70 25 Source: REA, Monthly S t a t is t ic a l B u lle t in , Table 2 . - 15 - Cumulative t o t a l loans approved (in m illio n s) * 2.730 2,594 327 9 Table 7 . R u ra l telephone systems borrowing from REA, 1950-52 W Item 5 and 1952 taam latlve 19U9-1552 1951 Number of borrowers « » » • • • # * • 113 77 190 Cooperative • • • • • • • • • • • • 38 42 80 Other . ......................................................... 75 35 110 141.3 iu .o $82.3 C o o p e ra tiv e ................................... $2 2 .0 $2 6 .6 $ 46.6 Other ...................... • • • • • • • • • $19.3 $14*4 $33.7 95,234 251,050 Loans a llo ca te d in year (in m illio n s )* S u b scrib ers a d d e d .......................... .... 155,816 1 So u rce: Report o f the A dm inistrator of the R u ra l E le c t r if ic a t io n A d m in istratio n , 1950, 1951 and 1 9 5 2 * HOUSING COOPERATIVES In 1950 the Bureau of Labor S t a t is t ic s surveyed 165 housing coopera t iv e s , w ith 2 4 ,2 5 0 members holding 1 0 ,4 0 0 acres o f land on which 2 8 ,3 3 0 dw elling u n its had been b u ilt , or were scheduled to be b u ilt . 32 / The study included a l l known a sso cia tio n s which met the fo llo w in g c r it e r ia t ( l) in i t ia t iv e taken by the group to be housed; (2 ) n o np ro fit e n te rp rise or sponsor sh ip ; and (3 ) membership determ ination and co n tro l of p o lic ie s from the s t a r t * Some a d d itio n a l inform ation on cooperative p ro je cts has been rece iv e d sin ce 1950. A la rg e apartment house, sponsored by the Omaha Education Asso c ia tio n , was completed in Omaha in 1952 w ith a mortgage insured by FHA under S ectio n 213 o f the N ational Housing A c t. A n o n p ro fit, non-par-value corpo ra tio n was organized in which 7 0 teach ers each owns one share ca rry in g one v o te , and each holds a 99-year le a se on h is apartm ent. F in a l co st to members ranged from $7,300 to $15 , 900 , w ith monthly payments from $35 to $90 *50 . The cooperative manages the p ro je c t. G reenbelt Veteran Housing Corporation, G reen b elt, Md*, (a cooperative included in the Bureau of Labor S t a t is t ic s ' study c ite d above) completed pur chase of housing from the government on December 31 , 1952, f a r $7 m illio n . F a m ilie s who a re , or become members, acquire perp etual use of the land and 12/ Cooperative Housing in the United S ta te s , 1949- 50 , Bureau of Labor S t a t is t ic s ' B u lle tin No. 1093 , U . S , Department of Labor, 1951. d w e l lin g , o n m o n th ly p a y m e n ts t o G VH C, I f d is p o s e d o f t o a n o u t s i d e r , a p p r o v a l o f G V H C m u s t b e o b t a i n e d . G VH C c o l l e c t s m o n t h l y p a y m e n t s , i n c l u d i n g t a x e s , m a k e s a lu m p s u m m o r t g a g e p a y m e n t t o t h e g o v e r n m e n t , a n d i s r e s p o n s i b l e f o r m a in te n a n c e a n d g e n e r a l s u p e r v is io n ( e . g . , o f a n y s t r u c t u r a l c h a n g e s p r o p o s e d b y o c c u p a n t s .) I t a l s o m a n a g e s tw o a p a r t m e n t b u i l d i n g s . S u b s e q u e n t t o t h e f i r s t g o v e r n m e n t s a l e , t h e c o o p e r a t i v e a c q u i r e d t i t l e t o 700 a c r e s o f la n d f o r d e v e lo p m e n t, i n l i n e w it h t h e o r i g i n a l to w n p l a n . T h i s la n d m ay b e d is p o s e d o f t o n o n m em b ers. I n t h i s c o n n e c tio n , s e v e r a l c o o p e r a tiv e p r o je c t s h a v e m a d e a p p l i c a t i o n s t o t h e F e d e r a l H o u s in g A d m i n i s t r a t i o n f o r d e v e lo p m e n t o f p a r c e ls o f t h is la n d . F o u r N ew Y o r k C i t y l a b o r u n i o n l o c a l s , t w o a f f i l i a t e d s t e r s (A F L ) a n d tw o w it h t h e U t i l i t y W o r k e rs ( C I O ) , a r e j o i n c o n s t r u c t a n d o p e r a t e a $21 m i l l i o n n o n p r o f i t h o u s i n g p r o j e c b e r s * f a m i l i e s . T h e ir a p p l i c a t i o n f o r p a r t i a l t a x e x e m p tio n f o r e t h e N e w Y o r k C i t y c o u n c i l i n m i d - J u n e 1953. w ith th e T eam t l y p la n n in g t o t f o r 2 ,0 0 0 mem w a s p e n d in g b e S e c t i o n 213 w a s a d d e d t o t h e N a t i o n a l H o u s i n g A c t o n A p r i l 2 0 , 1950, i n o r d e r t o a s s i s t n o n p r o f it c o o p e r a t iv e h o u s in g a s s o c i a t i o n s t o o b t a in lo w i n t e r e s t , l o n g - t e r m m o r tg a g e f i n a n c i n g . T h e F e d e r a l H o u s in g A d m i n i s t r a t i o n i s a u t h o r iz e d t o i n s u r e m o r tg a g e s o n tw o t y p e s o f h o u s in g c o o p e r a t i v e s — t h e s a le s ty p e o r c o -v e n tu r e s , an d th e m anagem ent ty p e o r a ll-th e ^ w a y c o o p e ra t i v e s . A c o ^ v e n tu r e o r s a l e s - t y p e c o o p e r a t iv e i s o n e w h ic h c o n s t r u c t s d w e ll in g s b u t d is s o lv e s u p o n c o m p le tio n o f th e p r o je c t a n d s a l e o f d w e llin g s t o i n d i v i d u a l o w n e r s . T h e b l a n k e t m o r tg a g e w h ic h FH A h a s i n s u r e d i s r e p l a c e d b y in d iv id u a l m o rtg a g e s a s e a c h u n i t i s s o l d . A n a ll- t h e - w a y o r m an ag em en t c o o p e r a tiv e c o n t i n u e s i n e x i s t e n c e f o r t h e p u r p o s e o f m a n a g in g t h e p r o p e r t y a f t e r c o n s t r u c t io n i s c o m p le te d . C o o p e r a tiv e s t a k in g a d v a n ta g e o f s e c t i o n 213 m a y b u i l d o n l y s i n g l e - f a m i l y d w e l l i n g s i f t h e b l a n k e t m o r t g a g e i s t o b e c o n v e r t e d , b u t i f t h e m o rtg a g e i s t o c o n t in u e , t h e n e i t h e r m u lt ip le o r s i n g l e f a m i l y u n i t s m a y b e f i n a n c e d u n d e r s e c t i o n 213. A l t h o u g h t h e p r o j e c t s f i n a n c e d b y F H A u n d e r s e c t i o n 213 a r e t e c h n i c a l ^ c o o p e r a t iv e s i n fo r m , t h e i n i t i a t i v e f o r t h e p r o je c t i n m o s t c a s e s h a s co m e n o t fr o m t h e g ro u p t o b e h o u s e d b u t