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UNITED STATES DEPARTMENT OF LABOR Frances Perkins, Secretary B U R E A U OF L A B O R ST A T IS T IC S Isador Lubin, Commissioner + Consumers’ Cooperation in the U nited States, 1936 Prepared by FLORENCE E. PARKER Bureau o f Labor Statistics B u lletin 7s£o. 659 August 1938 + U N IT E D ST A T E S G O V E R N M E N T P R IN T IN G OFFICE W A S H IN G T O N : 1939 For sale by the Superintendent o f Documents, Washington, D . C. Price 25 cents CONTENTS Page Preface_________________________________________________________________________ C h ap ter 1.— General review of the movement in 1936_ _ _________________ Development in the United States_______________________________________ Forms of cooperative effort______________________________________________ Extent of the movement in 1936________________________________________ Trends in cooperative development______________________________ Scope and method of study______________________________________________ Definition of terms__________________________________________________ Basic principles of consumers’ cooperation_________________________ Coverage of study___________________________________________________ Summary data for sample reporting for 1936______________________ C hap ter 2.— Retail distributive associations________________________________ Summary__________________________________________________________________ Scope of study____________________________________________________________ General condition of cooperatives________________________________________ Sponsoring groups________________________________________________________ Year of formation_________________________________________________________ Fields of cooperative activity____________________________________________ Operating facilities________________________________________________________ Membership_______________________________________________________________ Composition of membership________________________________________ Limitations on membership_________________________________________ Amount of business, 1936________________________________________________ Business with nonmembers_________________________________________ Operating expenses_______________________________________________________ Net earnings__________________________ .._____ r __________________________ Patronage refunds____________________________________________________ __ Proportion of goods purchased from cooperative sources______________ Annual stock turn-over___________________________________________________ Production by local cooperatives________________________________________ Financial data_____________________________________________________________ Cooperatives in relation to population__ _______________________________ Farmers in the consumers’ cooperative m ovem ent____ ________________ C h ap ter 3.— Local service associations______________________________________ Summary__________________________________________________________________ Business operations_______________________________________________________ Fields of activity__________________________________________________________ Associations supplying meals and lodging__________________________ Laundry and dry-cleaning establishments_________________________ Medical-care cooperatives___________________________________________ Garages_______________________________________________________________ Printing and publishing associations_______________________________ Burial associations___________________________________________________ Housing associations_________________________________________________ Electricity associations______________________________________________ hi v ii 1 3 3 5 11 17 17 18 20 21 24 24 24 25 28 30 31 35 35 38 38 40 42 43 44 46 48 49 50 51 56 57 61 61 61 64 64 65 65 73 74 74 80 88 IV CONTENTS Pag£ C hap ter 4.— Telephone associations_______________________________________ Scope and method of study___ _______________________________ Extent of cooperative telephone movement_______________________________ 97 Types of associations________________________________________________________ 99 Age of associations__________________________________________________________ 100 Membership and subscribers served_______________________________________ 101 Cooperative practice________________________________________________________ 104 Operative and administrative procedure____________________________ 107 Properties and equipment_____________________________________________ Cost of service__________________________________________________________ 108 Employment in telephone associations______________________________ Finances_______________________________________________________________ Resources_________________________________________________________ Income and earnings___________________________________________________ 113 C h ap ter 5.— Credit unions_______________________________________________ 115 Summary____________________________________________________________________ Method of operation________________________________________________________ 116 Fundamentals of cooperative credit_________________________________ Method and scope of study________________________________________________ 117 Year of establishment_______________________________________________________ 118 Membership,_________________________________________________________________ 120 Loans made, 1936___________________________________________________________ 123 Rates of interest charged on loans_________________________________________ 126 ______ 127 Dividends paid______________________________________________________= Financial data________________________________________________________ Losses from bad debts________________________________________________ C h ap ter 6.— Insurance associations____________________________________________ 134 Insurance in the consumers’ cooperative m ovement________________ Scope of Bureau’s insurance survey_________________________________ Year of formation of reporting associations_______________________________ 137 137 Membership, and insurance in force_______________________________________ Business done in 1936-------------------------------------------------------------Relation of amount of insurance to field of operations________________ 142 Claims paid__________________________________________________________________ 142 Dividends returned_________________________________________________________ 143 C h a p te r 7.— Federations________________________________________________________ 145 Wholesale associations______________________________________________________ 145 Services and facilities__________________________________________________ 146 Trading territory_______________________________________________________ 149 Membership and resources____________________________________________ 151 Business operations____________________________________________________ 153 Business with nonmembers_______________________________________ 155 Sources of supply_________________________________________________ 155 Goods produced-----------------------------------------------------------------------------156 Operating expenses__________________________________ 1__________ 156 Cooperative practice___________________________________________________ 157 Employment in wholesales____________________________________________ 159 Development of individual associations______________________________ 160 Service federations__________________________________________________________ 163 Noncommercial federations________________________________________________ 163 Federations in the distributive m ovement___________________________ 164 Federations in the credit-union movement___________________________ 168 93 96 106 110 110 111 115 117 128 133 134 136 140 CO N T E N T S V Page C h ap ter 8.— Education and recreation in the cooperative m ovem ent. _ . _ Education_________________________________________________________________ Recreation__________________________________________________________ C h a p te r 9.— Cooperative associations as employers________________________ Summary__________________________________________________________________ Personnel policies_________________________________________________________ Employment in distributive associations________________________________ Earnings of cooperative employees______________________________________ Average annual earnings____________________________________________ Average hourly earnings_____________________________________________ Comparative wages in cooperative and private employment____ Hours of labor____________________________________________________________ Cooperatives and organized labor_______________________________________ Cooperative Workers’ Union________________________________________ Collective bargaining________________________________________________ C h ap ter 10.— Legal status of cooperatives__________________________________ Medical-care associations____________ The insurance controversy__________________________________________ The issue of corporate practice of medicine________________________ Present legal status__________________________________________________ Electricity associations___________________________________________________ The question of State regulation___________________________________ Court cases__________________ Telephone associations___________________________________________________ Public regulation____________________________________________________ 170 170 171 174 174 175 178 179 179 180 181 183 185 185 186 189 189 190 190 193 194 196 197 197 199 PREFACE The consumers’ cooperative movement in the United States is in a continuous state of change. Weak associations are failing, new associations in greater numbers are taking their places, and a solid block of old, well-established associations remains year after year, expanding operations and adding new services. The rate of change is such that no general survey can possibly do more than present a picture of the cooperative situation as of a specific date. This the present report attempts to do, covering the 1936 operations of con sumers’ cooperatives of all types, and giving membership and financial status as of December 31 of that year. During the interval that has elapsed since the first questionnaires were sent out, early in the spring of 1937, a number of the associations covered in this study have gone out of existence. But later data indicate that the birth rate of new associations was higher in 1937 than in any other previous single year— even during the World War. This report, covering the year 1936, presents the results of the fifth survey of cooperative associations in the United States made by the Bureau of Labor Statistics. The previous studies related to the years 1920, 1925, 1929, and 1933. Like its predecessors, the 1936 survey does not cover all of the consumers’ cooperatives in the coun try, but its coverage is so extensive as to justify estimates being made for the extent of the movement as a whole. The Bureau wishes to express its appreciation of the assistance rendered, during the whole course of the study, by Thomas Holland, formerly Director of the Consumers’ Project of the Department of Labor; of the aid given by the Farm Credit Administration and the Rural Electrification Administration in obtaining information for the Bureau in their respective fields; and of the conscientious efforts of the interdepartmental committee (Donald Montgomery, Udo Rail, Nathaniel Fairbank, and Thomas Holland) which assisted in the formulation of the questionnaires and the instructions used in the survey. Spot studies of certain areas, not reproduced here but upon the findings of which the present report draws freely, were financed and made by the Consumers’ Counsel Division of the Agricultural Adjustment Administration and the Consumers’ Project of the Department of Labor. The spot studies were as follows: Chicago, by Sidney Gubin, Consumers’ Counsel Division; northern Wisconsin, by Samuel Mermin, Consumers’ Project; southern California, by yn PREFACE VIII Elbridge Burnham; and Cleveland, by Ernestine Wilke, of the Bureau of Labor Statistics. The Bureau of Labor Statistics takes this opportunity to extend its thanks to the cooperative associations which furnished information in the survey and especially to those which have supplied data on their operations year after year. The survey was directed and the report prepared by Florence E. Parker, under the general direction of Hugh S. Hanna, chief of the Bureau’s Editorial and Research Division. The section on legal status of medical-care cooperatives was prepared by Samuel Mermin. The field work was done by the following, all of whom were on the staff of the Bureau of Labor Statistics: Charlotte Abbott, John Ball, Lloyd Barnard, Irene Bergmann, Emma Borchers, Grace Felker, Pearl Ferrin, W. O. Futch, H. J. Hillebrandt, Nell Keyes, Edward Knapp, Joseph Lethco, Morris Levine, Pauline Paro, Carl Rittenhouse, Margaret Rupli, Lucy Scott, Helen Sexton, and Louise Sigler. Valuable assistance in the compilation and preparation of basic data was rendered by Elizabeth Black and Myrtle Selove of the Bureau’s staff, and by Tessim Zorach, of the Consumers’ Project. I sador L u b in , C o m m is s io n e r o f L a b o r S ta tis tic s . A ugust 15, 1938. Bulletin 7\[o. 659 of the United States Bureau of Labor Statistics C o n su m e r s’ C o o p era tio n in th e U n ite d S ta t e s , 1 9 3 6 Chapter 1.— GENERAL REVIEW OF THE M OVEM ENT IN 1936 During the past few years there has been a marked increase in interest in the United States on the subject of consum ed cooperatives, especially since President Roosevelt in 1936 appointed a commission to study the working of the cooperative movement in various European countries. At the time that that commission was carrying on its foreign survey, the Bureau of Labor Statistics was beginning a survey of the cooperative movement in the United States. This survey fol lowed the same general lines as the earlier studies on the same subject made by the Bureau at various intervals, but was considerably broader in scope, and, while lacking complete coverage, was sufficiently comprehensive to give a fairly accurate picture of the extent and character of all phases of consumers7 cooperation in this country. As a result of this survey, dealing for the most part with conditions as they were in 1936, it was found that the retail distribution and service associations, which constitute the heart of the movement, numbered about 4,100 with over 830, 000 members and were doing a business of some $188,000,000 per year. Because the cooperative movement in this country is largely restricted to certain geographical areas, however, there is undoubtedly much misunderstanding as to what consumers7 cooperation is and what it seeks to accomplish. Any activity in which two or more people join can in a broad sense be called a cooperative enterprise. However, the term “ cooperative movement77 has come to apply to joint effort under certain welldefined principles. It all began in 1844—nearly 100 years ago— as a sort of protest movement. In that year 28 poverty-stricken flannel weavers in Rochdale, England, decided to take action against the evils from which they suffered: namely, those resulting from unem ployment, underemployment, exorbitant prices, and adulteration of goods. Their first step in this ambitious undertaking was a very modest one. They formed the Rochdale Society of Equitable Pioneers, each member subscribing 1 pound sterling to be paid in at the rate of twopence per week. These small sums they invested in small quantities of flour, sugar, butter, and oatmeal, and with these 1 2 CO NSUM ERS’ COOPERATION I N THE U N IT E D STATES commodities as their stock in trade they opened a store. As they had to earn their living by labor in the textile mills during the day, the store was open only a few hours on Monday and Saturday evenings. The organization was successful from the first and in a few years other societies sprang up in imitation, in England and then on the Continent. Organizations patterned after the original are now found practically all over the world. Thus the Rochdale association can be said to be the parent of all the consumers’ cooperatives now in existence. It may also be noted that the first cooperative organiza tion is still in successful operation and the original tiny shop in Toad Lane, Rochdale, has been restored and is a mecca for all cooperative travelers. All truly cooperative associations follow the principles adopted by the Pioneers: Membership is open to anyone who can make use of the association’s services. The members themselves provide the capital necessary, but no one has more than one vote regardless of the size of his investment. The members decide what type of busi ness they shall carry on and they control all the policies. Whatever activity they undertake is carried on in their interest as consumers, to supply themselves with goods and services. The characteristic which above all distinguishes the consumers’ cooperative business from other business is that the net amount saved through the op eration of the business (i. e., what would in private operation be termed the “ net profit” ) is returned to the members, not in propor tion to the amount of capital stock they hold, but in proportion to their patronage of the business. Thus, in a store society the member who has spent $500 at the store in the course of the year receives five times as much as the member whose purchases totaled only $100. The consumers’ cooperative movement, wherever found, is still grounded upon these principles. The immediate objective is eco nomic— to make the pennies go farther, to eliminate the extra cost entailed by extravagant advertising and by high-pressure salesman ship, to handle only commodities of known good quality, and to fill an increasing number of human wants on a nonprofit basis. Like the original Pioneers’ society, the present-day movement also has a farreaching social philosophy. Its final aim is to supply every need of life, social and economic, without profit and by united effort. Although the cooperative movement long ago reached the category of “ big business” abroad, it remains, as it started, a distinctly workingclass movement, although other groups are evincing increasing interest and participation. So successful has this method of doing business proved that in Great Britain it is estimated nearly half of the whole population is served through the consumers’ cooperatives. The Scandinavian countries are other examples of successful operation. G ENERAL R E V IE W OF T H E MOVEM ENT 3 D evelopm en t in the U nited States In this country the first known instance of consumers’ cooperation occurred in 1845— only 1 year after its beginning in England—when a tailor in Boston induced the members of his labor union to under take joint buying of their household supplies and distribute them at the weekly meetings of the union. Another labor organization, the Knights of Labor, actively fostered cooperatives as part of its economic program during the early 1880’s. Of the movement that has persisted to the present time, however, the farmers may be said to be the earliest proponents. Some of the Grange stores formed by the Patrons of Husbandry shortly after the Civil War still survive. Since those early years consumers’ cooperation in this country has developed in a series of up-and-down movements corresponding roughly (but in reverse order) with prosperity and depression. The movement has not yet attained the development in the United States that it has achieved abroad, but it is growing steadily, though slowly, in a number of directions. Not only is there an expanding retail movement, but cooperative wholesaling is now firmly established, and here and there productive activities are being undertaken. Local study groups, city-wide or county-wide councils of local associations, and regional leagues are doing various kinds of recreational and edu cational work— acting as channels for the exchange of ideas and experience, issuing cooperative literature, furnishing speakers, spon soring social events, running summer camps for children, youths, and adults, holding classes, and furthering in all possible ways the spread of the cooperative philosophy. All of the educational work is headed up in a national league which serves the movement on a Nation-wide scale. The movement is also developing its own machinery to supply such centralized service as auditing, advice on merchandising methods, store planning, etc., and the technical training of both managers and clerks. Greater emphasis is being laid upon quality of goods and purchase by specifications, making use not only of established con sumer services but to some extent of their own laboratory tests. F orm s o f C ooperative E ffo rt Probably the best-known form of consumers’ cooperation in this country is the cooperative store handling groceries or general mer chandise. As a matter of fact the store associations do form the largest group and account for the largest proportion of total coopera tive business. There are, however, many other lines of activity in which cooperation has made at least a start, and there is probably greater diversification in cooperative effort today than at any time in the history of the movement in the United States. 4 CONSUMERS’ COOPERATION IN THE UNITED STATES In various parts of this country cooperatives are supplying them selves with one or more of nearly all kinds of service. Thus, through cooperative channels they obtain groceries, bakery goods, meats, shoes, clothing, furniture, hardware, paints (made in some cases by their own plant), all kinds of farm supplies, radios, refrigerators, electricity and electrical appliances, gasoline, motor oil, tires, and other automobile accessories. They can, in some sections, buy ice cream made in their own plant, bread and pastries from their own bakery, milk pasteurized in their own creamery, coffee roasted in their own roasting plant, and sausage and smoked meats from their own factory. Cooperators in many places insure themselves against sickness, death, fire, theft, hail, and accident, and insure their automobiles against accidental collision through cooperative or mutual associa tions. When they fall into debt, they borrow from the credit union. Medical service is an activity the possibilities of which are being explored with more and more attention. In such associations the physicians, services are engaged on a yearly basis and preventive measures are stressed. If the patient needs hospitalization, he can, in one place, go to the cooperative hospital. At death, cooperators in certain Middle Western States can be laid to rest by the cooperative burial association. One group of farmers in the West operates its own coal mine from which the fuel needs of the members are supplied. An association in the East provides bus service for the members’ children to and from school. Another runs a beauty parlor, and two associations (both in Wisconsin) each have a beer tavern as one department of the association’s activities. As an instance of the feasibility of application of the cooperative principle to even the smallest processes of every-day life may be cited the six families which combined in the purchase of a lawn mower and the hiring of a part-time worker to cut their lawns; another association for the same purpose is known to have been started in 1938. Other services cooperatively supplied include laundry service, printing, and recreational facilities. This is not to say that all or even a majority of these services are commonly offered throughout the United States. But one or more associations are rendering some of these services and in some districts nearly a full complement has been attained. Such a district is rep resented in St. Louis County, Minn., where a special study made for the Bureau revealed a high degree of cooperative infiltration. In that sparsely settled area of some 7,000 square miles, with a population in 1930 of 204,596, the consumers’ cooperatives alone had a combined membership of about 13,500; this number did not include the members of the many cooperative associations marketing or processing farm GENERAL REVIEW OF THE MOVEMENT 5 products, neither did it include the families of members of the con sumers’ societies. In that area cooperative telephone service, credit, lodgings, recrea tional facilities, electric power, insurance, garage service, automobiles, petroleum products, and automobile accessories, food, and practically all articles of household and farm equipment are available through cooperative channels. The cooperators produce their own butter and sausage, in a federated association, and since September 1,1937, burial service has been obtainable through a new department of the same association. In some of the towns of that county, virtually every family in the area belongs to the cooperative. This region presents one of the best and most complete examples of cooperative development to be found in this country— the result of many years’ patient building and education. At the other end of the scale are the communities where a credit union or one small struggling store represents the sum of cooperative activity. Between these two extremes are all degrees of development. E xten t o f the M ovem en t in 1 9 3 6 Earlier studies by the Bureau included the store associations, hous ing, credit, and certain service associations such as burial, laundry, and restaurant associations. In the 1936 survey, for the first time, attempt was made to obtain general coverage for the telephone, electricity, and insurance associations, and for farmers’ marketing associations doing collective purchasing of consumers’ goods. In short, the purpose of the study was to present as complete a picture of the consumers’ cooperative activities in the United States as the Bureau’s resources would permit. The actual coverage obtained, based on the number of associations known to have been in operation at the end of 1936, ranged from about 43 percent for the telephone associations to over 86 percent for the credit unions. Strictly speaking, all of the above classes of organizations were carrying on consumer activities and filling consumer needs of one kind or another. As generally considered, however, neither the credit unions nor the telephone or insurance associations are regarded as part of the consumers’ movement proper. As a matter of fact, although a certain proportion of the telephone and insurance associ ations are organized as cooperatives and run as such, by far the larger proportion of them are cooperative only because of their conformity to the principles of mutuality, not because of their acceptance of the Rochdale philosophy. The very large sample of associations reporting in all these fields enabled the Bureau to make, for the first time, detailed estimates of the total extent of the movement in this country. On the basis of the sample, it is estimated that there were at the end of 1936 some 6 CONSUMERS’ COOPERATION IN THE UNITED STATES 3,600 associations engaged in retail distribution, of which 2,400 were stores and buying clubs and 1,150 were handling petroleum products There were also some 500 service associations providing for their members such services as medical care, housing, burial, and serving of meals. These local associations had gone into the wholesale field, also, setting up wholesale organizations for that purpose. In these whole sales the retail associations, not individual persons, were the members. About 1,900 local associations were estimated to have been affiliated in the 20 regional wholesales doing business in one or more States. Eighteen of the regional wholesales had, in turn, formed two “ super” wholesales in order to obtain through them the advantages of the large-scale buying thus made possible. In some districts the retail associations had formed federations to take over the distribution of certain commodities or to perform specific services. The 9 such federations were owned by 81 local associations. It is estimated that the telephone and insurance associations doing business on a mutual or cooperative basis totaled 5,000 and 1,800 respectively, and the known credit unions reached a total of 5,440, at the end of 1936. T able 1.— E stim a ted N u m ber , M em bersh ip , and B u sin ess o f C onsum ers* C ooperatives , 1936 T yp e o f association Num ber of associations N um ber of members Am ount of business Local associations Retail distributive associations............ ................................. . Stores and buying clubs_____________________________ Petroleum associations........... ....................... .................. Other distributive associations................................... ....... 3,600 2,400 1,150 50 Individuals 677,750 330,500 325,000 22,250 Service associations............... — ....................... .......... ............ Associations providing rooms or meals or b oth _______ Medical-care associations................................................... Burial associations...................................... ........................ Housing associations.................... ................................. — Electricity associations______________________________ Miscellaneous....................... ............................................... 529 60 14 50 50 275 90 155,293 19,150 i 5,143 31,500 3,500 82,500 13,500 5,015,000 1,530,000 50,000 160,000 * 2,525,000 Telephone associations.......................................................... . Credit unions_________ _______________________ _______ _ Insurance associations................................................................. 5,000 i 5,440 1,800 330,000 1,210,000 8 6,800,000 *5,485.000 4 112,135,000 •103,375,000 $182,685,000 107,250,000 69,985,000 5,450,000 09 750,000 Federations 7 Associations Wholesale associations............. ................................... .............. Interregional...................... ............ ....................................... Regional............................... ................................................. District___________________ __________________________ 31 12 l 20 19 09 »18 1,900 181 43,328,099 i 468.067 42,000,000 i 860,032 1 Actual figure; not an estimate. * Gross income. * Insufficient data to warrant computation o f an estimate. 4 Amount of loans made. 8 Policyholders. * Gross premium income. * Does not include noncommercial federations, for which data were insufficient to warrant estimates. 8 Items cannot be totaled because subgroups are not m utually exclusive. 7 GENERAL REVIEW OF THE MOVEMENT The combined membership of the local distributive and service associations is estimated to have exceeded 800,000, of which about 155,000 were in the service associations, and most of the remainder were about equally divided between the stores and the petroleum associations. The estimated business done by the local associations totaled some $187,700,000, of which nearly 60 percent was accounted for by the store associations. The wholesale business by associations handling consumers’ goods during 1936 was estimated at more than $43,000,000. In order to round out the picture, data are given in table 2 for the labor banks, mutual savings banks, and the whole group of mutual insurance associations, all of which have some cooperative features. T able 2.— Sem icooperative O rganizations in the U nited States in 1 9 3 6 N um ber of organi zations T yp e of organization Labor banks 7......... ........... ............. . Building and loan associations4____ M utual savings b a n k s6------------------M utual insurance com panies7_____ Members Amount of business, 1936 Share capital Total assets Net worth 4 3 $21,747,423 $1,725,000 $24,368,310 $2,155,221 (2) 6,125,971 10,266 5,741,935,430 (2) (2) (2) 566 «13,165,045 » 10,059,951 18,587 5,113.633 1,716,097 1,279 » 276,015,960 515,582,733 <2) (2) (’ ) 1 Data furnished b y Industrial Relations Section, Princeton University. 1 N o data. * Deposits. 4 Data furnished b y United States Building and Loan League. * From Annual Report of the Comptroller of the Currency for year ended October 31, 1936; data are for June 30,1936. 6 Depositors. 7 From Directory of M utual Insurance Companies in the United States (fire and casualty), published b y American M utual Alliance, Chicago, 111.; figures here given represent remainder after deduction of asso ciations included in Bureau of Labor Statistics study. 8Premiums on policies written. G E O G R A P H IC A L D E V E L O P M E N T There has been considerable variation in the development of dif ferent types of associations on a geographical basis. Store associa tions are now found in practically every State in the Union. They still appear in largest numbers in the North Central States, though smaller growth is found in New England, the Middle Atlantic States, California, and Washington. The petroleum associations also have reached their greatest development in the Mississippi Valley States, with only a few in the Mountain States; the East is almost barren of such organizations. The bakery societies on the other hand are all in the States of Massachusetts, New York, and New Jersey, although there are a few store associations in other parts of the country which run a bakery as one department of the merchandising business. Cooperative housing has been concentrated in one metropolitan area—New York City. At the time the Bureau’s survey was made 8 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES two associations had been formed in Wisconsin but had not progressed to the point of actual construction. A group of petroleum and fuel-oil associations has developed in Texas. Aside from these, however, there was little cooperative activity in the South until the advent of the electricity associations formed under the rural electrification program. Of 28 States in which such associations had been formed and had received Rural Electrifi cation Administration loans by the end of June 1937, 8 were Southern States. Practically all other sections of the country also had asso ciations of this type except New England and California. Washing ton State, although not represented by associations under the Rural Electrification Administration, had a number of cooperative power associations which had been in existence for many years before that program was inaugurated. Telephone associations are found here and there in nearly every part of the country, but the vast majority (80 percent) are in the North Central States. No other geographic division has as many as 5 percent of the total. Credit unions also have been started in every State in the Union. Although New England was the birthplace of the cooperative credit movement in this country, that section has yielded first place as regards numbers of associations to the East North Central and West North Central regions; these together accounted for more than twofifths of the credit cooperatives existing at the end of 1936. In this connection it may be noted that although the South still has few distributive and service cooperatives, some of the States there have been very receptive to the idea of cooperative credit. Among these may be cited Florida, North Carolina, Tennessee, and Texas, each of which had more than 100 credit unions in operation at the end of 1936. The expansion of the credit-union movement was greatly facilitated by the passage of the Federal Credit Union Act, in June 1934. In the year and a half between that time and the end of 1936 nearly 1,900 associations had been formed under that act, whereas State associations (dating from as early as 1908) numbered only 3,575. Much of the cooperative development is in rural sections. Most of the telephone associations and a large proportion of the insurance associations are in the country or in small towns. The electricity associations are almost entirely rural. Analysis of the store associa tions and their members, in relation to population, indicated that of 1,668 associations in cities, towns, and villages, more than threefourths of the associations, over three-fourths of the membership, and nearly three-fourths of the business done in 1936 was in places with a population of 5,000 or less. For the whole group the cooperative membership 1 formed 0.92 percent of the total population in places ’Members only; not counting their families. GENERAL R E V IE W OE THE M OVEM ENT 9 where the associations were located. However, although the cooperators formed only 0.05 percent of the population in cities of a million or over they formed about 11 percent in places of 1,000-5,000, nearly 24 percent in places of 500-1,000, and 47 percent in places of less than 500. The bakeries, creameries, housing associations, restaurants, medicalcare associations, and credit unions were practically all in industrial centers. As the above figures indicate, the large cities have proved to be the most difficult locale in which to obtain a foothold for the store societies. There are several reasons for this: The efficiency of private retail distribution; the low prices in the chain stores, with which the cooperative with its small purchasing power cannot compete on a price basis, unless it has the advantage of a cooperative wholesale in nearby territory; the difficulties of bringing city people together in homogeneous groups and of contending with long-established buying habits of the housewife. That cities are not invulnerable to cooperative attack, however, is attested by the growing number of American cities in which there are associations of some size that are in apparently successful operation. Even in Great Britain the city of London was long regarded as impregnable. But in 1936 it had a city-wide society with 631,464 members— a number sufficient in itself to populate a large city— and its sales exceeded 60 million dollars (two-fifths of the sales of all the retail cooperatives in the United States combined) in that year. In the United States the buying club is being utilized as the approach to cooperative development in the cities. This method has the ad vantage of being very simple in operation, requires no financial invest ment and consequently involves no financial hazard, and offers a means of obtaining experience in the technique of cooperation. Part of the savings realized from the pooling of the members’ orders is retained in the common treasury, to be used in starting a store when the members feel that the time is ripe to do so. AGE AND S IZ E O F A S S O C IA T IO N S Because they see small associations spring up here and there and die out in a few months or a few years, many people are inclined to regard the whole cooperative movement as an ephemeral one. It is therefore of interest to note that of the associations reporting in 1936 there were 379 organizations that had been formed during the period of high but largely uninformed enthusiasm of the period 1916-20 and there were 229 others that had survived from even earlier periods. Two associations had been in business 57 and 60 years, respectively. Nearly 45 percent of the reporting associations, however, had been formed since the beginning of the depression that started in 1929. 9 0 6 2 1 °— 39-------2 10 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES On the average, the retail distributive associations in the United States are small. In 1936 the average membership of the store asso ciations was 219, of the petroleum associations 335, and of all retail distributive associations combined, 257. About 70 percent had fewer than 250 members, and only 3.5 percent had attained what would in Great Britain be considered a fair-sized association (1,000 members or more). Seven retail distributive associations (including three handling stu dents7supplies only) had sales in 1936 of over one million dollars each. For all distributive associations combined, the average annual sales per association were $81,058, and nearly half of the total had sales falling within the range of $25,000-$100,000. PATRONAGE REFUNDS The level of charges, volume of business, operating margins, and business efficiency all influence the amount of net savings made. As already stated, the practice of the distributive associations is to charge the regular current prices for the merchandise handled by them and to return all or part of the net surplus remaining, after expenses and reserves are covered, to their members in proportion to patronage. This practice is not so common among the service associations, many of which set their scale of charges only high enough to cover the over head; this was true also of the telephone associations. The insur ance associations operating on the assessment basis levied assessments only sufficient to cover actual losses and expenses, and those collecting advance premiums had set these at levels considerably below the “ manual” rates. Over 70 percent of all the retail distributive associations reporting were able to make net savings on the 1936 operations, but slightly over 7 percent of the total sustained losses. Possibly because of the relatively larger margins of profit and the less involved type of business, the Bureau found that a larger propor tion of petroleum associations than of the store associations were able to make net savings and their patronage refunds were at a higher rate. In the store associations the most common rates of patronage refunds were from 2-6 percent, whereas in the petroleum associations the largest groups paid refunds of 5-6 and 10-11 percent; these rates, it should be emphasized, represented percentages of sales, not of share capital. What these refunds meant to the individual member is indicated by the fact that, for the associations reporting the amount returned on 1936 patronage, the average received by each member in the store associations of all kinds was $13.42 and for the petroleum associations was $13.87. Individual members in some cases received patronage refunds of as much as $150. GENERAL R E V IE W OF THE M OVEM ENT 11 A larger proportion of petroleum associations than of store associa tions— 62.6 as compared with 38.4 percent— made patronage refunds. For the whole group of retail distributive associations the proportion returning patronage refunds was slightly over 48 percent. The failure of the other associations which had net savings on the year’s business to make refunds on patronage may have been due to a number of causes, such as use of the surplus to make up deficits in previous years, to provide additional working capital for the organization, to build up reserves, to construct or purchase new buildings, new equipment, or to expand into new lines of operation. In every case where such a plan was adopted, it was, of course, on the members’ own vote. Naturally the economic conditions during the .depression affected adversely the ability of the associations to make patronage refunds. Nevertheless some associations made such refunds throughout the depression; and others could have done so but preferred to use the surplus to strengthen the financial position of the association. The rate of interest that credit unions may charge is limited by the laws under which they operate. The most common maximum is 1 percent per month, calculated on the unpaid balance. Reports to the Bureau indicated that some 60 percent were charging the maximum rate of 1 percent per month and about 20 percent were charging % percent per month. As the operating expense of credit unions are very low, these rates yield a gain from which shareholders are re munerated. Credit-union practice differs from general cooperative practice in that such returns are made on share capital and not on patronage. T rends in Cooperative D evelopm en t DEVELOPM ENT FROM 1933 TO 1936 The Bureau’s latest previous study of cooperatives was made in 1933— at the low point of the depression. In contrast, the year 1936 was a year of considerable recovery which was reflected in the status of the cooperatives. The depression had the usual effect of depressions upon the coopera tive movement. Cooperative associations are predominantly workingclass organizations and as such are peculiarly sensitive to conditions affecting the employment and income of the workers. A substantial number of associations were wiped out by the results of unemploy ment, bank failures, failures of employing firms, and the general hard times which their resources were not sufficient to overcome. The stable and well-established associations, though severely affected, managed to survive and some were able, as well, to extend their opera tions. Also, there appeared the usual crop of new associations which always follows in the wake of a depression, when people begin to cast about for a means of eking out reduced incomes. The accessions 12 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES resulting from the depression of 1929-34, however, exceeded by far those in any period since the Bureau has been studying the movement. Although the development of the distributive branch of the move ment has proceeded at an uneven pace in different parts of the country, its momentum has greatly increased in the past few years. Distribu tive cooperatives at the end of 1936 represented not only a more ex tensive but also a sounder development than at any time since the Bureau first began to follow the movement, in 1918. It should be pointed out in this connection that there is in general a considerable difference in the picture presented by the associations which are affiliated to the organized movement and in that presented by the large number of scattered associations that are either unaware of the existence of cooperative wholesales and regional leagues or are not yet persuaded of their value. Among the associations that are members of cooperative educational or commercial federations, more and more emphasis is being laid upon education of members and em ployees, upon better accounting systems, and greater operating efficiency. Most of the larger and more stable organizations in the United States are part of these organized groups. The Bureau’s field studies, however, disclosed that the independent, isolated associa tions were in general far below the level of the federated associations in business efficiency^ size, volume, financial stability and operating results. A certain proportion of the movement disappears each year through failure or voluntary dissolution, but among the increasingly large number of associations which have realized the advantages of federation and have utilized to the full the wholesaling, auditing, and other facilities thus available, failures are becoming fewer and fewer. The credit unions represent a fast-growing phase of cooperation. Their growth during the past few years has been accelerated by the passage of the Federal Credit Union Act. Possibly, also, their forma tion has been speeded by the depression, the increased need of the small borrower for credit, and the losses from bank failures. The telephone associations, on the other hand, are not an expanding group. One of the older forms of cooperative activity, the telephone association filled a real need in the early days when there were wide rural areas without telephone communication. With increasing density of population, the private companies have taken over more and more of the service, cooperative associations have disbanded or been bought by private interests, and each succeeding telephone census has shown a decreased number of companies but an increase in the proportion of telephones served by the larger operating units. Duplication of telephone service is not favored by most public regula tory bodies. Undoubtedly, there are still areas in which expansion or creation of cooperative telephone facilities is possible, but in the very nature of things such opportunities cannot be great. GENERAL TREN D S IN C E THE 13 R E V IE W OF M OVEM ENT 1 9 3 4 , IN I D E N T I C A L A S S O C IA T IO N S Not only was the distributive movement expanded in 1935 and 1936 by reason of the formation of new associations, but there were also increases in average membership and average sales. Of 1,475 retail distributive associations reporting membership in both 1935 and 1936, 58.8 percent showed increases in number of members, 27.4 percent showed no change, and only 13.8 percent had a loss. There were 1,238 associations reporting amount of business for both years; of these 78.6 percent increased their sales and 21.4 percent suffered a decrease. The following table is based upon identical distributive associations, i. e., those that furnished membership data for both 1935 and 1936 and those that reported on sales for all three years 1934 to 1936. As the table shows, the combined membership of the retail distributive associations increased 7.2 percent from 1935 to 1936. Sales increased 19.8 percent from 1934 to 1935 and 16.0 percent from 1935 to 1936— a total rise of 39.0 percent during the 3-year period. All types of retail distributive associations benefited by this increase but the petroleum associations registered the greatest relative gain, both in membership and in sales. T able 3.