fr o m a n o u t s id e s p o n s o r , u s u a l l y a p r iv a te b u ild e r . " S e lf - p r o p e l le d " c o o p e r a tiv e s h a v e e n c o u n te re d m any d i f f i c u l t i e s b e c a u s e o f t h e i r l a d e o f e x p e r ie n c e w it h t h e c o m p le x p r o b le m s in v o lv e d i n r e a l e s t a t e , c o n s t r u c t i o n , m o r tg a g e f i n a n c i n g , a n d FH A r e q u i r e m e n t s . F u r t h e r m o re , fe w c o o p e r a tiv e g ro u p s h a v e h ad th e c a p i t a l n e c e s s a r y t o p u r c h a s e th e la n d a n d p r o v id e f o r a l l p r e lim in a r y c o s t s in v o lv e d i n la r g e p r o je c t s . I n c a s e s in v o lv in g sp o n so re d p r o je c t s th e s e c o s t s a r e a d v a n ced b y th e s p o n s o r . I n c a s e s w h e r e t h e d w e llin g s a r e s o ld b y t h e b u i l d e r t o a c o o p e r a t i v e w h ic h c o n tin u e s t o m an ag e th e p r o je c t , th e en d r e s u l t i s p r a c t i c a l l y i d e n t i c a l w ith th e a ll-th e ^ w a y c o o p e r a tiv e s . B y t h e e n d o f M a y 1953, t h e F e d e r a l H o u s i n g A d m i n i s t r a t i o n h e d r e c e i v e d 673 a p p l i c a t i o n s f o r m o r t g a g e i n s u r a n c e o n 8 2 ,8 5 5 d w e l l i n g u n i t s ; 242 a p p l i c a t i o n s i n v o l v i n g 4-0 ,6 0 0 u n i t s h a d b e e n a p p r o v e d o r w e r e t i n d e r e x a m i n a t i o n . 17 - ( S e e t a b l e 8. ) E ig h ty p e r c e n t o f a l l a p p lic a tio n s w ere f o r t h e m anagem ent t y p e a n d t w o - t h i r d s w e r e f r o m t h e N ew Y o r k a r e a . One h u n d red and fo u r te e n p r o j e c t s , w i t h 20,950 u n i t s a n d w i t h i n s u r e d m o r t g a g e s t o t a l i n g $ 19U .7 m i l l i o n , h a d e i t h e r b e e n c o m p le te d o r w e re u n d e r c o n s t r u c t i o n . A n o t h e r 10 p r o je c t s w e re r e a d y t o s t a r t , f u l l m em b er p a r t i c i p a t i o n h a v in g b e e n a s s u r e d ; m e m b e r s w e r e s t i l l b e i n g r e c r u i t e d f o r 1*0 p r o j e c t s w h i c h h a d b e e n s c r e e n e d b y F H A . O n e o f t h e p r i n c i p a l r e a s o n s f o r t h e l a c k o f p r o g r e s s i n t h e 308 a p p l i c a t i o n s w ith d r a w n o r e x p ir e d ( t a b l e 8) w as t h e d i f f i c u l t y o f o b t a i n i n g m o r t g a g e f i n a n c i n g a t t h e m a x im u m ^ - p e r c e n t s t a t u t o r y i n t e r e s t r a t e . I n 1953, C o n g re s s p e r m itte d a r i s e i n t h e U -p e r c e n t i n t e r e s t r a t e f o r m o rtg a g e f in a n c i n g u n d e r s e c t i o n 213. F H A a d m i n i s t r a t i v e r u l e s h a v e r a i s e d t h e r a t e s — n o t t o t h e f u l l e x t e n t p e r m i t t e d b y l a v — b u t t o 1* J p e r c e n t o n b l a n k e t m o r t g a g e e a n d t o 1*3* p e r c e n t o n r e l e a r n e d i n d i v i d u a l m o r t g a g e s . T a b le 8 . P r o g r e s s o f c o o p e r a tiv e h e n s in g p r o je c t s u n d e r s e c t io n o f N a t i o n a l H o u s i n g A c t , M a y 1953 N u m b e r o f ---D w e llin g P r o je c t s u n its Ite m 213 V a lu e (in m illio n s ) 673_ _ _ _ _ 8 2 .8 5 5 1 7 8 8 .9 242 4 0 ,6 0 1 3 8 2 .1 114 2 0 ,9 5 0 1 9 4 .7 10 1 ,6 1 9 1 6 .3 A0 5 ,738 5 2 .6 78 1 2 ,3 1 4 1 3 8 .5 60 4 ,6 7 3 4 3 .1 C a s e s w i t h d r a w n . ...................................... .... 248 2 0 ,0 8 0 1 9 8 .4 C a se s r e je c t e d 123 1 7 ,5 0 1 1 6 5 .3 T o ta l a p p lic a tio n s r e c e iv e d A c tiv e c a s e s • • • • • • • • • • • • • • • • • • • • • M o rtg a g e s in s u r e d C o m m itm e n ts o u t s t a n d i n g E lig ib ility s ta te m e n ts o u ts ta n d in g A p p lic a tio n s in E lig ib ility S o u rce: • • • • • • • p ro cess • • • • • • • • • s ta te m e n ts e x p ir e d • • • • • • • • • • • • . • • • F e d e r a l H o u s in g A d m i n i s t r a t i o n . -1 8 - M E D IC A L C A R E C O O P E R A T IV E S I n th e f i e l d o f m e d ic a l c a r e , th e c o o p e r a tiv e fo rm o f o r g a n iz a tio n i s b a r e ly d is t in g u is h a b le fro m o th e r ty p e s o f c o n s u m e r-s p o n s o re d , o r c o n su m e rc o n tr o lle d g ro u p h e a lth p la n s . T h e v o lu n ta ry fe d e r a tio n in t h is f i e l d , th e C o o p e r a t i v e H e a l t h F e d e r a t i o n o f A m e r ic a (C H F A ), i n c l u d e s p l a n s b a s e d o n t h e fo llo w in g f i v e p r in c ip le s t p r e p a y m e n t, c o m p r e h e n s iv e c a r e , g ro u p p r a c t i c e , o w n e r s h ip a n d m a n a g em e n 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 , a n d d e m o c r a t ic c o n t r o l o f t h e e c o n o m ic a n d b u s i n e s s a s p e c t s , ( i n a l l p l a n s , t h e m e d ic a l s e r v i c e s m u st b e u n d e r t h e d i r e c t i o n o f a p h y s i c i a n .) A lth o u g h t h i s l a s t c r i t e r i o n i s s i m i l a r t o o n e o f th e c a r d in a l R o c h d a le p r i n c i p l e s , som e p l a n s b e l o n g i n g t o C H FA a r e g o v e r n e d b y b o a r d s o f d i r e c t o r s r e p r e s e n t i n g , b u t h o t e le c t e d b y , la r g e g ro u p s o f u s e r s . Som e a r e jo i n t l y m an aged b y em p l o y e r s a n d u n i o n s , a s r e q u ir e d b y t h e T a f t - H a r t l e y A c t i f t h e e m p lo y e r c o n t r ib u t e s t o th e p la n u n d er a c o lle c t iv e - b a r g a in in g a g re e m e n t. S t i l l o th e r p l a n s , s p o n s o r e d b y l a b o r u n io n s f o r t h e b e n e f i t o f u n io n m e m b ers a n d t h e i r f a m i l i e s , a r e s u b j e c t t o t h e s a m e g e n e r a l m e m b e r s h ip c o n t r o l a s o t h e r u n io n a c tiv itie s . I n D e c e m b e r 1952, o n l y 16 p l a n s w e r e a f f i l i a t e d w i t h C H F A , b u t t h e y s e r v e d 8 0 2 ,0 0 0 p e r s o n s . T h e r e w e r e t h i r t y - t h r e e p l a n s w h i c h w e r e r e g a r d e d a s R o c h d a le c o o p e r a t i v e s j i . e . , s u b j e c t t o c o n t r o l b y t h e p l a n m e m b e r s h ip o n t h e b a s i s o f o n e v o t e p e r m e m b e r. T h e s e p l a n s h a d a c o m b in e d m e m b e r s h ip o f 2 0 0 ,0 0 0 i n 1951, a n i n c r e a s e o f 14 p e r c e n t s i n c e 1949j 11 o f t h e s e p l a n s h o w e v e r , d e c l i n e d s l i g h t l y i n m e m b e r s h ip . F o u r c o o p e r a t i v e h e a l t h p l a n s b e g a n o p e r a t i n g a n d f i v e c e a s e d o p e r a t i n g a s c o o p e r a t i v e s d u r i n g 1951. 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 e r ic a a s s i s t s c o o p e r a t iv e a n d o th e r g ro u p s in s e t t in g u p c o n su m e r-sp o n so re d m e d ic a l c a r e p la n s , lo b b ie s f o r f a v o r a b le l e g i s l a t i o n , c o l l e c t s fu n d s t o a s s i s t g ro u p s in v o lv e d i n l i t i g a t i o n , a n d r e n d e r s t e c h n i c a l a d v is o r y s e r v i c e o n o p e r a tin g p r o b le m s . I t p r o v id e s 2- o r 3- d a y f o r u m s a t w h i c h o r g a n i z a t i o n , s e r v i c e s , f a c i l i t i e s , f i n a n c i n g , a n d th e i n t e r r e l a t i o n s h i p s o f g ro u p h e a lt h p la n s a r e p e r i o d i c a l l y d is c u s s e d . D u r i n g 1952 t h e C o o p e r a t i v e H e a l t h F e d e r a t i o n e n l i s t e d t h e s e r v i c e s o f a n u m b e r o f s p e c i a l i s t s t o s e r v e a s m e d ic a l, l e g a l , and a c c o u n tin g c o n s u lta n ts t o g r o u p s w i s h i n g t o e s t a b l i s h h e a l t h p l a n s . I n 1953, t h e t h i r d a n n u a l G r o u p H e a l t h I n s t i t u t e a t S t . L o u i s , M o . b r o u g h t t o g e t h e r 100 a c t i v e r e p r e s e n t a t i v e * o f 29 g r o u p m e d i c a l p l a n s i n t h e U . S . a n d C a n a d a . T h e c o n f e r e n c e a g e n d a i n c l u d e d s t u d y o f t h e L a b o r H e a l t h I n s t i t u t e o f t h a t c i t y , w h i c h s e r v e s 1 4 ,0 0 0 m e m b e r s o f A F L T e a m s t e r s * L o c a l #688 a n d t h e i r d e p e n d e n t s , w i t h p h y s i c i a n s s e r v in g on a p a r t-tim e b a s is . R e p o rts to th e c o n fe re n c e in d ic a te d t h a t d u r in g th e l a s t fe w y e a r s u n io n -s p o n s o r e d an d e m p lo y e r -fin a n c e d p la n s h a v e i n c r e a s e d i n n u m b er and s c o p e , w h ile o th e r c o n s u m e r-s p o n s o re d p la n s h a v e e x p e r ie n c e d d i f f i c u l t y i n fin a n c in g e x p a n s io n b e c a u s e o f th e h ig h c o s t o f new p la n t an d e q u ip m e n t. T h e 20 p r i n c i p l e s ( a p p e n d i x A ) d r a f t e d b y a j o i n t c o m m i t t e e o f l a y m e n a n d p h y s i c i a n s i n 1949, a s a b a s i s f o r c o o p e r a t i o n b e t w e e n t h e m e d i c a l p r o f e s s io n an d n o n - p r o f it g ro u p h e a lt h p la n s , a p p e a r t o b e s lo w ly g a in in g l o c a l - 19 - a c c e p t a n c e . R e la t io n s h ip s b e tw e e n th e o r g a n iz e d m e d ic a l p r o f e s s io n a n d th e c o n s u m e r - s p o n s o r e d m e d i c a l c a r e p l a n s s h o w e d s o m e i m p r o v e m e n t i n 1952 a n d 1953, a i d e d b y c o u r t d e c i s i o n s . L o c a l m e d i c a l s o c i e t i e s o p e n e d t h e i r m e m b e r s h i p r o l l s t o g r o u p - h e a l t h p h y s i c i a n s i n C a l i f o r n i a , W a s h in g t o n , O k la h o m a a n d T e x a s — i n t h e f i r s t tw o S t a t e s f o l l o w i n g c o u r t d e c i s i o n s . A co n s u m e r-sp o n s o re d h e a lth p la n in S a n D ie g o , C a l i f . , o b ta in e d a f a v o r a b l e c o u r t d e c i s i o n i n M a r c h 1952; a m o n t h l a t e r a s u i t i n v o l v i n g t h e B eck h a m C o u n ty M e d ic a l S o c i e t y a n d th e C o m m u n ity -H o s p ita l-C lin ic i n E lk C i t y , G k la ., w as s e t t l e d o u t o f c o u r t . H o w ev er, a M in n e s o ta s u i t b y Tw o H a r b o r s ' H o s p it a l a n d C l i n i c a g a in s t t h e l o c a l M e d ic a l S o c i e t y i s s t i l l p e n d in g . I n A p r i l 1952, t h e U n i t e d S t a t e s S u p r e m e C o u r t a f f i r m e d a d i s t r i c t c o u r t ' s d i s m i s s a l o f t h e G o v e r n m e n t 's s u i t a g a i n s t t h e O r e g o n S t a t e M e d i c a l S o c i e t y w h ic h h a d a l l e g e d v i o l a t i o n o f t h e S h e r m a n A n t i - T r u s t A c t (U . S . v . O re g o n S t a t e M e d i c a l S o c i e t y , 343, U . S . 3 2 6 ) . T h e S u p r e m e C o u r t h e l d t h a t — s e v e n y e a r s p r io r t o th e co m m en cem en t o f t h e s u i t — th e c o n d u c t o f th e O re g o n d o c t o r s , h a d u n d e r g o n e a s i g n i f i c a n t c h a n g e w h e n i n 1941 t h e s o c i e t y o r g a n i z e d i t s o w n p r e p a i d m e d i c a l c a r e p l a n . D u r i n g t h e i n t e r v e n i n g p e r i o d s i n c e 1941, f u r t h e r m o r e , n u m e ro u s d o c t o r s h a d a c c e p t e d p a y m e n ts f o r s e r v i c e s r e n d e r e d t o th e p la n s t h a t h ad fo r m e r ly b e e n b o y c o tte d b y t h e i r s o c i e t y . A n a l m o s t u n i v e r s a l o b s t a c l e t o g r o u p h e a l t h p l a n s h a s b e e n t h e com m on 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 i o n . T h e p r in c ip le ,,w h ic h i s in te n d e d t o p r e v e n t i n ju r y t o th e p u b lic b y c o m m e r c ia l e x p lo ita tio n and d eb asem en t o f p r o fe s s io n a l s ta n d a rd s , h a s b e en s p e c if ic a lly 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 la w s . T h is d o c t r in e h a s b e e n s e t a s i d e , 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 t a t u t e , i n o t h e r s b y c o u r t d e c i s i o n s w h e re i t w a s sh ow n t h a t t h e g ro u p p r a c t i c e o f m e d ic in e w as 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 a n d c o m p l i e 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 ; (A n o u t s t a n d in g c a s e i s t h a t o f t h e D i s t r i c t o f C o lu m b ia G ro u p H e a lt h A s s o c i a t i o n ) A c ts s p e c i f i c a l l y a u th o r iz in g n o n p r o fit g ro u p h e a lth p la n s , c o n t r o lle d b y l a y m e n , h a v e b e e n p a s s e d i n 13 S t a t e s . 