— P ercen t o f In crea se in M em bersh ip and Sales o f Iden tica l D istribu tive Cooperatives in Specified P eriods Percent of increase in— T ype of association Sales Mem ber ship, 1935 to 1936 1934 to 1935 1935 to 1936 1934 to 1936 Retail distributive associations........... ............................... Store associations- ........................................................ Petroleum a s s o c ia tio n s .______ __________________ Distributive departments of marketing assodations. 7.2 7.3 7.9 3.8 19.8 18.8 26.1 13.5 16.0 16.5 20.1 7.6 39.0 38.3 51.4 22.2 Wkolesale associations. ....................................................... Interregional..................................................................... Regional............................................................................ District________ _________ ______________ _________ 8.3 80.0 7.9 12.2 50.9 11.5 51.2 48.6 23.7 12.0 23.5 37.3 85.9 24.9 83.4 104.2 The record of the identical retail distributive associations was exceeded by that of the wholesales. They increased the number of their member associations 8.3 percent and their sales 23.7 percent from 1935 to 1936; in the 3-year period 1934-36 their business rose 85.9 percent D E V E L O P M E N T IN P E R I O D 1 9 2 0 T O 1936 Index numbers of aggregate sales, net earnings, and patronage re funds of store associations and petroleum associations are shown in table 4. This shows in graphic fashion the effects of the depressions 14 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES of 1920-21 and 1929-34 upon the business of the cooperative stores. Beginning with 1922 the sales of the cooperative stores continued steadily upward until 1929 and declined only slightly in 1930, from which point they fell precipitately during the next 2 years but only slightly from 1932 to 1933. Beginning with 1933 they improved decidedly each year through 1936. An interesting feature is that although net earnings fell in 1932 to less than one-third of the 1929 level, even 1933 (at the trough of the depression) showed an improvement over 1932. The gasoline associations being a much newer type of cooperative business, which began only in the early 1920% naturally showed a much sharper upward swing in sales than did the stores, as the move ment gathered momentum. This momentum continued into 1930 and carried petroleum sales to nearly 15 percent above the 1929 level in that year. It was only in 1931 that a decline began. * Neither sales nor earnings declined in the petroleum associations to as low a point as was true in the stores. Also, whereas the store group as a whole had not regained in 1936 the 1929 level as regards either volume of business or net earnings, the petroleum associations not only had passed the 1929 level but had considerably surpassed their peak year of 1930. It should be noted that a number of individual store associations reporting to the Bureau had sales in 1936 substantially above any previous year in their history. T able 4.— In d ex es 1 o f Sales9 N e t E a rn in gs , and P atronage R efu n ds o f S tore and P etroleum C ooperatives , 1 9 2 0 -3 6 [1929=100.0] Retail store associations Year Sales N et earnings Patron age re funds Petroleum associations Sales N et earnings Patron age re funds 1920 . ____ 1921______ ___ ________________________ 1922................................................................... 1923...........................................__ ................ 1924________ _______ _____ ___________ _ 76.1 66.1 63.9 70. 7 75.1 1925___________________ ______________ _ 1926........................... .................................. . 1927______________________________________ 1928______________________________________ 1929_____________________________________ 82.3 88.3 93.0 98.1 100.0 84.0 90.2 89.9 94.5 100.0 88.1 82.6 91.5 97.3 100.0 38.6 54.0 62.9 79.4 100.0 34.5 51.3 62.0 51.7 100.0 30.3 54.8 51.0 57.4 100.0 1930_____________________________________ 1931______________________________________ 1932______________________________________ 1933______________________________________ 1934_________ ____________________________ 97.4 76.7 59.7 55.5 64.2 97.4 65.6 30.2 34.3 54.0 93.1 82.7 83.3 58.1 81.8 114.6 103.5 95.0 93.4 114.9 145.2 111.7 79.2 74.5 86.2 146.6 120.4 101.3 101.6 122.1 1935_______ ______________________________ 1936_____________________________________ 75.2 87.5 60.8 87.6 92.5 129.8 142.9 168.8 94.7 115.7 142.7 173.9 i Indexes computed on the chain system, i. e., on reports from identical associations from one year to the next, GENERAL R E V IE W OF THE M OVEM ENT 15 Compared to the situation in 1920, when the Bureau of Labor Statistics made its first study of the movement, the following may be noted: Today more associations are formed only after extended educational work (issuance of pamphlets, holding of meetings, formation of study groups, etc.) than was formerly the case. Reliance upon practical facts has to a large extent supplanted the unthinking enthusiasm and exaggerated claims that characterized the early period. There is now greater realization of the advantages of federation both for education and for business purposes. Fewer than 200 associations were affiliated with the national body— the Cooperative League—in 1920, and almost none of these were in a position to pay dues for its support. In 1936 the League had some 1,500 dues-paying member associations, and there were about 1,900 associations which were members of the various regional wholesales. In 1921 cooperative wholesaling, which had seemed to be on the upgrade a year or two before, was at very low ebb. There were still several subjobbing organizations, and two farmers, wholesales (which handled consumers’ goods) operating in one State each, but all but one of the regional or State wholesales connected with the consumers’ movement proper had either already gone down in the crash of the National Cooperative Wholesale or were so deeply involved financially that their remaining period of existence was a matter of only a few years at best. By 1936 cooperative wholesaling had revived in a most spectacular manner and represented one of the most successful phases of consumers’ cooperation. Largely because of the continued efforts of both the educational fed erations and the wholesales, the business practices of local associations have undergone a noteworthy change for the better. The Bureau’s 1920 report noted an almost incredible lack of knowledge of the most elementary principles of accounting, which in some cases proved fatal or nearly fatal to the organization. One of the more common of these was the failure to include the share capital as a liability. Others were simply mathematical errors. Thus, one association, through such an error, showed on its balance sheet an apparent profit of $7,074; as a matter of fact it had a loss of nearly $5,900. On the strength of the report, however, the illusory “ profit” was distributed to the mem bers in patronage refunds. The association never recovered from this misstep, but went into bankruptcy a few years later. Such elementary mistakes were very few in number among the financial reports received in 1936. There was still a certain propor tion of associations in which improvement in accounting methods was badly needed. Thus, one of the Bureau’s investigators found that in a small miners’ association visited in Pennsylvania no records of the transactions had ever been kept; he found also that there had never 16 CONSUMERS’ COOPERATION IN THE UNITED STATES been any net earnings. This association was started in 1929; it had always been operated entirely with volunteer help. In 1936 it had 29 members and its business in that year amounted to approximately $10,000 (as nearly as the secretary could estimate). The wonder is that it had lasted for 7 years. Again, a farmers’ store formed in the early 1920’s had never had its books audited and the investigator reported that the “manager didn’t seem to know much about the financial condition of the association.” Another had an audit in 1936 for the first time since it began business, in 1930. In a Wisconsin association “the books were in very poor condition, so that it was difficult to get exact figures; they carried a large amount of accounts receivable, some of which were quite old.” In another organization evidently very little check was kept on financial matters, for it was reported that the secretary-treasurer had embezzled $3,024 in 2 years and then committed suicide when about to be exposed. These were extreme cases and few in number. Whereas in 1920 only 35 percent of the associations subjected their books to periodic audit by an independent expert accountant, in 1936 this was true of over 76 percent of the associations. Operation on the hazardous cost-plus basis has decreased almost to the vanishing point. Under this method, instead of operating at current prices, the association sets its price level at cost plus a per centage estimated as sufficient to cover expenses. Cooperatives have come to realize, however, that this method allows no margin for build ing up reserves for expansion or unexpected losses, and that it is almost impossible to ascertain in advance what the cost of operation will be. Increasing numbers of associations have demonstrated the feasi bility of abolition of credit sales, with the corrollary, surprisingly enough, of increased sales in some cases. In certain places the return to a strictly cash basis has been accomplished with the aid of a newly formed credit union which fills the members’ need for credit. In both 1925 and 1936 over 70 percent of the reporting distribu tive associations were able to make a net gain on the year’s operations, but whereas only 40 percent returned patronage refunds in 1920, 48 percent did so in 1936. The most common rate of stock turn in 1920 was between three and four times. In 1936 it was between 10 and 13 times. On the other hand there are still many ways in which individual associations can make improvement: Some of the older associations are inclined to rest upon their laurels, to discoimt the value of the con tinuous educational work that is necessary to bring in new members and to make convinced cooperators of them, and to rely exclusively upon financial benefits to keep the membership loyal. Certain as sociations, including several which have been outstandingly successful in a business way, have allowed the responsibility and authority to GENERAL REVIEW OE THE MOVEMENT 17 drift into the hands of the manager and have in fact become “ oneman” associations. Such organizations are not on a sound basis, and face an uncertain future when the manager’s days are over. The average capitalization is still too small, in many cases, to allow the associations to realize their potential achievements. They struggle along, in a hand-to-mouth existence, unable to take the dis counts earned by cash buying or to make advantageous purchases, and without sufficient funds to make needed improvements or to ex pand into new fields. The wage earners who, by and large, are the members of the cooperatives, ordinarily have very little funds to invest, it is true. But it is also true that what money they have they feel must be placed where it can be withdrawn in an emergency, and this has not generally been the case with the share capital of cooperative associ ations. Also, the working conditions, both hours and wages, will in many cooperatives bear improvement. The field work revealed a considerable number of associations which need to improve their “ housekeeping,” bearing in mind that dingy, unkempt, and carelessly displayed stocks attract neither members’ nor nonmembers’ patronage. Many of the stores visited would be bene fited by increased attention to attractive windows, well-arranged goods, and a general paint-up campaign. One of the most common observa tions made by the field workers was the crowding of too many com modities into cramped quarters, giving the whole store an untidy, cluttered appearance. In some districts, on the other hand, the cooperatives have adopted a distinctive sign, a uniform, attractive color scheme, and up-to-date fixtures and store lay-out, with the result that the cooperative store compares favorably with any of its com petitors. S cop e and M eth od o f S tu d y D E F I N I T IO N O F T E R M S Cooperative associations may be divided broadly into two classes: Consumer organizations and producer organizations. (1) The consumer organizations are those operated for the benefit of the members in their individual consumer capacity, i. e., providing goods such as food, clothing, household supplies, fuel, or milk, or pro viding services such as shelter, automobile repair, credit, laundry service, insurance, telephone service, medical care, burial, recreation, etc. These may be provided singly, by an association specializing in one line, or in combination, by a general-service association whose aim is to fill the needs of the members in as many lines as it is practicable to do so. (2) The producer organizations are those operated for the benefit of the members in their producer capacity. Their function may be 18 CONSUMERS’ COOPERATION IN THE UNITED STATES either (a) the marketing or processing of goods produced individually (as in the fishermen’s marketing associations; the farmers’ associa tions marketing grain, livestock, milk, etc.; or the associations mak ing butter, cheese, etc., from farm products received from farmer members, to be sold on the open market) or (b) the marketing of goods processed or produced collectively (as in the so-called workers’ productive associations operating shingle mills, clothing factories, shoe factories, etc.). In practice these classes may overlap. Thus, a farmers’ market ing association may also undertake to purchase for the members groceries, or household supplies, or fuel to heat their houses. Pre cisely in the degree that it undertakes consumer activities it becomes also a consumer organization. Or a consumer association may by itself or jointly with other organizations undertake productive activ ities, such as the manufacture of sausage, bakery goods, etc., for consumption by its members; in this case, however, although carry ing on this producer activity, the organization does not thereby become a producer organization, for this is merely an extension of activities for the further benefit of its members as consumers. As individuals combine to furnish themselves with goods and serv ices through local cooperative associations, so the local associations may in turn combine (1) for purchasing goods at wholesale, for the processing or production of commodities, or for the undertaking of any other kind of business, or (2) for the carrying on of noncommer cial activities, such as the fostering of new associations, education, or recreation. Here again the classification of such an organization will depend upon whether its activities are for the benefit of the members as producers (as, for instance, in a cheese factory owned by local cooperative creameries, manufacturing cheese for general sale) or as consumers (as in a wholesale purchasing association, or a factory manufacturing sausage for consumption by the members of the local associations which own the establishment of the federation). The present survey covers only associations, whether local associa tions or federations, carrying on activities for the benefit of the members in their consumer capacity.2 BASIC PRINCIPLES OF CONSUMERS’ COOPERATION Consumers’ cooperatives vary but little in their organization and methods, from country to country. All are based upon the principles established by the Rochdale Pioneers in 1844. These principles are seven in number: 1. Open membership. 2. Democratic control (one vote only per member and no proxy voting). 2 For the basis of classification of the various types of associations and the basis upon which their inclusion in this report rests, see separate sections in chapters dealing with specific types of associations. GENERAL REVIEW OE THE MOVEMENT 19 3. Distribution of net surplus to the members in proportion to their patronage of the association. 4. Limited interest on share capital. 5. Political and religious neutrality. 6. Business for cash only. 7. Promotion of education in cooperation. In 1930, 86 years after the enunciation of these principles, the International Cooperative Alliance, at its congress, appointed a committee to examine anew these principles and their present validity. After 7 years’ study the committee reported that “ nothing in the modem developments of industry and commerce, or changes in economic method, has diminished the integrity” of the Rochdale principles. The committee, however, was of the opinion that, in deciding the essential cooperative character of any organization, stress should be laid particularly upon the observance of the first four principles. The observance of the others, while of importance as regards good practice, was not, in the opinion of the committee, of sufficient weight to be imposed as a condition for membership in the International Cooperative Alliance. Generally speaking, acceptance of the “ cooperative philosophy” and the recognition of cooperative activities as steps toward a new social order are found only among the store associations and in certain of the service associations. In the major service groups, however— credit-union, telephone, and insurance associations—in general the associations have not, with certain outstanding exceptions, regarded themselves as part of the cooperative movement. In them the collec tive activity undertaken is regarded as an end in itself. Also, there has been little contact among the various branches of the movement, except where members of one kind of association were also members of another. Continuance of the present tendency of the distributive associations to undertake the formation of such other activities as credit unions and cooperative insurance will in time undoubtedly have its effect in making for closer relationships. The so-called “ Rochdale principles” are consciously practiced in their entirety only by the store associations. All of the others deviate in certain respects. It happens that associations in either the insurance or the telephone business which operate as pure mutuals are in fact genuinely— though not consciously— cooperative and conform to all of the cooperative principles and methods except business at current prices and (consequently) the return of patronage refunds. They have open membership and democratic control on the one-vote plan and furnish service at cost. But this follows from their adherence to principles of “ mutuality,” not from acceptance of Rochdale philosophy. Mutual associations—insurance and tele phone— were, however, included in the tabulations if they were oper- 20 CONSUMERS’ COOPERATION IN THE UNITED STATES ating on the recognized cooperative principles. All things considered, a surprisingly high cooperative standard was found among them. COVERAGE OF STUDY The Bureau’s study was started in the summer of 1936 when a com mittee was formed, composed of representatives from those Govern ment agencies interested in various aspects of the cooperative move ment. This committee drew up the forms to be used and a set of instructions for the field agents. Early in 1937 these questionnaires were sent to every consumer co operative association, of whatever type, known to the Bureau. In this phase of the work the Farm Credit Administration cooperated by circularizing the farmers’ cooperatives known to be carrying on collective purchasing of supplies for their members. The data for those organizations which were purchasing some consumer goods were then made available to this Bureau. The returns from the questionnaire study were supplemented by personal visits to nonreporting associations made by representatives of the Bureau of Labor Statistics. This field work covered all or part of the 13 States of California, Connecticut, Illinois, Indiana, Massachu setts, Michigan, Minnesota, Nebraska, New Hampshire, New York, Ohio, Pennsylvania, and Wisconsin. The credit unions, like the distributive associations, were all cir cularized. The information so obtained was supplemented, for asso ciations formed under State law, by data furnished by the State officials having supervision of credit unions. Information regarding the credit unions chartered under the Federal act was furnished by the Credit Union Division of the Farm Credit Administration. The data here given for the electricity associations were obtained from the Rural Electrification Administration. The rate of returns and the incidence of undiscovered and nonre porting associations were checked in various parts of the country by “ spot” studies.3 Three of these studies were made by members of the Bureau’s staff, and the other two were made by members of the staff of the Consumers’ Project of the Department of Labor and of the Consumers’ Counsel Division of the Agricultural Adjustment Administration. Although the Bureau had made a number of earlier surveys of cooperative associations,4 this was the first time that an attempt 3 Summary data from three of these, covering Cleveland, Chicago, and northern Wisconsin, were pub lished in the M onthly Labor Review for September 1937 (p. 541), October 1937 (p. 816), and December 1937 (p. 1327). The findings of the other two, covering southern California and St. Louis County, M inn., are as yet unpublished, but some of the data obtained have been utilized in the present report. 4 See U. S. Bureau of Labor Statistics Bulls. Nos. 313, 437, 531, and 612. GENERAL REVIEW OF THE MOVEMENT 21 was made to obtain general coverage on telephone, electricity, and insurance associations. Altogether, usable reports were received for 9,880 local associations and 57 federations. SUMMARY DATA FOR SAMPLE REPORTING FOR 1936 The following table brings together data on the principal points of operation for the various types of organizations which reported for 1936. T ab le 5 .— Operations of All Types of Consumers' Cooperatives for Which Reports Were Received for 1936 T ype of association Associa tions fur Membership nishing at end of usable 1936 reports 1 Amount of business Net earn ings Local associations Retail distributive_________ ______________________ Store associations___ __ __ _ Buying clubs__________ _______________________ Petroleum a ss o cia tio n s .,___ .... ___ Distributive departments o£ marketing associa tions_________ ________________ _ _ ___ __ _ Bakeries______________ _____ _________ _______ __ ______ ___ . Creameries_______ ____ Water-supply associations____ .. ___ ___ 1,939 911 98 769 Individuals 458, 812 185,860 6, 573 232, 417 145 7 4 5 23, 530 5, 307 4, 497 628 20,360, 534 595, 680 2,954,121 18, 352 1, 581, 571 2 16, 643 63, 526 5, 075 Service____ _ _ . . . ________ . . . __ _ Associations providing rooms or meals or both___ Laundries and cleaning establishments . _ Medical-care associations___ __ __ . __________ Garages. __ _______________________ ____________ Printing and publishing associations__ . . . Burial associations______ . . . . _ _ _ _ _ _ _ _ _ Recreation associations. . . . . . _ Housing associations_____ _ ___ _ ... _ Electricity associations. _ _ _ _ _ ___ M iscellaneous5_______ _ _ _____ 330 30 3 4 2 7 17 9 39 214 5 41, 641 10,151 875 5,143 96 4,916 15,006 914 2,323 (4) 2,217 2,498, 889 989, 306 33,150 1, 950 53, 229 69, 264 63,189 6,498 3 1, 281, 641 (4) 3 662 40, 261 14, 220 549 77 2 1, 718 2 2, 347 4, 432 200 24, 848 (4) Telephone associations 6___ ___________ ____________ Credit unions. __ _ _ _ _ _ _ _ _ _ __ _ ___ Insurance associations 6___ _ ______________________ 1, 614 4 663 1,334 110,981 1, 106,076 9 4, 774, 854 3 1,486, 761 7 88, 342,486 io 71,925,068 69,381 (4) (4) Federations ___ ___ ____________________ f7 Associations (“ ) Distributive: Wholesales ___ _ _ _ ____ _ _ _ _ _ _ Interregional_______ __ _ _ _________ Regional___ _ _ ___ __ __ __ _____ District______ ___ _ _______ ______ ____ _____ 30 2 19 9 (ii) Service________ _ _ _ ___ __ ______________ Auditing___________________ ________________ Printing and publishing 12_ _________________ Other__________ _______ _ _ __________________ 12 4 5 3 (n) Educational _ _ _ _ _ National___ __ Regional. _ _ _ _ _ _ _ _ ___ Other__________________ _______________________ 15 1 2 12 All federations___ __ See footnotes at end of table. $146, 309, 260 $7, 527,092 71, 052, 638 2, 298, 336 415, 991 9,311 50,911,944 3, 585,916 41, 677, 594 1,120, 339 41,402, 623 468, 067 40,074, 524 860,032 1,103, 412 5, 406 1, 045, 422 52, 584 469 388 74 254, 269 37, 364 216, 905 (4) 16,927 (4) 16,927 (4) (n) 1, 500 396 259 3 17,974 3 2. 728 18 1,746 109 20, 702 22 CONSUMERS’ COOPERATION IN THE UNITED STATES T able 5.— Operations of All Types of Consumers’ Cooperatives for Which Reports Were Received for 1936— Continued Paid-in share capital Total assets Net worth Retail distributive____ ____ ----- ---------- $4,920,880 1, 239, 575 Store associations___ _______________ ________ 5, 921 B uying clubs........................ _ _ _ _ _ _ _ _ _ _ _ _ Petroleum associations__________________________ 2, 352, 290 Distributive departments of marketing associa1, 323, 094 tions__________________________________________ Bakeries__ ______ ______ _____________ _______ Creameries. ____ _____ __ ________ ___ _ W ater-supply associations_______________________ $23, 669, 613 9,634,138 19, 854 4,992, 205 $45, 752, 538 20,077, 206 35, 043 12,937, 282 $36,893, 273 16,127, 283 26, 362 10,026, 823 8, 059, 027 77,195 839, 486 47, 708 11,016, 487 322, 769 1, 287, 338 76, 413 9,479, 461 107, 067 1,049, 864 76,413 5, 497 3,425 650 4,438, 324 152, 234 8, 777 109, 900 13, 022 19, 398 31, 724 6, 550 4, 086, 569 (4) 10,150 1,057, 819 491, 842 14, 574 112, 689 143, 645 47, 572 62, 915 184, 432 (4) (4) 150 770,828 377, 704 9, 331 109, 900 6, 250 36, 878 50,109 180, 506 (4) (4) 150 2, 413,895 62, 592, 591 (4) 2, 719,155 82,139, 281 (4) 2, 446, 111 52,007, 044 (4) T yp e of association Patronage refunds Local associations Service_____ ___ ______________________ _______ Associations providing rooms or meals or both___ Laundries and cleaning establishments. ______ Medical-care associations_____ _________ _ _ . _ Garages___ _________ _ ___ ______ ________ __ Printing and publishing associations____ _______ Burial associations. _ _ _ _______ _ Recreation associations_____ ______________ ___ Housing associations.. ___________ ________ ____ Electricity associations______________________ . . . Miscellaneous 5_________________________________ 1,422 (4) 7,168 Telephone associations 8_________________ ________ 8 2, 068, 310 Credit u n io n s... __ . . . __ . . . ___ . . . . . . . . 2,155, 424 Insurance associations8 _______________ ______ _ . Federations A ll federations________ . . . ____ ________ _______ . . . 686, 211 2,069, 843 6,085,139 3, 671,296 Distributive: Wholesales_______ __________ . . . Interregional._ ________ _______ _____ . ... ... Regional_____ _____ . . . . . ______________ ___ D istrict_____________ ___________________________ 684,811 2,069, 843 127, 900 1, 889, 408 52, 535 6,085,139 197, 717 5, 697, 743 189, 679 3, 671, 296 180,127 3, 370, 807 120, 362 Service___________ ____ _ . . . ______ _ ____ A u d itin g ______ ____________ _ ____ ___ Printing and publishing 12 _ _ . . . . . . ____ _ .. ... Other_________________________________ 1, 400 (4) 1,400 (4) 636, 873 47,938 (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) (4) 1 N ot all of these associations reported on all points; for exact number reporting in each case, see sections dealing w ith specific types of associations. 2 Loss. 3 Gross income. * N o data. 6 This group includes local educational, lawn-mowing, and cold-storage associations. 6 Includes reporting “ mutual” associations operating on cooperative principles. 7 Loans made. 8 Dividends on share capital. 6 Number of policyholders. 10 Gross premium income. 11 Items cannot be totaled because most of member associations are in each case included also in the mem bership of the associations of wider scope, with resultant high degree of duplication. 12 Includes one federation serving local credit unions, printing credit-union forms and other supplies. Production by cooperatives.— It is the general practice in the coopera tive movement that such production as is undertaken is carried on by federations of local associations rather than by the local associations themselves. This practice is based upon considerations of both efficiency and economy. In the United States, however, cooperative wholesaling has only recently developed to the point of undertaking manufacture, and some of the older and larger local associations have gone into this field themselves, producing for the most part com modities (such as bakery goods) requiring immediate sale or suitable GENERAL REVIEW OE THE MOVEMENT 23 for local distribution or consumption. The articles produced by the local associations reporting included bakery goods, butter, ice cream, cheese, jams and jellies, canned goods, sirups, sausage and smoked meats, cosmetics, men’s custom-made clothing, briquets, lumber, and flour and feed, and the generation of electric power. The total value of such commodities produced in 1936 was $1,192,997. The wholesale associations had a combined production—of butter, sausage, canned goods, coffee, bakery goods, lubricating oil, feed, and fertilizer— valued at $1,009,039. One association has developed an international business in lubricating oils, with cooperative whole sales in several other countries. Chapter 2.— R E T A IL D IS T R IB U T IV E A S S O C IA T IO N S S u m m a ry The Bureau of Labor Statistics estimates that in 1936 there were approximately 3,600 cooperative associations engaged in the retail distribution of consumer goods of various kinds, including such asso ciations as stores, buying clubs, petroleum associations, bakeries, and creameries. These are quite distinct from the associations (such as housing, telephone, electricity, and burial associations) engaged in rendering various services. The total membership of these 3,600 re tail distributive associations is estimated to have been about 677,750 at the end of 1936 and their total retail business done during the year $182,685,000. The reports indicate that over 70 percent of the asso ciations were able to effect a net saving for their members on the year’s operations and that of these some 48 percent returned patronage refunds. The above figures include many farmers’ organizations engaged in the collective purchase of consumers’ goods. It is recognized that there is considerable difference of opinion as to whether the farmers’ organizations which do collective purchasing for their members should be classed as consumers’ cooperatives. Even the farm organizations themselves appear to be divided on this point. Many farmers’ purchasing associations handle only farm supplies, or producer commodities— goods used only in the productive business of the farm. Whether such associations are consumers’ cooperatives is a very moot point. However, insofar as they handle consumer goods— food and other commodities consumed or used by the house-, hold— they do unquestionably enter the consumer field. It was for that reason that farmers’ organizations doing any consumer business were included in the Bureau’s study. S cop e o f S tu d y Data were obtained for 1,939 of the 3,264 local distributive asso ciations known to be in existence at the end of 1936. The coverage as to business done was considerably greater than that for number of associations, as the returns include practically all of the larger asso ciations. In view of these facts, the data were felt to be sufficiently inclusive to warrant computation of estimates for the whole coopera tive distributive movement. 24 RETAIL DISTRIBUTIVE ASSOCIATIONS 25 Allowance was made for undiscovered associations in the propor tions that these were revealed by the field work, and for the fact that as most of the larger associations were known to be already covered, the averages for the nonreporting associations would be considerably under the averages for those reporting. On this basis the following estimates were arrived at, as representative of retail distributive cooperation in the United States at the end of 1936: 2,400 store associations (including buying clubs),2 with 330,500 members and a business of $107,250,000; 1,150 petroleum associations, with 325,000 members and a business of $69,985,000; and 50 other distributive associations (creameries, bakeries, and water-supply associations, etc.), with 22,250 members and a business of $5,450,000. G eneral C ondition o f Cooperatives The Bureau’s last previous survey covered the year 1933— at the low point of the depression. In the interval since then, the coopera tive distributive movement has had both gains and set-backs. Many associations have gone out of business, but a greater number of new associations have been formed. In general the record is one of slow, quiet expansion, of the strengthening of both local and wholesale associations, and of increasing emphasis upon educational activities. The data at hand indicate that the rate of progress has been very uneven, being greatest where the sense of cohesion and of a definite social and economic aim was liveliest and least among the scattered associations operating on the “ go-it-alone” policy. The field work done in the present survey discovered numbers of isolated associations going their own way, making mistakes that could have been avoided if they had been sufficiently in touch with the rest of the movement and had been utilizing the improved methods and other helps avail able through the central associations. It is recognized that some of the organizations have faced difficulties beyond their control. Thus, the manager of a South Dakota asso ciation, in his annual report to the membership, made the following comment: The 16 years which mark the life of our store have been, in many ways, without parallel in South Dakota history. They have brought deflation, poor crops, low prices, insects, bank failures, dust storms, foreclosures, Government relief, and changed the very fabric of our living. Yet, despite these disheartening conditions, we have kept going. We are enjoying a profitable trade. We owe no debts. Our store is controlled chiefly by practical farmers. Its stockholders, with few exceptions, patronize the store generously, and are directly interested in its principal purpose. All things con sidered, we have done exceptionally well. 2 It should be emphasized that this figure does not include farmers’ cooperative stores handling feed, fertilizer, and other farm supplies, but no consumer goods. There are hundreds of such associations. 90621°— 39------3 26 CONSUMERS’ COOPERATION IN THE UNITED STATES Two associations are known to have lost their stores by fire; both, however, took immediate steps to acquire a new place of business. The associations in the textile towns of New England were very hard hit, with the closing (in some cases, permanently) of the factories upon which the members depended for their livelihood. One organi zation, visited in the course of the study, which had been started by German textile workers in 1915, had finally given up and was in process of dissolution at the time of the agent’s visit in M ay 1937. The miners’ associations, also, have been through some bitter ex periences caused by long-drawn-out strikes, by the depression, and by the closing down of unprofitable or worked-out mines. Some towns—notably in the copper district of Michigan and the coal-mining districts of southern Illinois—now contain a virtually stranded popu lation. One of the oldest cooperatives in the country is located in such a town. At its peak the organization did an annual business of nearly $400,000 and claimed that it had the largest sales of any retail store north of Milwaukee. During the period of its operation it has returned to its members in patronage refunds about 1% million dollars. After the war the prosperity which the town had enjoyed because of the demand for copper ceased abruptly and the place became almost overnight a “ ghost town.” An Illinois coal miners’ association reports: “ This cooperative almost went bankrupt extending credit to the miners during the United Mine Workers and Progressive Miners’ Union troubles and has lost money during the years 1932 to 1935.” Another miners’ association in the same region had adopted the practice of “ plowing in” the net earnings, by crediting the patronage refunds to the mem bers’ individual accounts and using the money as “ loan capital” in the business. This association, whose store was described by the Bureau’s representative who visited it as “ the best I have seen thus far,” operated at a loss in 1936 because the railroad mine upon which most of the members depended failed to pay wages due; individuals lost as high as $800 each, and were unable to pay their bills at the cooperative. The Bureau’s representative commented: “ Right now this town of 1,000 people is in a pathetic condition. The only mine left is working 1 or 2 days a week and most of the people are on relief or P. W. A. projects.” Because of good management, sound financial judgment, and a loyal membership many associations have been able to prosper in spite of adverse conditions. Thus, in one Minnesota farming dis trict, in a community in which 13 private stores are reported to have failed since 1915, both the cooperative store and the cooperative gaso line and oil association have flourished. Another cooperative, in Michigan, celebrated its twentieth anniversary in 1937, Its hard- De t a i l d is t r ib u t iv e a s s o c ia t io n s 27 won success has been achieved in the face of an unprecedented de pression which kept closed for 4 years the iron mines on which the members depend for their living and which resulted in the closing of all the private stores in the town, leaving the cooperative store in 1937 the sole avenue of trade. During the depression the cooperative doubled its volume of sales. The Bureau has record of a number of associations which were able to pay patronage refunds every year in spite of the depression. Others which could have done so used the money to strengthen the financial position of the association. Some gains and some losses have occurred in the legislative field. The usual tendency has been toward gradual improvement of the cooperative laws, in the fight of the needs of the cooperative move ment, as revealed by experience. However, in two States the coop erative statutes have been wiped off the books altogether within the past few years. Thus, the Wyoming Legislature, although the State constitution provides that “ the legislature shall provide by suitable legislation for the organization of mutual and cooperative associa tions,” repealed the consumers’ cooperative act in 1931, leaving prospective cooperatives no special law, either cooperative or nonprofit, under which to incorporate. In the same year the California con sumers’ cooperative law was repealed and the cooperative associations were specifically made subject to the terms of the general corporation act of the State. In that State, the cooperatives have resorted to various expedients in order to retain their distinctive character as cooperative associations. Some are operating as unincorporated associations (involving unlimited liability to members); others had organized under the nonprofit act, thereby having to forego return of patronage refunds not considered permissible under the act, and were therefore operating on the cost-plus basis; and at least one was known to have organized as a fraternal association and to be carrying on its business activities through two separate subsidiary organizations. On the favorable side of the ledger must be recorded three special measures intended to further the spread of public understanding of the cooperative philosophy. In August 1935 the Wisconsin Legisla ture passed a measure requiring the giving of courses in agricultural and consumers’ cooperation throughout the public-school system of Wisconsin, from the State University downward, and making at tendance at such courses a required part of matriculation in economics, the social studies, and agriculture. In 1937 a special session of the Minnesota Legislature appropriated $5,000 to be used in providing educational material on cooperatives for schools and other groups in the State, and in 1938 the Legislature of North Dakota passed a measure requiring high schools to offer elective courses in cooperation. 28 C O N S U M E R S ’ COOPERATION IN THE U N IT E D STATES S p on sorin g G roups The groups which have formed the cooperatives now in existence are varied. Among the first organizations to become interested in cooperative purchasing was the Patrons of Husbandry, or the Grange, as it is more commonly known. During the period 1866-79 the Grange stores were found throughout the East and Middle West. Though most of these stores failed during the depression of 1874-78 some of them survived and indeed a few are alive today. Shortly after 1900, members of the new immigrant groups undertook cooperative activities. Among these were the Lithuanians and the Finns, whose favorite forms of cooperative enterprise at that time appear to have been stores and bakeries. Although the Lithuanian enterprises are not outstanding at present, the Finnish societies form one of the strongest elements in the cooperative movement of this country today. Italian associations have been started here and there throughout the country; it must be said, however, that many of the Italian associations studied by the Bureau of Labor Statistics leave much to be desired as to cooperative philosophy and practice. Other national groups which still have cooperative associations in successful operation include the Slovenians, Czechoslovaks, and Scandinavians. Few of the associations started early in the present century in New England by English textile workers remain. These have been gradually disappearing, one by one. During the years of the World War, when prices wer§ rising faster than wages, organized-labor groups became interested in the cooper ative movement and labor cooperatives began to be established in many places. Especially active in fostering cooperatives were the organized coal miners and railroad workers. Miners’ associations were found in many localities in Illinois, Indiana, Ohio, and Pennsyl vania. Most of these went down in the general crash of the National Cooperative Wholesale and the depression of 1920-21. A few of the coal miners’ stores still remain, especially in Illinois and Pennsylvania, but they have suffered from the recent depression and from the bad conditions in the coal industry. However, one of the most successful associations now existing in this country is a coal miners’ organization in Ohio, which has had a record of continuous expansion and growth. Other industrial groups with cooperatives in operation include the ore miners (copper and iron) in Michigan and Minnesota; gold and silver miners in Idaho; railroad workers in Kentucky, Michigan, Minnesota, North Dakota, and South Carolina; textile workers in Connecticut, Massachusetts, and North Carolina; and professional and white-collar groups in New York, Illinois, Ohio, and elsewhere. In the spot studies made for the Bureau of Labor Statistics in con nection with the present survey, it was noted that numbers of the new urban associations are those of professional groups and of middle- R ETA IL D ISTR IB U TIV E ASSOCIATIONS 29 class persons. Organized labor is taking a new interest in the possi bilities of cooperation and in the formation of cooperative enterprises. Church groups are also manifesting a lively and growing interest in cooperation. Farmers, in their occupational capacity, have been interested in the cooperative method for more than half a century. Although their interest formerly was centered for the most part in the cooperative marketing of their products, they have been taking an increasing interest in the collective purchase of their farm supplies—feed, seed, fertilizer, fencing, machinery, containers, binder twine, etc. From this it has been an easy step, taken more and more generally during the past few years, to the purchase of household supplies, groceries, work clothing, fuel, etc. In some of the subsistence-homesteads projects sponsored by the Federal Government, the homesteaders have formed cooperative asso ciations to provide themselves with food, farm supplies, raw materials for their productive enterprises, and associations for marketing their products. College students are turning to cooperation for the provision not only of their textbooks but also, during the past few years, for the provision of meals and lodging, laundry, and cleaning and pressing service. It must be said, however, that many of the so-called stu dents’ cooperatives are not genuinely cooperative but include supply organizations run by the school for the benefit of the students but not controlled by them; dormitories owned by the school in which needy students are enabled to work out part of their subsistence, etc. As the students’ cooperatives are in operation only during the school year and as the membership changes considerably from year to year as upper classmen graduate and new students come in as freshmen, these cooperatives in many cases lapse at the end of the year, a new asso ciation being formed, if desired, the next year. A number of consumer cooperatives have evolved from self-help associations,3 whose emphasis was on production, to full-fledged con sumers’ organizations in which the production is carried on as a sub sidiary activity. There are a few cooperatives whose membership is composed entirely or partly of Negroes. They vary considerably in their degree of success, but have usually resulted from the leadership of one especially gifted member or of a small group. As the colored workers are gen erally among the worst sufferers in time of depression and unem ployment, their associations have encountered extremely hard times during the past few years. In at least one case the membership includes a large proportion either on relief or engaged on W. P. A. 3 This term is used to designate associations formed among the unemployed, for the production and barter of goods and exchange of services. Articles on these associations have appeared in m any issues of the M onthly Labor Review; data for 1936 are shown in the July 1938 issue (pp. 1-17). 30 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES jobs, and consequently with very low purchasing power. In fact, the association grew out of a self-help organization formed among the unemployed, which was given a small grant under the Federal Relief Act of 1933. Year o f F orm ation More than 1,900 associations furnished data as to the year in which they were started. Exactly one-fifth of these were started during the wave of cooperative enthusiasm that occurred in the war and post-war period of 1916 to 1920. Almost one-seventh were formed during 1926-29. Altogether nearly one-third dated from 1920 or earlier and had therefore, at the end of 1936, been in operation 16 years or more. Twenty-five associations reporting in the present study dated from 1900 or earlier. Two of these were 60 and 57 years old, respectively; one was a Grange store started in 1876 and the other a consumers' county-wide store association started in 1879. The effect of the depression in turning the minds of workers to cooperation as a means of stretching the purchasing power of the rapidly diminishing contents of the pay envelope is seen in the fact that 24.9 percent were formed in the years 1930-34. That this public interest has persisted is shown by the fact that 184 and 183, respectively, of the reporting asso ciations (9.8 percent each) were formed in the years 1935 and 1936. Reports for 1937 indicate that an even larger number were formed in that year. That the earliest associations were overwhelmingly store associ ations is also indicated in the following table, the period during and immediately following the World War being especially productive of this type of cooperative, as well as of the marketing association which had added collective purchasing to its duties. Cooperative associ ations handling gasoline and motor oil did not begin to make their appearance until the 1920's. Of 29 petroleum associations predating that time, all had been started for the purpose of doing a general store business; gasoline was later added and during the course of the years had gradually assumed greater and greater importance and by the end of 1936 had become the associations' major line. The develop ment of the service associations has followed about the same line as that of petroleum associations. The buying clubs are relatively new and have become increasingly popular during the past 2 or 3 years. The oldest of those reporting were formed in the period 1921-25. It should be stated in this connection that the life of the buying club, in that form, is usually short. Being an informal organization involving no capital investment and with nothing tangible to “ tie” the member to the organization, the usual course is that the club either fades out altogether in a few years or graduates into a fullfledged business enterprise operating some sort of an industrial estab- R ETA IL D ISTR IBU TIVE 31 ASSOCIATIONS lishment. A considerable number of the store and service associations covered in the present report started as buying clubs. T ab le 6. — Y ea r or P eriod o f Form ation o f D istribu tive Cooperatives Total Period N um ber re porting Per cent Store associ ations Distribu Petro tive depart Buying leum ments of clubs associ marketing ations associ ations - __ 1,869 100.0 885 733 140 _ _ ___ 1880 or earlier_____ _ 1881-85 _____________________________ 1886-90 _____________________________ 1891-95 ____ ____ 1896-1900 _ _ __ ____ _________ _____ 1901-5 2 5 2 9 7 22 .1 .3 .1 .5 .4 1.2 2 5 1 7 6 14 1 1 2 1 7 ________ _ _______________ _ _ _________________ __________________________ ___________________________ _ ______ _ 53 129 379 166 263 112 2.8 6.9 20.3 8.9 14.1 6.0 37 89 308 113 57 17 4 6 18 41 195 92 12 32 46 8 9 3 1931 _ _____________________________ 1932 _________ 1933_________________________________ 1934 ______________________ 1935_________________________________ 1936 _ _ _ _ _ _ _ _ _ _ 97 44 73 139 184 183 5.2 2.4 3.9 7.4 9.8 9.8 17 12 18 38 61 83 76 29 48 92 83 48 1 2 3 7 5 1 All periods__ _ 1906-10 1911-15 1916-20 1921-25 1926-29 1930 _________ 96 3 1 2 1 3 1 34 51 Other dis tributive associ ations 15 2 7 1 1 1 i l l F ield s o f Cooperative A c tiv ity A wide variety of activities is being carried on by the local dis tributive associations. Although the store selling groceries or general merchandise is still the most prevalent type of cooperative, the associations handling petroleum products are increasing in numbers. These two groups are increasingly overlapping in their functions. The petroleum associations, in the early years of their development, handled gasoline and motor oil only. Later they began to carry auto mobile tires and then various accessories such as batteries, tubes, etc. Among the latest developments in this field are the addition of certain electrical appliances, such as light bulbs, washing machines, toasters, percolators, fans, and radios for cars and for homes; and now, finally, an increasing number are putting into stock small supplies o f groceries. Collective purchase of groceries was reported by the Bureau's agents to be on the increase in farmers' creameries, also. Some of the general-store associations handle a great variety of goods, including groceries, meats, clothing (work clothing for men, house dresses, limited lines of children's clothing), shoes, notions, dry goods, fuel, hardware, gasoline and motor oil, tires, farm supplies of all kinds, radios, electrical appliances, refrigerators, and washing ma chines. Although they do not generally carry furniture in stock, usually they will order whatever the member desires. Large numbers of these associations, in towns where there is no cooperative petroleum 32 CO NSUM ERS’ COOPERATION I N THE U N IT E D STATES association, also dispense gasoline and motor oil through curb pumps or separate service stations. Unusual forms of cooperative effort revealed by the survey include one association which has no store but operates a trailer truck, taking the goods directly to the members; two associations which run beer taverns; and one which has a beauty parlor. One store association operates a coal mine to supply its members with fuel. Two associa tions handle artists’ and teachers’ supplies. Associations carrying on several lines of activity have been classi fied, in the present study, according to the principal activity. Thus an association which reported that its main line of business was the operation of a grocery store was considered as a “ store” society, even though it may also have been operating a bakery, a creamery, or a gasoline service station. In order to avoid confusion it should be noted that the data on creameries cover only those run for the benefit of the consumers of dairy products; they do not include creameries whose function is the processing or the marketing of the farmers’ milk products on the open market. Also, the water-supply associations included here are purely consumer organizations; there are hundreds of water-supply associa tions whose business is the supply of water for the irrigation of farm lands, but these cannot be regarded as consumer associations. It should also be emphasized that all of the farmers’ associations included were handling some consumer goods. Many cooperatives, especially the buying clubs, have arrangements with local tradesmen by which services of various kinds (such as cleaning and pressing, laundering, or automobile repair) are made available to their members at an agreed discount. Organizations with such arrangements are here classified according to the principal estab lishment operated by them or by their chief function (as buying club, store, etc.). B A K E R IE S As far as the knowledge of the Bureau of Labor Statistics goes there were at the end of 1936 only nine associations whose main enterprise was a bakery; all of these were in the three States of Massachusetts, New Jersey, and New York. There were, however, seven associations in other businesses which were operating a bakery as one department of their business. The 7 bakery associations from which the Bureau received reports had a combined membership of 5,307 and sales of $595,680. All of these bakery associations have been in operation a long time. Not one of those reporting was started later than 1920. Two were formed in 1917, one in 1918, one in 1919, and three in 1920. The average age for the group was slightly over 18 years. R ETA IL DISTR IBU TIVE ASSOCIATIONS 33 Although cooperative societies are not numerous among Jews in this country, the bakery business is one branch of cooperation that seems to have appealed to them. Several of the known bakery asso ciations are mainly of Jewish membership and specialize in Jewish breads. In four others the predominant nationality is, respectively, Polish, Lithuanian, Italian, and Finnish. It is customary among the bakery associations to operate a retail store in which the bakery products are sold. All of the associations reporting in this survey have such stores and one of them has two. One association also operates a dairy, with a number of milk routes throughout the city. All of the reporting associations operate on the Rochdale basis of one vote, no proxy voting, and return of patronage refunds when earned. In one of the associations, however, membership is open only to persons of Polish descent. A considerable proportion of their business is done with nonmembers, the proportion ranging in the reporting associations from 25 percent to “ nearly all.” To some extent this high proportion of nonmember business is due to the fact that these organizations supply other cooperatives which have no bakery of their own. These bakery associations are predominantly working-class asso ciations, and their history is one of close association with labor move ments and with labor’s struggles to improve its condition. Their employees are, almost without exception, unionists receiving union rates or better. One association was started by bakers who were striking against conditions in the private bakeries in which they were employed. It will be noted that, although it is generally their practice to return patronage refunds, none of them did so in 1936. This was accounted for by the fact that three of them operated at a loss that year, and three had only small net earnings. It has often been true, however, that the members have voted to use their earnings for social purposes. In fact one association was reported to be in financial difficulties because of its overgenerous assistance to workers involved in a strike. Aid to strikers by cooperative bakeries has been a common occurrence. Indeed, at the time of the visit of the Bureau’s agent, the manager of one association was on the point of departure to a neighboring town, where a strike was in progress, to arrange for the distribution of free bread among the strikers; this association had also done much chari table work in assisting flood sufferers. In general, the viewpoint of The bakery associations may be said to be that of the worker-producer rather than that of the consumer. (The same is true of one of the creamery associations.) Their worker, rather than consumer, viewpoint is also indicated by the fact that although they are all situated in a region where there is a cooperative 34 C O N S U M E R S' COOPERATION I N THE U N IT E D STATES wholesale, all but one reported that they purchased none of their flour and other materials from cooperative sources. The one exception, a Finnish association, purchases about one-third of its supplies from cooperatives. All but two of the associations charge current prices for their product. One association which sells below prevailing prices does so in the belief that in this way it assists in keeping down the price of bread in the locality, and thus “ has helped the working people much more than patronage refunds would have done.” CREA M E R IE S Associations operating creameries as their principal line of business are also few in number. Of the four associations of this group which reported, three have their own dairies and one which does none of the processing of the milk operates two milk trucks for its distribution. In addition to the consumers’ creamery associations, 20 associations in other lines of business were operating a creamery department. The reporting creamery associations range in size from 99 to 3,925 members. These are younger associations than the bakeries. Of the four included in this report, one was formed in 1921, one in 1927, one in 1934, and one in 1935. One of these associations, a much-publicized organization, was formed by milk-wagon drivers on strike against the local milk dis tributors in 1921. Although organized in the form of a consumers’ cooperative, it has come to be, to all intents and purposes, a workers’ organization. Undoubtedly, doing as it does, a business amounting to several million dollars each year, it has exerted considerable influ ence on local prices and quality. It sponsors many social events, goes in for recreational and athletic events, and for a while ran a clinic for undernourished children. Its main problem is to obtain the participation of its general membership. Two of the associations purchase none of their milk from cooperative sources, but of the other two, one purchases 99 percent and the other purchases all of its milk and most of its cream from farmers’ coopera tives. Here again, a very large proportion of the business is done with nonmembers, ranging from 50 to 90 percent. W A T E R -S U P P L Y ASSOCIATIONS The water-supply associations, as indicated elsewhere, are entirely consumers’ organizations. Their only plant is, in each case, the water main or mains used to pipe the water to the homes of their members. All but one of the five associations are in California and Washington; the exception is in Wisconsin. One of the associations dates from 1913, one from 1915, one from 1931, and. one from 1933. Their membership ranges from 12 to 350. F ig u r e l . — G e n e r a l s t o r e o f c o o p e r a t iv e M e r c a n t il e a s s o c ia t io n , BIW AB1K , MIN N . F i g u r e 2 .— E l e c t r i c a l - A p p l i a n c e B u r e a u C o o p e r a t iv e departm ent a s s o c ia t io n , o f D e l a w a r e C o u n t y Fa r m D e l a w a r e , O h io . F i g u r e 3 .— g a s o l i n e S e r v ic e S t a t io n o f C o o p e r a t iv e T W a u k e g a n , III. r a d in g C o ., This association also operates eight retail stores, a bakery, a dairy, and a warehouse. F i g u r e 4 .— L o a d i n g C o a l a t F u e l Y a r d o f C o o p e r a t i v e S e r v i c e s , In d i a n a p o l i s , In d . This association also operates two gasoline service stations. R ETA IL DISTR IBU TIVE 35 ASSOCIATIONS O perating F a cilities Further indication of the variety of cooperative services and of the expansion of individual associations is given in table 7. Operating facilities were reported upon by 766 distributive store associations, 736 petroleum associations, and 17 “ other distributive” associations. These 1,519 associations were running a total of 3,478 establishments of various kinds, including 1,007 stores and 831 gasoline service sta tions; as will be noticed, many of the farmers’ associations carry on their distributive business through warehouses. T able 7 . — O perating F acilities o f R eportin g D istribu tive Cooperatives , 1 9 3 6 Facilities of specified kind, operated as— Facility Principal enterprise Retail stores_____________ ___________ Warehouses____________ ____ ________ Gasoline and oil— Service stations. ________________ Curb pum ps_____________________ Bulk stations.. ___ . . . _____ Tank trucks_______ _______ ____ Fuel yards____________________ ____ Garages____________ _ __ . _______ Bakeries.^_____ ______ __ _________ Creameries. ________________ ______ Restaurants and cafeterias____ _ _ Rooming houses. ___ _ C lu broom s... _ _. _______ . _______ Lum ber yards______________ ________ Feed mills______________ _ . _______ Water mains__ _____ _____ ________ Other__________________ ____ ________ Auxiliary enterprise 863 143 144 272 666 166 196 96 115 155 7 7 i 20 648 82.1 1,119 56 7 i3 6 1 1 14 8 5 21 3 17 1 Does not include 1 association which operated milk routes but had no creamery of its own. 2 Huckster truck. 3 Includes 1 cheese factory, 1 sausage factory, 2 beer taverns, 2 huckster trucks, 1 soda fountain and lunch counter, 4 bowling alleys, 1 beauty parlor, 1 stoker plant, 1 briquet plant, 1 shoe-repair shop, 1 coal mine, and 1 electricity generating plant. Analysis of the number of establishments operated by the store and petroleum associations reveals the extent to which these two types of associations overlap. Thus, the 766 store associations, besides their 863 stores, 232 warehouses, 155 fuel yards, 7 bakeries, and 19 creamer ies, were also operating 191 curb pumps at the stores, 154 separate service stations, and 91 bulk stations, and had a total of 111 tank trucks. The 736 petroleum associations had in operation, in addition to their facilities for dispensing gasoline and oils, 139 stores, 183 warehouses, and 38 fuel yards. M em bersh ip The distributive associations which reported as to membership included on their rolls nearly half a million persons at the end of 193 6 The greatest single group of cooperators was in the gasoline and oi associations; these accounted for 50.6 percent of the whole number C O N S U M E R S ’ COOPERATION I N 36 THE U N IT E D STATES and the store associations followed next in order with 40.5 percent of the total. T able 8 . — M em bersh ip o f D istrib u tive C ooperatives , 1 9 3 6 , b y M a jo r L in e o f B u sin ess M ajor business N um ber of associ M em ations bers report ing A ll associations_____ ______ 1, 782 458,812 257 851 185,860 256 40,757 200 40, 624 10 18,081‘ 57 8,923 313 72, 249 5,226 15 219 159 203 1,808 157 231 348 Store associations.______ __ Groceries 1________ ____ General merchandise___ S tu d e n ts * s u p p lie s Fuel___________________ Farm supplies_________ Miscellaneous 2_____ _ Aver age per asso cia tion N um A ver ber of age associ M em per ations asso bers cia report ing tion M ajor business Buying clubs______________ Petroleum associations_____ Distributive departments of marketing associations___ Bakeries______ ____________ Creameries________________ W ater-supply associations. _ 94 6,573 693 232,417 131 5 3 5 23,530 5,307 4, 497 628 70 335 180 1,061 1,124 126 1 Includes those handling meat also. 2 This group includes mail-order, artists' supplies, clothing, and “ other household supplies" associations. What may be termed the typical American consumers’ cooperative, from the point of view of membership, has from 100 to 250 members; 36.9 percent of all the distributive associations reporting fell in this group. Altogether, 88.7 percent of the total reporting had fewer than 500 members. There were, however, 62 cooperatives (3.5 percent) with 1,000 or more members each. T a b l e 9 . — D istribu tion o f D istribu tive C ooperatives , b y N u m ber o f M em bers at E n d o f 1 9 3 6 N um ber of associations with classified membership Major business Total re port ing U n der 50 50 100 250 500 750 1,000 2,000 and and and and and and and under under under under under under under 250 100 500 1,000 2,000 3,000 750 3,000 and over All associations___________ __ 1,782 245 350 658 328 93 46 50 7 5 851 94 693 146 59 28 192 23 101 321 8 259 128 3 176 33 9 16 4 2 58 37 30 2 2 131 5 3 5 9 33 69 16 3 Store associations___________ Buying clubs. _ ______ Petroleum associations._ . . Distributive departments of marketing associations Bakeries_____ ____ _________ Creameries . . . ______ Water-supply associations___ 1 3 1 1 1 2 1 2 1 1 1 The associations handling petroleum products are found almost wholly in the Mississippi Valley States, with only a few in the Middle Atlantic and Mountain States; there are only scattered associations of this type elsewhere throughout the country. In the Mississippi Valley States the farmers (who use large quantities of gasoline in their farm work) have taken the lead in the formation of these associations. The absence of development in the Eastern States may perhaps be due to lack of nearby, available sources of supply, and the large numbers of members in the low-paid occupations (and consequently without automobiles). 37 R ETA IL D ISTR IBU TIVE ASSO CIATIO NS Buying clubs are playing an important part in the present develop ment of the cooperative movement, especially in urban areas. Pre senting, as it does, a simple mechanism requiring almost no capital, the buying club is ideal in training persons how to work together. For small groups without sufficient funds, at the beginning, to operate a store or other enterprise requiring plant and equipment, it offers op portunities for savings without financial hazard. Most of the clubs reporting in the present survey were located in large cities. In num bers, New York, California, and Illinois led the way; most of the clubs in those States were in New York City, Los Angeles, and Chicago. The stores are especially numerous in Minnesota, Wisconsin, and Illinois, as table 10, covering those reporting, indicates. T able 10.— M em bersh ip o f R eportin g D istribu tive Cooperatives, b y T yp es and b y States, 1 93 6 Total State United States______________ Alabama___________________ Arkansas__ _____ ______ ___ California__________________ Colorado_____________ _ . Connecticut- ______________ Delaware _ ______ District of Columbia _ Florida __________________ Idaho_________ _ ______ Illinois____ ________________ Indiana____________________ Iow a---------- ------------------------Kansas. _____ _______ ___ Kentucky ____ ____ __ Maine . __ ______ ___ Maryland _____ _______ Massachusetts _ _______ Michigan________ ________ Minnesota___ ________ ____ Missouri___________________ Montana ____________ ____ Nebraska— __________ — New Hampshire______ ___ New Jersey _ _ New Mexico __________ New Y ork___ _________ ____ North Carolina. ____________ North Dakota______________ Ohio_______________________ Oklahoma__________________ Oregon. __________________ Pennsylvania--------------------Rhode Island ____ _____ South Dakota______ _____ __ Tennessee . __ Texas____________ ________ Utah_____ ____ ____________ Verm ont................................. _ Virginia. ___ _______ _____ Washington............... .............. West Virginia______ ____ _ Wisconsin_________ _____ _ W yom ing________________ _ N um ber report ing M em bers Store associations Num ber report ing M em bers Petroleum asso ciations N um ber report ing M em bers Other N um ber report ing M em bers 1,782 458,812 851 185,860 693 232,417 238 40, 535 3 2 45 16 14 1 3 2 17 149 75 84 151 3 9 5 33 87 224 48 49 123 4 10 2 65 1 63 76 13 20 31 1 34 6 32 4 3 4 55 8 200 7 1,235 134 6, 518 4,104 4,430 100 702 73 7, 611 66, 296 33, 838 21, 740 21,451 388 2,046 853 17,445 15,950 64, 827 8,281 5, 632 25, 623 1,494 2,436 852 14,953 79 10,141 17,460 3,044 7, 265 4,142 131 9,498 2,423 6,926 250 871 2,799 11,088 1, 502 51,115 1, 066 3 2 30 5 11 1,235 134 4,123 328 4,332 1 9 80 3,499 2 5 72 42 23 57 3 9 5 25 71 104 33 5 50 4 9 73 814 12, 754 18, 215 2,812 8, 291 388 2,046 853 16,141 13,886 23,037 5,454 1,081 7,467 1,494 2, 351 2,315 277 98 100 506 28 1 7 45 7 7 28 1 14 4 7 3 3 3 27 8 86 2 6, 791 79 530 9, 781 2,119 3,986 3, 759 131 1, 779 799 625 185 871 2, 565 5,703 1, 502 17,100 246 1 196 14 2 3 1 2 12 58 29 55 47 6,797 51,900 13, 330 17, 720 6,376 19 4 6 47 1,642 2,293 1,208 6, 784 3 105 5 40 59 657 35,917 1, 334 4,091 16, 723 8 13 15 10 4 r4 1,304 1, 407 5,873 1,493 460 1,433 1 85 2 4 852 1,921 33 6, 241 51 22 5 11 1 8,729 6, 478 823 2,746 312 5 9 1 2 2 882 1, 201 102 533 71 16 7,237 20 1 5,900 65 4 2 5 482 1,624 401 1 24 234 4,897 4 488 106 5 32, 783 820 8 1,232 38 CONSUMERS’ COOPERATION IN THE UNITED STATES C O M P O S IT IO N OF M E M B E R S H IP Although the Bureau did not ask specifically for data on the occu pational or other composition of the membership, such information was obtained in the spot studies made in five different localities and is at hand for a considerable number of other associations. Among these, farmers’ organizations outnumber by far the other occupational groups. Miners’ associations rank next. The reporting associations include four coal miners’ organizations in Illinois, one in Ohio, and three in Pennsylvania; three cooperatives of iron-ore miners in Minnesota (these also have many farmers in their membership); and two associations of copper miners in Michigan. Associations of textile workers reporting included two in Massachusetts, one in Connecticut, and one in North Carolina. The majority of the members in one association in Michigan are employees of a local power company; in another (Wisconsin), employees of a local cooperative dairy; in a third (Illinois), unskilled employees of the International Harvester Co.; and in a fourth (Wisconsin), the members are all district managers and carriers of a city newspaper. In an association situated in a suburb of Detroit the organization was started and is officered by school teachers. Associations of railroad workers include one in Minnesota, one in North Dakota, and two in Michigan. In two cooperatives in Illinois the membership consists largely of skilled laborers and un skilled laborers, respectively. Professional and white-collar people form the majority of the members in three other Illinois organizations. One Illinois association which made an analysis of its membership from the point of view of occupation reported its make-up as follows: Teachers, students, and ministers, 164; other professions, 43; business people, 54; and unclassified, 29. L I M I T A T I O N S O N M E M B E R S H IP One of the tenets of Rochdale cooperation is that of open member ship. Associations conforming to this principle accept any person 18 years of age or over who can make use of the services rendered by the association. Generally the only restrictive requirements are that the prospective member must not be engaged in a business competing with the cooperative or have other interests hostile to those of the association. Of more than 1,900 distributive associations reporting in the present survey, only 326 imposed any limitation on membership. That such limitations are far more general among the farmers’ than among the other consumers’ associations is shown by the fact that only some 6 percent of the latter as against 24 percent of the former were in this class. RETAIL DISTRIBUTIVE ASSOCIATIONS 39 The various farm organizations 4 have fostered in greater or less degree the formation of all types of cooperatives for their members. However, their tendency has been to make the cooperative activity only an adjunct of the farm organization’s program, and to keep the cooperative and its policies under the direction of the sponsoring organization. Only farmers were accepted into membership in 263 associations reporting to the Bureau of Labor Statistics (48 of these also required membership in a particular farm organization) and 3 additional associations specified that the new member must have some “ agri cultural interest or connection.” Some of these defined what they meant by “ farmers.” Two associations based their definition on income (i. e., as having their “ main income” or at least 5 percent of their total income from the farm), and 11 others on the total acreage worked. Of the latter group, eight regarded as a farmer a person owning or farming 3 acres or more and three associations a person with 5 acres or more. In one association the applicant for member ship must be a “ dirt” farmer. Nineteen associations accepted either landowners or renters, but an additional association accepted owners only. Of the farmers’ associations which admitted nonfarmers, three specified that their proportion in the total membership should not exceed 10 percent, and four others did not allow them to vote. This meant, of course, that although the nonfarmer members contributed to the success of the store through their patronage and may even have shared in the patronage refund, they had no voice in determining the association’s policies. Besides restricting the field of operations of the society, the inter locking relationship between the cooperative association and the parent farm body has frequently resulted in multiplication of coopera tives, each serving its own group. Among the reports received in the present study are three from one little town of 600 population, which has two farmers’ stores sponsored by competing farm organizations and a third composed of residents of the town. If people simply cannot get along together, it may be desirable to form separate asso ciations. It is safe to say, however, that schisms are not so apt to occur over honest differences of opinion on cooperative policy as over extraneous matters not connected with cooperation at all.5 In the town in question, instead of three small associations struggling along with indifferent success, given the combined purchasing power of all 4 These include the National Grange, Farmers’ Cooperative and Educational Union, National Farm Bureau, and Farmers’ E qu ity Union. 8 A n example in point is the division in the cooperative movement, about 1930, on the question of com munism. 40 CONSUMERS’ COOPERATION IN THE UNITED STATES three memberships it should be possible to build one large, successful association.6 Among the other consumers’ associations which restricted their membership one stated that its rolls were closed “ for the present” ; five others had a limit on the total number of members. Thirteen limited the membership to the students and faculty of a specified college or university, one to the residents of a single apartment house, one to the members of a specified cooperative association, three to residents of the locality where the cooperative was situated, and one to participants in a specified homestead project. Three limited their membership to persons of the white race. Eight had nationality requirements, accepting only Czechs (one association), French (one association), Italians (two associations), Lithuanians (one associa tion), or Polish (three associations). One organization limited its membership to persons who were members of a specified fraternal association (which in turn accepted only persons coming from Lom bardy, Italy). One association barred bankers and lawyers and two excluded business men. A m o u n t o f B u sin ess , 1 9 3 6 The associations reporting to the Bureau had retail sales 7 in 1936 aggregating $146,309,260. In sales as well as in membership (as already seen) the petroleum associations were outstanding, doing well over one-third (34.7 percent) of the total business. The tables here given do not present a complete picture of local distribution of petroleum products on the cooperative plan. In some States— notably in Minnesota, Michigan, and Wisconsin— there are a number of associations, intermediate in character between the retail petroleum associations and the wholesale associations dealing in petro leum products. They are owned by the local store associations throughout a certain district (but less than State-wide in scope) and distribute the gasoline and oil throughout that district. In the present study these have been regarded as federated rather than local associations and have been included with the wholesales.8 • On the question of amalgamation of associations, it might be pointed out that there is a very definite tendency toward the formation of larger units. N ot only are mergers of small associations within urban areas taking place, but in numerous instances small associations have become branches of successful organ izations in some nearby town, with resultant increase of purchasing power and reduction of overhead expense. * Some of the retail associations have a small amount of wholesale sales—i. e., sales of members' produce, or wood products or handicraft articles, sales to other cooperatives or to local dealers (as of milk, bakery goods, etc.). This wholesale business is not included in these figures. There were 139 associations which reported some wholesale sales; these totaled $8,924,536 for the year 1936. It should be emphasized that these whole sale sales do not include marketing business of farmers’ marketing associations, the distributive depart ments of which are included in this survey; the data here given for such distributive departments are for retail sales of consumer goods and farm supplies only. s The 9 associations in this class were owned b y 81 local retail associations and did a combined business in 1936 of $958,815. RETAIL DISTRIBUTIVE ASSOCIATIONS T able 11.— Sales o f R eportin g D istribu tive Cooperatives , All associations______ _ 1936, b y M a jo r L in e o f B u sin ess Number of associa tions re porting M ajor business __ __ _ 41 Amount of sales Average per association _ _ 1,805 $146,309, 260 $81,058 Store associations______ _____ ____ _ ___ _________ _ Groceries 1_______ __________ General merchandise ___ _ _ _ _ _ _ __ Students’ supplies____ ______ ___ _ Fuel______________________________________________ _ _ _ _ _ _________ _ _. _ _ Farm supplies____ __ Miscellaneous 2 ________ _ _ _ ___ _ Buying clubs___________ __________ __ ______ __ ___ __ _ Petroleum associations___________________ _______ __ ___ _ Distributive departments of marketing associations _ _ __ Bakeries __ ________ __________ ____ _____ _____ _ Creameries______________ _________ ___ _ _ _ Water-supply associations __________ ____ 858 259 194 12 56 322 15 79 722 132 6 4 3 71,052, 638 11,612,935 15, 726,165 1,884, 310 5,515,885 35,441, 276 872,067 415,991 50,911, 944 20,360, 534 595,680 2,954,121 18,352 82, 716 44, 838 80,647 157, 026 98,498 110,066 58,138 5,266 70,515 154, 246 99,280 738,530 6,117 1 Includes those handling meat, also. 2 This group includes mail-order, artists’ supplies, clothing, and “ other household supplies” associations. Of the whole group of distributive associations, 48 percent fell in the sales range of $25,000 to $100,000, as the following table shows. Table 12.— D istribu tion o f D istribu tive Cooperatives b y A m ou n t o f B u sin ess in 1 9 3 6 Total Number of associations doing num ber re Under $10,000 $25,000 $50,000 and and and port $10,000 under under under ing $25,000 $50,000 $100,000 M ajor business A ll associations___ _______ 1,805 Store associations___________ Buying clubs_____ _________ Petroleum associations___ __ Distributive departments of marketing associations.. _ Bakeries____ _ _________ __ Creameries- ____ ___ ___ Water-supply associations__ classified amount of business in 1936 $100,000 $250,000 $500,000 and and and $1,000,000 under under under and over $250,000 $500,000 $1,000,000 249 279 449 422 334 55 10 7 859 79 722 114 74 49 137 3 117 209 189 32 5 5 208 198 168 2 128 19 3 132 6 4 3 10 19 1 1 1 29 2 1 33 1 1 35 1 3 1 2 2 1 1 Leading distributive associations, in point of sales in 1936 (omit ting three students’ associations which had sales of over a million dollars each) were: The Franklin Cooperative Creamery Association, Minneapolis, Minn., with sales of $2,827,560; the Cloquet Coopera tive Society, Cloquet, Minn., with sales of $1,125,714; the Cooperative Trading Co., Waukegan, 111., with sales of $709,736; and the New Cooperative Co., Dillonvale, Ohio, with sales of $639,476. The greatest amount of cooperative business is still concentrated in the North Central States, more than 70 percent of the total in 1936 having been done there. 90621°— 39- 4 42 CONSUMERS’ COOPERATION IN THE UNITED STATES Table 13— Sales o f R eportin g D istrib u tive C ooperatives , b y T yp es and b y States, 1 9 3 6 Total associations State N um ber report ing Sales United States ............. ......... 1,805 $146,309, 260 Store asso ciations N um ber 859 $71,052,638 3 2 61 17 12 92, 900 1,652, 481 12; 046, 218 1,156, 030 1,150, 535 3 2 28 5 10 Idaho Illinois.......... .......................... 1 2 1 17 157 1,829 7,000 6, 921 1,151, 257 15,562,150 1 5 71 Indiana ______________ Iow a___________ ________ .Kansas_______ _ ____ K en tu cky. _____ __ _ M aine_____________________ 81 90 147 4 11 9,925, 374 6,889, 262 8,452, 962 182, 576 728, 670 M aryland _ _ M assachusetts... . M ichigan________ _______ M innesota_____ _ _ ____ Missouri ________________ 5 31 84 240 50 M ontana__________________ N eb ra sk a _________ ______ N ew H am p shire_________ N ew Jersey.. N ew M exico. __ Arkansas __ __ __ _ California_______ ________ Colorado______ ____ . _ Sales 92, 900 1, 652, 481 2,057, 081 101, 288 1,001, 267 Petroleum asso ciations N um ber Sales 722 $50,911,944 Other asso ciations N um ber Sales 224 $24,344,678 12 2 2 9,141,873 60,209 149, 268 1,500 1 1 1,829 5,500 12 67 735,170 9, 763, 569 19 790,863 31 59 46 1 3,640, 581 4,604, 366 1,655, 399 63, 278 5 7 43 465,936 842,461 3,878,454 3 114 6 315, 096 7,455,135 276, 504 5 12 19 10 143, 451 300,932 4,806,158 365, 338 39 62 1, 265, 549 3, 682, 787 ' 4 17 154,829 1,178,013 2 913, 796 21 10 847, 264 994, 533 1 6,921 416,087 5,007, 718 45 24 58 3 11 5,818, 857 1,442, 435 2,919,109 119, 298 728, 670 297, 979 4, 714, 590 5,844, 885 19, 541, 440 2,987,434 5 26 69 107 34 297, 979 4,571,139 5,228, 857 7, 280,147 2, 345, 592 47 132 2 9 2 1, 956, 338 9,002,015 171, 693 1, 591, 662 913, 796 4 53 2 9 535,960 4,141, 215 171, 693 1, 591,662 N ew York _ . . . ____ North Carolina . ___ _ North Dakota. _ _ _______ O hio_____________ ________ Oklahoma_________________ 61 2 61 84 13 2,986, 355 53, 500 3, 226, 936 7,807, 706 1,119, 542 28 2 7 50 7 2,132,652 53, 500 281, 377 5, 265, 762 892, 204 Oregon___________________ Pennsylvania _ __________ Rhode Island. _________ South Dakota. __________ Tennessee. . ___________ __ 20 29 1 35 4 1,177, 580 1, 532, 676 43, 654 2,154, 585 231, 218 8 27 1 15 3 Texas ___________ _____ U tah______________________ V e rm o n t... _ ___________ Virginia. _ . . . _________ Washington_______________ 30 5 1 5 31 1,274, 996 18,467 392, 640 1,355,899 1, 710,370 West Virginia_____________ W isconsin_________________ W yom ing. . . . _. ______ 8 200 7 229,073 14, 529, 934 436,132 4 191, 565 29 662,138 51 25 5 2, 595, 462 2,348, 711 190,338 3 9 1 350,097 193,233 37,000 844, 782 1, 507, 679 43, 654 681, 576 228,633 10 1 251,941 24,402 2 1 80,857 595 16 1,350,215 4 1 122,794 2,585 7 3 1 4 26 169,902 13, 650 392,640 1, 271,101 1, 591,571 19 2 1,034,495 4,817 4 70,599 1 2 84, 798 90,589 3 28,210 8 86 1 229,073 7,899, 526 25,000 106 6 6,118, 952 411,132 8 511,456 BUSINESS WITH NONMEMBERS That a considerable proportion of business is done with nonmembers is indicated by table 14. More than a quarter of the 1,729 associa tions reporting on this point did from 25 to 50 percent of their business with nonmembers. Less than 10 percent restricted their business dealings entirely to members. 43 RETAIL DISTRIBUTIVE ASSOCIATIONS T able 14.— P ercen t o f D istribu tive A ssocia tion s D oin g C lassified P rop ortion o f B u sin ess W ith N onm em bers in 1 93 6 Percent of business done with nonmembers Store associ ations Total Buying clubs Distrib utive Petro Other leum as depart distribu ments of tive asso socia market tions ing asso ciations ciations All associations: Number reporting________ _ _ Percent.. __ ----------------------- 1, 729 100.0 826 100.0 87 100.0 669 100.0 135 100.0 12 100.0 N on e________________ ____ ______________ Under 10 percent__________________ _ __ 10 and under 15 percent__________________ 15 and under 20 percent.____ __ . _ 20 and under 25 percent______ _ _ _ _ 25 and under 50 p ercen t---- _______ _____ 50 and under 75 percent.---------- ---------- 75 percent and over_________ __________ 8.7 12. 5 11.9 6.1 6.4 28.7 18.7 7.0 4.8 8.0 8.2 4. 6 6. 3 29.9 28.0 10.2 55. 2 14. 9 18.4 2. 3 2. 3 2.3 3.4 1.2 8.0 18. 4 16.7 8. 2 6. 7 29.0 9.4 3.6 5.2 11.1 5.9 7. 6 8.9 38.0 16.3 7.0 16.7 8.3 16.7 41.7 16.7 O perating E xp en ses Usable data on expenses of operation were obtained for 278 asso ciations— 43 handling general merchandise, 39 selling groceries or groceries and meats, 53 handling other commodities, and 143 handling petroleum products. The sales of these associations in 1936 aggre gated $22,403,336 and their operating expenses were $2,771,917, or 12.37 percent of sales. Details are shown in table 15. T able 15.— O perating E xp en ses o f R eta il D istribu tive C ooperatives, 1 9 3 6 Percent (in terms of total sales) spent for specified items Store associations Item of expense All asso ciations (278) Total (135) General mer chan dise (43) Grocer ies (39) Other (53) Petro leum as socia tions (143) Wages, salaries, and com m issions.-. . ______ Advertising----------- ---------------------------------- ------W rappings___________________ _________ _ _ 7.199 .214 . 100 5.981 .232 . 136 6.190 .253 .272 7.845 .353 .228 5. 040 . 165 0) 9.163 .186 2 ..041 Total sales expense_______________________ 7. 513 6. 349 6. 716 8. 427 5.206 9. 391 Miscellaneous delivery expense (except wages) __ R ent___________________________________________ Light, heat, power, water, ice__________________ Insurance, taxes, license, and bonds___ ____ __ Interest on borrowed m oney___________________ Office supplies, postage________________________ Telephone and telegraph____ . --------------------Repairs___ ______________________ ________ _ __ Depreciation_________________ _________ _____ Bad debts_______ _____________________________ Inventory, auditing, and legal expense ________ Warehouse and plant expenses_________________ Traveling and fieldmen’s expenses_____________ Directors’ fees and expenses____________________ Collection expenses. __________________ ____ __ Education, promotion, publication____________ Membership dues, meetings, and subscriptionsMiscellaneous........................................................ . .758 .264 .430 .856 . 197 . 194 . 119 . 197 .773 .119 . 120 .305 .034 . 134 .028 .043 .020 .269 .603 .242 .470 .804 .190 . 156 . 106 .232 .656 .146 .097 .221 .034 .073 .025 .046 .014 .222 .495 .062 .494 .881 .136 .127 .096 .208 .797 . 120 . 136 . 117 .025 .078 .006 .080 .021 .257 .551 .612 .741 .847 .231 .134 .096 .360 .657 .141 .112 .298 .032 .082 .034 .051 .014 .312 .702 .210 .338 .733 .210 .186 .118 .193 .557 .166 .064 .261 .042 .065 .034 .020 .009 . 159 1.008 .300 .366 .938 .208 .255 .139 .142 .962 .075 . 156 .441 .034 .232 .033 .037 .030 .344 12.373 10. 687 10.854 13. 732 9.273 15.091 All expenses..______ ____________________ iLess than Kooo of 1 percent. 2 Includes drum expense. 44 CONSUMERS’ COOPERATION IN THE UNITED STATES The stores handling groceries had higher expenses than either the general merchandise or miscellaneous groups, but this may have been due, in part at least, to the fact that more of the grocery stores than of the general stores were in urban areas where wages were higher. It will be noted that the larger part of the excess in their expenses was in the wage item, though their rent also was higher. The gasoline associations’ rate of overhead was considerably above the store expenses. Here again, most of the difference was in the wage item. A substantially lower cost of operation in the cooperative than in private stores is indicated by the following comparison: Private general stores, 1935 1 10. 1. . 3. Cooperative general stores, 1936 3 5 7 1 6. 2 . 1 2. 9 3 .7 Total_______________________________________________ 1 5 .6 1 0 .9 Wages cost____ Rent___________ Taxes__________ All other items. 1 Data are from Dun & Bradstreet’s review for 1935. 2 Includes insurance. The main point of difference here is in the wage item, though rent also is noticeably lower in the cooperative stores. Probably the large amount of volunteer labor characteristic of cooperatives, especially in their early period of operation, is a factor to be taken into account in considering the differences in wage cost. The wage level and policies of the cooperative associations are discussed at length in a later section of this report (p. 174). N e t E arn in gs A loss on the year’s operations was sustained by 139 associations in the sum of $117,597 and 1,392 associations made a saving of $7,644,689. For the whole group, therefore, there were net earnings of $7,527,092. Almost 48 percent— $3,585,916— of the total net earnings were made by the petroleum associations. They have shown remarkable savings, as a group, since the cooperatives entered this field, although the margins have narrowed considerably in the past few years. The store associations accounted for net savings of $2,298,336. RETAIL DISTRIBUTIVE ASSOCIATIONS T able 16.— N e t G ains and L osses o f R ep ortin g D istribu tive C ooperatives, 193 6 Total associations M ajor business All associations........ .......... 45 Net gain N um ber re port ing _ _ ___ Store associations________________ — ______ Groceries 1_________________ ____________ General merchandise_____________________ Students' supplies____________ _________ Fuel_____ _______________________________ Farm supplies___________________________ M iscellaneous2---------------------------------------Buying c lu b s .. _____________________________ Petroleum associations______________________ Distributive departments of marketing asso ciations ___ _______ . . . . . . ____ - Bakeries___________ _ . . . ______________ Creameries________________ __ _____________ Water-supply associations____ ___________ _ Associations having- Amount of net earnings 1, 531 $7,527,092 N um ber Net loss Amount N um ber 1,392 $7,644,689 Amount 139 $117,597 712 198 175 8 47 270 14 55 634 2,298, 336 336, 981 447,162 103,935 165,916 1, 214,193 30,149 9, 311 3, 585, 916 620 163 137 7 42 259 12 53 606 2,372,274 358, 315 485, 533 103,989 167,422 1, 221, 745 35, 270 9, 575 3, 607,969 92 35 38 1 5 11 2 2 28 73,938 21, 334 38,371 54 1,506 7,552 5,121 264 22,053 119 1, 581, 571 2 16,643 63, 526 5,075 106 3 1, 584, 265 1,813 63,718 5,075 13 3 2, 694 18, 456 192 6 2 3 1 3 1 1 Includes associations handling meats. 2 Includes associations handling art supplies, clothing, mail-order goods, and “ other household” goods. 3 Loss. Outstanding savings for their members were made in 1936 by the petroleum associations of Illinois, the “ other distributive” associa tions in California, and both store and petroleum associations in Minnesota, as the following table indicates. Table 17.— N et E arnings o f R eportin g D istribu tive C ooperatives, b y T yp es and b y States, 1936 Total associations Store associations State United States__________________ N um N um Net earn ber ber re Amount report ings port ing ing 1, 531 $7, 527,092 712 $2, 298, 336 Alabama_____________ ___ _____ Arkansas_____________ _________ California_____________ _______ Colorado_______________________ Connecticut_________________ __ 1 1 34 12 11 1, 247 736 1, 252, 577 18,839 30,198 1 1 26 4 9 1, 247 736 122, 854 753 29, 682 Delaware_______________________ District of Columbia__ _______ Florida_______ _________________ Idaho_________ ______________ I llin o is ..-________ _____________ 1 2 1 15 135 507 581 807 78, 951 1, 453, 820 1 4 59 807 20, 223 207, 297 Indiana_____________ __________ Iowa___________________________ Kansas______________ _____ ____ K entucky__________ __________ M aine______ _______ ___________ 72 545, 092 206, 949 372, 051 6, 397 374 38 233, 049 22,164 112, 293 4, 956 374 M aryland_______ ____ _________ Massachusetts . ______ ____ Michigan_______________________ Minnesota_____________________ Missouri........................................... 76 122 4 7 4 22 79 211 37 6, 718 189,087 183,106 953, 786 56,129 20 44 3 7 4 19 64 92 22 6, 718 187, 742 160, 493 302,936 28, 612 Petroleum asso ciations Other associa tions N um ber re Amount port ing N um ber re Amount port ing 634 $3, 585, 916 185 $1, 642, 840 8 2 2 1,129, 723 1,119 516 250 1 1 507 331 11 61 58,728 1, 213, 723 15 32,800 30 i 50 i 39 269,128 173, 523 87,821 1, 441 4 6 39 42,915 11, 262 171,937 6, 493 506,740 13,580 3 12 18 11 1,345 16,120 144,110 13, 937 6 16,967 1 1 3 101 4 46 CONSUMERS’ COOPERATION IN TTlE UNITED STATES T able 17.— N e t E arn in gs o f R ep ortin g D istribu tive C ooperatives , b y T yp es and b y States , 1 9 3 6 —Continued Total associations Store associations Petroleum asso ciations State N um N um Net earn ber ber re Amount report ings port ing ing N um ber re Amount port ing M ontana_______________________ Nebraska_______________________ N ew H am pshire...________ ____ N ew Jersey _ . . . ______ _ __ N ew M exico_____________ _____ 41 109 3 9 2 $152,415 413,893 13,162 36,915 61,110 3 40 3 9 $22, 240 130,877 13,162 36,915 35 54 $117,910 247,876 2 61,110 N ew Y ork____________ ________ North Carolina . _________ ___ North Dakota_____ __________ Ohio . __________________ Oklahoma______________________ 51 1 54 66 10 42, 244 62 171,177 249, 762 30, 661 27 1 6 40 5 48,822 62 8,561 173, 460 24, 589 2 45 22 5 O regon.. __________ ________ Pennsylvania__________________ Rhode Island______ _________. . . South Dakota__________________ Tennessee. ___________________ 17 27 1 23, 659 7 3 25 1 10 3 1 689 141, 956 2 5,838 9, 435 81,119 689 9,814 2 5, 838 9 86, 764 Texas---------------------- -----------------U tah___________________________ Verm ont_____________ . ______ Virginia______ ____ __ ______ Washington____________________ 21 3 2 3 39 51, 584 140 6,138 4, 941 89,859 3 1 2 2 2,614 200 6,138 2,182 44, 810 West Virginia__________________ Wisconsin______________________ ____ ____________ W yom ing 8 7, 459 554,978 35,410 28 179 7 19 8 77 2 7,459 235,053 3,037 Other associa tions N um ber re Amount port ing 3 15 $12, 265 35,140 6,504 22 2 13,082 144, 772 70,996 6,072 3 4 17,844 5, 306 14, 416 5,611 1 1 2 192 34 16 129,002 2 3,140 i 14 2 48,200 2 60 4 770 1 18 2,759 41, 695 2 3, 354 i 96 5 308, 286 32, 373 6 11, 639 1 N ot including 1 association having a loss, amount not reported. 2 Loss. Patronage R efu n ds Slightly over 48 percent (940) of the whole number of distributive associations reporting in the survey returned patronage refunds for 1936. The 853 associations which reported the amount of refund returned $4,920,880; 85 others returned dividends ranging from 1% to 17 percent but did not state the amount so returned, and 2 others reported varying rates on different commodities. A larger proportion of the petroleum associations than of the store associations made patronage refunds— 62.6 as compared with 38.4 percent. The petroleum associations accounted for 47.8 percent of the total amount returned. None of the water-supply associations, bakeries, or creameries made any refunds on patronage. The price level of the first group, however, is set so low as to yield no surplus. Table 18 shows, for the various types of associations, the number of associations which returned dividends on purchases and the amount so returned on the 1936 business. 47 R ETA IL D ISTR IBU TIVE ASSOCIATIONS T able 18.