13/ b u t n o n e w a c t s h a v e b e e n p a s s e d s i n c e 1951. T w e n t y - n i n e S t a t e s h a v e l a w s a u t h o r i z i n g t h e o p e r a t i o n o f p r e p a y m en t m e d ic a l c a r e p la n s , c o n t r o lle d b y p h y s ic ia n s ( s o - c a lle d B lu e S h ie ld p l a n s ) . 14/ T h r e e S t a t e s ( I l l i n o i s , M a s s a c h u s e t t s , a n d W i s c o n s i n ) h a v e l a w s w h i c h p e r m i t b o t h t y p e s o f p l a n s . N i n e S t a t e s h a v e n o e n a b l i n g a c t s . 15/ 13/ C o n n e c t i c u t , I l l i n o i s , M a r y l a n d , M a s s a c h u s e t t s , M i s s i s s i p p i , N ew M e x ic o ^ N ew Y o r k , O k l a h o m a , O r e g o n , S o u t h D a k o t a , T e x a s , W a s h i n g t o n , a n d W i s c o n s i n . 14/ A l a b a m a , A r i z o n a , C a l i f o r n i a , C o l o r a d o , F l o r i d a , I d a h o , I l l i n o i s , I o w a , K a n s a s , K e n tu c k y , L o u is ia n a , M a in e , M a s s a c h u s e t ts , M ic h ig a n , M in n e s o ta , M o n t a n a , N ew H a m p s h i r e , N ew J e r s e y , N o r t h C a r o l i n a , N o r t h D a k o t a , O h i o , P e n n s y lv a n ia , R h o d e I s l a n d , S o u th C a r o li n a , T e n n e s s e e , V e rm o n t, V i r g i n i a , W e st V ir g in ia , an d W is c o n s in . 15/ A r k a n s a s , D e l a w a r e , G e o r g i a , I n d i a n a , M i s s o u r i , N e b r a s k a , N e v a d a , U t a h , a n d W y o m in g . - 20 - L a w o f t h e B lu e S h ie ld t y p e , i t h a s b e e n a lle g e d , c o n s t it u t e a s e r i o u s o b s t a c le t o th e fo r m a tio n o f c o n s u m e r -c o n tr o lle d p la n s , b e c a u s e th e y e it h e r c o n fe r a n e x c lu s iv e p r iv ile g e u pon th e d o c to r -c o n tr o lle d c o r p o r a tio n , o r r e q u ir e t h a t th e p la n b e o p en t o a l l , o r a la r g e p e r c e n ta g e o f , q u a lif ie d p h y s i c i a n s , t h u s i n e f f e c t b a r r i n g a n o r g a n i z e d g r o u p - p r a c t i c e c l i n i c >16/ C o n s u m e r -c o n tr o lle d p la n s t h a t p r o v id e s e r v i c e b e n e f i t s th r o u g h t h e i r ow n f a c i l i t i e s , h o w e v e r , a r e o p e r a t i n g i n 4- S t a t e s w h e r e t h e o n l y e n a b l i n g s t a t u t e i s t h e B l u e S h i e l d t y p e , i n 10 S t a t e s h a v i n g s p e c i f i c e n a b l i n g a c t s , a n d i n 3 S t a t e s h a v in g n o l a w o n t h i s s u b je c t . t a l o n s i n i t i a t e d a n u m b e r o f d e v e l o p m e n t s i n t h e h e a l t h f i e l d i n 1952 a n d 1953* T h e I n t e r n a t i o n a l . A s s o c i a t i o n o f M a c h i n i s t s ( 1F L ) s t a r t e d a n a t i o n w id e p r s g r a m , h e a d e d b y a p h y s i c i a n , t o a i d m em b er l o c a l s i n d e v e lo p in g i n s u r a n c e o r g ro u p h e a lt h c e n t e r s , T h e S a n F r a n c is c o T ra d e s an d L a b o r C o u n c il U i L ) i s p la n n in g i t s ow n h e a l t h c e n t e r . T h e U n io n E y e C a r e C e n t e r , C h ic a g o , 111. , w h i c h p r o v i d e s s e r v i c e s f o r 70 A F L a n d C I O l o c a l u n i o n s , c o m p l e t e d i t s f i r s t y e a r i n M a r c h 1953; m e m b e r s o f t h e s e u n i o n s , w i t h t h e i r d e p e n d e n t s , n u m b e r 90, 000. T h e S i d n e y H i l l m a n H e a l t h C e n t e r i n N ew Y o r k C i t y , f i n a n c e d j o i n t l y b y t h e A m a l g a m a t e d C l o t h i n g W o r k e r s o f A m e r i c a ( C I O ) a n d t h e N ew Y o r k C l o t h i n g M a n u f a c t u r e r s * E x c h a n g e , i n 1953 d e c i d e d t o e q u i p t w o a d d i t i o n a l f l o o r s , a t a c o s t o f $ 250, 000. T h e U n i t e d M i n e W o r k e r s W e l f a r e F u n d ( i n d . ) i s p l a n i r t w g t o b u i l d 10 h o s p i t a l s i n m i n i n g a r e a s w h i c h l a c k a d e q u a t e m e d i c a l f a c i l i t i e s . So m e g ro u p p r a c t i c e c l i n i c s h a v e b e e n o r g a n iz e d b y t h e u n io n t o s e r v e m in e r s a n d t h e i r f a m i l i e s . T h e H e a l t h I n s u r a n c e F l a n o f G r e a t e r N ew Y o r k ( a c o m m u n i t y - w i d e p l a n , n o t a c o o p e r a t i v e ) s e r v e s 3 8 0 ,0 0 0 p e r s o n s i n c l u d i n g t h e m e m b e r s h i p s o f m a n y l o c a l u n io n s a n d g r o u p s o f c i t y e m p lo y e e s f o r w hom t h e c i t y p a y s h a l f o f t h e p r e m iu m s . I t a d d e d t h r e e m o re h o u s in g d e v e lo p m e n ts t o i t s m e m b e r s h ip i n 1952, m a k i n g a t o t a l o f e i g h t i n w h i c h 75 p e r c e n t o f t h e t e n a n t s h a v e m a d e a p p l i c a t i o n f o r c o v e r a g e . . A b o u t 6 ,0 0 0 p o l i c e m e n a n d t h e i r d e p e n d e n t s h a v e a ls o b een e n r o lle d r e c e n t ly . 16/ S e e L a w A f f e c t i n g G r o u p H e a l t h P l a n s b y H o r a c e R . H a n s e n i n I o w a L a w R e v i e w , 1950, v o l . 35 ( p . 209) ; a n d C o o p e r a t i o n i n M e d i c i n e , M i n n e s o t a L a w R e v i e w , 1? 51, v o l . 35 ( p . 373) . - 21 - A P P E N D IX A . SU M M A RY O F P R I N C I P L E S A D O P T E D B Y A M E R IC A N M E D IC A L A S S O C IA T IO N , F O R LA Y ^ SPO N SO BE D VOLUN TARY H EA LTH PLA N S ( 1949) . ? / I . T h e p la n s h a l l h e n o n p r o f it , p a y in g n o d iv id e n d s t o b e n e f i c i a r i e s o r o th e rs . S u rp lu s s h a l l b e u se d f o r s e r v i c e s , f a c i l i t i e s , d o c to r -c o m p e n s a tio n , o r reserv es# 2# I t i s u n e t h i c a l f o r a p h y s i c i a n t o s e r v e a n o r g a n i z a t i o n o r g r o u p w h ic h w i l l d e r iv e a d i r e c t p r o f i t fr o m h i s f e e s o r c o m p e n s a tio n . 3# T h e p la n s h a l l b e a d e q u a te ly fin a n c e d an d o r g a n iz e d w ith o u t c a p i t a l s t o c k . A# T h e p la n s h a l l b e o p e r a te d u n d e r a n a u to n o m o u s a d m i n i s t r a t i o n , o r t r u s t , w ith s e g r e g a te d fu n d s , d e v o te d e x c lu s iv e ly t o p r o v is io n o f h e a lt h s e r v ic e s . 5# P r o m o tio n , s a l e s a n d a d m in is t r a t iv e e x p e n s e s s h a l l b e m in im a l. 6# Q u a lity o f m e d ic a l s e r v ic e m eet S ta te s ta n d a rd s . 7# T h e p la n s h a l l p r o v id e a l l s e r v i c e s p r o m is e d t o b e n e f i c i a r i e s i n m e n t. 8. E a c h b e n e f i c ia r y s h a l l r e c e iv e a c l e a r s ta te m e n t o f te rm s o f a g re e m e n t r e s e r v ic e s , b e n e fits and lim ita tio n s . 9. A m ount o f d u es s h a ll b e c l e a r ly s ta te d fin a n c in g o f th e r is k s in v o lv e d . s h a ll b e a t h ig h e s t p o s s ib le le v e l and s h a ll 10. N o p r o m o t io n a l m a t e r i a l s h a l l p u b l i c i z e p a tin g p h y s ic ia n s . ag ree and s h a ll b e a d e q u a te f o r p ro p e r s k i l l o r a tta in m e n ts o f p a r t i c i I I . C o m p e n s a t i o n o f p h y s i c i a n s m a y t a k e a n y f o r m n o t c o n t r a r y t o AMA e t h i c s re co n tra c t p r a c tic e . 12. A n y d u l y l i c e n s e d a n d q u a l i f i e d p h y s i c i a n i n t h e c o m m u n ity w h o w i s h e s t o p a r t i c i p a t e i n th e p la n , w ho a g r e e s t o i t s te r m s an d m e e ts i t s s ta n d a r d s , s h a l l b e a d m itte d t o th e p la n . 13. P r o s p e c t i v e b e n e f i c i a r i e s s h a l l b e t o l d t h e n a m e s o f p a r t i c i p a t i n g p h y s i c i a n s , a n d s h a l l h a v e fre e d o m o f c h o ic e , w ith in r e a s o n a b le g e o g r a p h ic an d p r o fe s s io n a l lim ita tio n s . 14. G o v e r n in g b o d y s h a l l n o t i n t e r f e r e w i t h t h e m e d i c a l s t a f f i n t h e p r a c t i c e o f m e d ic in e . Co n f id e n t ia l d o c t o r - p a t ie n t r e la t io n s h ip s h a l l b e p r e s e r v e d . V J o u r n a l o f t h e A m e r i c a n M e d i c a l A s s o c i a t i o n , J u n e 26, 39lj9 , p p . 686- 687. 22 - 15* M e d i c a l s t a f f s h a l l p a r t i c i p a t e i n d e l i b e r a t i o n s o f t h e g o v e r n i n g b o d y a n d i t i s reco m m en d ed t h a t r e p r e s e n t a t iv e s o f t h e m e d ic a l p r o f e s s io n s h o u ld b e m em b ers o f t h a t b o d y , 16# A l l s e r v i c e o u t s i d e t h e c o n t r a c t s h a l l b e p a y a b l e b y b e n e f i c i a r y t o p h y s i c i a n o n wa f e e - f a r - e e r v i c e b a s i s 17* H o s p i t a l s c o n n e c t e d v i t h p l a n s h a l l b e o p e r a t e d i n p u b lic p o lic y * a c c o rd a n c e w ith so u n d I S * T h e re s h a l l b e n o d is c r im in a tio n i n r a t e s , b e n e f i t s , te r m s , an d c o n d i t io n s f o r a l l p e rs o n s in th e sam e c l a s s * 19* R e s e r v e f u n d s s h a l l b e p r u d e n t l y i n v e s t e d * 20* P l a n s d e s i r i n g a p p r o v a l s h a l l a g r e e t o r e g u l a t i o n a n d p e r i o d i c r e v i e w b y a n a p p r o p r i a t e a c c r e d i t i n g b o d y o f AMA i n c o n s u l t a t i o n w i t h t h e p l a n ' s sp o n so rs* 23 A P P E N D IX B . SU M M A R Y C F - S T A T E L E G I S I A T I O N , 1952 O f t h e 12 l e g i s l a t u r e s i n r e g u l a r s e s s i o n i n 1952, 6 e n a c t e d n o l a v s o n c o o p e r a tiv e s (A r iz o n a , K e n tu c k y , L o u is ia n a , M is s is s ip p i, R h od e I s l a n d , S o u t h C a r o l i n a ) . T h e o t h e r 6 S t a t e s p a s s e d l a v s o f m in o r im p o r t a n c e t o c o o p e r a tiv e s : C o lo r a d o a m en d ed i t s in c o m e t a x l a v t o e x e m p t c r e d i t u n io n s fr o m t a x o n n e t i n c o m e , p r o v i d e d 85 p e r c e n t o r m o r e o f g r o s s i n c o m e i s d e r i v e d f r o m t h e b u s i n e s s o f m a lr in g l o a n s t o m e m b e rs o r f r o m i n v e s t m e n t i n U . S . b o n d s . O t h e r c o o p e r a tiv e s ( f o r m e r ly a l s o e x e m p t) a r e now r e q u ir e d t o r e p o r t an d t o in c lu d e i n t h e i r g r o s s in c o m e a l l d i s t r i b u t i o n s a n d a l l o c a t i o n s . I n d i v i d u a l s a r e p e r m i t t e d t o e x c l u d e fr o m t h e i r g r o s s in c o m e c o o p e r a t i v e r e f u n d s o r r e b a t e s i f e x p e n d e d f o r p e r s o n a l , l i v i n g , o r f a m il y e x p e n s e s . C o o p e r a t iv e s a te a llo w e d to d e d u c t a m o u n ts a l l o c a t e d , c r e d i t e d o r p a id t o m em b ers a s p a t r o n a g e d i v i d e n d s , r e b a t e s o r r e f u n d s -d u r in g t a x a b l e y e a r o r w i t h i n t h r e e m o n th s o f i t s e n d ; R E A -fin a n c e d c o o p e r a t iv e s m ay d e d u c t s u c h a m o u n ts c r e d i t e d o r p a id o r a l l o c a t e d t o c u s t o m e r s a n d m e m b e r s , ( c h . 4 7 , L a v s o f 1952) , £ / I n e f f e c t , C o lo r a d o h a s a d o p te d t h e p a t t e r n o f F e d e r a l t a x a t i o n o f c o o p e r a t iv e s . M a s s a c h u s e t t s a d o p te d m in o r a m e n d m e n ts c o n c e r n i n g c r e d i t u n io n o p e r a t i o n s a n d c o o p e r a t i v e b a n k s ( r e s p e c t i v e l y , o h . 8 8 , 9 5 , 162, 163, 9 1 ; 149 a n d 2 5 7 , l a v s o f 1952) . M ew Y o r k m a d e s l i g h t c h a n g e s i n 268 a n d 307, L a v s o f 1952) . th e la v s r e g u la t in g c r e d i t u n io n s (c h . w tfttrfg a n r e q u i r e d a l l c o r p o r a t i o n s ( p r o f i t , n o n p r o f i t , o r c o o p e r a t i v e ) t o p a y a n o r g a n iz a t io n f e e an d a n a n n u a l f e e f o r th e p r i v i l e g e o f d o in g b u s i n e s s i n t h e S t a t e ( P . A . 