— P atronage R efu n ds o f R eportin g D istribu tive C ooperatives, 1 9 3 6 Number of asso ciations reporting M ajor business Amount of patronage refund Average per association All distributive associations._____ _________ ___ ___________ 853 $4,920,880 $5,769 Store associations____ _________________ _______ ___________ Groceries___ _________ ______ ______ ___ ______________ General merchandise. __________ ____ ________ _____ Students’ supplies_______________ ____________________ Fuel___________ ______ _______ ____ _________ _______ _ Farm supplies__ _______ __ ________________________ . . Miscellaneous1__ ____________________________ ________ Buying clubs___ ___ ___________________ ________________ . Petroleum associations___________ __ _____________ _____ Distributive departments of marketing associations _ _____ 318 93 62 5 12 139 7 38 442 55 1, 239, 575 149, 869 261, 245 99, 558 30, 589 684, 755 13, 559 5,921 2, 352, 290 1,323,094 3, 903 1, 611 4,210 19, 912 2, 549 4,926 1, 937 156 5, 321 24,056 1 Includes mail-order, artists’ supplies, clothing, and “ other household supplies’ ’ associations. The rates of patronage refund for the 644 associations reporting on this point are shown in table 19. The most common rates for the store associations were from 2 to 6 percent, whereas those for the petroleum associations were 5 to 6 and 10 to 11 percent. Table 19.— R ates 1o f P atronage R efu n ds b y D istribu tive Cooperatives on 1 9 3 6 B u sin ess Number Percent Total associ ations Store associ ations B uy ing clubs Petro leum associ ations All ra tes................................... .......... 644 267 23 354 Under 1 percent__________________ 1 and under 2 percent______________ 2 and under 3 percent______________ 3 and under 4 p ercen t______________ 4 and under 5 percent--------------- ------5 and under 6 percent_______ ______ 6 and under 7 percent_______________ 7and under 8 percent............... .......... 8 and under 9 percent______________ 9 and under 10 percent______________ 10 and under 11 percent____________ 11 and under 12 percent- . ________ 12 and under 13 percent____________ 13 and under 14 percent____________ 14 and under 15 percent____________ 15 percent and over_______ __ . . . _ 3 28 64 80 62 110 66 46 48 15 61 6 12 6 6 31 1 19 47 43 33 42 19 17 20 4 13 1 Percent of patronage refund 1 8 1 6 2 3 5 3 1 1 1 2 9 16 31 27 65 42 29 25 11 47 4 11 6 6 23 v Total associ ations Store associ ations B uy ing clubs 100.0 100.0 100.0 .5 4.5 9.9 12.4 9.6 17.1 10.2 7.1 7.5 2.3 9.5 .9 1.9 .9 .9 4.8 .4 7.1 17.6 16.1 12.4 15. 7 7.1 6.4 7.5 1.5 4.9 .4 Petro leum associ ations 100.0 4.4 26.1 8.7 13.0 21.7 13.0 4.4 4.4 4.4 3. 0 .6 2. 5 4.5 8.8 7.6 18.4 11.9 8 2 7.1 3.1 13.2 1.1 3.1 1. 7 1.7 6. 5 1 Percentages are in terms of annual business (sales). Taking only those associations that reported as to both patronage refunds and membership, it was found that the average saving per member for the store associations of all kinds was $13.42, and for the petroleum associations $13.87. The average for the various organiza tions was as follows: Store associations handling— Groceries_________________ General merchandise____ Students7 supplies_______ Fuel______________________ Farm supplies___________ Miscellaneous____________ Petroleum associations_______ Average patronage refund per member — _ $ 8 .9 4 ___ 18. 13 ___ 6 .2 9 1 2 .5 6 ___ 17. 89 19. 71 — 1 3 .8 7 48 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES Cooperative associations are quite generally undercapitalized and in many places have voted to pay the patronage refunds either partly or wholly in shares credited to the individual member. Others are increasing the capital requirements per member. One association has raised the share requirements from one to five shares; the 4-percent patronage refund for 1936 was paid in merchandise orders to all owning the required five shares, and the others received 2 percent applied to the purchase of shares and 2 percent in merchandise orders. Although the margins in the grocery business are small, some of these local associations have an enviable record of savings to their members. A number of those for which reports for 1936 were received had returned patronage refunds through all the years of the depression. One store association in Wisconsin returned $15,809 in dividends for the years 1933-36; its sales in 1936 were $116,570. One Nebraska association has returned refunds every year since its organization in 1916, amounting to $108,398. An outstanding Ohio organiza tion established in 1908 has had sales totaling $7,645,224, on which patronage refunds aggregating $259,334 have been returned ; and this in spite of the fact that it is located in the coal fields where unemploy ment and general economic disorganization have been rife. The records of the petroleum associations are even more striking, and the rate of refund in this line of business has been higher than in the merchandising business, as the margins are greater there. As regards patronage refunds, the nonmembers are on the same footing as members in 393 associations. Of these, 36 specified that they paid the refund to nonmembers in cash, 270 that it was applied on the purchase of one or more shares of stock required for membership in the association, and 6 that it was paid in merchandise or shares. One farmers’ association specified that the nonmember patron received the full rate of refund only if he was a producer. Refunds at half the members’ rates were reported by 19 associations, payable in 3 cases in shares; 1 association paid 2 percent less than to members and 1 paid “ a little less.” Replying as to patronage refunds to nonmembers, 259 associations said they make no returns whatever to them. Six associations stated that the surplus accruing from nonmembers’ patronage was placed in the educational fund, nine that it was placed in the reserve fund, one that it was used as working capital, and one that “ it all goes to the members.” Such practices by cooperative associations are open to serious criticism and put the associations in the position of making a profit on nonmembers’ trade, especially where such trade constitutes any considerable proportion of the total business. P rop ortion o f G oods P urchased F rom Cooperative Sources The proportion of supplies purchased by local cooperative associ ations from cooperative sources is indicated in table 20. As it shows, R E T A IL D IS T R IB U T IV E 49 A S S O C IA T IO N S nearly one-four fch of all associations reporting purchased none of their stock of goods from other cooperatives. At the other end of the scale are nearly one-third of the associations which obtained 90 percent or more of their inventory from cooperative wholesales and other coop eratives. To some extent, of course, this table is an indication of the extent to which cooperative goods may be available. Not all parts of the United States have cooperative wholesales. Also, even in territories with such facilities, not all of the goods handled by the local cooperative associations can be obtained in this way. Table 20.— D istribu tion o f A ssocia tion s A ccord in g to P rop ortion o f Goods P urchased F rom C ooperative Sources Percent Percent of goods purchased from coop erative sources Total reporting Store associ ations Buying clubs Petrole um asso ciations Distrib utive depart ments of market ing asso ciations Other associa tions A ll associations: Number reporting___________________ Percent______________________________ 1, 605 100.0 716 100.0 85 100.0 662 100.0 129 100.0 13 100.0 N one____ ___________________ ______ Under 10 percent________________________ 10 and under 25 percent__________________ 25 and under 50 percent__________________ 50 and under 75 percent _ __ _____ 75 and under 90 percent__________________ 90 and under 100 percent. _______________ 100 percent_______ . . . ______________ .. 23.2 6.0 9.7 8.2 10.8 9.7 18.3 14.4 27.8 7.8 13.0 11.9 14.8 11.2 9.8 3.8 22.4 2.4 14.1 11.8 7.0 5.9 9.4 27.0 16.3 3.5 5.1 3.5 5.9 8.5 30.7 26.6 29.4 10.1 12.4 9.3 17.0 10.1 8.5 3.1 61.5 15.4 7.7 7.7 7.7 A n n u a l Stock T u rn -O ver The associations which reported as to number of times the mer chandise is turned over in the course of a year are shown in table 21. Table 21.— A n n u a l Stock T u rn -O ver in Specified T yp es o f D istribu tive Cooperatives , 1 93 6 Percent of associations with specified number of stock turn-overs N um ber of stock turn-overs Less than 3___________________ 3 and under 4_________________ 4 and under 5 - . . _____________ 5 and under 6___________ _____ 6 and under 7_________ _____ 7 and under 8 ______________ 8 and under 9..............__ __ 9 and under 10. _ ________ ____ 10 and under 11_______________ 11 and under 12 12 and under 13........................ 13 and under 14 _____________ 14 and under 15 ........... .......... 15 and under 16 ______ __ __ 16 and under 17__ ____ _______ 17 and under 18_______________ 18 and under 19 _____ 19 and under 20 __ ________ 20 and over___ ______ _____ T otal__________________ All types of associa Groceries tions 4.3 2.7 6.6 4.6 8.0 3.6 7.2 3. 0 13.0 1. 7 13.4 1.9 3. 7 4.6 1.9 1.4 2.2 .7 15.7 100.0 2.2 3.0 6.0 6.0 6.0 4.5 9. 7 3. 7 9.0 14.9 1.5 .7 6.0 1.5 1.5 3.7 1.5 18.7 100.0 Store associations handling— General merchan Students’ supplies dise 3.2 4.3 14.0 10.8 15.1 7.5 5.4 6.5 9.6 1.0 10.8 2. 2 2.2 1.0 16.7 33.3 16.7 16.7 16.7 Fuel 6.7 6.7 6.7 6.7 13.3 10.0 10.0 6. 7 13.3 13.3 3.3 1.0 1.0 4.3 100.0 100.0 3.3 100.0 Farm supplies 6.0 1.5 6.7 1.5 6.0 1.5 4.5 2.2 17.9 2. 2 13.4 .7 3.0 3. 7 1.5 3.7 2.2 .7 20.9 100.0 Petro leum as sociations 4.4 1.1 3.1 2.1 6. 3 1.1 8.0 1.1 14.4 3.1 14.4 3.1 7.4 7.0 3. 7 2.6 17.9 100.0 CONSUMERS’ COOPERATION IN THE UNITED STATES 50 Production by Local Cooperatives Generally cooperative associations carry on most of their productive activities through federations owned by the local associations. This combination of effort permits manufacture or performance of service on a scale larger than the average local association can finance and also avoids duplication of productive plant. Cooperative production is still in its infancy in this country, but promising beginnings have been made by some of the wholesales and by separate productive federa tions formed for the purpose.9 A few of the local associations have also undertaken certain pro ductive activities— generally of commodities (such as bakery goods) requiring immediate sale or suitable for local distribution or consump tion. Quite a wide variety of goods was manufactured by the asso ciations in 1936, as is evident from the following table. Altogether, 74 local associations carried on some productive activity in 1936. The 45 associations which reported the value of their product had an output in that year valued at $1,192,997. It should be emphasized that the figures for bakery products shown in this table do not include the value of bakery goods produced by the bakery associations (which have already been included in the sales figures for those associations). They cover only the output of bakeries carried on as auxiliary departments of distributive or service associations. T ab le 22 .— V alue o f G oods M an u fa ctu red b y R eportin g D istribu tive A sso cia tion s Com m odity produced Value of products All products_______ ___________ _________________ 45 $1,192,997 Bakery products_________________ _____ __________ Dairy products (butter, ice cream, cottage cheese, etc.)- _ ___________ ______________ - ___ ____ Jams, jellies, and cosmetics. . ______________ ____ _ Canned g ood s.. _____________________ . . . ______ Syrups . . . _ __________ _________________________ Meat products: Sausage___________________ ____________________ Smoked meat________________ _ __________ Meat slaughtered and processed________________ Clothing, custom _____________________ ___________ Fuel: Briquets and fuel stokers-------------------------------Lum ber________________ _ ___________ __________ Electric power (generated)_________________________ Flour ________ ______ _ __ ___ . . ____________ Grinding of corn, etc., for m eal___________ _________ Feed______________ _______. . . ____ ______ _________ i4 201,858 22 1 1 i 1 144,121 1,500 1 2 3 4 9 Number of associations reporting 37 0 ) 1 1 1 1 1 12 2 4 20 100 734 50, 549 ) 35,495 24,000 500 0 1 2 ,0 0 0 22, 753 9,853 1 0 0 ,0 0 0 589, 534 N ot including 1 association which did not report value of goods produced. N ot including 3 associations which did not report value of goods produced. N ot including 2 associations which did not report value of goods produced. N ot including 2 0 associations which did not report value of goods produced. The federations and their productive activities are covered in chapter 7, , 1936 51 RETAIL DISTRIBUTIVE ASSOCIATIONS Financial Data SHARE C A P IT A L Share capital aggregating $23,669,613 was reported by 1,603 asso ciations— an average of $14,766 per association. Details for the various types of associations are shown in table 23. T able 2 3 .— Share C apital o f R ep ortin g D istribu tive C ooperatives at E n d o f *1936 Number of associations reporting Major business All associations. _ _ ____ ________ ____________________ _____ Amount of share capital Average per association 1 1,603 $23,669, 613 $14,766 752 218 190 4 54 275 9, 634,138 1, 593, 540 2, 679,494 13, 589 882, 074 4, 389, 467 75, 974 19, 854 4,992, 205 8,059, 027 77,195 839, 486 47, 708 12 , 811 7, 310 14,103 3, 397 16, 335 15, 962 6,907 451 7, 473 63,960 Stores . _ ____ __ ______ __ ____________________ Groceries______________________________________________ General merchandise___ ___ ___________ ___________ _ Students’ supplies________________________ ____ _______ Fuel___________________________________________________ Farm supplies___ _________________ ____ ____________ M iscellaneous2. . __________ ________ ____ ____________ ____ _______________________________ Buying clubs_ __ Petroleum associations______ _____ _________ ______________ Distributive departments of marketing associations________ Bakeries_____ __________ ___ _____ _________________ _ Creameries_____ ________________________________________ Water-supply associations _______________________________ 11 44 668 126 6 4 3 1 2 ,8 6 6 209, 872 15, 903 1 N ot including 32 nonstock associations distributed as to type as follows: 18 store associations, 7 buying clubs, 5 petroleum associations, and 2 distributive departments of marketing associations. 2 This group includes mail-order associations, clothing associations, ‘ ‘other household supplies” associa tions, and art-supply associations. T able , 2 4 .— Share C apital o f R eportin g D istribu tive Cooperatives b y T yp es and , b y States 1 93 6 Total associations State United States N um ber re porting ______ _ Arkansas__ _ ________ California__ __________ Colorado________ ______ Connecticut___ ____ Delaware_______ __ District of Colum bia___ Florida_________________ Idaho_________________ Illinois____ ____________ Indiana....................... ....... Iow a___________________ Kansas_______________ K entucky. ____________ Maine ______________ M aryland_____ ________ Massachusetts_____ ____ M ichigan______ ______ Minnesota______________ Missouri- _____________ Montana _______ ___ Share capital 1,603 $23, 669, 613 2 31 13 10 1 2 1 16 135 62 81 143 3 7 5 25 81 222 42 46 515,910 6,159, 507 69,136 67, 755 109 1,640 800 94,052 2,145, 714 933,035 704,280 1, 515,119 14, 379 53,154 23, 598 162, 8 7o 986, 809 2,977, 228 282, 318 331,118 1 N ot including 24 nonstock associations. 2 N ot including 10 nonstock associations, s N ot including 8 nonstock associations. Store associations N um ber re porting Share capital i 752 $9, 634,138 2 22 4 8 515, 910 146, 645 18, 560 66,648 Petroleum asso ciations N um ber re porting 3 62 34 20 51 3 7 5 21 66 97 28 4 800 56, 382 908, 971 533,297 295,594 492, 770 14, 379 53,154 23, 598 136,496 848, 909 1,061, 364 198,200 120, 640 N um ber re porting Share capital 3 183 $9,043, 270 2 668 $4, 992,205 9 6 , 0 1 2 , 862 7 38,197 2 2 1 12, 379 1,107 109 • 1 Share capital Other 1 1,390 1 250 13 60 25 37, 670 1,084,114 291, 673 13 152,629 108, 065 54 47 301,531 268,958 45 3 16, 663 887, 490 37, 325 185, 678 17 9 3 7 4 108 5 39 12 3 107,155 753,391 26, 379 121, 237 1,028, 374 46, 793 24,800 CONSUMERS’ COOPERATION IN THE UNITED STATES 52 T a b le 24 .— Share b y States, 1 9 3 6 State N um ber re porting North C a r o lin a ..-_____ North Dakota___ ____ Ohio____ ____________ O k la h om a .______ _____ Oregon_________________ 122 2 7 2 39 2 61 72 12 17 Pennsylvania___________ Rhode I sla n d ________ _ South Dakota__________ Tennessee Texas_________________ 28 U tah___________________ Verm ont______ ________ Virginia___________ ____ Washington____________ West Virginia__________ 4 W isco n sin _____________ W yom ing ___________ 1 35 4 21 $1, 810, 368 252,350 254,104 73, 628 297,039 1, 601, 795 19,932 Petroleum asso ciations N um ber re porting Share capital $301, 622 12 59, 720 4 7 82,963 24, 434 3, 775 18, 820 73, 628 9, 570 2 28,181 96, 625 421, 502 38, 660 35, 604 50 21 6 11 343, 013 69, 739 37, 905 30, 720 1 6 3 2 1 22 8 81 1 179, 356 6 , 800 172,079 17, 650 51, 798 2,706 5, 530 2, 325 179,095 89, 990 938, 663 9,002 Share capital 14 2 2 14 3 N um ber re porting $376,694 227, 749 26 Other 58 25 7 44 5 4 185,046 6,800 375,399 18, 648 141,086 189 4 Share capital 50 $1,132,052 2 252, 350 7 254,104 28,181 522, 601 515, 675 80, 340 85,144 8 41 N um ber re porting Share capital 3, 489 5, 530 6,129 257, 803 89,990 2 2 — Continued Store associations Total associations • Nebraska______________ N ew Hampshire________ N ew J e r s e y ...____ __ _ N ew Mexico __ _ __ _ N ew Y ork_____________ , C ap ital o f R ep ortin g D istrib u tive C ooperatives b y T yp es and 1 2 1 5,540 1 150 18 169,985 3 1 15 33, 335 998 89, 288 3 46,806 7 75,117 1 783 1 3, 804 31,902 16 101 3 588,015 10,930 TO T AL ASSETS Assets aggregating nearly 46 million dollars were reported, of which the store associations alone had more than 20 million, but nearly 13 million were attributable to the petroleum associations. Regarding the distributive departments of the marketing associations it should be pointed out that their assets represent mainly the resources accu mulated in the course of a marketing business. T able 25 .— A ssets o f R eportin g D istribu tive Cooperatives at E n d o f 1 9 3 6 Number of associations reporting M ajor business All associations.. ________________ _________________ ____ __ Store associations. _________ _________________ _______ _ . Groceries 1_______ _______ _ _______________ ______ General merchandise. __________ _______ ___________ ___ Students’ supplies._ _. __________________ ____ _______ Fuel. . . ________ __________________ ____________ _____ Farm supplies_____ _________ ________________ . . . ____ Miscellaneous2_. ... _ ____ _ _____ . Buying clubs _____ _ ____ ________ _ ___________ Petroleum a ssocia tion s..__ _____________ _____ ___________ _ Distributive departments of marketing associations_____ _ B a k e rie s.______ _______________ ________ ______________ _ C ream eries___ ___________________ _____ . . . ________ _ ... Water-supply associations _______ ______ ____________ 1 Includes also those handling meats. 2 This group includes clothing, art supplies, Am ount of assets Average per association 1,534 $45, 752, 538 $29,826 723 2C9 178 20,077, 206 3,102, 083 5, 894, 325 902, 932 904, 758 9,052,090 2 2 1 , 018 35,043 12,937, 282 11,016,487 322, 769 1,287, 338 76,413 27,769 14, 842 33,114 90, 293 24,453 32, 797 17,001 746 20, 342 94, 970 53, 795 429,113 25,471 10 37 276 13 47 636 116 6 3 3 mail-order goods, and “ other household” goods. RETAIL DISTRIBUTIVE ASSOCIATIONS 53 The amount of assets, on a geographic basis, is shown in table 26. T able 26 .— D istribu tion o f A ssets o f C onsum er C ooperatives, b y T yp es and b y States, 1 93 6 State United States___________ A labam a.. ____________ Arkansas_________ _____ California . _________ ___ _ . C olorado.. . . Connecticut_____________ Total associations Store associations N um ber re port ing N um ber re port ing Amount 1,534 $45, 752, 538 2 2 38 11 10 Amount 723 $20,077, 206 6,806 712,992 7,868,526 133,916 217,115 2 2 29 3 8 6,806 712,992 672,824 10,881 214,661 100 780 1,823 1,577 286,557 3,554,779 42 1, 577 66,752 904,579 Indiana_________________ Iow a_____________ . . . .. Kansas__________________ Kentucky _ __ _ Maine . . . _____ _____ 71 76 132 4 9 2,252,025 1,609,896 2, 644,667 53, 297 255,924 37 19 44 3 9 1,183,630 347,315 597, 634 41,693 255,924 M a ry la n d ..___ _________ Massachusetts Michigan_______________ Minnesota_______________ Missouri________________ 5 25 73 102,626 1,419,430 1, 944,034 6 , 730,177 472, 261 5 61 90 25 102,626 1, 322,159 1,665,997 2,448,319 322,452 Delaware ________ District of Columbia____ Florida . . . ___ ___ Idaho_______ . .. ... Illinois__________________ M ontana------------------------Nebraska____ _________ New Hampshire ________ New Jersey _____ _____ New Mexico . _______ New Y ork_______________ North Carolina _ ____ North D a k o t a .___ _____ Ohio___ _____ _ . -. . Oklahoma. . ___________ Oregon____ _____________ Pennsylvania Rhode Island South Dakota_____ _____ Tennessee 1 o 1 14 210 37 45 110 3 8 2 45 1 58 72 12 21 24 1 30 4 22 547, 609 2, 978, 702 474, 741 442,050 184, 731 4 47 3 862,121 26,385 1,046,656 1,538, 611 181,938 27 8 1 5 46 5 317,904 440,481 15, 749 677, 272 594,863 7 23 6 1 1 Texas______ ______ _____ U tah____________________ Vermont ___ Virginia W ashington. ............. ....... 29 3 4 46 575,194 5,848 47,045 36,748 869,951 West Virginia _ _ ___ W isconsin_______________ W yom ing__ _________ _. 7 181 4 118,918 3,413, 595 8 6 , 218 1 1 2 NET 1 14 3 3 26 7 80 1 Petroleum asso ciations N um ber re port ing Amount 636 $12,937, 282 Other associa tions N um ber re port ing 175 $12, 738,050 9 1 2 7,195,702 23, 745 2,454 1 ,6 8 8 1 1 780 135 219,805 2,478,987 12 171, 213 3 5 43 151, 701 118, 500 1, 503,450 7 99, 290 1 12 46 1 916,694 1,144,081 543, 583 11,604 3 104 3 79,659 2,504,649 43,347 3 9 16 9 97, 271 198,378 1, 777, 209 106,462 142,471 1,681, 649 474, 741 442,050 38 50 304, 736 905,718 3 13 100,402 391,335 2 184, 731 579,240 26,385 150,195 1,164,552 82,752 3 40,344 15 242, 537 49 4 20 6 717,464 310,156 84,867 6 1 178, 997 63, 903 14, 319 12 1 75,013 23,002 2 43, 676 14 347,975 2 1 26, 242 2, 203 18 425,800 4,448 5 33,146 2 73,698 7 220,592 199, 215 417,479 15, 749 303,055 592,660 116,248 1,400 47,045 26, 244 660,620 118,918 1,940,449 15, 268 31 52 45 Amount 2 18 10,504 135,633 94 3 1, 252, 554 70,950 1 W ORTH A net worth of nearly 37 million dollars was reported, of which somewhat under one-half was that of the store associations. 54 CONSUMERS’ COOPERATION IN TH E UNITED STATES T a b le 2 7 .— N e t W o r th o f R e p o r t in g D is t r i b u t i v e C o o p e r a tiv e s a t E n d o f 1 9 3 6 Number of of net associations Amount worth reporting Major business Average per association All associations_________________________________ _ ________ 1,529 $36,893,273 $24,129 Store associations_________________________________________ __ Groceries 1_______________ ________ ______________________ General merchandise—........................................ _ _____ . . . Students ’ supplies_____ _________ ____________ _________ Fuel______________ _________ ____________________________ Farm supplies. ______________ ____ _______ _____ _______ 4 ______ _____ ___________ M iscellaneous ____ _ ________ Buying clubs___ __________ _____________________________ . Petroleum associations___________________ _____ _____________ Distributive departments of marketing associations__________ Bakeries_______________ _______ ________________________ ____ Creameries. __ ______________________________ __________ W ater-supply associations____ ____ _________ ______ ___ ____ 726 2 208 3 173 16,127, 283 2,329,921 4,569,420 760,304 1,296,427 6 , 989,519 181,692 26,362 10,026,823 9,479, 461 107,067 1,049,864 76,413 22,214 10 46 277 12 51 «628 8 115 M 82 3 1 Includes associations handling meat. 2 N ot including 5 associations with combined deficit of $6,787. 3 N ot including 5 associations with combined deficit of $26,777. 4 Includes associations handling art supplies, clothing, mail-order 1 1 ,2 0 2 26,413 76,030 28,183 25, 233 15,141 517 15,966 82,430 26, 767 524,932 25,471 goods, and “ other household” goods. 6 Not including 5 associations with combined deficit of $3,956. N ot including 1 association with deficit of $14,687. 7 N ot including 2 associations with combined deficit of $25,741. 8 N ot including 1 association with deficit of $7,235. 8 That the majority of the cooperative associations are still small, from the point of view of net worth, is shown in table 28. Just 45 percent had a net worth of less than $10,000, and another 30.2 percent had a net worth of from $10,000 to $25,000. Altogether 93.1 percent had a valuation of less than $50,000. At the other end of the scale were six associations worth half a million or more. There were 19 associations which had lost all of their capital and were “ in the red,” but in the case of 8 of these the deficit was less than $1,000 each. T able 2 8 .— D istribu tion o f D istribu tive Cooperatives b y N et W orth at E n d o f 1 9 3 6 T yp e of association Net worth of— Total asso cia tions $1 0 ,000 $25,000 $50,000 $100,0 0 0 $250,000 $500,000 $1 ,0 0 0 ,0 0 0 and re Under and and and and and and port $1 0,000 under under under under under under over ing $25,000 $50,000 $1 0 0,000 $250,000 $500,000 $1 ,0 0 0 ,0 0 0 A ll associations_____________ 1,529 690 462 272 83 14 2 3 726 51 628 319 51 296 202 149 44 7 2 3 216 83 30 3 115 4 22 40 3 39 1 8 4 Store associations 1__________ Buying clubs_______________ Petroleum associations 2____ Distributive departments of marketing associations 3___ Bakeries 4 _ _ _ ___________ Creameries 3 ______________ Water-supply associations.. . 1 2 3 2 1 3 2 1 1 N ot including 10 associations with deficits, as follows: 4 with deficit of less than $1 ,0 0 0 ; 4 with deficit of $1,000 and under $5,000; and 2 with deficit of $5,000 or over. 2 N ot including 5 associations with deficits as follows: 4 of less than $1,000 and 1 of $1,000 and under $5,000. 3 N ot including 1 association with deficit of $5,000 or over. 4 N ot including 2 associations with deficits of $5,000 or over. The geographic distribution of consumer cooperatives reporting as to their net worth is given in table 29. 55 RETAIL DISTRIBUTIVE ASSOCIATIONS T able 29 .— N e t W orth o f R eportin g D istribu tive C ooperatives, b y T yp es and b y States , 1936 Total associations State United States.......... .......... Alabama__ ____ ________ Arkansas...... ...................... California_______ _____ Colorado________________ Connecticut_____________ Delaware___ ____________ District of Columbia____ Florida__________________ Id a h o.................. ................ Illinois_______ __________ Indiana.____ ___________ Iow a________ ___________ Kansas__________________ Kentucky__________ ____ M aine___________________ M aryland. _____________ Massachusetts___________ Michigan________________ Minnesota______________ M is sou ri.._____ ________ M on ta n a ............................ Nebraska_____________ New Hampshire. ______ N ew Jersey______________ N ew M exico____________ N um Num ber re Net worth ber re port port ing ing 1,529 $36,893,273 1 1 "-'r _ . : : r 2 8 , 651 2 516,414 37 6,871, 298 11 81,284 11 188,028 1 1 1 Amount 726 $16,127,283 ■ ' -- —1 1—t ; 2 8,651 2 516, 414 442,109 28 3 7, 734 9 185,585 14 134 4 61 1,245 1<49,971 1,368,313 69 71 125 4 7 1,794, 266 1,153,541 2,079,535 38, 033 159,901 336 4 17 8 42 3 87 993, 257 346, 590 545,250 32,048 159,901 5 63,976 991,930 1,370,068 5,128,819 414,426 5 ®2 0 ii 58 91 27 63,976 949,355 1,136, 598 1,913,249 271,171 406, 978 2,387, 559 368,087 208, 801 152,028 3 44 3 9 34,472 1,343, 253 368,087 208,801 440,186 10,496 932,168 1,023,523 169,592 24 353,325 10,496 147,463 815,919 119,769 215,846 365, 640 15,565 653, 767 572,835 7 23 22 71 211 40 40 102 3 9 2 44 Oregon______ ___________ Pennsylvania_________ Rhode Island____________ South Dakota___________ Tennessee...................... . 21 Texas_______ ___________ U tah________ ______ _____ Verm ont________________ Virginia__________ _____ _ Washington...................... . 24 3 2 58 76 13 24 1 31 3 1 2 6 47 7 1 13 14 2 15 4 16 1 3 46 373,230 1,883 42,549 15,274 615,604 7 175 113,465 2, 748, 975 1 6 ,0 0 0 7 77 (19) 2 Petroleum asso ciations N um ber reporting 1 Amount Other associa tions 1 Num ber re port ing 2 2 26 133,986 353,361 15,565 262,060 571, 837 9 6 59,652 1 1 , 688 10 60 128,871 2, 332,086 3 30 6 50 43 650,344 704,889 420,209 5, 985 1 2 2 6,429,189 13,898 2,443 1 804 13 210,074 3 4 7 40 150,665 102,062 1,114,076 io 2 42,575 159,895 1,445,762 81,818 73, 575 1, 769,808 61,437 18 9 1247 304,039 738,174 11 2 152,028 3 102 4 34 10 3 68,467 306,132 3 11, 771 is 17 75,090 48 4 5 620,928 167,378 43,591 8 1 163, 777 40, 226 6 , 232 12 1 62,921 12, 279 2 18,939 15 341, 754 3 1 49,953 998 4 17, 397 21 49,938 800 42,549 4, 770 455, 907 16 18 10, 504 85, 999 2 73,698 113,465 1,630, 043 17 92 953,935 18 6 164, 997 1 6 ,0 0 0 2 1 305,895 1,083 1 Buying clubs, distributive departments of marketing associations, and miscellaneous. 3 N ot including 1 association with a deficit of $1 0 . s N ot including 1 association with a deficit of $713. * N ot including 1 association with a deficit of $15,349. ®N ot including 1 association with a deficit of $1,138. 6 N ot including 1 association with a deficit of $106. 7 N ot including 1 association with a deficit of $14,687. 8 N ot including 1 association with a deficit of $7,211. ®N ot including 1 association with a deficit of $810. N ot including 1 association with a deficit of $6,171. ii N ot including 1 association with a deficit of $2,197. 13 N ot including 1 association with a deficit of $476. is N ot including 1 association with a deficit of $19,570. ii N ot including 1 association with a deficit of $4,861. ifi N ot including 1 association with a deficit of $1,464. i® N ot including 1 association with a deficit of $1,000. 17 N ot including 2 associations with a deficit of $1,629. 58 N ot including 1 association with a deficit of $7,235. i 0 N ot including 1 association with a deficit of $556, Amount 628 $10,026,823 175 $10,739,167 ■ - . i^ ^ ■■■ ■ —; -- ------ ;-------- 804 1 ,6 8 8 I! 245 278,842 3,910,473 New Y ork _______________ North Carolina__________ North Dakota___ _______ Ohio____ _______________ Oklahoma_______________ West Virginia.................... Wisconsin_______________ W yom ing...................... . Store associations 56 CONSUMERS’ COOPERATION IN THE UNITED STATES Cooperatives in Relation to Population A tabulation of some 1,900 distributive cooperative associations re porting to the Bureau for 1936 is given, in relation to the population, in table 30. Although based upon only about 60 percent of the number of such associations known to have been in operation in that year, it is believed to be representative of the general cooperative picture. In making this table many adjustments were necessary. For in stance, many associations have branches in various towns, in addition to the headquarters establishment. In such cases, a proportionate part of the total membership and of the sales of the association was assigned to each of the towns in which a branch was located. An association with three branches in separate towns would therefore ap pear in the data in four places, although in the majority of cases the data cover organizations all of whose activities are in a single locality. As regards the membership figures shown in the table, two things which tend to offset each other should be borne in mind: (1) The data represent only persons who are paid-up members of reporting coopera tive associations, and take no account either of the members of their families or of persons with membership partially paid; were these in cluded, the proportion of population would, of course, be greater than the table indicates; (2) in the smaller places, many of the members may live outside the town in which the store is located, and if the asso ciation’s whole trading area is considered, the population would be considerably greater than that of the headquarters town which was here taken as the basis for comparison. Some of the associations operate on a county-wide basis. This is true of the Farm Bureau cooperative associations and of a number of petroleum associations. The 315 such associations reporting to the Bureau of Labor Statistics have been here treated in a separate group, and to have compared their membership with the population of the headquarters town would obviously have been extremely misleading. For such associations, therefore, the population of the entire county was used; in the case of the farmers7associations, however, the popula tion of the cities of 25,000 or over was subtracted, because they do little or no business in the cities. RETAIL DISTRIBUTIVE ASSOCIATIONS T able 57 30.— M em bersh ip , Sales, and N et E arnings o f D istribu tive C ooperatives in R elation to P opu la tion Distributive associations Population class N um Per ber cent All population classes- . . _ _ Under 500__________________ 500 and under 1,000_________ 1,000 and under 5,000 _______ 5,000 and under 10,000_______ 10,000 and under 25,000______ 25,000 and under 50,000______ 50,000 and under 100,000_____ 100.000 and under 500,000____ 500.000 and under 1,000,000___ 1,000,000 and over. _______ _ Members, 1936 Popu lation, 1930 N um Percent of popu ber lation 1,668 100.0 32,984, 657 304,258 547 311 431 99 68 42 31 59 19 61 32.8 18. 7 25.8 5.9 4.1 2.5 1.9 3.5 1.1 3.7 138, 586 209, 678 850, 319 613, 409 937, 367 1, 229, 719 1, 861, 582 7,851, 751 4, 386,037 14,906,209 60,866 47,900 89, 346 30,803 17,180 10,906 6,766 30,294 2,604 7,593 Sales, 1936 Amount Per cent of total Net earnings, 1936 Amount Per cent of total 0.92 $94,232,349 100.0 $4,125,058 100.0 47.40 23.85 11.16 5.42 1.92 .94 .36 .40 .06 .05 22, 272,728 17, 743,598 28, 384,659 11,297,163 4, 400,606 2,873, 616 975,074 5,206,926 332, 760 745, 219 23.6 889, 382 18.8 725,110 30.1 1,437,167 505,492 12.0 4.7 124,563 3.0 133,441 1.0 31,177 5.5 260,973 .4 3,441 .8 14, 312 21.6 17.6 34.8 12.3 3.0 3.2 .8 6.3 .1 .3 County-wide associations All population classes____ _ 315 100.0 9,975,660 137,700 Under 10,000________________ 10,000 and under 25,000______ 25,000 and under 50,000_ _ __50,000 and under 100,000_____ 100,000 and over_____________ 26 141 108 34 6 8.3 44.8 34.3 10.8 1.9 207,002 2,440,038 3,620,903 2, 251,810 1, 455,907 6,992 55,851 52,656 20, 789 1,412 1.53 36,000,587 100.0 1,961,148 100.0 3.60 1,345, 331 2.53 12, 558, 504 1.58 15,382,117 1.04 5,047,420 .11 1,667,215 3.7 34.9 42.7 14.0 4.6 90,004 614, 614 910,675 326,360 19,495 4.6 31.3 46.4 16.6 1.0 It will be noted that more than three-fourths of the 1,668 coopera tive establishments included in the first group in the table were in places of less than 5,000, and that from that point they declined abruptly both absolutely and in relation to population. These asso ciations had a combined membership of 304,258. Although ranging, in the various population groups, from only 0.05 percent of the popu lation in places of 1 million or over to over 47 percent of population in places of less than 500, for the whole number of associations the membership formed less than 1 percent of the combined population of the places in which they were located. Some 72 percent of the total cooperative business was done, and 74 percent of the total net earnings were made, by associations located in places of less than 5,000. The data for the population class of 100,000-500,000 are distorted by one unusually large association. Much less variation in development is shown in the county-wide associations. Altogether their members formed 1.53 percent of the population in the localities where they were operating. Farmers in the Consumers9 Cooperative Movement The consumer activities of farmers’ associations vary widely in different associations in their importance in relation to the total busi ness. As shown in table 32, 73 farmers’ associations reporting were entirely consumer organizations; they performed no farm market ing or processing functions and handled no producer supplies of any 9 0 6 2 1 ° — 3 9 --------5 58 CONSUMERS’ COOPERATION IN THE UNITED STATES kind. The majority of the farmers’ associations included in this report, however, were those handling mainly supplies used in the busi ness of the farm, but also handling sizable proportions of consumer goods. One group included associations whose major business was the marketing of farm products, but which had also set up departments for the collective purchase of farm products and household supplies. In this connection it is interesting to note that there was a small number of associations which had been organized for the purpose of marketing or processing farm products and whose names still indicated that this was their function (elevator, livestock association, creamery, etc.); in the course of time, however, their character had gradually changed and in 1936 they reported that their chief business was the purchase of supplies, not the marketing of farm crops or livestock. The farmers’ associations, classified by major line of business, are shown in table 31. T a b l e 31.— O p e r a tio n s , i n 1 9 3 6 , o f R e p o r t in g F a r m e r s ’ C o o p e r a tiv e A s s o c ia t io n s H a n d lin g C o n s u m e r G o o d s , b y M a j o r L i n e o f B u s i n e s s Membership Sales N et earnings Net worth N um ber of asso cia tions re port ing M em bers _____ 1,173 303,899 Store associations___ _____ __ Groceries-__ . _____ General merchandise___ Fuel____________________ Farm supplies--. -------M iscellaneous.. _______ Buying clubs. _____ _____ Petroleum associations_____ Distributive departments of marketing associations____ 567 83 113 52 313 6 1 474 117, 340 16,635 18,435 8, 382 72, 249 1, 639 80 162,949 584 92 114 49 322 7 1 498 54,613,053 5,164,062 8,072,048 5, 303,272 35,441,276 632,395 3,000 37,022, 054 482 64 101 42 270 5 1 441 1,712,872 128, 286 178, 376 164, 533 1,214,193 27,484 90 2, 745,900 495 73 98 41 277 6 429 7, 294,838 131 23,530 132 20, 360, 534 119 1, 581, 571 115 9,479,461 M ajor business AH associations—_ __ N um ber of asso cia tions re port ing Amount 1,215 $111,998, 641 N um ber of asso cia tions re port ing Amount 1,043 $6,040,433 N um ber of asso cia tions re port ing Amount 1,039 $28,427,078 11,652, 779 1,039,088 2, 206, 579 1,253, 387 6,989, 519 164, 206 The farmers’ store associations had an average volume of business generally considerably exceeding that of the other consumers’ asso ciations. Probably this was due in substantial degree to the much more extensive lines of commodities dealt in. Whereas in the other consumers’ associations the largest group (29.8 percent) had sales of less than $10,000 per year and about 70 percent of the total did a business of less than $50,000 annually, among the farmers’ associations about equal proportions fell in the groups doing an annual business of $25,000-$50,000 (24.5 percent), $50,000-$100,000 (25.7 percent), and $100,000-$250,000 (23.3 percent). Somewhat the same situation was shown among the associations handling petroleum products. There the largest group of the other consumers’ associations was that doing RETAIL DISTRIBUTIVE ASSOCIATIONS 59 an annual business of $25,000-$50,000, as compared with $50,000$100,000 among the farmers’ organizations. Comparative average sales of the farmers’ and the other consumers’ associations in 1936 are shown in the following statement: Other consum ers’ associations Farm ers’ associations Store associations (ail types)_____ Buying clubs____________________ Petroleum associations__________ Associations providing meals only Laundries_______________________ Printing and publishing_________ Burial___________________________ $93, 3, 74, 2, 23, 13, 510 000 342 474 150 121 938 $59, 5, 61, 75, 10, 10, 66, 907 295 978 226 000 756 568 There were 73 associations, with a combined membership of 8,520 and an annual business of $2,578,271, which were handling only con sumers’ goods in 1936. Data for these associations, by States, are shown in table 32. T able 32.— O p e r a tio n s o f R e p o r t in g F a r m e r s ' C o o p e r a tiv e A s s o c ia t io n s D o i n g C o n su m e r B u s in e s s O n ly , 1936, b y S ta te s Amount of— State N um N um ber of ber of asso m em cia tions bers A ll States-------- 73 Colorado_____ Illinois________ Indiana______ Iowa___ __ ____ Kansas_______ M aine________ M a ry la n d ____ M innesota. _ _ M issouri. _ __ M on ta n a ... . . . Nebraska_____ N ew Y ork ____ North D akota.. Oklahoma____ Pennsylvania.. South D akota.. W ashington___ W isconsin_____ 272 3 2 210 64 1 5 627 21 83,144 2 2 30 1 67 11 1,163 1 87 1 75 5 476 1 110 5 465 241 3 112 1 4 560 4 695 2 122 Amount of busi ness 8,520 $2,578,271 29, 351 29, 700 22,164 4 122, 611 8 574,069 230,294 15, 539 365, 477 15,943 26,934 182, 531 20,000 216,427 197, 597 19, 249 273, 392 147,741 89, 252 Gains Losses Total net earn ings Pa tron age re funds Share capital $42,663 $19, 558 $23,105 $13, 292 $569,534 $852,297 1,104 160 978 5 1,645 8 5,087 2 14 3 843 160 978 2 6 , 328 6 4,683 10 7, 391 11 2,304 2 261 OQQ 299 10,029 3 1, 743 is 8 , 286 8 7,416 5 7, 546 3 2,430 216 s 1, 524 5 3,646 2 583 474 3 2,131 500 3 485 2 69 176 1,104 149 3 5,100 17 4 74 5, 285 2 2,149 17 500 7,061 2,430 216 1,455 s 3, 646 407 3 2 2 2 1, 568 3 1,829 2 800 a 364 2 229 3 3,280 3 10,701 25,000 1,925 5,987 4 78,600 4 61,461 12119,096 13129,102 2 7,180 2 6 , 680 7,670 1,740 16 69,308 16117,579 8,700 10,800 17,807 45, 795 6 8 , 767 10,400 8,000 63,625 150,195 3 11,850 3 19, 527 1,274 46,020 75, 561 53, 665 108, 566 61,020 14,950 1 N ot including 1 society which reported a deficit of $15,349. 3 1 association. 3 2 associations. 4 4 associations. 5 3 associations. 6 Loss; 4 associations. 3 3 associations; not including 1 reporting deficit of $15,349. 8 20 associations. 9 7 associations. 4012 associations. ii Loss; 19 associations. I2 19 associations, is 18 associations. 14 6 associations. 15 8 associations; not including 1 which reported loss but did not state amount, is 10 associations. 17Loss. Assets Net worth 1 $690,096 3 7,554 2 9,500 5,541 7 67,982 12 69, 556 2 171 5,170 98, 579 13,818 64,135 10, 240 129, 313 17,936 3, 656 55, 483 70, 442 61,020 60 CONSUMERS* COOPERATION IN THE UNITED STATES The farmers’ associations accounted for $818,279 of the total value of goods produced (shown in table 22). Their manufactures were in a much more restricted field than were those of the other consumers’ associations. One association manufactured dairy products (to the value of $113,543), 1 manufactured sausage ($5,349), 1 manufactured flour ($9,853), 2 ground corn for meal ($100,000), and 20 made feed ($589,534). Chapter 3.— LOCAL SERVICE ASSOCIATIONS Summary The service associations present as varied a field of activities as do the distributive associations. They provide such services as housing (in the form of apartments or furnished rooms), electricity, meals, laundry work, automobile repair, recreational facilities, burial, lawn mowing, and cold-storage facilities. They present also a most varied aspect from the point of view of financial success, as this group con tains some of the most rapidly expanding as well as the most laggard types of associations. As regards money value of business, they range from the milliondollar operations of the housing associations to the very small turn over of the recreation and publishing associations which perform services that are important but which do not bulk large in terms of dollars and cents. At the end of 1936 the service associations were operating as principal enterprises 31 rooming houses, 31 restaurants, cafeterias, and dining rooms, 7 printing plants, 5 clubhouses or clubrooms, 4 laundries, 2 halls, 2 cooperative parks, 2 garages, a hospital, and a cold-storage plant. Auxiliary enterprises operated by this group included 5 retail stores, 2 bakeries, a warehouse, a laundry, a shoerepair shop, a gasoline service station, an automobile sales agency, a restaurant, and a rooming house. Data were not available for the electricity associations. Business Operations Summary data on the operations of the various service associations in 1936 and their financial status at the end of the year are given in table 33. 61 CONSUMERS’ COOPERATION IN THE UNITED STATES 62 T able 33 .— Summary of Operations of Local Service Cooperatives, 1936 Business done Membership T yp e of association Associ ations report ing A ll types. Associations providing— Meals only________________________ Rooms on ly________________________ Meals and room s__________________ Laundries and cleaning establishments. _ Medical-care associations______________ Garages_______________________________ Printing and publishing associations----Burial associations_____________________ Recreation associations________________ Housing associations___________________ Electricity associations_________________ Miscellaneous 4________________________ I ll 41, 641 15 3 6,809 576 2, 766 875 5,143 96 4,916 15,006 914 2,323 12 3 4 2 7 17 9 34 _____ Associations providing— Meals on ly . _ . . . ______ Rooms on ly ___ __ __ ________ M eals and rooms _____ _____ Laundries and cleaning estab lishments. . . _. _____ Medical-care associations. ____ _ __________ Garages__ ______ __ Printing and publishing associ ________________ ____ ations Burial associations___ _____ _____ Recreation associations____ _____ Housing associations______ _____ Electricity associations________ _ M iscellaneous4__________________ 11 3 10 2 2 2 6 12 2 33 2,217 3 Share capital Asso Asso cia cia tions Amount tions re re port port ing ing T yp e of association Associ ations report ing (3 ) 5 Patronage refunds All t y p e s __ ___________ Members Amount N et earnings Associ ations report ing Am ount $2,498,889 70 $40, 261 754, 738 9, 552 225,016 33,150 1,950 53,229 69, 264 63,189 6, 498 1, 281, 641 (3) 662 12 2 5 2 2 2 6 10 1 28 14,388 234 i 402 549 77 i 1, 718 i 2, 347 4,432 200 24, 848 (3) Total assets Asso cia tions re port ing Net worth Amount Asso cia tions re port ing 81 $4,438,324 54 $1,057,819 42 $770,828 Amount Amount 8 $5,497 5 3,425 11 2 8 125, 559 3, 680 22, 995 13 2 7 441, 597 7, 714 42,531 9 1 6 358», 921 4,048 14, 735 1 650 1 1 2 8, 777 109, 900 13,022 2 2 2 14, 574 112,689 143, 645 2 1 1 9,331 109,900 6, 250 2 1,422 6 12 4 32 19,398 31, 724 6,550 4,086,569 (3) 10,150 6 12 7 47,572 62,915 184,432 (3) (3) 150 6 11 4 36, 878 50,109 180, 506 (3) (3) 150 2 1 1 1 Loss. 2Gross revenue. 3 N o data. 4 This group includes local educational, lawn-mowing, and cold-storage associations. Combined data, by States, for the service associations (except the housing associations) are shown in table 34. LOCAL S E R V IC E 63 A S S O C IA T IO N S T able 34.— Operating Statistics of Local Service Cooperatives, 1936 [Data do not include housing associations, for which see p. 80] M em ber ship Asso cia tions M em bers re port ing State Business Asso cia tions re port ing Total T otal_______ 73 37,106 51 $1,216, 722 California___ Connecticut . Florida_____ Illinois______ Indiana..- _ Iowa________ M ichigan___ Minnesota. __ Missouri____ Nebraska___ New Jersey. . N ew Y o r k ... N . D a k ota .._ Ohio________ Oklahoma__ Oregon.......... Pennsylvania S. Dakota__ Texas______ W ashington. W isconsin. 2 1 1 6 2 5 7 19 1 1 1 8 1 2 1 1 2 1 1 2 8 1 1 1 3 2 1 7 16 1 1 1 5 2,958 5 44 4,488 103 2,075 826 7,265 90 60 499 9,368 380 760 2,485 35 23 3, 530 700 340 1,072 1 69,487 136 9,500 171,159 37, 662 4,170 111, 789 117, 660 1,223 928 12,807 489,175 (3) 10,000 N et earn ings Asso Asso cia cia tions Total tions re re port port ing ing l 42 $15,413 2 663 1 1 4 2 1 5 13 1 1 1 6 4,464 616 73 5,430 712 61 1,023 264 747 (6) 4 1 2 7 15 2 1 561 196 1 1 2 1 1 3 193 2,064 1 4 (6 ) (3) 14,891 3,920 40,000 56, 215 66,000 Total 49 $351,710 1 (3) 2 1 1 1 5 Share capital 1 1 5 1 560 150 (3) 13,881 5,000 8,634 7,400 41,816 (3) 1,055 21,264 109,107 3,800 (3) 109,900 750 1,329 3, 530 (3) 7,490 16,044 Assets Asso cia tions re port ing Net worth Asso cia tions re port ing Total 54 $1,057,819 1 1 1 4 1 2 7 14 1 1 1 7 1 1 1 1 2 1 1 5 14,483 150 2,000 5, 746 5,000 14,674 52, 855 69, 588 200 1,145 32,564 670, 462 15,000 380 112,489 1,200 6,657 5,440 (3) 20, 538 27,248 Total 42 $770,828 1 1 1 42 1 2 5 3 11 1 1 6 1 1 1 961 150 2,000 770 5,000 12, 705 25, 727 47,481 (3) 1,055 21, 378 494,479 15, 945 271 109,900 (3 ) 2 1 1 3 4, 354 5,440 (3) 7,314 15,898 1 2 associations had losses aggregating $727 and 40 associations gains aggregating $16,140; does not include 1 association with a loss, whose amount was not reported. 2 Loss. 3 N o data. 4 N ot including 1 association which had a deficit of $848. 5 N ot including 1 association which had a deficit of $1,797. 6 1 association had a loss, amount not reported. B U S IN E S S W IT H N O N M E M B E R S No information was available as to the proportion of nonmember patronage in the electricity associations. The income of the housing associations was from their own members. For the other service cooperatives the proportion of nonmember business reported was as follows: N um ber o f asso ciations None_______________________________________________________________ Less than 10 percent______________________________________________ 10 and under 15 percent__________________________________________ 15 and under 20 percent__________________________________________ 20 and under 25 percent__________________________________________ 25 and under 50 percent__________________________________________ 50 and under 75 percent__________________________________________ 75 and under 90 percent_________________________________________ 90 percent and over_______________________________________________ 7 4 4 1 2 1 7 7 2 64 CONSUMERS’ COOPERATION IN THE UNITED STATES IN T E R E S T O N S H A R E C A P IT A L Very few of the service associations paid interest on share capital. In the housing associations the share capital paid in represented the member-tenant’s equity in his apartment. Of the rates paid by the 54 other service associations reporting, only 5 paid interest on share capital— 2 at 5 percent, 1 at 6 percent, and 2 at 8 percent. SUPPLIES FROM C O O PE R A TIV E SOURCES Of 33 service cooperatives reporting as to the proportion of all supplies that was purchased from cooperative sources, the distri bution was as follows: Num ber of asso ciations None_______________________________________________________________ Less than 10 percent______________________________________________ 10 and under 25 percent__________________________________________ 25 and under 50 percent__________________________________________ 50 and under 75 percent__________________________________________ 75 and under 90 percent__________________________________________ 90 and under 100 percent_________________________________________ 100 percent________________________________________________________ 17 4 5 2 1 2 1 1 F ield s o f A c tiv ity A SSO C IA T IO N S SU P P L Y IN G M EA L S A N D L O D G IN G At the end of 1936 there were known to be in operation some 41 associations or groups supplying meals, lodgings, or both. Data were obtained for 31 associations in this class, of which 16 furnished meals only, 3 rooms only, and 12 both meals and rooms. Although definite restrictions on membership were not common, almost all of these represented homogeneous memberships, bound by ties of occupation or race. Thus, 14 were associations of students or faculty members of specified colleges or universities, 10 were asso ciations whose membership was overwhelmingly of a specific nation ality (i. e., 7 Finnish, 1 Russian, 1 Scandinavian, and 1 Ukranian), 3 catered to a definitely working-class membership (steel workers, auto mobile workers, etc.) and another to office and white-collar workers, 1 was restricted to the employees of a particular company, and 1 to office employees of a farm organization. A large proportion of these associations have been in operation a long time. Of the 30 whose year of establishment is known, 2 date from 1912, 2 were started in 1913, 2 in 1917, 1 in 1918, 3 in 1919, 1 each in 1920, 1922, 1923, 1924, 1926, 1931, 5 in 1932, 3 in 1933, 2 in 1935, and 4 in 1936. Their average age was 11 years. At the end of 1936 these associations were operating 16 restaurants, 13 cafeterias, 4 rooming houses, 28 boarding houses, 4 stores, a meat market, a warehouse, a bakery, a laundry, and a central kitchen LOCAL SERVICE ASSOCIATIONS 65 serving a number of boarding houses. In addition, two eating clubs occupied donated quarters and another association provided laundry service for its members through a contract with a local laundry. A combined membership of 10,151 was reported, and an annual business of $989,306. Although the students’ organizations do most of their business with their members, a very high proportion of non member business was reported by the others, being as high as 90 percent in one association and upward of 66% percent in seven others. In some of the older associations this was due to the moving away of the original members, though still retaining their shares, and to a lack of zeal in interesting patrons in joining. Besides the associations described above, whose main business is that of furnishing meals and lodging, five associations in other lines of activity were also operating restaurants and cafeterias, and one was running a clubhouse and one a rooming house. L A U N D R Y A N D D R Y -C L E A N IN G E ST A B L ISH M E N T S The Bureau of Labor Statistics had record of the existence of only seven associations operating laundries or dry-cleaning plants as their main activity at the end of 1936. Four of these furnished reports of their operations in that year. One reporting society was in New York, one was in Ohio, and two were in Wisconsin. Three were urban consumers’ associations and the fourth a farmers’ association, which, however, was doing most of its business with residents in town. The farmers’ association dated from 1914, but all of the others were started in 1935. Three of the associations operated one laundry each, the fourth having a dry-cleaning business. One also had a store in which cloth ing was sold and another had a shoe-repair department. A large propbrtion of nonmember patronage was reported. One association did only 10 percent of its business with nonmembers in 1936. The other three, however, reported 50, 70, and 80 percent, respectively. It would appear that if the customers in the community liked the cooperative service well enough to give the organization a large part of their patronage, here would be a good potential field of expansion, by direct persuasion or by crediting of patronage refunds. Only one association made sufficient net earnings in 1936 to be able to return a patronage dividend, and this was the association only 10 percent of whose business was with nonmembers: it returned patron age refunds to members only. M E D IC A L -C A R E CO O PE R A TIV ES Cooperative medical care is a type of service in which there is great public interest. This has grown out of the present system of the provision of medical attention. In spite of the enormous sums spent 66 CONSUMERS’ COOPERATION IN THE UNITED STATES annually in this country for physician’s services and hospitalization, yet a large group of our population cannot afford adequate medical care. Cooperators declare that this situation can be remedied, for individ ual groups, by adoption of the cooperative plan of medical care. This cooperative plan is characterized by payment for medical services on a periodic prepayment basis (via membership dues in the associa tion) ; furnishing of the services of physicians who are closely associated in what is known as “ group practice,” and are under contract to render specified medical services to members of the association for a consideration (usually annual) from the association; democratic control of the association on a nonprofit, one-vote basis. Such a plan, its supporters declare, (1) relieves the burdensome and sometimes catastrophic costs of unforeseen illnesses, by enabling the patient to budget the costs in advance, in the form of small periodic payments; (2) makes possible the sharing, among the physicians in the group, of the high cost of equipment, thus enabling them to offer service at a lower cost to the patient; (3) gives the physicians more time for actual practice by liberating them from the mechanics of “ building up” a practice and from the worries of financial and admin istrative details; and (4) gives the physicians, including the specialists, more time to continue research and keep up with the continuing ad vances in medical science. A number of “ group medicine” plans were in effect or in the plan ning stage at the end of 1936, but the Bureau of Labor Statistics has knowledge of only four such plans which were entirely cooperative— initiated and operated by the members (prospective patients) them selves. Reports were received from all of these— one in California, one in Indiana, one in Missouri, and one in Oklahoma. The Oklahoma association was the oldest cooperative medical organization in the United States, having been started in 1929. It was also the only farmers’ organization of the group, the members of the others being mainly town or city dwellers. One of the town associations was formed in 1933 and the other two in 1936. The farmers’ organization started with the idea of making hospitali zation its primary service. The others began with general medical care, with hospitalization secondary. In all except the farmers’ organization, the cooperative association furnished the services through a contract arrangement with local physicians and hospitals, using their facilities. The farmers’ association had its own hospital and equipment and full-time medical staff. Each of the four associations, and the basis on which it operates, is described in the following pages. Generally the data are as of the end of 1936, but important developments in 1937 are also noted. LOCAL SERVICE ASSOCIATIONS 67 During 1937 the subject of cooperative medical care received much publicity and many groups declared their favorable interest in the subject. The establishment of medical plans is known to be under consideration in various sections of the country. Early in 1937 groups in northern Wisconsin, already operating cooperative business enter prises, formed a health association to provide medical care by contract with local physicians and hospitals. Farm groups in western Wis consin held several meetings, with a view to establishing their own hospital. In a number of the Farm Security projects the settlers have started health associations with the assistance of the Federal Farm Security Administration. Among these are two known to have been formed in the San Gabriel and San Fernando Valley projects in California; others are reported to have been started in eastern Idaho and in New Mexico. The residents of Greenbelt, Md., a low-cost housing project just outside of Washington, D. C., formed such an organi zation early in 1938. The Home Owners’ Loan Corporation, in order to reduce the time lost through sickness by its employees in Washington, D. C., took the initiative in the formation of the Group Health Association, a medicalcare association on a cooperative basis. For this purpose it advanced $40,000. Although started primarily to care for employees of the H. O. L. C., the organization later opened its membership to employees of other Government departments and a number of them affiliated with it. It began operations November 1, 1937, and by February 1, 1938, had a membership of about 2,300. This organization provides general and specialized medical and hospital care, charging $2.20 per month for individuals and rates ranging from $4 upward (accord ing to number of dependents) for families. These cooperative medical associations have been under fire, since their inception, by local and national doctors’ organizations. In Oklahoma, in the fall of 1937 an initiative petition, seeking a State wide vote on a measure which would definitely legalize cooperative medicine, was filed by the Farmers’ Union with the secretary of state of Oklahoma. That official, after hearings, overruled petitions attack ing the sufficiency of the petition and declared it sufficient. From this ruling appeal was taken to the State supreme court which, in December 1938, had not rendered a decision. In the meantime a branch of another farm organization, the Farmers’ Equity Union, in another part of the State was reported to be taking steps to establish a cooperative hospital for its members. A bill to legalize consumers’ and producers’ cooperative medical groups and exempt them from the provisions of the State insurance laws was introduced in the 1937 session of the Wisconsin Assembly but was defeated.1 1 For a discussion of the legal status of cooperative m edicine, see p. 189. 68 CONSUMERS’ COOPERATION IN THE UNITED STATES F a rm ers9 U n io n C o o p era tiv e H o s p ita l A s s o c ia tio n The farmers’ association— The Farmers’ Union Cooperative Hos pital Association, at Elk City, Okla. (see fig. 5, facing p. 80)— was the only one of the medical group operating its own hospital. In the others, hospital care was arranged for on contract. As of December 31, 1936, it had 2,485 members, an increase of 285 over the same date of the previous year. Because of limited facili ties membership was restricted to 2,500 members. Up to this limit membership was open to anyone living in the district served by the association, upon subscription for one or more $50 shares. This constituted a family membership covering all members of the family living in the immediate household. The medical and hospital service was provided on the basis of annual dues ranging from $12 for one person to $18 for two persons, $22 for three persons, and $25 2 per family of four or more; these dues were payable quarterly or semiannually. This fee entitled every member of the family to the following services: Consultations, prescriptions, physical examinations (including laboratory analyses of blood, urine, sputum, etc.), and necessary medical treatment. For cases requiring hospitalization, the association furnished room, board, general nursing service, and the services of a special nurse, without additional charge; a charge of $1 per day was made to cover cost of laundry, medicine, serums, etc. Surgical operations were without additional charge, the only charge being for the cost of the anesthetics and other surgical supplies used in the operating room; this charge averaged from about $3.50 for minor operations to some $18 for major operations. Every mother, in addition to prenatal and postnatal care, was entitled to hospitalization during confine ment, upon payment of the regular laundry, etc., fee of $1 per day. Limited dental care, including examination, X-rays, and extrac tions, was also being provided for the membership. For medical attention at the members’ home a flat charge of $1.50 was made, plus 25 cents per mile of travel one way. For ambulance service the charge was $1, plus 10 cents per mile one way. Extra charges ranging from 50 cents to $3 were made for special services such as electric baths, violet-ray treatments, medical X-rays, etc. In 1937 the hospital added a special plan for members living in outlying sections who will receive treatment only when they require hospital care. Dues under this plan range from $6 per year for one person to $12 per year for families of four or more. In all of its work stress has been laid upon preventive measures, such as a periodical physical examination. It is felt that in this way serious illnesses have been prevented and the general level of health among the members has been raised. a Reduced in 1937 to $24. LOCAL SERVICE ASSOCIATIONS 69 The organization grew out of the efforts of a single physician who conceived the idea of a medical cooperative and was successful in enlisting the interest of some local cooperators. The organization was formed in 1929 and the first unit of the hospital was built in 1930. Later he interested the officials of the Oklahoma Farmers7 Union, whose members were already carrying on various cooperative business enterprises, and the farm organization became the official sponsor for the cooperative hospital. •Additions have been made to the original building and facilities, from time to time. At the end of 1936 the association owned a 3-story hospital building with 75 beds; it provided facilities for X-rays and physiotherapy, an analytical laboratory, a general clinic, and special clinics for dental, surgical, eye and ear, nose and throat, and gynecological service. It had on its staff three full-time physicians and one full-time dentist. The staff performed 141 surgical operations in 1932, 286 in 1933, 458 in 1934, 741 in 1935, and some 1,200 in the first 9 months of 1936. Because of the fact that the membership was scattered throughout a region of some 40 miles7 radius from Elk City, the bylaws provided for regional members7meetings and for regional representation on the board of directors. The board consisted of five persons elected an nually by the members. A business manager, hired by the directors, attended to the business affairs, and a medical director (the physician who was prime mover in the association) had supervision over the professional matters. Although the bylaws of the association provide that patronage refunds shall be made, if earned, this has not as yet been put into practice. The charges have been so low that there is little surplus, and that which has accrued has been used to provide more service or better hospital facilities. S a n D ie g o B e n e fic ia l S o c ie ty The next of the four reporting organizations to be formed was the Beneficial Society, San Diego, Calif. Because of Statutory restrictions, this organization was incorporated as a fraternal organization, oper ating two auxiliary enterprises— a benefit association (for rendering of hospital benefits) and a medical cooperative association (for pur chasing medical services). Formed in 1933, its membership rose from about 2,000 at the end of 1935 to 2,500 at the close of 1936, and about 2,800 in June 1937. The beneficial society was a nonstock association, having a repre sentative form of government, and was governed by a board of directors of nine. There was no proxy voting and each member was allowed one vote. This association held regular meetings of its members for social and educational purposes. The membership was 70 CONSUMERS’ COOPERATION IN THE UNITED STATES divided into local councils of not more than 500 members in each; these councils also held regular monthly meetings. A mutual benefit association was formed, composed exclusively of members of the fraternal order, for the purpose of rendering dis ability benefits (hospital benefits). Under the plan the association paid not to exceed $7 a day while the member was confined to any hospital in the United States. In order to obtain the hospital bene fits the member paid monthly dues of $1 for the first member of the family, $1 for the second member, and 50 cents for each additional member. The hospital association was governed by a board of trustees of three, elected by the members once each year. In addition to the above hospital benefits, the member was entitled to the medical services offered by the medical association (a cooper ative purchasing association), at a cost of $1 per month per person. However, one membership in a family entitled the rest of the family to a low schedule of fees, some of which were as follows: Office consultation and treatments____________________________________________ $0. Residence or hospital calls, day_______________________________________________ 1. Residence or hospital calls, night. _ __________________________________________ 2. Minor surgical operations, including local anesthetic, not to exceed_________ 12. M ajor surgical operations_______________________________________________________ 25. Delivery in confinement cases__________________________________________________ 20. 75 50 50 50 00 00 Services for the member included complete medical and X-ray examinations, laboratory tests, dressings, splints, and supplies; and a preventive medical service of two complete physical examinations, including laboratory tests, each year. Services were rendered at the physician’s office, the hospital, or at the residence of the member, within 10 miles of the medical doctor’s office. All of the above were covered by the monthly or annual fees. Additional charges were made for such special services as ambulance service, dental care, dental X-ray, X-ray therapy, special nursing, and general anesthetic. All medical services were supplied through a contract by the association with a copartnership of four physicians, who in turn employed other physicians, surgeons, and specialists. The coopera tive association had no hospital of its own, but permitted the member to choose any hospital in the United States, the association paying the bill, not to exceed $7 per day. The medical cooperative association was governed by a board of trustees of three, who were elected at the annual membership meeting, at which each member had one vote only and no proxy voting was allowed. There was an entrance fee of $3. The representative of the Bureau of Labor Statistics who visited this association found that one of the association’s problems was to induce the members to attend the monthly social and educational meetings. Also, the organization was handicapped in that it could LOCAL S E R V IC E A S S O C IA T IO N S 71 not solicit for members because of the ethics of the medical profession. Therefore, its growth had only been through the recommendation of its members to their friends. Every applicant must ask to become a member and no paid employee was allowed to solicit for member ships. The members were largely office workers of the local telephone, gas, and light companies, the board of education, and the Y. M. C. A .; city employees; State college faculty; and the small storekeepers. Economy Mutual Health Association The Economy Mutual Health Association was an organization serving the village of Economy, Ind., and the surrounding farming community. According to the prime mover of the plan, this com munity of some 300 families had been without physician’s services, because “ the depressed conditions of agriculture after the war caused the doctors to move to larger towns and cities” and those who did start to practice in the locality stayed only a short time. “ During the last 10 years we have had at least four different doctors in Econ omy.” In August 1935 an interested group drew up a notice outlining a cooperative health plan, and circulated 200 copies throughout the community. Because the idea was new, sentiment developed slowly and it was not until the winter of that year that the plan took shape. The organization was formed early in 1936 and went into operation in March, with 69 members signed up. There has been little varia tion in the membership since organization. This was an unincorporated, nonstock association, membership in which was open to residents of the village and its vicinity within a 7-mile radius. Individuals were admitted to membership, but in general the memberships were on a family basis. Dues were $3.90 per quarter, in advance, and covered all dependent members of the cooperator’s immediate family. Individuals paid at the rate of $1.85 per quarter. These dues entitled the members to medical treatment at home and at the doctor’s office, to physical examinations, and to ordinary drugs and medicines. Unusual or expensive medicine must be paid for by the patient, at actual cost. Obstetrical service was charged for at the rate of $10 per case. Hospitalization was not covered by the plan. Of the dues, all but 5 cents (used for administrative expenses) was paid over to the physician. The report for 1936 showed receipts of $727.36, of which $666.21 was paid to the physician. Because this plan insured a certain yearly income, besides leaving the physician free to practice outside the cooperative membership, it had resulted in attracting to residence in the community a quali- 72 CONSUMERS’ COOPERATION IN THE UNITED STATES fied doctor, and thus had benefited not only the cooperative member ship but the nonmembers who lived in and around the village. W a g e E a r n e r s ’ H ea lth A s s o c ia tio n This nonstock organization, located in St. Louis, Mo., was formed in April 1936, by a group of social workers. Starting with 30 mem bers, it had increased to 90 at the end of the year, to 280 by June 1937, and to 379 on February 1, 1938. Membership was open only to employed persons (either singly or in groups) earning not more than $300 per month. Each new mem ber paid an initial fee of $1. Memberships were of three classes, with varying rates of dues, as follows: (1) Single memberships, fees for which were $1.25 per month; (2) group memberships— i. e., 15 or more persons (members of an organization, church, or club, em ployees of a single employer, etc.) who joined in a body, paying dues of $1 per person per month; and (3) family memberships, open to dependent members of the cooperator’s family (wife and minor children) at the same rate paid by him, subject to the provision that the combined rate should not exceed $5 per month per family whose head had an individual membership and $3 per month per family whose head was a member of a group holding group membership. Members holding class 1 memberships automatically transferred to class 2 (with lower dues) when the number in their organization group exceeded 15; and those in class 2 transferred into class 1 when their organization number fell below 15. These dues entitled the members to a complete physical examina tion when they joined and regular examinations annually thereafter or whenever deemed necessary by the medical staff. These examina tions included urinalysis, blood count, Wassermann test, examination of heart, lungs, blood pressure, etc. Other services included medical service at home when necessary, at the doctor’s office, or in a hospital whenever needed, as well as the services of specialists; all routine laboratory examinations; complete annual dental diagnosis; complete obstetrical care, provided the member had been enrolled for 12 months or more prior to the confinement. They did not include: (1) Services in accidents covered by the workmen’s compensation law; (2) services in accidents covered by policies and paid by a third party—not by the member; (3) institutional care for mental diseases after diagnosis; (4) institutional care for tuberculosis after diagnosis; (5) institutional care for alcoholism and drug addiction; (6) examination of eyes for glasses; (7) X-ray diag nosis or treatment; (8) physiotherapy treatment (quartz lamp, diathermy, infrared rays, etc.); (9) basal metabolism test; (10) elec trocardiogram; or (11) drugs, surgical, and medical appliances (material for surgical dressings, etc.) not supplied at present. LOCAL SERVICE ASSOCIATIONS 73 An unusual feature of the plan was that it covered chronic dis eases. In such cases the member was entitled to continuous medi cal care as long as he was employed, and for varying periods when unemployed because of disability. These periods varied according to the time during which the member had paid dues, as follows: 1 year, care for 3 months; 2 years, care for 6 months; 3 years, care for 9 months; 4 years, care for 1 year; and 5 years, care for 2 years. In each case the period of care was computed from the time the em ployment terminated. During the year ending in March 1937 the association rendered the following services: 172 physical examinations, 967 office visits, 14 home visits, 36 hospital cases. These services included 142 confine ment cases, 253 ear, nose, and throat cases, and 46 surgical operations. This association, like the others described, aimed at prevention of disease, and to further this purpose on January 1, 1937, began the publication of a regular monthly bulletin distributed to the members. The organization had no hospital or medical facilities of its own. All of the services mentioned above were furnished on contract with physicians carefully selected who devoted only part of their time to the work of the association. They were paid directly by the associa tion, except for special care not covered by the regular dues, in which case the member was responsible directly to the attending physician. The staff included specialists in internal medicine, surgery, diseases of the ears, nose, and throat, gynecology and obstetrics, genitourinary diseases, and pediatrics. An advisory committee of leading St. Louis physicians and surgeons was being assembled, in order that the association might have the benefit of their advice regarding ethics and the physician-patient relationship. An analysis made by the association of its activities during the period from April 1, 1936, to December 31, 1937, revealed that in that time 500 persons had been examined for membership. The medical department had handled 6,423 calls— an average of 12.8 per member— half of which were for preventive medicine. In addition, 36 operations had been performed. G A R A G ES There were in 1936 only two associations known to the Bureau whose principal activity was the storage and repair of automobiles; one of these was in Minnesota and one was in New York. One was started in 1928 and the other in 1935. The older associa tion increased its volume of business by 12 percent from 1934 to 1936, and in the latter year made a small net saving. The new association sustained a loss. 9 0 6 2 1 ° — 3 9 ------- 6 74 CO NSUM ERS’ COOPERATION I N THE U N IT E D STATES One of these associations also had the agency for a well-known make of automobile in the middle-price class and the other ran a gasoline service station in connection with the automobile-repair business. There were also seven local associations which operated a garage as one department of a general mercantile or petroleum busi ness.3 The undertaking of repair service showed further gains in 1937. At the end of the year such service was being offered by at least three additional store associations,4but in all cases as a subsidiary service only. A number of the buying clubs, which, of course, did not operate garages themselves, had contracted for auto-repair service from local repair companies, at an agreed discount. PRINTING AND PUBLISHING ASSOCIATIONS The Bureau’s list included 14 local associations in the printing and publishing field at the end of 1936. Data were obtained for 7, of which 4 were consumer groups and 3 were farmer groups. They were located as follows: 2 in Minnesota, 2 in New York, 1 in North Dakota, 1 in Pennsylvania, and 1 in Wisconsin. One of them dated from 1901, and 1 each from 1916, 1917, 1918, 1931, 1933, and 1936. These were individual-membership associations having in their ranks a total of 4,916 persons, but in one a labor organization was also a shareholder and another had as members 9 consumers’ cooperative associations as well as 310 individuals. Although these associations had an unusually large average membership— some 700— and for the most part reported that they did business at prevailing prices, all but three operated at a loss in 1936. One association published a daily paper, 6 issued weeklies, and 2 monthlies. Two also did book work and 6 did job work. BURIAL ASSOCIATIONS The provision of burial service on a cooperative basis is compara tively new and has as yet been little developed. Hard times and the high cost of living cause the formation of cooperative associations whose main purpose is the supply of food and other household supplies without profit. The high cost of dying and what seemed exorbitant charges for funeral service were the motives for the formation of the cooperative burial associations now in existence. Coal mining is a hazardous occupation and funeral expenses form an item of considerable importance in mining regions. It is not sur prising, therefore, that the first burial association of which the Bureau of Labor Statistics has record was started in 1915 by a group of coal 3 The store associations with auto-repair departments were at Fitchburg, Mass., Cloquet and Floodwood, M inn., and M aple, W is. The petroleum associations were at Charleston, 111., Blue Earth, M inn., and Williston, N . Dak. < R ock, M ich ., Menahga, M inn., and Superior, Wis. LOCAL SERVICE ASSOCIATIONS 75 miners organized in a local union in Illinois. At least four other labor groups— composed largely of coal miners— formed similar associations in the same State within the* next few years. These organizations, though cooperative in the sense of being nonprofit, have in other respects more of the character of union than of cooperative enterprises. In the late 1920’s the farmers in Iowa and Minnesota became inter ested in the provision of funerals at more moderate prices and, with local townspeople, established burial associations at a number of places. Recently some of the farm journals have expressed their favorable interest in the formation of these associations, and in Nebraska local Farmers’ Union groups started two associations, each of which was county-wide in scope.6 The early organizations usually confined their activities to a single town and its immediate vicinity. Most of the later associations have been authorized to do business over one or several counties. For obvious reasons, a large membership is desirable in a burial associa tion if it is to be successful.6 This is one line of activity entirely dependent upon conditions outside the control of the organization. The volume of business being dependent upon the death rate, no amount of advertising or sales campaigns will increase it. Only a large membership will insure a sufficiently large number of funerals to make operation worth while. The tendency, therefore, has been toward a greater and greater coverage of membership and territory served. Organized cooperators entered this field several years ago, when a group of cooperative associations operating stores and creameries throughout the Mesabi Range district in Minnesota obtained a charter for the Range Cooperative Burial Association. Shortly afterwards another group of associations in Aitkin, Carlton, Pine, and St. Louis Counties applied for a charter for the Northland Cooperative Burial Association. Opposition to the formation of this association was manifested by the private undertakers’ association in the State, which brought suit questioning whether such a cooperative association was legal under the Minnesota law, on the ground that cooperative associ ations which were members of the burial association were not the “ ulti mate consumers” of the service. After a long period of controversy the case was decided in favor of the cooperatives. A charter was granted and the Northland Cooperative Burial Association began opera tions January 1, 1937. Pending settlement of this case, no attempt had been made to go ahead with the plans for the Range Association. In July 1937, it amalgamated with the Range Cooperative Federation, 8 One of these discontinued operations in 1938, because of an insufficient volume of business. 8 It was estimated, on the basis of the Iowa associations’ experience, that a burial association, to be success ful from the beginning, should start with at least 500 members and capital of at least $5,000 (Consumers’ Guide, Washington, July 26, 1937). 76 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES becoming a department of that federation. Burial service was inaugurated on September 1, 1937. This federated type of association makes burial service available over a wide territory. For the local associations reporting in the Bureau’s survey, the average membership in 1936 was 883, whereas the two federated associations each represented a combined individual membership of from 5,500 to 6,000. In the local type of association, the individual becomes a member through the payment of a membership fee. This fee represents a nontransferable family membership and is valid even after the death of the parents, as long as there are minor children. As each child becomes of age, his right to service under the family membership lapses. In the federated associations the individual members of the local associations which own the burial association are entitled to utilize the burial services of the association by virtue of their affiliation with the local cooperative association, upon payment of a small fee. In the Northland Association this fee is 50 cents per year. The local associations in Iowa and Minnesota both have a central federation— the Iowa State Federation of Burial Associations and the Northwestern Cooperative Burial Association. The former was re ported to have in membership all 10 Iowa local associations, and the latter had 8 member associations. These federations carry on no business activities. Their duties are to protect the interests of the local associations, be on the watch for legislation detrimental to cooperatives, provide speakers, do organizational and educational work, and serve as a clearing house of experience among the members. On the basis of reports to the Bureau of Labor Statistics it is cal culated that the 42 associations known to have been in existence at the end of 1936 had an estimated membership of about 27,000 and did a business in that year estimated to have been about $170,000. These associations were all in the North Central States— Illinois, Iowa, Minnesota, Nebraska, and South Dakota. As already noted, the first association of record was started in 1915. Of 33 other associations for which the date of organization is known, 1 was started in 1915, 3 in 1921, 2 in 1924, 2 in 1927, 3 in 1928, 5 in 1929, 4 in 1930, 4 in 1931, 5 in 1932, 3 in 1934, and 1 in 1935. Their average age was slightly over 8 years. C ooperative P ractice The reporting associations, without exception, operated on the basis of one vote per member. Generally there was no limitation on member ship, any family in the vicinity being eligible for membership on pay ment of the required fee. One association, however, reported that it desired no new members at present because of its limited operating LOCAL S E R V IC E 77 A S S O C IA T IO N S facilities. Two others limited their total membership to 1,000 and 2,000 respectively, but this limit was far from having been reached in either association. These associations depart from the Rochdale practice of “ business at prevailing prices.” All of those furnishing returns made charges below those current in the community. For that reason, the “ net earnings” reported were lower than would have been the case had they followed Rochdale practice. Only one association reported returning a patronage refund. The amount so returned was not stated, but the rate of return was 10 per cent. Mainly because the margin between actual cost and the charge to the patron is small, the practice of return of patronage refunds is not common among the burial associations; the member has already had the equivalent of the refund, in the form of lower prices. M em bersh ip Of 42 associations known to have been in existence at the end of 1936, usable reports were received for 19. A combined membership of 15,006 was reported, an average of 883 per association. The individual associations ranged in size from 50 to 4,000 members; they were distributed as follows: Number of associations Less than 100 members___________________________________________ 100 and under 250 members____________________________________ 250 and under 500 members_____________________________________ 500 and under 750 members_____________________________________ 750 and under 1,000 members___________________________________ 1.000 and under 2,000 members__________________________________ 2.000 and under 3,000 members__________________________________ 3.000 members and over__________________________________________ 2 1 5 5 2 1 0 % The associations for which membership data were available for a period of years showed an almost unbroken record of expansion. One association which started with 10 members in 1930 had increased to 800 by the next year, to 1,030 in 1933, to 1,050 in 1935, and to 1,260 in 1936. Another rose from 400 members in 1931 to 3,530 in 1936. The associations reporting for both 1935 and 1936 had an increase of 672 members, or 5.7 percent; not one had had a loss in membership. Statistics o f O peration The reporting associations conducted 595 funerals during the year, or an average of 35 each. Two of the smaller associations handled only 6 funerals each. The largest number (91) was handled by a 6-year-old association with some 1,200 members. An aggregate income of $63,189 was reported by 12 associations, of which $4,432 represented net savings. 78 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES The following table summarizes, by States, the 1936 operations of the associations reporting. Bills and accounts payable, not shown in the table, aggregated $5,455—reported by 12 associations. Six associations reported that they had no outstanding obligations. Most of these were nonstock associations operating on a membership basis. The cost of membership was generally $5 or $10, but in two associations reporting the membership fee was only $1. Generally this was the only regular charge, but one organization (with a $10 membership fee) also charged dues of 25 cents per month; it stated, however, that these dues were “ not compulsory.” A number of the associations provide that upon the lapsing of a family membership, the membership fee shall be transferred to the “ free burial fund.” This fund is commonly maintained by members’ annual contributions of 25 cents each, and is used to assist in paying burial expenses for needy members. T able 35.— Statistics o f 1 9 3 6 O perations o f C ooperative B u ria l A sso cia tion s , b y StcUes All States Item Total known associations. __________ _______ _ Total number of reporting associations_________ Membership: Num ber of associations r e p o r tin g _________ N um ber of members— _____ ______________ Average per association__________ _ _ _ _ _ _ N um ber of funerals: N um ber of associations reporting__________ Total funerals__________________ ________ Business done: N um ber of associations reporting _ ____ _ Amount ____________________ ___ ____ N et earnings: Num ber of associations reporting__________ A m ount_______________________ ____ _ _ Share capital:1 Nuiflber of associations reporting__________ Amount ________________________________ T otal resources: Num ber of associations reporting__________ A m ount______________ _____ __ _ ________ Net worth: Num ber of associations reporting__________ A m ount___ ___ ___________________________ 42 19 Illinois 4 1 1 M inne Nebras South sota ka Dakota Iowa 10 3 20 12 2 2 3 1,935 645 11 1 1 5,481 498 60 60 3, 530 3, 530 30 6 1 17 15,006 883 4,000 4,000 17 595 1 2 11 75 41 427 2 22 12 1 1 $4,170 9 $54,171 1 $63,189 $928 $3,920 1 10 1 1 $73 7 $3,140 1 $4, 432 $1,023 $196 12 2 1 $8,634 g $18, 505 1 $31, 724 $1,055 $3,530 12 2 8 1 1 $62,915 $14,674 $41,656 $1,145 $5,440 11 2 1 $12,705 7 $30,909 1 $50,109 $1,055 $5,440 1Includes paid memberships, in nonstock associations, where amount was known. Services , O perating F a cilities , and Charges The provision of caskets and hearse service is practically universal among these associations, and undertaking service is also common. Other, less usual, services are the furnishing- of tombstones, cemetery plots, burial vaults, and ambulance. Of 16 associations reporting, all provided caskets, 14 provided hearse, and 12 embalming, 4 dealt in tombstones, 3 in burial vaults, 3 had an ambulance, and 1 owned a cemetery. Of 14 associations reporting as to operating facilities, 13 operated a funeral parlor and the same number had their own hearse; 1 asso- 79 LOCAL SERVICE ASSOCIATIONS ciation rented the hearse each time it was needed. (For illustration of funeral establishment, see fig. 6, facing p. 80.) It is a common provision in the bylaws of the burial associations that business shall be done “ at the lowest practicable cost” consist ent with the safety of the business. One organization set the cost of funerals thus: “ The cost of the funeral shall consist of the cost of casket and other supplies, plus the funeral director’s charges and use of hearse, plus a surcharge sufficient to meet the current operating expenses of the association and other essential costs including the reserves required by law.” Charges.— For the associations reporting, the average cost per funeral to the patron was $175. Classified by average cost the dis tribution was as follows: Number of associations Less than $100_____________________________________________________ $100 and under $150_____________________________________________ $150 and under $200_____________________________________________ $200 and under $250_____________________________________________ Over $250__________________________________________________________ 3 3 5 3 1 The foregoing were the prices charged to members. The practice as regards nonmembers varied. Three associations stated that they did no business with nonmembers. Two allowed nonmembers to utilize their services but required from them at the time of the burial the regular membership fee, thus admitting them to membership. One association extended its facilities to nonmembers at the same prices as charged to members. The remaining associations, however, charged higher rates— 10 percent higher in one case and 20 percent in another. Each association was asked to estimate the amount the patron saved per funeral, by utilizing the services of the cooperative. The replies ranged from $15 to $400; the average was $160. One associa tion pointed out that its estimate of saving was based upon prices prevailing before the establishment of the cooperative association. The 14 associations reporting employed in 1936 some 25 persons, and expended $15,472 in wages. All of these employed an undertaker but only 2 were on a full-time basis; in 12 cases the undertaker was employed on contract. In 7 cases he also acted as manager of the association; in 6 associations a manager was employed in addition. Sources of supply.— The early associations experienced some diffi culty in obtaining supplies— embalming fluid, caskets, etc. This was known, in a few cases, to be due to pressure from private undertakers. Several years ago arrangements were made with a small independent casket factory, and many of the burial associations, notably in Minne sota, now obtain their supplies through that company. 80 CONSUM ERS' COOPERATION I N THE U N IT E D STATES Of the associations reporting, seven said that none of their supplies were obtained from cooperative sources. Seven purchased at least part of their supplies from cooperatives; of these one purchased in this way 75 percent, one 80 percent, one 90 percent, and two 100 percent. HOUSING ASSOCIATIONS The development of cooperative housing in the United States has been thus far almost entirely in the apartment-house field in greater New York and has been restricted by the large amount of capital necessary. In the opinion of one housing expert, a project cannot be made successful in New York City unless it covers at least a city block.7 With the very large sums involved in such projects and total investments per member ranging up to $700 or more per room, it is evident that comparatively few wage-earner groups would be able to finance such enterprises unaided. Nevertheless several housing associations have been started and have provided accommodations for more than 2,200 families. It was found that since the Bureau’s last previous survey of coopera tive housing, in 1933, six associations had lost their properties and had gone out of existence, one had lost its cooperative features, and in two instances two associations had consolidated into one. Six additional associations were reported to the Bureau of Labor Statistics, but it was not possible to check as to the cooperative features of these. Of 48 known housing associations, data were obtained for 39, of which 35 were actually operating housing properties, and in 4 others the organization had been formed and plans were well advanced. Of the 35 completed projects, 12 were in Manhattan and the Bronx and the remaining 23 were in Brooklyn. Of the four projects still under way, two were in New York and the other two were in Wisconsin. The earliest of the groups (2) for which the Bureau has information dates from 1916. In the following 2 years no new projects were started among the groups that responded to the Bureau’s request for information, but beginning in 1919 two projects were undertaken, in 1920 there were six more, four each in 1921, 1922, and 1923, one in 1924, three in 1925, two in 1926, three in 1927, one in 1928, and two in 1930. Thereafter, cooperative activity in the line of new coopera tive housing ceased until 1936 when the four new groups were formed. A number of the early cooperative housing associations drew their membership largely from the building-trades workers. A series of several apartment buildings has been built by needle-trades workers, with the financial assistance of their labor organization. (See figs. 7 and 8, facing p. 81.) In several other groups the members were “ white-collar” or professional people, and in still another the members 7 A. E. Kazan’s address at 1936 Congress of the Cooperative League. Figure 5.—Farmers’ Figure 6.—Funeral union Cooperative hospital . Elk Cit y , O kla . County Cooperative ASSOCIATION, LUVERNE, MINN. establishment of rock burial Figure 7.—A malgamated Cooperative apartments , new Y ork Cit y . Only 47 percent of the ground is occupied b y the buildings; the remainder is in garden and playgrounds. Figure 8.