180 a n d 183) . C o o p e r a t i v e s w o u ld b e p e r m i t t e d t o o p e r a te a s n o n p r o f it o r g a n i z a t i o n s , p r o v id e d t h e y e n g a g e d i n b u y in g a n d s e l l i n g p r o d u c t s f o r m e m b e r s w i t h o u t d i r e c t p e c u n i a r y g a i n ( P , A . 23) . I t h a s b e e n p o in t e d o u t t h a t t h i s m ig h t r u l e o u t p a tr o n a g e r e f u n d s , s o t h a t o n ly c o s t - p l u s b u y i n g c l u b s w o u ld b e a b l e t o q u a l i f y . N e w J e r s e y , b y p r o c l a m a t i o n o f t h e s e c r e t a r y o f s t a t e , d i s s o l v e d 60 c o o p e r a t i v e a s s o c i a t i o n s w h ic h h a d f a i l e d t o f i l e a u d i t o r s ' r e p o r t s f o r t h r e e c o n s e c u tiv e y e a r s a s r e q u ir e d b y l a v . V i r g i n i a a u t h o r i z e d i t s C o r p o r a t i o n C o m m is s io n t o w it h h o ld a c e r t i f i c a t e fr o m a c r e d i t u n io n w h en i t h a s r e a s o n t o b e l i e v e t h a t i t h a s b e e n fo rm e d fo r o t h e r th a n l e g i t i m a t e c r e d i t u n io n b u s i n e s s , o r t h a t t h e m o r a l f i t n e s s , f in a n c ia l r e s p o n s ib ilit y , a n d b u s in e s s q u a lif ic a tio n s o f i t s o f f ic e r s d o n o t co m m a n d c o n f i d e n c e ( c h . 22) . S t o c k i n a g r i c u l t u r a l c o o p e r a tiv e s m ay b e r e g i s t e r e d i n th e nam e o f t w o o r m o r e p e r s o n s , p a y a b l e t o a n y o n e o f t h e m a s a s u r v i v o r ( c h . 166) . 2/ B o t h f a i m a n d n o n f a n a c o o p e r a t i v e s a t e p e r m i t t e d t o d e d u c t f r o m H x e i r g r o s s t a x a b l e in c o m e , a m o u n ts p a id o r a l l o c a t e d t o p a t r o n s a s d iv id e n d s o r p a tr o n a g e a n d a m o u n ts p a id a s i n t e r e s t ^ o r d iv id e n d s o n c a p i t a l s t o c k . APPENDIX C. RECENT DEVELOPMENTS IN CONSUMER COOPERATIVES IN OTHER COUNTRIES For reasons of space, tills review Is United to Canada and certain countries of Western Europe. It is not meant to imply that there have been less interesting developments elsewhere. In Asia and Africa, producer and agricultural credit societies, with governmental encouragement and assistance, have become Important in the economy of a number of countries; consumer coop eratives are less well developed in these areas. Canada.3/ Distributive cooperatives, in Canada, as in the United States are organised chiefly by farmers. The 1952 report indicates little progress to date in organizing consumer cooperatives in the urban centers of Canada. How ever, separate data are not available for nonfam consumer cooperatives. During 1951-52 (year ending July 31) 3,838 cooperatives engaged in mar keting agricultural products, purchasing supplies, or providing services for their members. A total of 2,19b societies with 1,163,803 members engaged in marketing or purchasing, or in a combination of tne two; 83 fishermen's co operatives had lU,6m members and did #20 million worth of business; 339 "Service* cooperatives had 195,027 members and did #8.1 million worth of business. Since some persons belong to several cooperatives, the grand total of 1,373* U71 members includes duplication. The number of societies and mem bers reported was somewhat lower than in the preceding year. While the marketing of members' produce is the leading cooperative activity, Canadian farm cooperatives are increasing their purchasing of sup plies for farm and household use. Merchandise sales constituted 20.3 percent of total cooperative business in 1952 compared to 5 percent twenty years ago. This type of business increased by #38 million (18 percent) between 1951 and 1952, the biggest annual increase since 1932. The total volume of .pupplypu rehasing reached #21*8,050,700. Much of this business is combined with mar keting* However, separate cooperative retail stores sold an estimated #111; million worth of goods in 1952. The proportion of total retail trade account ed Tor cooperativesstores is somewhat higher than in the United States but is not above 2 percent. Cooperative wholesales, owned by 1,710 local cooperative associations, operate in every Canadian province accept Newfoundland. Eleven wholesales sold about #70 million worth of business in supplies to member associations, in 1952. These wholesales also carried on a somewhat larger volume of mar keting business (#95.5 million). A total of 339 "service" cooperatives with 195,027 members, assets of #32 million, and revenue of #$«U million in 1952 provided hospital and medical care, housing, transportation, electricity, and operated undertaking establishments, restaurants, student boarding houses, and recreation facilities. 3/ This account is based on Cooperation in Canada 1952, Twenty-first Annual Summary, Department of Agriculture, Ottawa, July 1953* ■ 25 • In addition to the associations included in the statistics shown, Bare than 4 0 0 provincial farmers* mutual fire insurance companies carried risk in surance of $2.5 billion* A Cooperative Fire and Casualty Company was incorp orated under a special federal act of June 30, 1951 and began to write fire and automobile insurance July 1, 1952* The following table shows the commodity groups supplied to Canadian members and patrons in 1952: W *-—^ or • 8S0oe£atl0h0*y jiupdot Commodity groups T o t a l ................. . . • Food products * ........ • • • • • • • • Petroleum products and auto accessories• • Coal, wood, building materials.......... Clothing and home furnishings .......... Machinery and equipment • • • • • • • • • Miscellaneous . . • • • • • • • • • • • * 1.683 ___ 907 790 639 474 358 964 „Value ct sales Percent Dollars (thousands) 248.050 96,142 56,456 25,966 15,822 7,871 16,532 27,261 100.0 38.7 25*5 10.5 6*4 3*2 6.7 11.0 1/ Associations handling more than one commodity group are counted more than once* Some associations also market produce of members. Great Britain. Consumer cooperatives have grown steadily since 1938 in mem bership, volume of business, and proportion of total retail trade handled, according to reports by the government* e Registrar of Friendly Societies (including cooperatives) and estimates made by the Cooperative Union (the national federation of cooperative societies). In 1952 membership had reached almost 11 million - an increase of 2 peroent over 1951, and 31 percent over 1938, while population had increased only 6 percent. (See table p>21» Between one-fourth and one-4ialf of British families are now believed to hold membership in cooperatives engaging in re tail trade. Volume of business increased between two-and three-fold; however when adjusted for the rise in the price level, the increase was only about 15 percent. The percentage of national consumers* expenditures for goods and services of types handled by cooperatives, rose from 8.9 percent in 1938 to 9*3 percent in 1951. According to the 1950 retail trade census, cooperatives constituted 5 percent of all retail establishments and handled 12 percent of all retail trade (compared with 0.2 peroent of the establishments and 0.8 pea* cent of sales in the IT* S.). The cooperative share of retail sales in certain lines is as follows: dairy products, 35 percent; specialized grocery stores, 29 percent; other food, 16 peroent; coal, 15 percent; men*s and women*s wear, 14 peroent; furniture, 9 peroent; and drugs, 6 peroent. 26 Great Britain Cooperative Trading Societies, 193S, 1951, and 1952 Wholesale societies ............ . . . Member societies • 1938 1951 1952 2 2 2 1,800 1,500 1,500 153.5 Sales (million S )]J. Retail societies-number . . . . . . . . Members (thousands) • • • • • • • • Sales (million & ) . . ......... 1,168 435.8 _ 482.2 1,109 1,107 8,357.8 10,744.6 10,931.5 262.4 649.8 704.2 23.6 38.2 35.6 9.0 5.9 5.1 tttvidends ox sales Million h ..................... Percent of sales • • . • • • • • 1/ h i equalled $4,89 in 1938, In 1951 and 1952 the official rate of exchange was fixed at $2,80, This rate does not necessarily provide an ac curate measure of differences in purchasing power of a unit of currency in idH'ttfo eotmfcrtsa Source* Reports of Registrar of Friendly Societies, London, 27 As part of a national survey of personal incomes and savings made by the Oxford University Institute of Statistics in the spring of 1952, infor mation was obtained on investment in cooperative societies, by income and occupation of head of income unit^/ The sample studies showed membership in a cooperative society for 23 percent of the income unitsj 26 percent of the skilled manual workers, 21 percent of the unskilled, 1? percent of the cler ical and sales workers, 20 percent of the managers, and 15 percent of the self-employed. One-third of the units with incomes in the &400-599 bracket^/ belonged to cooperatives. Most cooperative members had small investments; nearly half reported owning a single L 1 ($2.80) share; more than two-thirds reported owning shares worth less than L 10 ($28). Reduction in the rate of patronage refunds since prewar is being studied by a special Committee of the Cooperative Union. Dividends on sales have been and still are at a much higher rate than is usual in the United States; the overall rate was 9 percent of sales in 1938, and in 1952, 5.1 percent. The decline has been partly explained by the government's regulation of retailers* gross margins as part of its price control program (only recently discontinued); another factor is the practice of paying refunds on total amount of purchases including heavy excise taxes on tobacco and other goods. The highlight of the 84-th annual congress held by the Cooperative Union in 1953 was the unanimous adoption of a report on social ownership and consumer problems, stressing cooperative ownership as an alternative to nationalization. Advantages urged for the cooperative form were its greater opportunities for the exercise of democratic control by the membership. The report indicated some apprehension lest a conflict develop between advo cates of further nationalization and the cooperatives, particularly in areas rhere cooperatives have extended their control vertically over a related jroup of industries. The report criticized "the facade of consumer repre sentation without really effective consumer influence" in the nationalized industries, and noted that centralization had removed "something which exist ed in municipal enterprises namely.the direct responsibility of the munic ipal government to local risers of gas, electric current and water, and the ready channels available for communication of consumer grievances. U/ National Survey of Personal Incomes and Savings, by H. F. Iydall in Bulletin of the Oxford University Institute of Statistics, June and July 1953* vol. 15, nos. 6 and 7, pp. 208-209. W At the official exchange rate of $2.80 « fi 1, this bracket amounts to $1,1?0-$1,680 a year. - 28 - Scandinavia. Although consumer cooperatives in Denmark, Norway, and Sweden continued to increase their volume of sales in 1950-51, the increase was not substantial when adjusted for upward changes in the price level. In Norway and Sweden, cooperatives’ wholesale trade increased more than their retail trade. In 1950 Swedish cooperatives accounted for 15 to 20 percent of all retail trade and for an even higher proportion of sales of foodstuffs. Coop erative membership included 993,000 families, or between one-third and onehalf of the population. Wage earners constituted 51.4- percent of the member ship of consumer societies in 1951. The Swedish cooperative movement is the largest single employer of labor (next to the government) with 51,000 employ ees. In the cooperatives* establishments, works committees and special com mittees have been concentrating on the improvement of productivity and work ing efficiency# In order to assist local societies in improving their store layouts and techniques and in building more self-service stores as well as ware houses, the Swedish Cooperative Union and Wholesale Society floated a loan in 1952 of which 68 million kroner had been subscribed by April— more than doubling its outstanding bond issues. (One krone - 19*3 cents U. S# at the official rate of exchange). As in Great