— Kindergarten at Amalgamated cooperative apartments , new Y ork Cit y . LOCAL SERVICE ASSOCIATIONS 81 were drawn from the membership of a cooperative association which operates a chain of cafeterias. Of the projects still in the planning stage at the time of the Bureau’s survey, one will limit its membership to civil-service employees earn ing less than $4,000 a year and persons recommended by them who are in the same salary class. Another will be composed of professional persons and State employees. C ooperative P ra ctice and C ontrol The genuinely cooperative housing enterprise is characterized by the following: (a) Each member has one vote, regardless of the number of shares held. (ib) The building is either erected or bought already constructed, by the association (i. e., by the members as a whole), not by individuals who later form an association. This excludes so-called cooperative apartment buildings built by private contractors on a profit basis, the apartments in which are sold outright to individual purchasers. (c) The member does not receive title to any individual apartment or dwelling. He merely owns shares in the association to the value of the dwelling he occupies. His evidence of ownership consists of a certificate of shares and a permanent lease on his dwelling. Legal ownership is held by the association as a whole. It was found in the present study that all but 3 of the 35 associations, which were actually operating properties, followed accepted coopera tive practice whereby each member was allowed only 1 vote on administrative decisions. One of the associations in which voting was based on stock ownership was in Manhattan and the remaining two were in Brooklyn. Twenty of the 33 cooperatives which furnished information on proxies stated that such voting is permissible; in the remaining 13 associations— 4 in Manhattan and Bronx and 9 in Brook lyn— members must vote in person. Voting membership in 11 of the 12 groups in Manhattan and Bronx totaled 1,746 in 1936. For Brooklyn the voting membership of the 23 groups was 577. All of the 12 Manhattan and Bronx associations and the 23 Brooklyn projects retain title to the cooperative apartments. As an evidence of ownership, purchasers of dwelling units are furnished with various kinds of papers, such as a contract, membership or stock certificate, pass or rent book, or lease. In 10 cases in Manhattan and Bronx and 22 in Brooklyn subletting by owners was permitted, but the remaining 3 associations forbade this practice. Where subletting is allowed the association usually specifies that approval of the entire group or the board of directors must first be obtained. In some associations the member may set his own rate, 82 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES but in the majority the board fixes the amount of rental, or places restrictions on the rates at which the apartment may be sublet. Similarly, while members are permitted to sell apartments under the original contracts of purchase, the associations exercise control over the terms of sale by requiring that the group or the board shall approve sales, that the price shall not include a profit, or that the apartment must be offered to the association first. In Manhattan three groups provided for the repurchase of the equity of an individual apartment owner and in Brooklyn seven follow this practice if permission to sell is refused. Six groups in Manhattan and Bronx and 12 in Brooklyn stated that the associations do not obligate themselves to take apartments back and reimburse the owners. The importance attached to choice of resident managers in the associations’ houses is evidenced by the careful methods by which such employees are selected. In Manhattan and Bronx the board makes the choice in 8 cases, the members in 2, and both in 2; in Brook lyn the board chooses managers for 4 projects and the total member ship for 19. T yp es o f B u ild in gs P rovided Altogether the 30 housing associations for which information was obtained on this point provided quarters for 2,248 families. The apartment projects ranged in size from a single building with 8 apartments to a group of several buildings containing 724 dwelling units. The size of the housing properties owned by the various cooperative groups is indicated in the following statement: t-, .. . . ... ivumuer oj ■o . . . . ... jyumoer oj Buildings W ith — associations Buildings With— associations 35 apartments_________________ 1 8 apartments__________________ 2 2 40 apartments_________________ 4 12 apartments_________________ 16 apartments_________________ 44 apartments_________________ 8 1 67 apartments_________________ 1 19 apartments_________________ 1 121 apartments________________ 1 20 apartments_________________ 1 24 apartments_________________ 3 724 apartments........................ 1 32 apartments_____________ l __ 4 Buildings of four stories predominated. In Brooklyn 22 associations out of 23 reported buildings of this height. Of the 12 associations in Manhattan and the Bronx supplying data on this point 1 had a 3-story building, 4 had 5-story buildings, another 5- and 6-story buildings, 4 were of the 6-story type, 1 was 6% stories, and another had a building of 12 stories and penthouse. In Manhattan and the Bronx 6 of the 12 apartments in the buildings of 6 or more stories had elevators. All 23 apartments in Brooklyn were of the walk-up type. The buildings for which information was supplied concerning number and size of suites had more three- and four-room units than any other size. Of the 1,709 separate apartments furnished in Manhattan and the Bronx 56 were of 1 room, 223 were of 2 rooms, 786 were of 3 LOCAL SERVICE ASSOCIATIONS 83 rooms, 488 were of 4 rooms, and 156 had more than 4 rooms. Brook lyn had 539 units ranging in size from 6 two-room suites, to 118 of 3 rooms, 235 of 4 rooms, and 180 of over 4 rooms. Thus in Brooklyn, where only one-third as many units were being occupied cooperatively as in Manhattan and the Bronx, there were 10 percent more large apartments (of over four rooms) than in New York City. In only one case was a bathroom rated as a room in establishing apartment size, but it was fairly common to include a kitchen as a room. In 9 apartments in Manhattan and the Bronx and 20 in Brooklyn this practice was followed. In two additional cases in Man hattan a kitchenette figured as a half room and in another as a full room. In two Brooklyn associations the number of rooms was calcu lated on a space basis, regardless of the use to which the room might be put. One association in New York City had houses in addition to apart ments. The report of its activities showed that the property included a garden house and three other separate dwellings. Otherwise the dwellings were of the multiple-dwelling type in every instance. Of the two new Wisconsin groups—neither of which had progressed to the point of actual provision of living quarters for its members— one was in Madison and the other in Milwaukee. The Madison association was organized in September 1936, and by the spring of 1937 had over a hundred members, composed almost entirely of university people and State employees. It owned 75 acres of land, with an option on an additional 75 acres, about 5 miles from the capitol. Its plans were drawn and it was expected that ground would be broken during 1937. Only about half of the land was to be used for building, the rest being left as communal wooded ground. Both apartments and individual houses were planned. The fourfamily apartments were expected to cost approximately $3,000 per family and the houses about $10,000 each. It was the announced purpose of the Milwaukee group to establish, not only one cooperative enterprise, but a complete cooperative com munity. This might be termed a combination housing and self-help group. It began during the depression under the leadership of a professor of economics who gathered together a number of workers of different skills, most of whom were unemployed at the time. They worked together with the idea of building themselves a cooperative community, whose members would, however, hold jobs in Milwaukee, except for such persons as the gas-station attendant, the gardener, etc., who would be needed to maintain the community services. This group had completed the building of a house in the suburbs which is worth about $10,000. It was to be traded for land on which the village could be built. Pending the construction of the village, this self-help group exchanged services among its members. Instead of money it 84 CONSUMERS’ COOPERATION IN THE UNITED STATES used a system of credits, an hour’s work being exchanged for an hour’s work. Any credits earned but not spent were counted toward ownership in the house which had been constructed. Value o f Properties The paid-in share capital for 32 of the 35 projects amounted to over 4 million dollars at the end of 1936, or approximately one-third of the original cost of land and buildings. The appraised value of the properties was slightly over 10 million dollars. The ratio of paid-in share capital to original cost was higher for Brooklyn than for Manhattan and the Bronx. The cost of the Brooklyn apartments was considerably lower than of those in Manhattan and the Bronx, ranging from $23,000 to $230,000 as compared with a range of $49,500 to $3,682,750. In Brooklyn most of the apartment buildings were small, as shown in the membership statistics already given, while in Manhattan and the Bronx the individual buildings housed larger numbers of families, thus accounting to a large extent for the higher cost of buildings and land. Financial statistics covering the value of share capital, original cost of land and buildings, and the appraised value of the properties are shown in table 36. T a b l e 36 .— Investm ent in Cooperative H ousing Associations, 1936 Original cost (land and buildings) Present appraised value (land and buildings) N um ber of associ ations N um ber of associ ations Paid-in share capital Location of housing project N um ber of associ ations Amount ... 11 21 $2, 875,063 1,211, 506 T o ta l.. ________ _ _______________ 32 4,086, 569 Manhattan and the B ronx.. _____ _ Brooklyn_______________ Amount Amount 12 $10,062,317 23 2,905, 759 11 23 $8, 386, 287 1,907, 500 35 34 10, 293, 787 12, 968, 076 Operating Statistics The gross income for 10 apartment houses in Manhattan and the Bronx amounted to $1,035,500 in 1936,8 and for the 23 Brooklyn projects, $246,141. All but two of the reporting associations in Manhattan and the Bronx either made a profit or broke even after deducting expenses from gross income in that year. In Brooklyn seven associations showed neither profit nor loss, six had a profit, and five reported a loss on the year’s operations. Table 37 shows the surplus or deficit resulting from operations of the cooperative housing assocations in 1934, 1935, and 1936. s M ost of the associations operate on a calendar-year basis, but in some cases fiscal years have been adopted ending in different months. This must be considered in using the financial statistics furnished. 85 LOCAL SERVICE ASSOCIATIONS T able 37.— Surplus or D eficit in Operations o f Cooperative H ousing Associations, 1934 to 1936 Associations hav Associations hav Associ ing net loss ing net gain ations with neither gain N um Amount N um Amount nor ber ber of gain of loss loss Year and location All associations reporting N um ber Amount of net gain 1931, Manhattan and the Bronx____ __ _ Brooklyn_____________________________ 4 4 $21,056 999 2 7 $7, 779 9,866 3 6 9 17 $13,277 i 8,867 T otal___________________________ 8 22,055 9 17,645 9 26 4,410 5 6 21,285 3,751 3 6 5,931 7,286 2 7 10 19 15,354 i 3,535 11 25,036 9 13,217 9 29 11,819 Manhattan and the Bronx _ _ _ ----------Brooklyn ___----------------- ------------- ------- 6 6 28,360 4,801 2 5 3,338 4, 975 2 7 10 18 25,022 i 174 T otal_____________________ _____ 12 33,161 7 8,313 9 28 24,848 1935 Manhattan and the B r o n x _____ __ _ B rooklyn, _ . ----------------- ------------- _ T otal___________________________ 1936 1 Loss. One association which was organized shortly after the onset of the depression went along with its project in spite of the growing hard times. Notwithstanding the peculiarly difficult situation it had achieved a remarkable record. In 1931 it rebated to the members on their rentals the sum of $3,234. In 1933 and again in 1937 it made a general reduction in monthly rental rates. In only 1 year was a loss sustained on the operations. The financial position of the housing associations in Manhattan and the Bronx was relatively more favorable in all 3 years covered by table 2 than was that of the organizations in Brooklyn. Only two projects showed a loss in each of the 3 years 1934 to 1936, in Manhattan and the Bronx, and the balance for all reporting projects was favorable. In contrast, more associations in Brooklyn showed a loss than a profit at the end of 1934. A substantial group operated without a loss or profit in all 3 years. For all reporting associations as a group in Brooklyn the total losses exceeded profits in the 3 years covered, but the annual loss decreased considerably in each successive year and was only $174 at the close of 1936. Cost to Tenant M em ber When the individual becomes a member of a housing society he subscribes for a certain amount of capital stock in the association estimated as covering the cost of the apartment or dwelling he will occupy. This total cost is arrived at after consideration of a number of factors; the total cost of land, building, and other expenses there- 86 CONSUMERS’ COOPERATION IN THE UNITED STATES with are taken as a basis, and the cost of each dwelling is determined according to the number of rooms, floor space, location, and other points of advantage or disadvantage. The cost figure so arrived at for each individual apartment is the price which the prospective tenant must pay and the amount for which he must subscribe stock in the association. This stock must be paid for either as a whole or in installments, according to the requirements of the bylaws. The following tabular statement shows the average total cost per room to members in the societies that reported on this point: Number of societies Number of societies $7 5 and under $ 1 0 0 __________________ 3 $ 3 50 and under $ 4 0 0 ________________ 4 $ 1 0 0 and under $ 1 2 5 ________________ 3 $ 1 2 5 an d under $ 1 5 0 ________________ 1 $ 4 00 and under $ 5 0 0 ________________ 3 $ 5 0 0 and under $ 6 0 0 ________________ $ 1 5 0 and under $ 2 0 0 ________________ 1 $ 7 0 0 and over_________________________ 1 $ 2 0 0 and under $ 2 5 0 ________________ 4 $ 2 5 0 and under $ 3 0 0 ________________ 2 $ 3 0 0 and under $ 3 5 0 ________________ 6 T o ta l___________________________ 3 31 Over half the groups showed per-room costs of $200 to $400. Of the eight apartments with lower charges, two were in Manhattan and the Bronx and six in Brooklyn. Of the higher-priced apartments, one between $400 and $500 and three at $500 per room were in Manhattan and the Bronx, and the remaining three were in Brooklyn and ranged in cost from $400 to $787 per room. Of the 10 Manhattan and Bronx associations that furnished infor mation on the maximum term allowed for full payment of the sales price of apartments, 5 specified cash, 1 allowed 8 years, and 2 each provided terms of 10 and 12 years, respectively. In Brooklyn, for 17 associations, immediate payment in full was required in 12 apart ments, the term was 1 year in 3, 2 years in 1, and 10 years in 1 project. The initial payments are shown in the following statement: Number of associations $ 5 0 .0 6 per share------ -------------------------- 1 $ 9 0 0 _____________ $ 9 0 0 to $ 1 ,5 0 0 _ . Number of associations _____ 2 $ 1 0 0 ____________________________________ 3 _____ 1 $ 2 5 0 ____________________________________ 3 $ 1 , 0 0 0 ____________ ____ 3 $ 3 0 0 ____________________________________ 1 $ 1 ,0 0 0 to $ 1 ,2 0 0 _____ 1 $ 3 0 0 and u p ___________________________ 1 $ 1 , 1 0 0 ____________ _____ 1 $ 3 0 0 per r o o m ________________________ 1 $ 1 . 2 0 0 ____________ 1 $ 1 ,2 0 0 to $ 1 ,6 0 0 _____ 1 _____ 1 _____ 1 $ 5 0 0 ____________________________________ 1 $ 1 ,2 0 0 to $ 2 ,0 0 0 2 $ 1 ,2 5 0 to $ 2 ,0 0 0 _____ 1 $ 6 0 0 ____________________________________ $ 6 0 0 to $ 1 ,0 0 0 ________________________ 1 $ 1 ,3 0 0 to $ 2 ,2 0 0 1 $ 2 , 0 0 0 ____________ _____ 1 _____ 1 $ 6 3 6 ____________________________________ 1 $ 3 7 5 ____________________________________ $4 0 0 per r o o m ________________________ Monthly 'payments.— After the member takes possession of his dwelling he pays as “ rent” each month a certain amount which is calculated to cover his proportionate share of such items as taxes, 87 LOCAL SERVICE ASSOCIATIONS insurance, the general upkeep of the building (repairs, improvements, janitor service), fuel, payments on the mortgage or mortgages, etc. In some cases the members adopt the policy of making these monthly payments large enough to cover unexpected expenses, building up a little surplus for this and other purposes. In others such expenses are met as they arise, through a pro rata assessment on all the tenant members. Average monthly rental rates per room range, in the associations studied, from $4 to $22.12, as shown in table 38. As the rentals were in most cases lower in Brooklyn than in Manhattan and the Bronx, the figures are given separately for the two localities. T able 38.— Average M onthly Rental p er Room to M em bers o f Cooperative H ousing Associations Number of associations M onthly rental per room $4 _ $5 _ _ ____ _____ $6.__ __________________ $6.18 $6.30 $ 6 . 5 0 ____________ ... $6.80____________________ $ 7 .0 0 $7.15____________________ M an hattan Brook lyn and the Bronx 3 1 3 1 1 3 1 1 1 Number of associations M onthly rental per room Total 3 1 3 1 1 3 1 1 1 M an hattan Brook and the lyn Bronx $8___ ______ ___________ $9_______________________ $10______________________ $10.50_____ ______ ____ $11_________________ . . . $12_________________ . . $22.12.____ _____________ 1 1 2 3 1 T otal_____________ 10 Total 1 1 3 1 1 2 1 1 4 2 3 5 1 22 32 For the group as a whole 41 percent of the projects had a rent scale of under $7 per room per month; 44 percent had rents of $10 to $12; and 12 percent from $7 to $9. In Manhattan and the Bronx 80 per cent were in the class charging $10 per room per month and over, as compared with 32 percent of the total in Brooklyn. Half of the Brooklyn apartments rented for less than $7 per room per month. Supplementary Activities The concentration of families entailed by the very nature of life in a modem apartment building makes possible cooperative activities along other lines as well. Thus, the residents may form their own credit union, undertake the collective purchase of such commodities as ice, milk, electric power, and staple groceries, and the provision of such services as lectures, class-room instruction, cleaning and pressing, etc.9 Of the cooperative housing associations from which data were obtained, seven associations—six in Manhattan and the Bronx and one in Brooklyn—had other features and activities in addition to 9 For a description of the cooperative activities of a group of apartment-house dwellers, see M onthly Labor Review, August 1937 (p. 312). 88 CONSUMERS’ COOPERATION IN TH E UNITED STATES providing housing. Thus one cooperative provided assembly rooms and playrooms for the children; it also had classes on various subjects. Another had an auditorium, playroom, a kindergarten, library, and sports club, conducted classes in English, and had social functions. A gymnasium, auditorium, classrooms, social rooms, and a library were features of another organization. One project provided an as sembly room, another a garden, and a third a cafeteria and roof garden. Communal facilities in another apartment project included an assem bly room, playrooms, and classes. There were also cooperative gro cery, fruit, and meat stores, organized as a separate association. Dental and medical service was available at low cost. Further savings were made from the joint purchase of milk, ice, electricity, and laundry service. During the depression each tenant contributed $1 a month toward a relief fund from which needy members could be supplied medical care. Prior to the depression this group of some 600 families spent about $10,000 a year for community activities alone. E L E C T R IC IT Y A SSO C IA TIO N S 10 At the end of June 1937 there were in existence at least 259 cooper ative associations for the supply of electric current to the homes of consumers. Of these, 214 had been formed since the inauguration of the Federal Government’s rural-electrification program and had received loans under it, and 45 were in existence before the program was started. While the R. E. A. associations date only from 1935 or later, some of the early associations were started as far back as 1914, and practically all before 1930. The membership of the early associations for which there is informa tion ranged from 8 to nearly 1,000 persons. Membership data for the R. E. A. cooperative associations are not available, but the number of customers served ranged from 53 to 5,500; in fact 8 associations had more than 2,000 patrons each. The early associations were mainly in the States of Idaho, Iowa, Minnesota, Washington, and Wisconsin, with one or two in each of the States of Illinois, Indiana, Missouri, North Carolina, Virginia, and Wyoming. The formation of the associations in these States was undoubtedly furthered by the existence of State cooperative or non profit statutes and also (especially in Washington State) by the proximity of municipal power plants from which current could be obtained at favorable rates. The swift march of the rural-electric movement under the impetus of Federal assistance, on the other hand, is shown by the fact that by June 30, 1937 (only 2 years after the All data in this section relating to R. E. A. cooperatives were obtained directly from the Rural Electrifi cation Administration or from its publications. LOCAL SERVICE ASSOCIATIONS 89 inauguration of the program), cooperative associations which had had allotments of Federal funds were found in 28 States.11 These associations have been formed among the prospective users of electric power in rural districts. These people cooperate in the erection of the poles, the stretching of the wires, the bargaining for and purchase of current, and the maintenance and repair of lines. The current is obtained from a municipally owned power plant, if there is one nearby, or from a private power company. Several asso ciations, unable to obtain current from either of these sources have, with Federal aid, constructed their own generating plants. The association that is the largest of the pre-R. E. A. organizations is an excellent example of cooperation unaided by financial assistance from outside the cooperative group. Started in 1925, and serving members only, in 1936 it had 950 members, operated some 225 miles of line, and had built up total assets (after depreciation) of more than $100,000. Current was obtained from a municipally owned electric plant in a neighboring city. It is interesting to note that one organization which benefited by a loan under the Federal program was that formed to serve the Amana Community. This community was a religious cooperative colony which was started in Germany as early as 1714, but because of religious persecution came to this country in 1842, establishing itself first in New York and then removing to Iowa in 1854. Until 1932 the colony was run on strictly communal principles, all possessions being held by the community as a whole and all members working for the com munity. In that year the principle of individual ownership of per sonal property was adopted and the industrial enterprises run by the community were reorganized on a stock-company basis. Modern electric appliances and labor-saving machinery are now made available to the homes in the community through the new electricity-supply organization. Cooperative Practice ° The electricity-supply associations have been formed under various types of laws— cooperative, nonprofit, rural electrification, and general corporation acts. For the most part, however, they operate on cooper ative principles. Open membership and one vote per member are quite general, regardless of the legal basis of the organization. A number of the early organizations operate as mutual associations and practically all of the R. E. A. associations are nonstock. 11 The 20 States not at that time represented in the R . E. A . program b y loans made or earmarked for cooperative associations were Arizona, California, Connecticut, Delaware, Florida, Maine, Massachusetts, Nebraska, Nevada, N ew Hampshire, N ew Jersey, N ew York, Rhode Island, South Carolina, South D a kota, Utah, Vermont, Washington, W est Virginia, and W yom ing. In the interval between July 1 and Novem ber 10,1937, loans were approved for cooperative associations in California and Washington (R . E . A . News, December 1937). ° See also section on legal status of electricity associations (p. 195). 90621°— 39---------7 90 CONSUMERS’ COOPERATION IN TH E UNITED STATES One of the Rochdale principles is sale at the current retail price and the return of the overcharge, above cost, to the member on the basis of his patronage. How general the return of such patronage refunds will be, in the electricity field, it is too early to judge. The theory under lying the “ current price’ ’ procedure of the cooperative grocery associ ations is that by charging the current price the association avoids price cutting against the private dealer and the consequent arousing of his enmity; it ensures a margin wide enough for safe operation of the business and for expansion into new lines; and it makes possible the return of patronage refunds which are the tangible evidence of the advantage of cooperative activity. In the field served by the electricity-supply associations, however, there has generally been no prior service available, no competitors, and therefore no current price. It has thus far been their general policy to set rates high enough only to cover expenses of operation plus such necessary charges as depreciation, reserves, amortization of loans, etc. In this way the same principle attained by the patronage refund is also achieved— that of service without profit. The bylaws, however, generally provide for the return of patronage refunds, should a surplus remain after making provision for the items mentioned above. Cooperatives Under R ural Electrification Program Because of the overwhelming preponderance of R. E. A.-assisted associations, any report on the electricity-supply cooperatives must largely deal with that group. This program is being carried out by the Rural Electrification Administration created by Executive order on May 11, 1935, but not established by law until M ay 20, 1936 (Public, No. 605, 74th Cong.). In November 1935 it was announced that 11 loan contracts aggre gating $2,399,612 had been signed, for the construction of a total of 1,940 miles of line which would carry electricity to 8,286 rural homes. The current was turned on in the first R. E. A.-financed project (in Iowa) on December 15, 1935. During 1936, according to the first annual report of the R. E. A., more than 25,000 miles of line were erected and “ over 110,000 farms received electric service for the first time.” As of the end of the year, 218 allotments had been approved, 109 loan contracts had been exe cuted (on 94 projects, plans for which had been approved), construc tion was under way or had been completed, and 28 projects had been energized in whole or in part. These involved Federal loans to a total of $43,737,779. In addition two loan contracts for a total of $55,000 had been executed to finance the wiring of rural premises. Loans to cooperative associations.— It has been the practice of the R. E. A. from the first to give preference to public, cooperative, and nonprofit organizations. This policy was continued by the act of LOCAL SERVICE ASSOCIATIONS 91 1936, which authorized tne Administrator “ to make loans to persons, corporations, States, Territories, and subdivisions and agencies thereof, municipalities, people’s utility districts, and cooperative, nonprofit, or limited-dividend associations organized under the laws of any State or Territory of the United States, for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing of electric energy to persons in rural areas who are not receiving central-station service,” and directed him to give preference to public, cooperative, nonprofit, and similar bodies in the granting of loans. This preference has stimulated greatly the growth of cooperative ac tion in the electrical field and many new societies have been organized for the purpose of obtaining R. E. A. loans. Of the first 11 projects author ized, 5 were obtained by county electric cooperatives and 1 other, although organized under corporation law, was in effect a cooperative. As table 39 shows, 76.8 percent of the total projects for which loans had been made or funds earmarked (up to June 30, 1937) had been for cooperative associations. T able 39.—R . E . A . Projects A p p ro ved up to J u n e 3 0 , 1 9 3 7 , b y T y p e o f Organization Num ber of projects Loans granted Customers Miles of line T ype of borrowing organization N um ber Cooperative projects____________ Private nonprofit corporations____ State corporations________________ M unicipal corporations_____ ___ Power and irrigation districts_____ Private utility companies_________ i 239 33 1 5 17 16 Total_______________________ 311 Per cent Per cent N um ber Per cent N um ber 76.8 $47, 856,968 10.6 5, 670, 200 542, 328 .3 546, 058 1.6 5.5 5, 244, 750 5.2 1, 251, 767 78.3 9.3 .9 .9 8.6 2.0 161,037 16,901 2,128 2,073 13, 228 5, 564 80.1 8.4 1.1 1.0 6.6 2.8 44, 950.4 4, 741. 2 511.0 520.2 4, 689. 7 1, 280. 7 79.3 8.4 .9 .9 8.3 2.2 61,112, 071 100.0 200, 931 100.0 56, 693. 2 100.0 100.0 Amount Per cent i 214 associations with 239 projects. Table 40 shows the geographical distribution of the R. E. A. cooperatives and loans, by States, as of June 30, 1937. T able 40.— Federal L oa n s, Length o f L in e , Customers o f Electricity A ssocia tion s, J u n e 3 0 , 1 9 3 7 , b y State State A la b a m a _____ Arkansas______ Colorado______ Georgia_______ Idaho................. Illinois________ Indiana_______ Iowa________ _ Kansas..... ........ K en tu cky......... Louisiana_____ M aryland____ M ichigan_____ Minnesota____ M ississippi-.__ N um Amount Miles of N um ber of of ber of Federal line associ loans custom ations ers 5 $1,053,000 1,063.0 4 617,000 575.0 2 390,000 387.0 16 2, 294, 375 2, 263.4 2 478.5 883, 750 574, 000 3 531.0 15 4,644, 926 4,469.2 24 3, 751, 712 i 3,060. 5 4 614, 651 573.0 8 1,120, 000 1,083.0 3 905, 000 961.0 1 165, 000 165.0 5 2, 845, 000 2, 432.1 23 4, 515, 954 4, 435. 5 6 758, 200 755. 5 1 22 associations. 4,102 2,512 1,282 10,839 1,665 2,030 15, 716 i 9,648 1, 716 4,008 3,639 600 8, 717 13,198 3, 312 2 8 associations. State N um N um ber of ofAmount Federal Miles of ber of associ line custom loans ations ers Missouri______ M ontana______ N ew M exico__ N orth Carolina. N orth D akota.. Ohio__________ Oklahoma_____ Oregon________ Pennsylvania-_ Tennessee_____ T e x a s .____ _ Virginia----------Wisconsin____ Total___ 3 14 associations. 9 $1, 605,000 2 1,560.0 2 5,225 7 715, 600 674.8 2,381 1 164,000 60.0 100 7 1,044,000 908.9 4, 664 2 456.5 500, 000 1,545 18 5,756, 200 5, 371. 5 19, 430 7 1, 701, 000 1, 784.0 5, 348 3 302, 000 261.0 1, 273 6 1,950, 000 1,808.0 6,146 6 1, 363, 200 1, 316.0 6, Oil 7 1,955, 000 2, 015.0 7,190 5 1, 427, 800 1, 290.0 5, 341 15 4,440, 600 3 4, 212.0 3 13, 399 214 47,856, 968 444, 950.4 4161,037 4 210 associations. 92 CONSUMERS’ COOPERATION IN THE UNITED STATES Most of these loans were for the purpose of financing the construc tion of power lines. However, 11 projects in 8 States,12 where power either could not be procured at all or could not be obtained at a reasonable price, were allotted funds for the construction of plants in which to generate their own current. Loans for wiring purposes were extended to 8 projects in 7 States.13 Conditions for recei/pt and repayment of Federal loans.— The con trolling objective of the R. E. A. has been “ to take electricity to as many farms as possible in the shortest possible time, and to have it used in quantities sufficient to affect rural life.” To this end it has granted loans for self-liquidating projects for the extension of distri bution lines into rural areas to carry fight and power to farm homes and other farm buildings, and also for the wiring of such homes and buildings. The Rural Electrification Act of 1936 also authorized loans for the purchase and installation of electrical and plumbing appliances and equipment.14 If necessary to protect the loans, the Adminis trator was authorized, in the event of foreclosure, to bid for and pur chase property pledged or mortgaged as security, and to operate or lease such property for not over 5 years, or to sell it. Under the procedure as first established, loans could be made for the entire cost of the project; they were normally for 20 years, with interest usually at 3 percent, and were secured by mortgages on the property. An Executive order of August 7, 1935, provided that not less than 25 percent of the loan was to be spent for labor, and at least 90 percent of all persons working on the project should be taken from the public relief rolls. The act of 1936 provided that loans were to be self-liquidating within a period of not over 25 years and were to bear interest at a rate equal to the average rate of interest on United States obligations (with a maturity of 10 years or over) issued during the preceding fiscal year. In order to obtain a loan for a rural electrification project a coop erative association must represent a sufficient number of homes in the area to make the project economically feasible, must have ac quired all possible easements,15 and have a contracted source of wholesale power. 12Idaho, Iowa, Michigan, N ew M exico, Oregon, Pennsylvania, Virginia, and Wisconsin. 13Georgia, Illinois, Iowa, Minnesota, Missouri, Montana, and Wisconsin. i* Prior to that act funds for installation of electric pumps and the purchase of electric appliances and equipment were obtainable from the Electric Home and Farm Authority, and loans for pressure water systems, including modern kitchens and inside bathrooms, could be secured from the Federal Housing Administration. is A n “ easement” is a grant of right to construct, maintain, and operate electric transmission lines across or alongside any specified property. Chapter 4.— T E L E P H O N E A SS O C IA T IO N S Cooperative telephone associations represent one of the older forms of cooperative enterprise. It was found that for the group as a whole the average age was more than a quarter of a century. The oldest association reporting dated from 1893. The period from 1900 to 1919 was the most fruitful; nearly 88 percent of those making returns were formed in this 20-year interval. It appears, however, that almost no new associations are being formed in this field. This is probably due to conditions in this branch of business. Today the entire country is fairly well covered by the telephone network and there appears to be comparatively little territory into which to expand. At the time the early associations were formed, there were few tele phones in the rural districts. The telephone had been known only for about two decades and had not yet spread much beyond the cities and towns. In the country the sparse, widely scattered population made the installation of service by private companies unprofitable, and the farmers in many localities were entirely isolated and cut off from com munication not only with each other but with the outside world. It was to remedy this situation that the telephone associations began to be started. These early associations were generally the product of mutual effort. The poles were cut from nearby timberland or purchased collectively, and were erected by the members all working together. Sometimes the wires were even strung along the fences. Wire, insulators, batteries, and instruments were bought collectively and the cost was apportioned among the members. If there was a switchboard in a nearby village, the association would bargain for connection and service there; if not, a small switchboard of their own would be installed, perhaps in some conveniently located farmhouse. The costs of operation were very small, as any repairs necessary were generally made by the cooperators themselves. The service in these early organizations usually afforded communi cation either within the cooperative group only or within the imme diate locality. The next step would be to obtain connection with nearby towns and villages and then with long distance. As this extension took place and as new lines came into existence, some over lapping of territory and service became inevitable. This led to mutual agreements between lines and eventually to consolidation of several lines within given territories, to form larger associations. This process of consolidation was undoubtedly hastened by the gradual spread of State regulation of telephone companies of all types. 93 Q4 CONSUMERS’ COOPERATION IN THE UNITED STATES Whereas the original organizations were largely informal, unin corporated associations, as they grew larger and extended their field of operations, more and more of them took corporate form. Some of the local associations which had no switchboard of their own formed federated associations for the purchase and operation of a switchboard which would handle the calls of all of them. All of these stages of development were represented in the associa tions which reported to the Bureau of Labor Statistics. With some minor variation they fell into three main classes, as follows: (1) The so-called “ service line” — the local association, formed among the subscribers on one or more party lines, which has no switchboard of its own but connects with other local lines and the outside world through the switchboard of another company, either cooperative or private. In these associations the cooperative enter prise is one of common ownership and maintenance of the telephone facilities and of bargaining for switchboard service. (2) The local association, also composed of individual telephone users, having its own switchboard. (3) The switchboard association of the federated type, whose mem bership is composed of local service-line associations. Extreme variation was found in size of societies. Those reporting varied from the associations which consisted of only one party line and some half dozen members to a large organization with a member ship of 4,025, serving 6,606 families throughout a whole county. Most of them, however, were small organizations operating in small towns or rural districts. Nearly 68 percent of those reporting had fewer than 50 members each, and of the whole number only 19 associations had 500 members or more. On the basis of the findings in the Bureau’s study it may be said that the typical telephone association is a small organization of 60 to 70 members, serving on an average about 90 subscribers (including members). The association is more likely than not to be incor porated, and quite likely to be operating its own switchboard. Gen erally the association owns the poles and wire along the right-of-way, but the wire and poles necessary to carry the service to the member’s home must usually be furnished by the member. It is also common to find that the member must furnish his telephone instrument in the smaller associations, though in the larger organizations these are generally owned by the company. The construction may be either of the single-wire (grounded) type or double-wire (metallic) type; in the former the ground completes the circuit, whereas in the latter the entire circuit is carried by wire. The grounded type is less expensive to maintain but is also said to be TELEPHONE ASSOCIATIONS 95 less satisfactory as to clearness of reception and general service. The existing associations appear to be about evenly divided between the grounded and metallic types. Local service for 24 hours a day is quite general and toll connection is also usually available. The typical association operates on an assessment basis; about twice as many associations make assessments as charge flat rates. The cost of service to the member is very moderate, averaging $7.77 a year in the assessment associations, and in those charging flat rates 87 cents a month for rural service and 92 cents a month for service within the village or town limits. The financial data obtained in the survey were not entirely satis factory, owing to lost records, inadequate records, and lack of knowl edge of business methods on the part of a considerable number of the reporting associations. On the basis of the returns, however, it appears that the average gross revenue per association in 1936 was only $968. This average probably understates the actual amount. Many of the service-line associations handle almost no cash in the course of the year. Even the fee paid per telephone to the. switch board company for making switchboard connections may not pass through the local association but may be paid by the individual members directly to that company; in such cases, however, where the amount of the switching fee could be obtained the total amount paid in such fees was credited as income to the service-line association. Many of the associations have no employees and make little or no cash expenditures. If repairs are needed, the members as a whole either make them themselves (purchasing only the necessary materials) or hire from a local company the services of a lineman at a fixed hourly rate. Taking into consideration the fact that many of the associations were formed before the passage of cooperative laws, that they are operating under corporation acts whose requirements are in many cases in direct contravention of cooperative practice, and that as public utilities they are in a number of States subject to public regula tion by State utility commissions, a surprisingly high degree of conformity with cooperative principle was found among them. It may be said, however, that few of them have any conception of themselves as a part of a general cooperative movement. They have been content with their avowed purpose of furnishing telephone service in territories which would ordinarily be without such service if they did not exist. This service they are furnishing through democratic channels and at extremely low cost. 96 CONSUMERS’ COOPERATION IN THE UNITED STATES S cop e and M eth od o f S tu d y From various sources the Bureau assembled a list including not only associations operating as cooperatives but also those operating as mutuals. One or more associations of these types were found in 44 States. All of these were circularized one or more times. Examination of the replies showed that a substantial number of the so-called “ cooperative associations,” while they may have been cooperative in their early years, were no longer so. A very large proportion of the “ mutuals/’ however, although making no pretensions to being cooperative, nevertheless were conforming to all of the cooperative principles except possibly that of return of patronage dividends; and in most instances the same purpose— service without profit— was being achieved through the medium of rates only high enough to cover expenses. In order to be included in the Bureau’s tabulation an association had to be at least semicooperative. For purposes of this study an association was regarded as entirely cooperative which conformed to the principles of open membership, a single vote per member, no proxy voting, limited return on share capital, and service at cost (either through the patronage refund or through service rates so low as to yield no profit). An association was regarded as semicooperative which allowed voting by shares but limited to a small number the shares held by any one person, or which allowed proxy voting but only one vote per member; no association was included in the tabulations in which both voting by proxy and voting by shares was allowed or in which the nonmember subscribers outnumbered the members, unless the organization was clearly a nonprofit association. In evaluating the cooperative features, consideration was given to requirements of State cooperative and other laws and to public-utility regulations. Altogether there were 1,614 associations which furnished usable reports and which were cooperative on a sufficient number of points to warrant their inclusion. The geographic distribution of the known and reporting associations is given in table 41. As is there shown, more than 80 percent of all the known associations are in the North Central States. 97 TELEPHONE ASSOCIATIONS T able 41 .— Number of Known and Reporting Cooperative Telephone Associations, by Geographic Division and State Total known associations Geographic division and State N um ber Per cent N um ber fur nish ing usable reports 3,728 100.00 1,614 34 19 5 9 1 .91 .51 .13 .24 .03 15 7 2 6 M iddle A tla n tic..- ............. New Y ork -. _________ New J e rs e y _________ Pennsylvania______ __ 70 22 1 47 1.88 .59 .03 1.26 36 18 East North Central________ Ohio_____ _____________ Indiana________________ Illinois________ _______ Michigan______________ Wisconsin____________ 493 70 135 170 53 65 13.23 1.88 3.62 4. 56 1. 42 1.74 223 46 52 69 24 32 West N orth Central_______ Minnesota_____________ Iowa___________________ Missouri______________ North Dakota_________ South Dakota_________ Nebraska- _ __________ Kansas________________ 2, 535 1,653 272 90 162 143 38 177 68.00 44.34 7.30 2. 41 4. 35 3.83 1. 02 4. 75 1,178 765 137 30 81 65 15 85 South Atlantic________ M aryland_____________ Virginia_______ _______ West Virginia________ _ 152 8 64 27 4.08 .22 1. 72 .70 41 3 24 5 United States_____________ New England ____________ M aine_________________ New Hampshire_____ . Vermont____________ __ Massachusetts_________ T otal known associations Geographic division and State N um ber N um ber fur nish Per ing cent usable reports South Atlantic—Con. N orth Carolina________ South Carolina_______ Georgia________________ Florida__________ _____ 18 13 19 3 0. 48 .35 .51 . 10 2 East South Central _ _ K entucky_____________ Tennessee____________ Alabama_______________ Mississippi . -_ - ____ 44 17 16 9 2 1.18 .46 .43 .24 .05 8 4 3 1 West South Central_______ A r k a n s a s ...__________ Louisiana._ _______ Oklahom a._ . . Texas__________________ 149 21 4 56 68 4.00 .56 .11 1.50 1.82 20 2 M ountain. ______________ M ontana______________ Idaho__________________ W yom ing______________ Colorado______________ N ew M e x ic o ______ _ U tah__________________ Nevada_______________ 96 39 11 16 20 4 4 2 2.58 1.05 .30 .43 .54 .11 .11 .05 32 14 4 6 7 Pacific___ _________________ W ashington. _ Oregon. ______________ California______________ 155 31 114 10 4.16 .83 3.06 .27 61 20 40 1 7 18 8 10 1 E xten t o f Cooperative T elephone M ovem en t The Bureau of the Census every 5 years makes a count of the num ber of telephone companies and telephones in use in the United States. Its reports classify the companies into two groups— those with annual gross incomes of $10,000 and over and those whose income is less than that amount. Its latest report covered the year 1932. In that year it found that there were 44,828 telephone systems in the United States, of which 918 (or less than 2% percent) had incomes of $10,000 or over. But the network of that 2% percent was serving about 93% percent of the nearly 17% million telephones in use that year. This was an average of slightly more than 17,700 telephones for each of the larger systems, whereas the small companies were averaging only about 26 telephones each. 98 CONSUMERS’ COOPERATION IN TH E UNITED STATES T able 42 .— Development of Large and Small Telephone Companies Since 1922 1 Companies with annual gross incomes of— $10,000 or over Under $10,000 Year Num ber of telephones in use 1922____________________________________ 1927____________________________________ 1932____________________________________ i Source: U. S. Bureau of the Census. Washington, 1934. 