Britain, the Swedish cooperatives have helped to head off or slow down nationalization. In Sweden, they have specifically opposed nationalization of the oil industry. Sweden adopted a special law to provide for the incorporation of co operatives, effective January 1, 1953, replacing a 1911 Act which applied to both cooperatives and profitmaKing enterprises. The centenary of consumers* cooperation in Norway was reached in 1951. In 1950, one-fifth of all Norwegian families were enrolled in cooperatives more than twice as many as before World War II. In 1951, approximately 13 percent of national retail trade in foods, textiles, shoes, and household goods (amounting to 705 million kroner) was carried on by cooperatives. There were 282,166 members enrolled in 1,097 consumers* societies in 1952, which did a business worth 801,847,000 kroner in 1952. (1 krone ■ 19.3 cents UJS. at the official rate of exchange). On sales to members a patronage refund of 1.3 percent was paid. Almost as large ail amount was ploughed back into the societies' reserves and other funds. The Norwegian cooperative law was amended in 1952 to permit societies to operate in more than one county or municipality and to permit societies operating more than one store to sell to nonmembers. During World War II, the old prohibitions had been suspended. The Oslo society, in early 1953, operated about 75 stores. Bow to safeguard consumer interests was the subject of an official committee report to the Norwegian Government in 1953* It recommended a Consumer Federation, with a secretariat to deal with prices, production, dis tribution, supplies, rationing, quality control, standards, research and in formation. „ Denmark, like Norway prior to 1951, still has legislation prohibiting common ownership of two or more shops in a municipality, and operating both a retail store and a producing enterprise. Revision of this obsolete legis lation was demanded by the KFB (Urban Cooperative Union) in January 1953 but was opposed by the conservative press, which feared that a change might lead to the "American" system of retailing, and eliminate many of Denmark1s 25,OCX) small shopkeepers. The 1,900 Danish consumer cooperatives had 460,000 members in 1951 who, with their families, lnoluded from one-fourth to one-third of the total population. The annual volume of business in 1951 totaled 950 million Kronen (One Krone s 14*46 U. S. cents) or about 10 percent of the nation's retail trade. France. ^ French consumer cooperatives were handicapped by World War II in itiation even more than those of other countries. Holdings of members were limited by lav to 500 francs per person until a recent modification raised the wwHmmn to 3,000 francs ($8.50 at the official rate of exchange). Not all members have increased their holdings to the new limit. Both the nation al wholesale society and the member locals are reported to be short of funds for investment in needed facilities. A government-established Central Fund far Cooperative Credit, for providing long-term credit, has also been handi capped by receiving only small appropriations. The cooperatives have their own Central Bank of Cooperatives for short-term borrowing. Finally, the French taxation system favored the small shopkeeper and tended to penalize large-scale operations, including those of cooperatives. Cooperative trade accounts for 3 to 8 percent of total trade in com modities which cooperatives handle. The following figures show the extent of consumers* cooperation in France at the end of 1951. 1951 947 Number of local societies • .......... Membership......... 2,552,000 Number of stares ........ . . . . . . . 7,586 Sales— million francs • • • • • • . . • 87,723 million dollars • • • • * • • • 250.6 Wholesale society........... • • • • Direct sales— million francs • • • • million dollars • • • • Commission sales— -million francs . . . . million dollars . . . 1 9,000 25.7 45,000 128.6 West Germany.^/ In 1946 the Central Association of German Cooperatives was re-established; German cooperatives had been liquidated in two actions by the Nazis in 1935 and in 1941* The Association represents consumer interests at 6/ This account is based on a memorandum on Consumer Cooperation in France, by Thoraten Odhe, 1953* 7/ This account is based on D.G.B. News Letter of June 1953* published by Executive Cased.ttee of German Federation of Trade Unions. - 30 the federal and local level, on legislative and administrative matters; en gages in cooperative education, training, research and publicity; and audits books of member cooperatives. During 1952 cooperatives sought repeal of a long-standing, but unenforced statutory provision which prohibited sales to nonmembers. In September 1952 the question of restitution of cooperative property confiscated by the Nazis was finally settled in principle, although each case must still be adjudicated. In 1951 it was estimated that 11 percent of the population belonged to families having membership in a cooperative, compared to 30 percent of the population in 1930. Cooperative members have been increasing rapidly in recent years; the rise from 1951 to 1952 was 15 percent. At this time total membership was 1,835,774-. A total of 7,389 stores was operated in 1952; sales totaled 1,34-0 million Deutsche mark. (One DM - 23*81 U* S. at the offi cial rate of exchange). The wholesale purchasing company of Germany, Consumers Cooperatives (GIG), which also engages*in production and importing, continued to make progress during 1952. In re-establishing the central Association, particular effort was made to avoid duplication of functions, and to achieve simplification of structure and greater efficiency in management. Towards this end, the boards of the association and the wholesale (which share a headquarters building) hold joint meetings weekly to discuss organization, finance, administration, and broad policies in respect to production and trade. 2/ 8/ Out of the Ashes, in The Cooperative Official, June 295>3, Manchester England. ☆ U. S. GOVERNMENT PRINTING OFFICE: 1954 O — 289150
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