12, 295,234 16, 712,495 16,284, 231 Average number per com pany 9,293 12,217 17, 739 Number of telephones in use 2,052,161 1,810, 272 1,140,175 Average number per com pany 37 31 26 Num ber of tele phones per 10,000 popu lation 130 155 139 Census of Electrical Industries, 1932—Telephones and Telegraphs. The returns in the Bureau of Labor Statistics study indicate that most of the mutual and cooperative companies would fall within the small-company classification/ but it cannot be assumed that all of the small systems are either mutual or cooperative. The reports to the Bureau show that a substantial proportion of these smaller systems are owned either by single individuals or by stock companies operat ing for profit. A further percentage, although calling themselves mutual or cooperative, are actually not now operating along mutual or cooperative lines, whatever they may have done in the beginning. It is not known how many telephone systems there are in the United States which are functioning cooperatively. A Federal law makes the individual returns and the mailing lists of the Bureau of the Census confidential even as regards other Federal offices, and it is therefore not possible to examine the census files in order to obtain a complete list of companies which might be cooperative. In the absence of these data the Bureau of Labor Statistics was able to build up a list of some 4,400 associations, but nearly 400 of these proved to have gone out of business and over 300 had to be discarded because they could not qualify under the Bureau’s definition of cooperative or semicooperative. That left some 3,700, of which nearly 45 percent were in Minnesota alone. It is known that, with two exceptions, this is not a complete list of associations. The exceptions are Minnesota and North Dakota, where State-wide cooperative censuses, made as “ white-collar” projects under the W. P. A., resulted in finding almost all if not quite all of the associations. It is believed, however, that the list does cover at least 70 percent of the total number of the really cooperative or mutualcooperative associations in telephone operation in the United States. The list is weak mainly in its coverage of the unincorporated service lines, but many of these are included in the returns from the federated switchboard associations. i Only 5 of the associations included in the present study had gross incomes of $10,000 or over in 1936. TELEPHONE 99 A S S O C IA T IO N S Assuming a total of 5,000 associations functioning either entirely cooperatively or semicooperatively, then on the basis of returns to the Bureau of Labor Statistics it may be estimated that their total mem bership in 1936 was in the neighborhood of 330,000 and that some 460,000 persons were served by them in that year. T yp es o f A ssocia tion s Of 1,614 reporting associations, over three-fifths were of the serv ice-line type, about a third were local associations with their own switchboard service, and less than 4 percent were federations of local associations. In the States from which 25 or more associations reported, service lines were in the majority in Minnesota, North Dakota, Oregon, South Dakota, and Wisconsin, whereas in Illinois, Indiana, Iowa, Kansas, Missouri, and Ohio it was more common for the telephone associations to own their own switchboards. The distribution of the associations by type and by State is shown in table 43. T able 43 .— Geographic Distribution of Reporting Cooperative Telephone Associations, by Type, 1936 Geographic division and State Total United States______________________ Number Percent Locals Locals Federa tions W ith with Total W ith switch out switch switch board board board 1,614 554 999 100.0 34.3 61.9 N ew England_____ _ „ M aine___ _ _ _ ______ _ _ N ew H am pshire... ___ Verm ont____________ ____ ____ 15 7 2 6 4 3 100. 0 100. 0 100.0 100.0 26. 7 42. 9 1 11 4 2 5 16. 7 73. 3 57.1 100.0 83.3 M iddle Atlantic____ _ . .... N ew Y ork ________ . . . _ . Pennsylvania. _____ . ... 36 18 18 10 5 5 26 13 13 100.0 100. 0 100.0 27.8 27.8 27.8 72. 2 72. 2 72. 2 East North C e n tr a l______ .. . _ Ohio................. . . . Indiana____ ___________________ Illinois______ __________________ M ichigan______________________ W isconsin________ _ . . . . _ 223 46 52 69 24 32 154 42 42 45 13 12 55 4 7 15 9 20 14 100.0 100. 0 100.0 100.0 100.0 100.0 69.0 91.3 80.8 65.2 54.2 37.5 24.7 8. 7 13.5 21.7 37.5 62. 5 West N orth Central____ __________ Minnesota_____________________ Iow a________ _ ______________ M issouri____ _ . . . ____ _. . North Dakota_______ . . . . . South Dakota__________________ Nebraska______________________ K ansas.____ ___________________ 1,178 765 137 30 81 65 15 85 307 78 91 25 26 11 9 67 831 681 27 2 55 52 5 9 40 6 19 3 100. 0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 26.1 10.2 66.4 83.3 32.1 16.9 60.0 78.8 70.5 89.0 19.7 6.7 67.9 80.0 33.3 10,6 South A tlantic_____________________ M aryland_____ _ ______ . ... Virginia________________________ W est Virginia . _ ______ _ . . . North Carolina.. _ . Georgia________________________ 41 3 24 5 7 2 22 1 17 3 100.0 100.0 100.0 100.0 100.0 100.0 53.7 33.3 70.8 60.0 43.9 66.7 25.0 40.0 100.0 50.0 1 61 Federa tions W ith with W ith switch out switch switch board board board 3 9 2 2 1 9 18 1 2 6 1 2 7 1 __ „ ___ 50.6 3.8 6.3 5.7 13.0 8.3 3.4 .8 13.9 10.0 3.1 6.7 10. 6 2.4 4.2 100 CONSUMERS’ COOPERATION IN TH E UNITED STATES T able 43.— Geographic Distribution of Reporting Cooperative Telephone Associations, by Type , 1936— Continued Geographic division and State Total Number Percent Locals Locals Federa tions with Total W ith W ith switch out Switch switch board board board East South Central________________ Kentucky _ _ _ _ _ _ T e n n ess ee.__ ___________ Alabama _ ________ _______ _ 8 4 3 1 7 3 3 1 1 1 West South Central______ _ _ Arkansas . . . ___ __ ... _ _ Oklahoma____ _ Texas_____ ___ _______________ 20 2 8 10 15 1 5 9 2 1 1 Mountain ____ _ _ . . . __ M ontana__________ . _______ Idaho________ _ _ _ _ __ W yom ing_______ Colorado. ___ _ ______ _ __ N evada______ 32 14 4 6 7 1 12 5 3 20 9 1 6 3 1 Pacific____________ ___ _ _____ _ California_______ _________ _ Washington ._ ________ Oregon___________ __ ___ 61 1 20 40 23 1 10 12 4 3 2 1 35 3 9 26 1 2 Federa tions with W ith W ith switch out switch switch board board board 100.0 100.0 100.0 100.0 87.5 75.0 100.0 100.0 12.5 25.0 100.0 100.0 100.0 100.0 75.0 50.0 62.5 90.0 10.0 50.0 12.5 100.0 100.0 100.0 100.0 100.0 100.0 37.5 35.7 75.0 62.5 64.3 25.0 100.0 42.9 100.0 100.0 100.0 100.0 100.0 37.7 100.0 50.0 30.0 57.1 15.0 25.0 10.0 57.4 4.9 45.0 65.0 5.0 5.0 A g e o f A ssocia tion s The reports received from the telephone associations show that these associations are one of the older forms of cooperative effort in the United States. The average age for all associations reporting on this point was 26 years. The following statement shows the distribution of associations, by length of time in operation: Number of associations Less than 1 year____________________________________________________ 2 1 and under 3 years_______________________________________________ 10 3 and under 5 years________________________________________________ 9 5 and under 10 years_______________________________________________ 48 10 and under 15 years_____________________________________________ 45 15 and under 2 0 years_____________________________________________ 147 20 and under 25 years_____________________________________________ 321 25 and under 3 0 years_____________________________________________ 30 years and over___________________________________________________ 400 492 T o ta l_________________________________________________________ 1 ,4 7 4 The largest groups had been formed in the periods 1900 to 1909 (49.5 percent) and 1910 to 1919 (38.0 percent), but 1.3 percent had been in operation since before 1900. The oldest association reporting was started in 1893. Table 44 shows, by States, the distribution of the associations according to the year in which they were formed. 101 TELEPHONE ASSOCIATIONS T able 44 .— Distribution of Cooperative Telephone Associations, by Period in Which Established State Total number of associxepui ling All associations.. 1,474 Alabama________ Arkansas___ - California-- _ Colorado___ _ Georgia_______ 1 1 1 7 2 Idaho___________ Illinois. ________ In d ia n a ..- _ ___ I o w a . . ____ ____ Kansas............ 4 61 46 122 81 K entucky.. _ M aine. ___ Maryland_____ Michigan_____ _ Minnesota _____ 4 7 2 18 700 Missouri______ . Montana______ Nebraska __ Nevada __ New Hampshire 25 14 14 1 2 New Y o r k ____ North C arolin a.. North Dakota___ O h io _____ ___ Oklahoma______ 18 6 78 44 7 Oregon.. _ __ _ Pennsylvania___ South Dakota___ Tennessee. _ _ _ T e x a s ____ _ _ 37 17 58 3 9 Vermont Virginia, _ _ _ W ashington West Virginia.___ Wisconsin W yoming 4 22 18 5 30 5 Number of associations organized in specified period 1890 to 1899 1900 to 1909 1910 to 1919 1920 to 1924 1925 to 1929 1930 1931 1932 1933 1934 1935 19 730 560 78 50 10 6 7 2 7 3 1 i2 2 1936 2 1 1 3 1 1 11 1 1 1 2 1 5 1 1 2 44 37 76 59 2 9 7 22 15 3 1 7 3 8 2 1 32 1 14 1 2 5 1 3 14 309 2 326 2 1 L 5 9 4 1 1 12 1 16 34 4 3 3 50 6 3 4 9 12 22 3 1 3 3 11 4 31 2 3 4 9 6 1 17 1 10 8 2 6 3 2 18 2 9 1 3 2 2 4 1 1 3 1 1 1 2 2 1 ' 1 1 1 2 1 1 1 6 7 1 1 2 2 1 1 1 1 1 1 2 1 1 1 4 2 1 1 1 reorganized; no information on date first established. 2 1 established in 1911; reorganized in 1936. M em b ersh ip and Subscribers Served The telephone associations ranged in size up to 4,025 but were generally small. Of the whole group, 48.5 percent had fewer than 25 members each and 67.8 percent had fewer than 50 members each. Less than one-fifth had more than 100 members and only 1.2 percent had 500 members or more. (Table 45.) 102 CONSUMERS’ COOPERATION IN TH E UNITED STATES T able 45 .— Distribution of Cooperative Telephone Associations by Number of Members, 1936 Operating switch boards N ot operating switchboards Both types of associations Classified membership Fewer than 10 members_________________ 10 and under 25 members_________ ____ 25 and under 50 members________________ 50 and under 100 members_______________ 100 and under 250 members__ ___________ 250 and under 500 members__ ___________ 500 and under 1,000 m e m b e rs .________ __ _ 1,000 members and over _ Total_______ ____ _________________ Number Percent Number Percent Number 7 35 92 123 201 55 10 8 1.5 6.6 17.3 23.2 37.9 10.4 1.9 1.5 166 530 201 64 26 3 1 16.8 53.5 20.3 6.5 2.6 .3 .1 173 565 293 187 227 58 11 8 11.4 37.1 19.3 12.3 14.9 3.8 .7 .5 531 100.0 991 100.0 1,522 100.0 Percent As would be expected, the service-line associations were the smaller of the two types of associations shown in table 45. Seventy percent of these had fewer than 25 members and 90 percent fewer than 50 members. As table 46 indicates, they averaged only 27 members each, as compared with 161 members in the associations having their own switchboards. The central, or federated associations, had in membership an average of 24 local associations each. The 1,522 local associations reporting as to membership had a com bined total of 110,981 members at the end of 1936, or an average of 66 persons each. More than three-fourths of these were members of local associations operating their own switchboards. Not all of these members were also subscribers at the end of the year. In some cases shareholders had moved out of the territory served by the association, and though retaining their stock in the organization were no longer using its facilities. Reports from other associations indicated that, low as the rates or assessments were, there nevertheless were members whose financial condition was such that they could no longer afford the service. The number of inactive members was more than counterbalanced by the nonmember patrons, however, so that the number of active subscribers of the local associa tions at the end of 1936 exceeded the number of shareholders by 25,185. T able 46 .— Membership and Subscribers of Cooperative Telephone Associations, 1936, by Type of Association Membership T ype of association Local associations— ___ ____ ___________ _______ Operating switchboards______________________ N ot operating switchboards__________________ Federated or central associations operating switchooards-------------------- -----------------------------------------i Num ber of member associations. Subscribers Number Number of associ Members Aver of associ Members A ver ations age ations age reporting reporting 1,522 529 993 110,981 85,041 25,940 66 161 27 1,542 549 993 136,166 109,274 26,892 88 199 27 50 i 1,198 i 24 56 11,641 208 103 TELEPHONE ASSOCIATIONS Fifty-six associations, composed of 1,198 member associations of the service-line type, reported a total of 11,641 subscribers. Although there was a small amount of duplication, in number of subscribers reported, as between the local service-line associations and the feder ated central associations, it is safe to say that the reporting associations were serving over 147,000 families at the end of 1936. The total and average membership and subscribers are shown, by geographic divisions and States, in table 47. It is evident from this table that 87 percent of the local associations reporting and 81 percent of the membership were in the North Central States. The largest associations were in the State of Washington where the average membership was 339, followed by Idaho with 296. In Minnesota, which had the largest number of associations, the average member ship was only 37 but this was because of the unusually large proportion of the small service lines. A considerable margin between average membership and average number of subscribers was shown in some States, notably Iowa, Nebraska, Oklahoma, and Washington. Undoubtedly this was due to some extent to requirements by State commissions making it compulsory upon the associations to serve all applicants (whether members or not) in the area in which they have license to operate. T able 47 .— Membership and Subscribers, 1936, by Division and State Membership Geographic division State and T ype of asso ciation Associ ations reporting M em bers Subscribers Average Associ per asso ations ciation reporting M em bers Average per asso ciation United States_____ _______ Local.......... . Central____ 1,522 50 110,981 i 1,198 66 i 24 1,542 56 136,166 11,641 88 208 New England........................ M a in e .. . _ _ _ N ew Hampshire______ Vermont M iddle A tla n tic.. N ew Y ork ___ _ _ Pennsylvania. _______ East North Central . . Local______ ___ d o ___ _ ____ d o ______ ____ d o. ___ d o ______ ____ d o ______ ____ d o ______ ____ d o _____ Central____ Local___ . . ____ d o. Central____ Local______ Central____ Local____ __ Central____ Local______ ___ do. Central____ Local____ _ Central. __ . Local___ __ Central____ Local___ . . Central____ L o ca l.. ___ do . . Central____ Local. . __ Central........ Local. Central____ 14 7 2 5 36 18 18 204 13 45 49 2 59 9 19 2 32 1,115 32 743 5 114 14 26 3 80 63 2 14 1 75 7 1,774 1, 554 58 162 1, 298 747 551 22,011 i 282 5, 542 5,151 i 37 7,152 1208 1,976 1 37 2,190 67,416 i 801 27, 744 * 120 16, 674 i 438 3, 608 i 71 3, 839 1,938 i 16 2,530 i6 11, 083 1 150 127 222 29 32 36 42 31 108 122 123 105 i 19 121 i 23 104 i 19 68 60 i 25 37 124 146 i 31 139 124 48 31 i8 181 i6 148 121 14 7 2 5 36 18 18 207 13 46 49 3 59 8 21 2 32 1,131 36 756 5 115 18 27 3 81 63 1 14 1 75 1, 534 1,316 56 162 1, 683 1,062 621 26, 365 2,803 6,482 6,251 364 9,050 1, 889 2,040 550 2, 542 82, 399 7,845 32, 753 594 21, 803 4, 358 4, 376 760 3,854 2, 386 70 3,734 275 13,493 1,788 110 188 28 32 47 59 35 127 216 141 128 121 153 236 97 275 79 75 218 43 119 190 242 162 253 48 38 70 267 275 180 224 Ohio__________________ Indiana. . . . Illinois_____________ ._ M ichigan___ __________ W isconsin.— _______ West North Central.. __ Minnesota___________ Iowa_____ _______ _____ Missouri____ _________ North D akota_________ South Dakota____ _____ N ebraska._____ ______ Kansas................ .......... . 1Number of member assocnations. 8 104 CONSUMERS’ COOPERATION IN TH E UNITED STATES T able 47.— Membership and Subscribers, 1936, by Division and State— Continued Membership Geographic division State and T yp e of asso ciation South A t la n t ic .___ _______ Local___ __ Central____ Maryland_____________ Local___ _ Virginia........... ............... ____ d o ______ Central____ West Virginia. _ _ ._ Local _ North Carolina_______ ____ d o ______ Georgia.. ___________ ____ d o ______ East South Central_____ ____ d o______ K entucky. _ ____ d o . . . . Tennessee_____________ ____ d o______ Alabama________ _____ ____ d o ______ __ do. West South Central Central _ Arkansas____ ... Local _ _ Oklahoma_____________ . . . d o .. Central____ Local. ___ T e x a s ............... .......... Central____ M ountain________________ Local ____ Montana________ . . . . . . . d o_____ Idaho. _____________ _ ____ d o .. _. W yom ing____ ________ ____ d o ______ Colorado________ . . . . . . . d o. _ _ N evada_________ _____ ____ d o ______ Pacific________ ___________ . . . .d o ___ C entral.. . C aliforn ia_______ ____ Local _____ ____ do _ W ashington.. _______ Central____ O r e g o n ..____________ L ocal. Central___ Associ ations reporting 40 1 3 23 1 5 7 2 8 4 3 1 16 3 2 6 2 8 1 32 14 4 6 7 1 57 1 1 18 1 38 M em bers 5, 725 i 30 277 4,952 i 30 312 149 35 689 185 490 14 1,605 i 81 43 722 i 74 840 i7 2,215 635 1,182 100 288 10 8, 248 14 33 6,110 i4 2,105 Subscribers Average Associ per asso ations ciation reporting 143 i 30 92 215 i 30 62 21 18 86 46 163 14 100 127 22 120 137 105 17 69 45 296 17 41 10 145 14 33 339 i4 55 40 1 3 23 1 5 7 2 8 4 3 1 16 3 2 6 2 8 1 32 14 4 6 7 1 58 3 1 19 1 38 2 M em bers 5,934 210 352 5,003 210 385 154 40 726 209 498 19 2,448 195 43 1, 592 155 813 40 2,136 464 1,195 84 383 10 12,941 588 33 10,643 20 2,265 568 Average per asso ciation 148 210 117 218 210 77 22 20 91 52 166 19 153 65 22 265 78 102 40 67 33 299 14 55 10 223 196 33 560 20 60 284 1 Number of member associations. The associations appear to have been losing ground as regards membership. Of 1,305 societies which reported number of members for both 1935 and 1936, the membership in the latter year showed an increase in 184, a decrease in 218, and remained unchanged in 903. Some relation between period of operation and membership was indicated, in the reporting associations. Thus, of 62 associations which had been in existence for less than 10 years, all but 17 had fewer than 50 members. On the other hand, no associations less than 15 years of age had attained a membership of 500 or more, and the only associations with 1,000 or more members were 5 which had all been operating for 20 years or longer (3 of these, for 30 years or longer). Cooperative P ra c tic e 2 In general the practice of open membership is followed by the telephone associations. Limitation, where found, was generally that imposed by the capacity of the facilities owned. Thus several asso ciations reported that membership was limited to 15, 18, or 20— the load limit of the party line owned by the association. A few associa tions required that the prospective member must live in the territory * See also section on legal status (p. 197) for legislative provisions affecting operating practice. TELEPHONE ASSOCIATIONS 105 served by the association and thus be in a position to utilize the telephone facilities. Only four associations were found which im posed any other restriction. In two of these, membership was open only to farmers, and in one farmers were specifically excluded. The fourth association (located in Texas) barred Negroes from membership. Voting.— Roughly, 80 percent of the reporting associations allowed only one vote per member, and about 75 percent prohibited voting by proxy. In the federations, member associations had one vote each. In one case, however, a number of party lines, all in rural districts, had federated and bought their own switchboard which was set up in a village centrally located. At the same time, service was extended to villagers. The rural service was still operated on the assessment basis, and the members continued to provide and maintain their own telephones and lines, but the village subscribers were renters and were charged a flat rate. In this association each of the local member associations (i. e., the party lines) had one vote in the affairs of the association and the villagers were given one vote for every 10 subscribers. Share capital.— In the associations with capital stock one of the conditions of membership was the purchase of at least one share. The pure mutuals and some of the cooperative associations were membership organizations without capital stock. In the pure mutuals the usual practice, at the time the lines were built, had been for the members to divide the total cost equally among themselves, the pro rata share being regarded as the cost of “ membership.” In at least one case, the association later issued shares, the par value of which was based upon the amount of contribution of the original members. Generally when a member wishes to withdraw from the organiza tion, he must find a purchaser for his share, but some associations purchase his share at par value or net worth, whichever is lower. Analysis of the policies of the associations indicates that less than 5 percent make a practice of paying interest on share capital. In these associations, therefore, although they are organized as capitalstock associations, the share may be regarded as only a membership certificate. Of 33 associations which make a practice of paying interest on share capital, 14 limit the rate of return— one to 4 percent, five to 5 percent, three to 6 percent, one to 7 percent, three to 8 percent, and one to 10 percent. Only 23 made any return on shares in 1936, the rates ranging from 2 to 8 percent. Patronage refunds.— The return of surpluses earned on the year’s operations, in proportion to patronage, is not common among the tele phone associations. The main reason for this is that there is generally no surplus to return. About three-fourths of the associations operate on the assessment basis. The assessment may be levied upon all 90621°— 39-------- 8 106 C O N S U M E R S ’ COOPERATION IN THE U N IT E D STATES members alike, or may be in proportion either to the amount of shares held or to the telephones in use. Whatever the basis, the total amount is set only high enough to cover operating expenses. Those associations which do operate on a predetermined monthly rate usually aim to fix that rate only high enough to cover the actual cost of service. In the grocery trade and retail gasoline business there is a “ current price” which is easily known, and which provides for a margin suffi cient to cover operating expenses plus a profit to the dealer. In other words, the member of a grocery cooperative voluntarily advances to his association this difference between actual cost and the current price. It is from this “ overcharge” that he receives his patronage refund at the end of the operating period. Most of the telephone associations, however, are operating in a business field and in districts where there has been no current rate, and their low rates afford little or no surplus. Among the associations covered by the present study only 29 reported that they had returned a patronage refund for 1936. They had rebated the sum of $7,168, which was an average of $3.23 for each of their members. The practice of one additional association was to divide any surplus equally among the members— a purely mutual procedure— and it was the custom of another to give free service until the surplus was exhausted. O perative and A d m in istra tive P rocedure The larger switchboard associations operate like any other tele phone company, with directors, officers, manager, linemen, and opera tors. The directors, however, are generally either unpaid or receive only a small fee for attendance at meetings. Full-time officers and all employees are on a salary status. There is little formal procedure in the operation of the service lines. Generally most of the actual work is carried on by a secretary, elected from the membership, who may contribute his services or may receive a small annual amount for his work. In some of the very small associations the secretary is the only officer and there are no paid employees. The associations which have no switchboard of their own naturally need no operators. In the smaller associations which give switch board service, it was found that service may be provided for in one of several different ways: (1) One or more operators may be hired at a flat monthly or yearly rate, the association being responsible for the payment of the salary; (2) the operator may be guaranteed a certain sum per year, each member being directly responsible to the operator for his share; (3) the operator may be hired on a contingent or com mission basis, receiving either a specified commission on the total business (calls made) or a flat rate per call; (4) the switchboard may be placed in the home of one of the members and operated by the TELEPHONE A S S O C IA T IO N S 107 family, either gratuitously or for a small yearly amount. A fifth method had been resorted to in a few instances, mainly in territories where the economic situation of the association and its members was desperate; there the procedure was to turn over the switchboard (though still retaining ownership) to some person or family willing to take over its operation for the small amounts receivable in annual switchboard fees or for a small amount per call; generally such arrange ments were undertaken by a local family simply to obtain some small supplementary income. PROPERTIES AND EQUIPMENT Data as to miles of lines owned by the associations were available for only 239 organizations. These had a total of 7,139.8 miles, an average of 29.9 miles each. If this average can be regarded as repre sentative of the whole group, then the associations covered in this report own and operate about 45,000 miles of line. As already indicated, the associations usually own the poles and wire along the main right of way. The wire and poles necessary to carry the service from the highway to the members' homes, however, must be furnished by the member in over three-fifths of the service lines, and in nearly two-fifths of the local associations operating their own switchboards. In over three-fourths of the service lines, and three-fifths of the local switchboard associations, the member must also supply his own telephone instrument. Many of the associations furnish service only to members; if nonmember subscribers are served, instruments are furnished by the association, either (1) at a specified monthly rental for the instrument but with switching service at the same rate as for members, or (2) at a higher flat service rate than for members, the difference being in consideration of furnishing instru ment and maintenance of line. The larger companies, particularly those which charge a stipulated monthly rate, utilize part of their revenues for the maintenance and repair of lines and equipment. In the smaller companies it is the general practice that a considerable amount of the repair and mainte nance work on the association’s lines is done by the members them selves. Of the 1,224 companies reporting on this point, in 692 (57 percent) the members are responsible for the repair of their instru ments, the replacement of batteries, and the upkeep of their wire as far as the main line. In some associations, when repairs on the main lines are needed, either the members all contribute the necessary services or a lineman (who may be a professional from one of the private companies or simply one of the cooperative members) is hired. Some associations permit certain members to pay all or part of their assessment in services. In at least one association one member is elected as lineman each year and receives a small sum for his services. 108 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES Sometimes the association holds a “bee.” Thus one society reports: “Every fall the members go out 1 day, in a body, all over the line, reset poles and insulators and do everything possible to keep expenses down to a minimum.” COST OF SERVICE Service charges.— It was found that about three times as many associations were operating on the assessment basis as were charging flat monthly rates. Of those in the former class many were service lines paying a specified annual switching fee per phone to some private company. In such cases the procedure varied. In some the total expenses— switching fees plus cost of repairs, replacements, etc.— were divided equally by the number of active members, and the resultant sum was levied as an assessment, for each quarter, half year, or year. In others, the switching fee was paid separately; either the individual subscriber paid his fee directly to the company or the secretary of the association collected the fees and paid them to the company in a lump sum. The associations which had their own switchboards usually charged flat monthly rates, but even in this class some made flat rates only to renters (nonmember subscribers); members bore their pro rata share (in the form of assessments) of the total expenses of the association. Of those charging flat rates, the average charge for a rural telephone was 87 cents a month, and for a residence telephone in town 92 cents a month. Yearly assessments of service-line associations averaged $7.77 per member; the yearly rate charged to nonmembers in these associations averaged $11.79. Although nonmembers were usually charged a higher rate than the members, in a few cases the cost to the member in 1936 was higher than to nonmembers. This could generally be attributed to unusually large repair expenditures necessitated by storms, etc. Several of the associations in a section swept by a forest fire many years ago reported that they made unusually small assessments in 1936 because, having just received part of the indemnity from the Federal Government,3 that sum took care of the expenses. Another association had returned to the members the first half of the Federal indemnity; this was later found to have been a mistake, for later losses which could have been met comfortably from this sum had to be covered by individual assessments. The second half of the indem nity, received during 1936, was used for line improvements and repairs on the building housing the telephone exchange. The average cost per subscriber per month, for the 1,150 associations reporting the amount of their charges, is shown in table 48. 3 The fire was attributed to a spark from a railroad locom otive. control of railroads. This was during the period of Federal TELEPHONE 109 A S S O C IA T IO N S T able 48.— C ost p e r Subscriber p e r M on th , in T elep hone A ssocia tion s Rate per month Num ber of associ Range of ations re charges of porting Average Median associations reporting Item Associations with switchboard, operating on— M onthly rate: Residence service__ ______________________ ________ Commercial service__ __ _____ __ ____ ____ ______ Rural service________ ________ _______ _ ____ __ __ __ Yearly assessment: M em bers______ __________________________ _ ____ Nonm embers_____ _____________ _____ __ . ______ Service lines having no switchboard: M em bers________ __________ _____ . . _ ____________ Nonmembers____ ________ __ ______________ _______ _ 1.00 1.00 .83 $0.04-$3.06 . 08- 4.58 . 08- 3. 75 .67 1.19 .58 1.04 . 17- 2.00 . 75- 2.00 .64 .98 .58 .89 . 06- 2.25 .1 7 - 2.00 415 360 414 $0.92 1.19 .87 54 681 67 6 $ Switching jees.— For switching service purchased by service lines from private companies, the most common yearly switching fees per telephone were $4.20 (35 cents per month) and $6 (50 cents per month). Of 808 service-line associations for which the amount of the switching fee was reported, 521 paid yearly rates of less than $5 (234 of these paid $4.20), 33 paid $5, 225 paid $6, and the remainder paid more than $6. The statement following shows the distribution by amount of switching fee per telephone per year: Number of associations reporting Number of associations reporting $ 2 .0 0 ________________________________ 15 $ 2 .50________________________________ 17 $ 3 .0 0 ________________________________ 93 $ 3 .20________________________________ 3 $ 3 .6 0 ________________________________ 69 $4 .00________________________________ 46 $4 .20__________________________________ 234 $4 .50________________________________ 10 34 $4.80__________ $5 .00________________________________ 33 $6 .00__________________________________ 225 $6 .75________________________________ 2 $7.20________________________________ 9 $7.60________________________________ 13 $9 .00_________________________________ 5 In most States the switching fees were fairly uniform throughout the State. Thus, in Illinois, Kansas, Michigan, North Dakota, Oregon, Pennsylvania, Virginia, Washington, and Wyoming, the common rate was $6, in South Dakota $3, and in Wisconsin $7. In Minnesota a great variety of fees was charged; the 593 associations for which information was obtained were distributed as follows: Number of associations reporting $ 2 . 0 0 ______________________________________ 6 $ 2 .40________________________________ $ 2 .5 0 ________________________________ $ 3 .0 0 ________________________________ $3 .20_________________________________ $3 .60_________________________________ $4 .00________________________________ 7 9 49 2 68 41 Number of associations reporting $4.20__________________________________ 234 $4.50________________________________ 6 $4 .80________________________________ 26 $5 .00________________________________ 15 $6 .00________________________________ 123 $7 .20________________________________ 4 $9.00________________________________ 3 110 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES There appeared to be no relation between size of association (i. e. number of telephones served) and the rate of switching fee charged. Employment in Telephone Associations As pointed out elsewhere, most of the service lines have no regular employees, the necessary work of repair and upkeep being done by the members themselves or by a repairman hired when necessary. The associations having their own switchboards have the usual em ployees— managers, switchboard operators, linemen, etc. As shown in table 49, over 2,100 persons were employed by the 911 telephone associations which reported having any expenditures for labor in 1936; these figures, however, include much part-time employment. T able 49.— E m p loyees and W ages in C ooperative T elephone A sso cia tion s , 1 9 3 6 Salaries, 1936 Number of associ ations reporting T yp e of association Number of em ployees Total amount Average per em ployee 1 _________ 2 911 2,131 $773, 657 $379 Locals operating switchboards__ _____________________ Locals without switchboards__________________________ Federated switchboard associations___________________ 508 349 54 1,506 3 499 126 680, 501 29, 922 63, 234 464 3 60 514 All associations___________________________ 1 Computed on basis of associations reporting both number of employees and amount of salaries. 2 Not including 1 association paying a daily rate of $1.50 for any work done; and 9 associations paying hourly rates of 20 cents, 25 cents, 30 cents, 35 cents, 45 cents, or 50 cents. 3 M ainly part-time employees. Finances The associations were asked to supply data on gross and net income, paid-in share capital, net worth, bills and accounts payable, and total assets. The financial data thus obtained were far from complete and not altogether satisfactory. Most of the switchboard associations (espe cially the larger ones) had good accounting and bookkeeping. A large proportion of the service-line associations, however, operate on an informal basis, and many of them keep few accounts. It was found that the determination of the associations’ net worth, for instance, was impossible in many cases. It will be noted, in table 51, that the number of organizations reporting varies widely from point to point. Sometimes early records had been lost. Often no record had been kept of the value of original installations, equipment, or replacements. Some reported “ no net worth,” even though size able sums had been invested, the plant was still in good operating con dition, and there were few or no debts outstanding against the or ganization. It is more than likely therefore that the aggregate net worth, even of associations reporting, is considerably greater than that shown in table 51. TELEPHONE ASSOCIATIONS 111 RESOURCES Of 505 associations which reported as to amount of assets, 42 per cent had total resources of less than $1,000, about 36 percent had resources of from $1,000 to $5,000, and only a little over 11 percent had assets of $10,000 or over (table 50). The assets of the service line associations were small; in about 42 percent they were less than $500 and in 65 percent were under $1,000. T able 50.— D istrib u tion o f C ooperative A sso cia tion s b y A m o u n t o f A ssets at E n d o f 1 93 6 Number of associations with assets of— State All associations. _ _________ Locals operating switchboard____ ___________ Locals not operating switchboard_________ Federations operating switchboard________ Alabama___________________ California__________________ Colorado___________ ______ I d a h o . _________________ Illinois._____ ____ _________ Indiana.._____ ___________ Iowa_______________________ Kansas__ __ . __ ____ Kentucky___ _____ ___ M aine...... ... ........... ......... M aryland................. ............ . Michigan Minnesota_______ ________ M issouri.. __ _ __ ________ Montana . . .................... Nebraska New Hampshire.... .......... ..... N ew York North Carolina North Dakota .. _ Ohio_____ _________________ Oklahoma__ __ __ __ Oregon. _ Pennsylvania.. ___________ South Dakota............... . . . Tennessee_____ _______ ____ Texas.. _____ _____________ Virginia___________________ Washington_______________ West Virginia....... .................. Wisconsin__ __________ ___ W yom ing________________ _ Total num ber report ing Under $500 $500 and under $ $ and under $ $ and under $5,000 505 125 87 81 99 56 38 14 5 261 29 29 37 67 45 36 13 5 227 95 53 40 30 7 1 17 1 5 4 1 1 1 1 1 1 2 1 1 3 2 1,000 2,000 1 2 7 24 32 42 3 1 8 1 1 4 4 3 65 43 25 12 5 14 7 20 2 4 7 15 3 11 1 1 1 2 3 2 6 1 10 2 I 2 1 1 2 $5,000 and under $ 10,000 4 1 3 4 2,000 $ 10,000 $25,000 $50,000 and and and under under $25,000 $50,000 over' 1 24 1 2 1 11 202 7 10 11 1 2 2 1,000 2 2 1 2 2 8 12 3 25 3 1 1 5 4 10 6 8 9 3 28 2 3 5 5 5 2 2 3 6 2 1 4 2 2 16 1 1 1 2 2 1 1 1 2 2 1 2 1 1 1 2 4 1 1 1 3 2 1 1 2 4 3 1 6 1 2 1 7 1 7 3 1 1 16 3 4 2 1 1 1 1 7 4 3 For the 505 associations reporting, total assets amounted to $2,719,155. A combined net worth of $2,446,111 was reported by 422 asso ciations and a paid-in share capital of $2,413,895 by 750 associations (table 51). 112 CONSUMERS’ COOPERATION IN TH E UNITED STATES T able 51.—R esou rces, and B ills P a ya b le, o f C ooperative T elephone A sso cia tion s, at E n d o f 1936 Total assets T y p e of society All associations._ ________ _. Locals operating switchboard__________________ L o c a ls n o t o p e r a t in g switchboard___________ F e d e ra tio n s o p e ra tin g switchboard___________ Net worth N um N um ber ber Amount re re port port ing ing Amount N um ber Amount re port ing N um ber of N um non ber stock re Amount asso port cia ing tions 505 $2, 719,155 l 422 i $2,446, 111 750 $2,413,895 230 261 2, 379,385 i 227 i 1,970,912 343 1, 781, 641 87 130 170,689 545, 780 119 91 17, 567 86,474 24 7 3, 514 2 2 460 460 227 288,252 176 240,960 17 51, 518 19 234,239 3 4 15,852 15,177 275 400 N ew England....... ................... . M aine. __________________ N ew Hampshire_____ ___ Verm ont_________________ 2 1 17,448 17,198 250 M iddle Atlantic_____________ N ew Y o r k . . _______ __ Pennsylvania____________ 9 23, 585 15, 617 7,968 East North Central__________ Ohio— _____ ________ . . . Indiana................................. Illinois. _______ __________ Michigan________________ W isconsin................... ......... 82 West North Central_________ Minnesota_______ _______ Iowa_____________________ Missouri___ ______ . . . N orth D akota__________ South D a k ota ........... ......... Nebraska_________ __ Kansas_____________ ____ 202 South A t l a n t i c .............. _ _ M aryland___ _______ __ Virginia___________ _____ W est Virginia — _______ North C arolina._ ______ 13 East South Central _ ______ K entucky__________ __ __ Tennessee___ _________ Alabama_________________ 4 1 2 1 1,949 400 517 1,032 W est South Central_________ Arkansas_____________ _ Oklahoma_______________ T e x a s ..._____ ___________ 9 22,270 5 4 19,720 2, 550 3 3 M ountain_______________ M ontana________________ Idaho_________ _ ._ __ __ W yom ing___ ____________ Colorado_________________ Nevada_________________ 16 Pacific___________________ California__________ _ . . . W ashington_____________ Oregon____ _____________ 2 7 2 1 1 6 3 3 346, Oil 50,037 98.609 120, 683 18,087 58, 595 73 9 19 339 1, 724,120 1,023, 381 32 194, 770 7 14,200 25 84,992 30,109 221,826 154,842 42 288 i 143 46 7 26 18 24,101 10,306 10,910 2,650 235 9 12 24 24 11 11 20 11 22 8 15 10 38 13,448 11,008 2,440 310,994 32,172 79,067 101,300 29,164 69.291 1,621,915 i 697, 623 426,125 10, 500 100,487 33,887 214, 692 138, 601 396 11 6 3 20,307 16, 333 3 3,974 12 4 8 14, 725 , 625 2 1 1 377, 353 91, 378 68,041 112,877 23,827 81,230 46 15 48 15 3 3 7 9 519 1, 691, 617 304 730, 599 70 360, 330 7 16, 503 46 212,145 34 78, 287 13 86,104 45 207, 649 159 85 28 9 9 9 118 21 25 37 11 24 4 10 19 1 5 2 1 1 1 400 1 7 10, 707 50 8,369 , 288 2 2 1 6 17,380 3 3 11,800 5, 580 10 2 1 118,348 46,479 65,284 1,527 5,058 13 8 2 1 2 87,806 31,029 49,414 1,577 5,786 18 10 4 2 2 114,928 28, 777 63, 399 12, 755 9,997 4 30 441, 323 50 424,139 17,134 21 362,356 46 125,828 7 9 329, 733 32, 623 17 29 88,154 37, 674 1 2 3 1 15 14 12 400 2 7 4 20 1 7 3 228 $191,770 6 8,100 22, 633 7,173 13, 235 2,050 175 1N ot including 1society which reported a deficit of $6,438. Bills and ac counts payable Paid-in share capital 14 3 2 5 44, 513 4, 300 34,853 4, 710 650 2 2 7, 244 1,409 4, 540 1,295 2 5 12 8 12 3,233 2, 300 933 23, 264 5, 240 2, 645 6,123 3,706 5, 550 88, 305 68 22, 610 16 25,435 2 695 22 14,598 12 4,220 5 5, 634 12 15,113 137 7 4 1 2 3,113 2, 482 561 70 3 1,112 2 1 1,037 75 6 2 4 1 2 1 1 1 5 9 2 3 I 3 738 84 261 168 225 15 71, 545 9 70, 232 1,313 6 TELEPHONE ASSOCIATIONS 113 For the associations reporting both amount of share capital and membership, the average member’s investment (in share capital) was $36.33. Bills and accounts payable at the end of 1936 were reported by 228 associations, in an aggregate amount of $191,770. An additional 642 associations stated that they had no debts. IN C O M E AND E A R N IN G S The figures for revenues, given in table 52, can be regarded as only approximate. In many cases no exact records of income and expenses are kept. Often the only expense in the service-line associations is the monthly switching charge and even this may be paid by each subscriber directly to the company which provides switchboard serv ice, so that this money may not pass through the hands of the local treasurer. If repairs are needed for which labor must be hired or materials bought, each member is assessed his pro rata share. In the figures of revenues here given, however, the association has been credited with the total amount of switching fees paid, where this was known; no estimate could be made of value of repairs. The 1,536 associations reporting gross revenue in 1936 had an aggre gate of $1,486,761, of which over three-fourths was reported by the local associations giving switchboard service, about one-seventh by the service lines, and the remainder by the federations. There were 495 associations which made a net gain during the year; for the 494 which reported the amount the combined total was $90,030. On the other hand 163 associations had a loss; in the 153 which reported the amount this totaled $20,649. Altogether the whole number of associations furnishing returns on this point had combined net earnings of $69,381. This small net can be attributed mainly to the pre ponderance of associations operating on the assessment basis. These collect only enough revenue to cover expenses. In the words of one association: “ Our profit is service at cost.” 114 T able CONSUMERS’ COOPERATION IN THE UNITED STATES 52.— In com e and E a rn in gs o f C ooperative T elep hone A ssocia tion s , 1 9 3 6 , b y States C ross revenue State N um ber re porting Amount Net gain Net earnings, all societies 1 Net loss N um N um N um ber re Amount ber re Amount ber re Amount porting porting porting 1,536 $1,486, 761 2 495 $90,030 3 163 $20,649 4 658 $69, 381 539 1,164, 263 2 222 71,929 5 84 17, 016 8 306 54,913 941 211,971 252 9,945 7 68 2, 720 7 320 7,225 56 110,527 21 8,156 8 11 913 832 7,243 890 3, 709 96 26, 507 108,435 1 114 1 1 9 114 137 Georgia____________________ Idaho _______ __________ __ Illinois______________________ 1 6 1 4 61 Indiana_____________________ Iow a_____ _______ _____ ____ Kansas______________________ Kentucky M aine ______________________ 51 127 84 3 7 Maryland ______________ ___ M ichigan____________________ Minnesota________________ . Missouri____________________ M ontana----- ------------------------- All associations______________ Locals operating switchhoard__________________ L o c a ls n o t o p e r a t in g switchboard...... .......... F e d e ra tio n s o p e ra tin g switchboards................... Alabama . __ _________ 1 137 3 20 762 6,332 4 95 3 24 762 6,237 70, 573 289,551 142,937 1,400 17,857 2 22 49 36 3,635 17,185 5, 691 86 li 17 8 20 529 1,911 3,108 io 28 11 66 8 56 3,106 15, 274 2,583 3 766 3 766 2 24 741 30 14 3,998 38,304 276,146 35,341 4,430 1 16 232 6 4 367 8,625 20,879 2, 581 100 367 8, 575 15,678 2,331 46 Nebraska .............. ........... ..... Nevada _____ ___________ N ew Hampshire_____________ N ew Y ork _________________ North Carolina______________ 15 1 2 6 7 56,826 84 582 6,858 885 North Dakota_______________ Ohio_______ - _____ Oklahoma_______ ________ Oregon______________________ Pennsylvania_____________ _ 78 44 7 40 18 South D akota______________ Tennessee___________________ Texas________ ___________ -Vermont ___________________ V ir g in ia .-__________________ Washington_________________ W est Virginia______ ______ W isconsin_______ _____ _____ W yoming _____ _________ 1268 3 1 50 5, 201 250 54 1 17 12 300 9 5 9 5, 265 9 9 5,265 1 2 94 1 377 3 9 283 45, 237 69, 770 15,520 26, 604 6, 252 18 19 3 10 7 3,838 3,912 129 2,823 436 86 6 776 1,159 2 3 91 219 8 24 25 3 12 10 3,062 2, 753 129 2, 732 217 62 3 9 5 23 26,463 5,010 5,743 3,055 27,428 19 955 4 355 23 600 3 10 2 1 4 442 191 127 5 1 4 9 181 9 127 442 20 4 30 6 133,013 6 8,166 190 1,975 2,210 34,435 612 2 9 li 4 33 4 744 ii 10 2 13 8,133 190 1,231 1 N ot including 320 associations which reported^no net earnings” for the year. 2Includes 1 association reporting small gain, amount not stated. 3 Includes 10 associations which did not report amount of loss. * Includes 10 associations reporting loss and 1 reporting gain, amount not stated. Includes 5 associations which did not report amount of loss. 6 Includes 1 association reporting gain, and 5 reporting loss, amount not stated. 7 Includes 4 associations which did not report amount of loss, s Includes 1 association which did not report amount of loss. 9 Loss. 10 Includes 1 association reporting gain and 1 reporting loss, amount not stated, n Includes 2 associations which did not report amount of loss. I2 Includes 3 associations which did not report amount of loss. Only five of the associations included in the present study had gross revenues in 1936 amounting to $10,000 or over. The revenues of these ranged from $11,205 to $67,000. Chapter 5.— CREDIT UNIONS S u m m a ry On the basis of reports to the Bureau of Labor Statistics, repre senting 86 percent of the 5,440 credit unions in operation at the end of 1936, it is estimated that they had a membership of 1,210,000 persons, and that they made available to more than a million bor rowers credit in the total sum of $112,135,000. These organizations not only furnished loans at moderate rates but also returned to the members on the year’s operations more than $2,000,000 in dividends on share capital. Credit unions, as their name implies, are cooperative associations whose function is the supplying of credit. Generally they serve small borrowers who can offer little or no security except their own personal integrity. When it is remembered that a very large percentage of all credit-union loans are Character loans” , i. e., loans made without any security except the personal note of the borrower, it becomes evident how important the personal factor is. As various analyses have shown, remedial loans, for such purposes as the payment of cost of sickness or death or accumulated debts, form a very large proportion of the total loans made. This is espe cially true of the early experience of nearly all credit unions. Later, as the organizations accumulate funds and the early cases of need are taken care of, they expand their lending to such other constructive purposes as tuition for educational courses, house repairs and improve ments, payment of insurance premiums, taxes, etc. Credit-union funds come in the main from the share capital pro vided by the membership. Obviously, not all of the members can be borrowers, and indeed a certain percentage of the members of all credit unions never avail themselves of the credit facilities of the organization but join because of their desire to support the cause. The principle of open membership is one of the main tenets of Rochdale cooperation. By the very nature of credit-union operation, however, this principle has to be modified somewhat in credit coop eratives. In order to insure the safety of loans made, it is essential that the members know one another and thus be able to judge the trustworthiness of those who apply for loans. For this reason it is usually required by the statutes under which credit unions operate that the organizations shall be formed among persons having some common bond of employment, religious faith, association, etc., and that the membership shall be limited to persons within that group. Within this field, membership is open to all trustworthy persons. 115 116 CONSUMERS’ COOPERATION IN THE UNITED STATES One of the questions asked of credit associations by the Bureau of Labor Statistics in its survey was whether there was any limitation on membership and if so what the limitation was. Slightly over 4,000 associations reported on this point. These had a combined membership of over 865,000 and made loans in 1936 aggregating nearly $73,000,000. Some 61 percent of these associations had been formed among em ployees of industrial businesses, and not quite one-fourth were organi zations whose membership was restricted to public employees. The earliest credit unions to be formed among public employees, it may be noted, were those of postal employees; the first of these was started in 1923. The largest groups of credit unions were reported in the manufac turing industries, the public utilities, and among Federal employees. There were nearly 200 associations among railroad employees, and slightly more than that number among employees of petroleum companies. There were 78 credit unions formed from among the employees and members of other cooperative associations. Consumers’ coopera tives are becoming increasingly interested in cooperative credit. Credit unions are especially valuable in connection with store asso ciations operating on a strictly cash basis. Store members who are unable to pay for the groceries and other necessaries obtainable at the store can borrow from the credit union. One cooperative leader who is strongly in favor of credit unions for cooperators points out that to expect the store association to extend credit is to expect it to act as banker— a function which it was not intended to perform. Method of Operation As in all truly cooperative associations, each credit-union member has one vote only. At the annual meeting the members elect a board of directors to carry on the affairs of the association. The directors, in turn, elect from their own number the usual officers— president, vice president, secretary, and treasurer. In a credit union the treasurer is really the manager of the affairs of the association, hav ing charge not only of the funds but also of making the loans to the borrowers. It is the treasurer who reports upon the status of the organization. The treasurer is assisted by a credit committee of varying numbers; whose function is to pass upon applications for loans. T o this com mittee are submitted all applications for loans. Practically all creditunion laws provide that in passing upon applications for loans a majority of the committee must be present and the vote must be unanimous. The personal integrity of the applicants, as well as their record as regards payment of debts—in other words, their credit CREDIT UNIONS 117 rating—is investigated by the credit committee. This committee also takes into consideration the purpose for which the loan is applied for. As practically all of the credit-union acts provide that loans shall be made only for provident purposes and purposes which promise to be of benefit to the borrower, the credit committee has the authority to refuse any loans which it regards as not constructive or as being for a purpose which would not aid the would-be borrower. A second committee very important in the functioning of the credit union is the supervisory committee. Generally composed of 3 mem bers, this committee has oversight of all of the operations of the organ ization. It is specifically charged with examining into the records and into the manner in which all of the officers, directors, and other committees are carrying out their functions, and it may, for reasons which seem sufficient to it, suspend them and carry the whole matter to a vote of the members assembled in general meeting. Fundamentals of Cooperative Credit In brief, the following are the principles upon which credit unions operate: 1. Membership open to persons of good character who have a community of interest with the credit-union group. 2. Low membership fees, and shares of low denomination which may be paid for in installments. 3. Democracy in government, with directors and committees elected by and responsible to the members. 4. One vote per member, irrespective of the number of shares held. No voting by proxy. 5. Loans to members only. 6. Loans to directors, officers, and committee members prohibited, except in amounts held in shares by them. 7. Loans made only for productive purposes and urgent needs. 8. Loans at low rates of interest, and interest generally payable only on unpaid balances. 9. Net earnings returned, as dividends on all fully paid shares of stock. Scope and Method of Study Questionnaires were sent to every credit union known to the Bureau as having been chartered under the law of any State, In addition, data were requested from State officials having oversight of the credit unions in their jurisdiction. The information received from State officials was in the form of a combined statement covering the total number of associations in the State; analysis of the individual organizations therefore had to be confined to those from which direct reports were received. This explains the fact that the number of associations covered in the tables classifying the associations by 118 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES number of members, amount of loans made, etc., is considerably less than that covered in the tables giving total figures for member ship, loans, etc.; the latter, of course, include the combined figures from the State officials. The information presented for the credit unions formed under the Federal Credit Union Act was supplied by the Credit Union Division of the Farm Credit Administration, although the computations and analyses were made by the Bureau of Labor Statistics. Year of Establishment Although organizations closely resembling credit unions are known to have been in operation in this country (in spite of the lack of legal authorization) as early as 1892, the first credit union formed under statutory authority was started in Manchester, N. H., in December 1908. This credit union, La Caisse Populaire Ste. Marie, was organ ized under a special charter. In May 1909 the Massachusetts Legislature passed a general credit-union act. This was the first such law to be enacted and was the only one on the books until 1913, when three other States— New York, Texas, and Wisconsin— passed similar legislation. With this early start Massachusetts took the lead in credit-union matters, a position which it held until 1936, when Illinois exceeded it in number of associations. The Massachu setts organizations, however, being older and larger, were still leading as regards amount of business done. Formation of new associations was facilitated by the passage of the Federal Credit Union Act in 1934. Not only does that law per mit groups in any State without a credit-union act to incorporate under it, but it offers those in States where the State law is not entirely satisfactory a choice of incorporation under the State or under the Federal act. The oldest associations reporting in the present study date from 1910, as the following statement shows. The increasing popularity of these organizations is also indicated in the figures for 1934-36. State associations Associations formed in— 1910 ___________________________ 19 1 1 -2 0 _____________________ 1 9 2 1 -2 5 _________ _______ _ 1 9 2 6 -2 9 _____________________ _ ________ __ ___ 1930_________________________ 1931_________________________ 1932 _ ____________________________ _ _ 1933_________________________ 1934 ___________________________ __________________ 1935_________________________ __________________ 1936_________________________ __________________ T o ta l __________ __ 3 55 82 316 102 125 202 286 453 431 364 __________________ 2 ,4 1 9 Federal associations 42 702 931 1, 675 C R E D IT 119 U N IO N S The distribution of the credit unions reporting as to field of member ship, by year in which they were formed, is shown in table 53. Of the 118 which were started before 1926, 2 were formed in 1906-10, 17 in 1911-15, 23 in 1916-20, and 76 in 1921-25. T able 53.— D istribu tion o f C redit U nions o f S pecified M em bersh ip b y Y ear o f F orm ation Number of credit unions according to year or period in which operations started Field of membership All fields of membership____________ Total num ber of 1925 credit or unions ear 1926-29 1930 lier 4,018 Employees of specified com pany------- 2,444 1 Coal mining___________ ________ Public utilities________ _______ 525 Telephone and telegraph __ __ 99 Electric light and power, water, and gas____________ 172 Steam railroads_____________ 195 Street railways and buses___ 36 Other____ _____________ ____ 23 Trade—wholesale and r e t a il____ 195 Manufacturing__________________ 726 Automobiles___ ___________ 22 Food products______________ 146 Machinery__________________ 80 Metals and metal products—_ 163 Paper and paper products___ 47 Rubber and rubber products. 12 Shoes_______________ ______ 22 Textiles and textile products. 57 Miscellaneous. __________ . . . 177 Hotels________ _ _ _________ . 30 Laundries and dyeing and clean ing_______ _________________ _ 16 4 Banks____________ ______ __ . . 1 Brokerage_____________________ . Insurance_______________________ 43 Building construction. _ ______ _ 21 Loan companies . . . ___________ 2 Printing and publishing __ 126 Slaughtering and meat p acking.. 144 Gas and oil.. __ _ _ _ _ _ _ _ _ _ 234 Cooperative associations 1_______ 77 Industrial company, not specified. 80 Miscellaneous________ _______ 219 Employees of specified organizations. 146 _____________ C lu b s .____ ____ 16 Colleges or universities________ 16 Farm organizations_____________ 37 Fraternal orders____ _______ _ 71 Hospitals or sanitariums________ 6 Public employees___________________ 989 545 Federal_____________________ . . . State.. ____ __ ______ 55 County or municipal____________ 389 F irem en _______ __ _ __ 28 Police______ _______ ______ 18 Teachers and other school___ 215 Other. ____________________ 128 Specified occu p ation ______ ________ 7 Members of specified labor organiza tion ________ _______ ________ ___ 66 Specified nationality___ _______ ___ 16 Resident of specified locality___ ____ 129 Resident of specified locality and member of specified religious sect or church_________________________ 91 No restrictions_________ __________ 124 Professional and other self-employed: 2 Dentists___ ____________ _ ___ 4 Meat dealers__ ____________ 1Q32 1933 1934 1935 1936 118 303 96 127 195 277 488 1,126 1,288 46 114 38 52 110 170 290 869 10 3 62 7 15 4 14 2 17 32 5 52 5 755 1 157 43 1 4 1 1 4 6 5 45 3 2 7 21 1 7 1 2 2 10 6 4 2 4 12 1 16 8 3 30 16 3 12 5 36 1 1 1 1 3 2 5 1 1 2 1 2 2 3 1 1 10 3 5 7 6 35 1 8 4 6 4 3 6 1 1 2 1 2 4 6 2 53 54 18 11 94 293 14 45 37 69 12 7 6 32 71 21 1 5 1 1 1 5 6 2 7 6 27 1 56 45 7 6 62 218 7 51 20 62 11 4 1 8 54 4 1 1 2 6 1 1 12 95 23 11 12 9 166 30 1 1 1 1 2 3 1 12 9 6 1 1 21 H 8 4 5 8 2 1 20 5 2 1 2 2 9 6 2 1 1 5 1 1 3 4 8 11 42 4 3 7 25 15 1 1 7 13 36 24 4 16 30 20 7 2 3 9 10 2 7 6 16 13 1 2 8 2 26 22 1 3 130 no 45 38 113 18 15 56 32 1 3 3 23 2 255 154 11 90 1 2 31 10 91 39 30 54 46 3 5 3 33 2 281 113 30 138 6 3 1 2 3 4 34 29 50 30 1 19 3 3 54 27 3 24 7 2 2 7 3 6 1 7 8 i 19 3 2 5 7 7 1 3 5 5 2 58 23 4 31 5 1 18 7 2 4 4 5 2 2 2 17 11 3 2 4 1 14 5 9 3 6 3 3 9 18 7 11 14 6 10 3 101 37 4 60 3 5 35 17 1 56 83 31 1 46 1 5 7 7 1 5 27 1 31 17 1 29 12 28 21 22 25 18 1 1 2 l 1 Includes organizations open to members as well as employees. 1931 1 1 120 CONSUMERS’ COOPERATION IN THE UNITED STATES M em b ersh ip Some 4,600 associations reported their membership at the end of 1936. These had an aggregate of 1,100,000 persons. Data as to membership, by States and geographic divisions, are shown in table 54. On the basis of the reports to the Bureau, which covered some 86 percent of the total, estimates of the total membership of all known credit unions were prepared and are presented in a parallel column. As the table indicates, New England, which was the birthplace of the credit-union movement in this country and which long held the lead in all respects, has been surpassed by the East North Central States (including Ohio, Indiana, Illinois, Michigan, and Wisconsin). T able 54.— Reported and Estimated Total Membership o f Credit Unions at End o f 1936 Membership Geographic division and State Total number of known credit unions 1 Association s reporting to B. L. S. Number Members Estimated total mem bers, all associa tions 5,440 3,575 1,865 4,663 2,989 1,674 1,106,076 803,079 302, 997 1,209,902 893,932 315,970 N ew England_________________________________________ M aine____________________ _____ ___________ _____ N ew Hampshire______ ___________________________ V erm on t... _ _________ -- - --- ______________ M assachusetts.-. _________________ _____________ Rhode Island----- ---------------------- -------------------------Connecticut_______________________________________ 541 21 8 4 384 24 100 522 20 7 3 379 23 90 187,315 4,028 5,778 150 147,098 12,164 18,097 188, 599 3 4,060 » 6, 291 200 3 147,418 s 12,211 318,419 M iddle Atlantic_________________________ ________ ___ N ew Y o r k . . . -------- --- ---------------------------------------New Jersey__________ - ------------- ----------------------------------- ---------------------- --Pennsylvania-.- 785 366 123 296 718 339 117 262 198,899 103, 311 27, 236 68,352 205,435 3 104,880 3 27,555 73,000 East North Central____________________________ ______ Ohio______________________________________________ Indiana_________________________________________ _ Illinois.-- __________ ____ ___________ __________ M ichigan--------------------------------------------------------------Wisconsin________________________________________ 1, 468 272 207 382 151 456 1,314 193 136 380 149 456 320, 491 45,894 28, 981 137, 047 28, 267 80,302 346,346 56,600 3 43,918 3 137,208 3 28,318 * 80,302 West North Central____________________________ _____ Minnesota_____ *_------------ ------- -----------------------------Iowa ______ _________________________ ________ Missouri__________________________________________ N orth Dakota __ ------------- --------------------------------South Dakota________________ ..................................... N eb ra sk a ... ----------- --------------------------------------------Kansas_________________________________________ — 889 230 174 192 28 14 188 63 779 229 173 88 26 13 187 63 130, 577 42, 574 26,125 23, 209 2,097 1,734 24, 527 10,311 155,294 * 42, 574 3 26,235 47, 750 4 2,097 1,800 4 24, 527 * 10,311 South Atlantic------------------------------------------- ------- ---------Delaware--------------------------------------- -----------------------M aryland---------------------------------------------------------District o f Columbia .............. ................................... Virginia______________________________ _____ ______ W est Virginia-------------- ------- ------------------- ------------- N orth C arolina--------------------------------------------------- -South Carolina___________________________________ G e o r g ia ..______________________________ ________ _ Florida------------------------------------------------------------------ 573 5 38 86 76 42 102 19 96 109 457 5 36 71 54 37 58 15 95 86 98,667 262 11,425 24, 520 12, 538 7,239 7,668 1, 939 20, 217 12. 859 11$, 583 4 262 4 11, 425 29,500 16, 450 7,586 11,300 2,143 4 20, 217 14, 700 United States_________________________________________ State associations---------------------_ _______ Federal associations------------------------------------------------ See footnotes on p. 121. 2 C R E D IT T a b l e 5 4 . — Reported U N IO N S 121 and Estimated Total Membership o f Credit Unions at End o f 1936— C on tin u ed Membership Geographic division and State Total number of known credit unions 1 Associations reporting to B. L. S. Number Members Estimated total m em bers, all associa tions East South Central________________________________ K entucky.. --------------------------------------------------------Tennessee_________________________________________ A labam a..---------------------------------------- ------------------Mississippi------------------------------------------------------------- .248 67 109 55 17 160 41 74 32 13 36,625 11,613 17,026 5,786 2,200 51,097 20,385 21,000 3 7,162 2, 550 West South Central____________________________ _____ Arkansas_______________________ _________________ Louisiana_________________ . _____ _____ _______ Oklahoma_____________________ __________________ Texas___________ . . . . . . . . ___________________ 336 30 61 53 192 261 20 53 35 153 47,459 1,890 11,139 5,363 29,067 55,100 3,500 12,000 6, 600 33,000 M ountain--------------- ------- --------------------------------------------Montana_____________ _ _______________ _ _ _ ___ Idaho_____________________________________________ W y o m in g .._______ _ . . . ----------------------------Colorado______ _______ ___________ ______ _______ New M ex ico.. ____________ _____________________ Arizona___________________________________________ Utah_______________ ________ ___________ . . . ___ Nevada________________________ _________________ 158 14 20 14 46 11 8 42 3 123 10 17 11 34 7 7 34 3 16,337 795 890 729 8,035 598 521 4, 649 120 18, 750 3 1,219 960 825 3 9, 522 3 758 3 553 3 4, 793 4 120 Pacific. _ ------------------------------------------------------------------Washington___ . . . - - - - - - _____ _____ _________ Oregon-------------- --------------------------------------------------C aliforn ia____ _ ___________________ . ________ 423 110 38 275 314 70 28 216 68, 308 8,816 5,384 54,108 74, 300 4,900 6, 400 63,000 19 15 1, 398 4 1, 398 Hawaii____________ ________ ___________ _____ ____ _ 1 Figures in this column represent in most cases total number of credit unions in existence. 2 Includes 77 credit unions chartered but not yet in operation at end of year. 3 Only partly estimated, i. e., complete coverage either for State or for Federal associations. 4 Actual figure—i. e., complete coverage—for all associations in operation at end of year. 90621°— 39---------9 122 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES The number of associations reporting as to their field of membership and the number of members in each industrial or other group are shown in the following table: T able 55.— Distribution o f Members o f Credit Unions, Total number of credit Associations unions reporting reporting Field of membership A ll fields of m e m b e r s h ip -------------------------------- ----- Employees of specified com pany------------------------------- Coal m in in g ---------- ------------- ------------------- ---------Public utilities___________________________ ______ Telephone and telegraph______________________ Electric light and power, water, and gas---------Steam railroads___________________________ -Street railways and buses . . . ---------------------Other-------------- --------------------------------------------Trade—wholesale and retail--------------------------M anufacturing________ ________________ _______ Automobiles__________________________________ Food products---------------------------------------- ----M achinery----------------- ---------------------------------Metals and metal products------------------------------Paper and paper products-------------------------------E ubber and rubber products------------ ----------Shoes___ ___________________________________ Textiles and textile products_______ _________. M iscellaneous______________ _____ _______ Hotels ________________________ _____ _______ Laundries and dyeing and cleaning -------------------Banks____________________ _______ ___________ Brokerage------------ ------- --------------------------------------Insurance_________________________________________ Building construction_____________________________ Loan companies_______________- ------- . . ------------ Printing and publishing______ _________ ___ _ Slaughtering and meat packing ---------- ------------Petroleum products_______________________________ Cooperative a s s o c i a t i o n s ___ ______ ______ . . . Industrial com pany, not specified... _____________ Miscellaneous ___ _. _______ ___ __ . . . ___ Employees o f specified organizations----- ------- -------Clubs_______ _ ___ . . . ________________ Colleges or universities________________ ___ ___ Farm organizations_______ _______________________ Fraternal orders ____________ __________________ Hospitals or sanitariums_ _ . . . _ .. _. _____ _____ Public employees______ _ __________________ ______ Federal______________ ____________ _________ S ta te ___________ _ ________ _________ __ ___ County or m unicipal.. ____ __ ________________ Firemen______________ _______________ P o lic e ___ ____ _ _______ ____ __________ Teachers and other school _. ____________ _. Other_________________________________________ Specified occupation__________________________________ Members of specified labor organization_______________ Specified nationality___________________ _______ . . . ._ Eesidents of specified locality_________________________ Eesidents of specified locality and members of specified religious sect or church_____________________ ______ Professional and other self-employed: Dentists_____ ____ ________ _____ __ . ---------------M eat dealers_________________________________ . . . N o restrictions o f any kind------------------------------------------- Membership Members Average per asso ciation 4,034 3,921 865,172 221 2,453 1 526 99 172 196 36 23 195 729 22 148 80 163 48 12 22 57 177 31 16 4 1 43 21 2 126 144 234 78 81 221 147 16 16 37 72 6 991 546 55 390 28 18 216 128 7 66 16 130 2,390 1 506 94 163 192 34 23 192 712 20 144 79 160 47 12 22 55 173 31 16 4 1 43 21 2 125 141 229 77 75 214 139 15 16 32 72 4 970 534 55 381 27 17 211 126 6 63 16 126 578,849 281 126, 228 28,266 41,404 40,995 8,525 7,038 49,956 212,003 5,191 29,896 37,901 53,056 8,159 2,087 4,800 18,199 52, 714 3,494 1, 859 272 69 6, 604 3,657 600 19, 221 43, 246 47, 661 6,464 16, 338 40,896 16, 205 2,426 1, 787 2,981 8,517 494 190, 948 111, 565 11,644 67, 739 3, 712 3,389 30,110 30,528 2,193 11, 343 4,179 27, 738 242 281 249 301 254 214 251 306 260 298 260 207 480 332 173 174 218 331 305 112 116 68 69 154 174 300 154 307 208 84 218 191 117 162 112 93 118 124 197 207 212 178 139 199 143 242 365 180 261 220 94 89 10,115 114 2 4 124 2 4 116 124 •984 22,494 62 246 194 1 Includes organizations open to members as well as employees. by Field o f Membership, 1936 CREDIT UNIONS 123 The largest associations, in point of average number of members, were those in the machinery, telephone and telegraph, metal, textile, loan, and slaughtering and meat-packing industries, and in the credit unions restricting membership to a specified occupation. All of these groups had average memberships of 300 or more per association. A combined membership of over 50,000 was reported by each of the following groups: Metal products, Federal employees’, and municipal employees’ credit unions. The following statement shows, for the associations formed under State acts and for those formed under the Federal Credit Union Act, the distribution of associations according to their membership at the end of 1936. As the statement indicates, nearly one-third of the State credit unions fall in the group having from 100-250 members. The extremely rapid development of credit unions under the Federal act is shown by the fact that two-fifths of the young Federal credit unions already fall in this group. State associations Under 25 members_________________________________ 25 and under 50 members_________________________ 50 and under 100 members________________________ 100 and under 250 members______________________ 250 and under 500 members______________________ 500 and under 750 members______________________ 750 and under 1,000 members_____________________ 1.000 and under 2,000 members__________________ 2.000 members and over___________________________ Total_____________________________________________ Federal associations 90 315 558 725 341 125 51 87 37 36 194 503 630 202 61 26 20 2 2 ,3 2 9 1,6 7 4 Loans Made, 1936 The business of credit unions, as already indicated, is to make loans to the members. Over 3,900 associations reported to the Bureau of Labor Statistics as to the number of loans made during 1936 and the amount so loaned. On the basis of these reports, it is estimated that the 5,400 associations in operation at the end of 1936 served about 1,035,000 borrowers, lending them a total of more than $112,000,000 during the year. The data for associations reporting and the esti mates for the total number of associations, based on these reports, are shown in table 56. 124 CO N SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES T able 56.— Reported and Estimated Total Number o f Loans Made and Amounts Loaned by Credit Unions in 1936 Geographic division and State N um ber of loans Total num ber of Associations re known porting to B. L. S. Estimated total, all credit associa unions1 N um tions Borrowers ber 5,440 United States----------------------State associations------------ 3, 575 Federal associations------- 21,865 3,988 2,417 1,571 814,188 595,479 218, 709 1,035,176 806,021 229,155 N ew England----------------------M aine__________________ N ew Hampshire________ Verm ont________________ Massachusetts__________ Rhode Island___________ Connecticut—........... ........ M iddle Atlantic_____________ N ew Y ork— ..................... N ew Jersey_________ __ Pennsylvania__________ East North C e n t r a l--........— Ohio____________________ Indiana_________________ Illinois 5________________ M ichigan_______________ Wisconsin--------------------West North Central— -------Minnesota______________ I o w a «__________________ Missouri________________ North Dakota---------------South Dakota----------------Nebraska_______________ Kansas_________________ South Atlantic. — Delaware________ ______ M aryland— ----------------District of C o lu m b ia ----Virginia______________ — W est Virginia----------------North Carolina_______ __ South Carolina__________ Georgia_________________ Florida_________________ East South Central_________ K entucky----------- -------Tennessee__________ Alabama___________ — Mississippi....... .......... — West South Central-------------Arkansas______________ . Louisiana__________ ___ Oklahoma_______________ Texas................. ................. M ountain_________________ M ontana_______________ Idaho___________________ W yom ing_______________ Colorado________ _____ N ew M e x i c o . . ___ __ . Arizona_________________ Utah____________________ Nevada____ ____________ Pacific__________ _________ Washington_____________ Oregon__________________ California_____________ _ 541 21 8 4 384 24 100 785 366 123 296 1,468 272 207 382 151 456 889 230 174 192 28 14 188 63 573 5 38 86 76 42 102 19 96 109 248 67 109 55 17 336 30 61 53 192 325 17 6 3 196 16 87 689 321 116 252 1,094 184 128 223 146 413 673 228 173 82 25 13 89 63 385 4 33 68 46 25 53 13 61 82 151 43 66 31 11 245 20 47 36 142 99,304 3,914 910 109 72,026 5,627 16, 718 142, 548 69,452 24,110 48,986 209,171 32,185 20, 763 93, 534 14, 646 48,043 110, 617 38, 958 21,616 20,456 1,954 1,519 15,940 10,174 89,918 110 7,918 22, 548 14,638 5,027 8,270 2 1,889 316, 748 12, 770 49,126 17,017 22,828 7, 519 1,762 48,757 1,825 11, 297 5, 655 29,980 124, 378 3 4,162 3 1,110 125 94,700 7,200 3 17,081 150,074 72,300 3 24, 274 53, 500 313,403 41,100 32, 300 168,900 20,100 3 51,003 158 14 20 14 46 11 8 42 3 423 110 38 275 116 10 17 10 31 6 7 33 2 302 67 25 210 Hawaii______________ _______ 19 8 Am ount of loans Associations re porting to B. L. S. N um ber Amount Estimated total, all associa tions 3,923 $88,342,486 $112,134,577 2,308 73, 235, 326 96,476, 517 1,615 15,107,160 15, 658,060 13,490 721 697 457 6,686 530 376 3,977 46 51,117 7,104 5,175 38,838 137, 760 3 39,021 3 21, 640 39,150 31,978 1,550 3 24, 247 4 10,174 112, 653 120 8,150 26, 300 21,950 7,500 10, 300 2,149 20,984 15, 200 60,943 20,300 28, 200 3 10,293 2,150 57,110 2, 360 12,500 7,300 34,950 16,605 3 983 740 500 3 8, 519 775 3 423 4, 600 65 61,950 9,800 6,850 45, 3Q0 356 18 7 3 218 22 88 706 333 117 256 832 193 134 234 146 125 774 228 173 84 26 13 187 63 404 4 36 66 51 30 54 14 65 84 161 44 71 33 13 254 20 50 36 148 119 10 17 10 31 7 7 35 2 308 66 27 215 14,365, 241 346,996 248,242 3,766 11, 688,488 1,069,694 1,008,055 17, 578,741 12, 282, 762 1,495,865 3,800,114 20, 359,404 3,189,407 1,872,846 9,405, 317 3,183,815 2, 708,019 11,850, 289 4, 234,743 31,816, 785 2, 524,824 127,975 100, 384 2, 378,148 667, 430 7,871,106 2,851 739, 521 1,798,128 1,183, 319 462, 509 757, 361 129,374 1,822, 206 975,837 4, 643, 623 2,127, 608 1,831,852 540,387 143, 776 4, 371, 622 128, 855 1, 274, 676 494,804 2,473,287 1, 552,361 59,020 40,311 31,673 905,088 33, 672 46,177 434,455 1, 965 5, 741, 286 661, 361 476, 703 4, 603, 222 18,047,148 3 12,321, 701 3 1, 510, 447 4, 215,000 29,127,944 4,600,000 2, 565,000 12,850,000 3 3,192,869 3 5,920,075 13,986,244 3 4, 238,019 3 1,817, 687 4, 652,000 3 129,960 103,000 4 2, 378,148 4 667,430 10, 604,881 3,000 4 739, 521 2,100,000 1, 627,000 591,000 1, 980,000 3139,188 3 2,275,172 1,150,000 5, 837,013 2, 549,000 2,340,000 3 788,013 160,000 4,909,250 171, 750 h 395,000 515,000 2,827, 500 1,779,832 3 56,888 42, 200 35,000 3 1,059, 425 3 58, 672 3 47,947 477, 500 2,200 6, 755,000 885,000 565,000 5,305,000 140 300 9 8, 813 10, 600 21,076, 665 2 355,178 3 278, 325 4,500 18, 330,000 1,073,838 3 1,034,824 1 Figures in this column represent in most cases the total number of credit unions in existence. 2 Includes 77 credit unions chartered but not yet in operation at end of year. 3 Only partly estimated; i. e., complete coverage either for State or for Federal associations. 4 Actual figure—i. e., complete coverage—for all associations in operation at end of year. Revised figures. C R E D IT 125 U N IO N S The business operations of the various types of associations in 1936 by field of membership, are shown in table 57: T able 57.— Business Operations o f Credit Unions o f Specified Field o f Membership, 1936 Number of loans Loans made during Loans outstanding made year at end of year Field of membership Associ ations report ing Loans Associ ations report ing Amount Associ ations report ing Amount All fields of membership______________________ 3,681 704,032 3,568 $72,866,792 3,872 $42,101,688 Employees of specified company ____________ C oalm ining_______ _________________ Public utilities___________________________ Telephone and telegraph______________ Electric light and power, water, and gas--------------- ---------- ------------------------Steam railroads----------------------------------Street railways and buses_____________ Other_________________________________ Trade—wholesale and retail----------------------Manufacturing___________________________ Automobiles__________________________ Food p ro d u c ts -----------------------------------M achinery___________________________ Metals and metal products___________ Paper and paper products____________ Rubber and rubber products_________ Shoes.____ _________ ____ ________ . . Textiles and textile products__________ Miscellaneous________________________ Hotels____________________________________ Laundries and dyeing and cleaning_______ Banks____________ _______________________ Brokerage________________________________ Insurance________________ ____ ___________ Building construction_____________________ Loan companies__________________________ Printing and publishing__________________ Slaughtering and meat p acking.. ________ Petroleum p ro d u c ts ________ ____ _______ Cooperative associations 1_________________ Industrial company, not specified________ Miscellaneous__________. . . __ . . ________ Employees of specified organizations_________ Clubs____________________________________ Colleges or universities__________________ Farm organizations- . . _______________ _ Fraternal orders__________________________ Hospitals or sanitariums _______ _____ _ Public employees_____________________________ Federal___ __________________ _. ________ State___________________________________ . C ounty or m unicipal_____________________ Firem en______________________________ Police____ ______________ ___________ Teachers and other school____________ Other_________________________________ Specified occupation____ __________ _________ Members of specified labor organization______ Specified nationality__________________ ______ Residents of specified locality_________________ Residents of specified locality and members of specified religious sect or church____________ Professional and other self-employed: Dentists______________ . . _____ ______ Meat dealers______________________________ N o restrictions________ ______________________ 2, 271 489,833 1 500 488 103,442 89 20,861 2,130 1 478 91 42, 595,218 45,000 9,608, 693 2, 309,045 2,386 1 515 97 22, 597,695 13,000 5,711,858 1,507, 765 160 32,071 185 37, 393 32 7,665 22 5, 452 184 42,631 681 181,966 21 4, 308 140 28,429 76 28,106 156 46,798 45 7,440 12 1,342 20 3,765 47 16, 281 164 45,497 29 3,373 14 1,456 4 482 12 1 41 5,147 19 2, 738 2 644 116 22,019 137 44,151 222 33,124 70 2, 559 67 13,873 195 31,716 121 7, 604 13 1,359 804 15 1,404 27 62 3, 630 4 407 916 153,052 516 103, 264 53 9,068 347 40, 720 2, 389 23 4,097 17 194 14,802 113 19, 432 7 1,206 59 8, 502 12 1,941 104 18,182 158 175 32 22 184 663 21 140 70 155 33 12 15 47 170 30 15 4 1 41 20 2 113 136 224 54 54 110 129 15 13 29 67 5 922 520 52 350 24 16 197 113 62 13 114 2, 593,958 3, 745,840 575,205 384,645 3,160,057 15,004, 515 286,939 2, 682, 210 2, 239,885 4,058,926 541, 435 75,455 219,889 1, 215, 672 3, 684,104 173,900 99,092 24,136 545 493,828 136,018 68,842 1,976,176 3,880,872 2,884, 660 350,845 876, 606 3,811, 433 1, 305, 547 340, 767 94,930 204,466 638, 093 27, 291 20,585,671 12,677, 219 860, 235 7,048, 217 425,473 823,178 2,904,363 2,895, 203 137,403 1,063,261 705, 572 3,158,141 170 191 35 22 191 709 21 146 80 161 47 12 22 48 172 31 14 4 1 42 21 2 125 142 229 71 77 211 131 16 13 30 67 5 957 534 54 369 27 18 201 123 7 64 14 114 1, 515,923 2,221,836 306, 275 160,059 1,405, 586 7, 208,055 117,491 1,400,406 1,130, 394 1,956,784 285,924 32, 229 174, 536 547,498 1, 562, 793 62,079 41,366 10,096 797 257,068 63,146 30, 494 946,699 2,191, 722 1, 502, 376 227,864 563, 999 2, 361, 490 744, 570 184,892 79, 693 118,329 349,118 12, 538 13, 556,215 8, 317, 304 452,008 4,786,903 304,522 423, 715 2,026,663 2,032,003 94,885 634,067 411, 523 2,169, 391 79 3, 535 71 620, 203 84 472, 763 2 77 1, 297 18,803 2 3 117 13, 371 125, 213 2, 557,192 2 3 110 7, 210 55,956 1, 357, 413 3 107 i Includes organizations open to members as well as employees. 5 126 CONSUMERS’ COOPERATION IN TH E UNITED STATES A distribution of the State and Federal associations according to total amount of loans made during 1936 is shown below: State associations Federal associa tions Under $1,000_______________________________________ $1,000 and under $5,000___________________________ $5,000 and under $10,000_________________________ $10,000 and under $25,000________________________ $25,000 and under $50,000________________________ $50,000 and under $100,000_______________________ $100,000 and under $500,000______________________ $500,000 and under $1,000,000____________________ $1,000,000 and over________________________________ 170 476 353 445 279 155 143 10 2 310 590 301 261 92 35 10 _____ _____ T otal________________________________________ 2 ,0 3 3 1 ,5 9 9 The 4,213 associations that reported as to amount of loans out standing at the end of the year had on the books $54,631,773 in loans unpaid; of this the 2,597 State associations accounted for $47,364,482 and the 1,616 Federal associations for $7,267,291. Rates of Interest Charged on Loans About 2,000 associations furnished information as to the rate of interest charged to borrowers on loans. The two largest groups were those charging, respectively, 6 and 12 percent a year (0.5 and 1 percent a month). The latter is the maximum rate set by most of the creditunion acts. This interest is computed, at the time of each payment on the principal, on the amount of loan still remaining unpaid. The distribution of associations reporting was as follows: t , , j .v umuer uj Rate per year: associations 3 and under 4 percent____________________________________ 1 4 and under 5 pereent____________________________________ 8 5 and under 6 percent____________________________________ 89 6 and under 7 percent____________________________________ 399 7 and under 8 percent____________________________________ 44 8 and under 9 percent____________________________________ 103 9 and under 10 percent____________________________________ 66 10 and under 11 percent__________________________________ 38 11 and under 12 percent__________________________________ 8 12 and under 13 percent__________________________________ 1, 259 13 percent and over_______________________________________ 6 T otal_____________________________________________________ 2 ,0 21 C R E D IT 127 U N IO N S Dividends Paid Credit unions practice the return of dividends, not on patronage (i. e., on amounts paid in interest by borrowers) but on share capital. More than $2,000,000 in dividends was returned by the nearly 3,000 associations for which information on this point was available. Of this amount, $1,890,646 was returned by 2,134 State associations and $177,664 by the 837 Federal associations reporting. The geographic distribution is shown in table 68. T able 58.— D ividen d s R etu rn ed b y C redit U nions in 1 9 3 6 , b y G eographic D ivisio n and State Geographic division and State Asso ciation report ing United States________________ State associations________ Federal associations _____ 2,971 2,134 837 $2,068,310 1,890,646 177, 664 N ew England________________ Maine____________________ N ew Hampshire--------------Verm ont_________________ Massachusetts____________ Rhode Island................ Connecticut-------- ------------- 260 13 6 1 183 19 39 320,113 2, 500 8,060 42 260,470 36,431 12,610 M iddle Atlantic______________ N ew Y ork_______ ____ ___ N ew Jersey_______________ Pennsylvania_____________ 489 254 77 158 414,868 322,288 40,014 52,566 East North C entral._ _______ Ohio_____________________ Indiana__________________ Illinois____________ _____ Michigan_________________ Wisconsin________________ 753 115 85 366 67 120 518, 731 53,129 38,267 288,745 71, 626 66,964 West North Central__________ Minnesota_____________ . . Iow a________________ M is s o u r i________________ N orth Dakota_______ ____ South Dakota - _________ Nebraska_________________ Kansas-------- --------------------- 569 227 171 76 13 8 39 35 266,100 102,657 41,901 87,344 1,344 1,535 14, 604 16,715 Amount Geographic division and State Asso ciation report ing Amount South A tla n tic______________ M aryland______________ _ District of C olum bia. _ __. Virginia__________________ West Virginia___ ________ North Carolina—- ___ - _ South Carolina----------------Georgia___________________ Florida........................ .......... 296 31 53 38 18 35 7 50 64 $179,800 12,457 30,160 29, 795 15, 551 11,328 1,966 58,658 19,885 East South Central___________ K en tu cky________________ Tennessee.----------------------Alabama_________________ Mississippi----------------------- 124 38 51 24 11 122, 235 58,193 44,656 16,978 2,408 West South C entral._________ Arkansas_________________ Louisiana. __________ Oklahoma________________ Texas........ - ------- --------------- 204 12 37 26 129 82, 240 2,739 23,715 8,616 47,170 M ountain____ ______ ____ M ontana-------------------------Idaho____________________ W yom ing. ______________ Colorado________________ N ew M exico_____________ Arizona__________________ U tah_____________________ 69 3 4 4 23 3 4 28 35,970 1,684 286 288 21,116 241 1, 524 10,831 Pacific------- - -------------------- . Washington______________ Oregon_________________ California________________ 207 51 8 148 128, 253 11, 570 14,487 102,196 128 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES The amounts returned in dividends in 1936 by the associations formed among various employee and other membership groups are shown in table 59. T able 59.— D ividen ds R eturned b y C redit U nions o f Specified M em bersh ip , 1 9 3 6 Field of membership Asso cia tions report ing Amount Field of membership All fields of membership_______ 2,489 $1,595,745 Employees of specified company. 1,470 1 Coal m in in g ____________ _ Public utilities _ _• 378 Telephone and tele* 73 graph--------------------- — Electric light and power, water, and gas. 142 Steam railroads________ 128 Street railways and b u s e s ________ ______ 18 Other ____ _________ 17 Trade—wholesale and re tail______________________ 119 Manufacturing___ ______ 411 Automobiles___________ 13 Food products_________ 98 M achinery___ ________ 39 Metals and metal prod ucts. _ ____________ . 98 Paper and paper prod ucts_____ ___________ 20 Rubber and rubber products_____________ 6 11 Shoes______ ___________ Textiles and textile products___ _ _____ 21 Miscellaneous___ __ _ 105 Hotels_____ _____ ______ _ 12 Laundries and dyeing and cleaning. _______________ 8 Banks______ ____________ 3 Brokerage _ __ . . . . 27 Insurance. _______________ 14 Building construction _____ 2 Loan companies. ___ ____ Printing and publishing___ 80 812,202 244 245,276 Employees of specified com pany—Continued. Slaughtering and meat packing_________________ Gas and oil_______ ____ . Cooperative associations L . Industrial com pany, not specified_________________ Miscellaneous___________ _ Employees of specified organi zations______________________ Clubs____________________ Colleges or universities____ Farm organizations________ Fraternal orders. _____ . . . Hospitals or sanitariums___ Public em ployees................... . . Federal____________________ State____ ______________ . . C ounty or m unicipal______ Firemen_____________ _ Police. ............. .......... . . Teachers and other school________ _____ Other_____________ . . Specified occupation____ ______ Members of specified labor organization__ . . _ _ Specified nationality _ _ Residents of specified locality.._ Residents of specified locality and members of specified re ligious sect or church Professional and other selfem ployed: Dentists.. _________ ______ M eat dealers_______ _______ N o restriction s____ __________ 47,503 62,751 119,242 9,569 6, 211 43,824 239, 656 3,519 48, 734 30,612 75,571 10,102 1,559 6, 307 10,459 52,793 1,909 1,165 316 8,780 1,359 1,174 40,173 Asso cia tions Amount report ing 118 156 24 $79,196 44,494 5,102 33 84 18,644 80,890 81 14 8 21 34 4 692 420 38 234 22 14 24,572 4,083 1, 558 7,082 11, 564 285 587,909 396,117 14,971 176,821 15, 310 22,870 121 77 5 73, 337 65,304 2,600 43 12 59 21,111 16,585 64,442 44 14, 236 1 3 79 204 3,399 48,485 1 Includes organizations open to members as well as employees. Financial Data A sse ts .— On the basis of reports for nearly 4,700 associations, it is estimated that all of the credit unions in operation at the end of 1936 had total assets amounting to more than $88,000,000. The geographic distribution of the reporting associations and of the total number of associations based on these reports, is shown in the table following. 129 CREDIT UNIONS T able 60.— R eported and E stim a ted T otal A sse ts o f C redit U nions at E n d o f 193 6 Geographic division and State Total assets* Total num ber of Estimated Associations reporting known total to B . L. S. credit amount, unions 1 all associa Number Amount tions United States________ ___________________ _______ State associations_________________________________ Federal associations.____ _________________________ 5,440 3,575 2 1, 865 N ew E ngland.____ ___________________________________ M aine_____ _ ___________________ __ . _____ _ N ew Hampshire__________________________________ Verm ont__________________________________________ Massachusetts____________________________________ R hode Island_______________________ ___________ Connecticut______________________________________ 541 21 8 4 384 24 100 521 20 7 3 378 23 90 21, 785,089 312,194 1,658,344 2,173 16,641,834 2,576,496 594,048 22,019,189 3 314,156 3 1,860,462 2, 600 3 16,654, 605 3 2, 578,479 3 608, 887 M iddle Atlantic______________________________________ N ew Y ork ________________________________________ N ew Jersey____ ______________ : __________________ Pennsylvania____ ________________________________ 785 366 123 296 713 337 117 259 14,082,209 10,627,049 1,164,695 2,290,465 14,401,042 3 10,675,088 1,173, 954 2, 552,000 East N orth Central___________________________________ Ohio________ _____________________________________ Indiana____ _____________ ______________________ Illinois 6_____ _____________________________________ M ichigan_________________________________________ W isconsin_____________________________ __________ 1,468 272 207 382 151 456 1,309 189 135 380 149 456 19,466,361 1,916,609 1, 585, 546 8,883,166 2,498,363 4, 582,677 20,837,050 2, 568,000 2 2, 297,948 3 8,887,919 3 2, 500, 506 4 4, 582, 677 West N orth Central__________________________________ M innesota________________________________________ I o w a 5____ ________________________________________ Missouri__________________________________________ North Dakota____________________________________ South Dakota_____ ________________ _______ _____ Nebraska_______ _________________ _______ ____ Kansas____________ ____ _________________________ 889 230 174 192 28 14 188 63 774 229 173 84 25 13 187 63 9,998,558 3,487,092 1,372,736 1,938.916 57,204 58,049 2, 548,681 535,880 11, 569,392 4 3,487,092 3 1,373,742 3, 506,000 3 57,997 60,000 4 2, 548,681 3 535,880 South Atlantic________________________________________ Delaware_________________________________ ______ M aryland________________________________________ District of Columbia______________________________ Virginia. _______ __________________________________ W est Virginia___________ ________________________ N orth Carolina___________________________________ South Carolina__________ __ ___________ ____ _ . Georgia___________________________________________ Florida____________________ ______________________ 573 5 38 86 76 42 102 19 96 109 450 5 36 68 54 37 57 14 95 84 5,445,238 1,921 467,714 1,007,034 808,438 377,632 524,816 65,133 1, 634,206 558,344 6,409,044 1,921 3 467,714 1,157,000 1,170,000 3 381, 949 848, 000 3 68,254 4 1, 634, 206 680,000 East South C entral.. . _______________________________ K entucky______ ______ ______ ______ ___________ Tennessee_________________________________________ Alabama___________________________ ____________ Mississippi_______________________________________ 248 67 109 17 161 43 74 31 13 2,771, 464 1,136,087 1,179,262 369,924 86,191 3, 434,700 1,357,700 1,490,000 484, 500 102, 500 West South Central_________________ _______________ Arkansas_________________________________________ Louisiana_______________________________________ . Oklahoma____ __________ ____ ___________________ Texas_______ ______ _____ _____________ ______ ___ 336 30 61 53 192 290 21 52 37 180 2,880, 375 77, 336 577, 529 310,073 1,915,437 3,048,248 95, 500 635,000 370,300 3 1,947, 448 M ountain____ ____ ___________________________________ M ontana_________________________________________ Idaho_____________________________________________ W yom ing___________ _______ _______________ . . . Colorado___________________________________ ______ N ew M e x i c o . . ___ ____________ _________________ A rizon a ..____ _______ __________________________ U ta h ..._____ _____________________________________ N evada............. ............................... ............. ................. 158 14 20 14 46 11 8 42 127 10 18 11 3 3 1,019, 342 35,175 23, 768 17,172 616,221 17,294 35,123 273,032 1, 557 1,048,188 45,014 24, 684 19,000 613,333 31, 294 3 36,178 3 277,128 1, 557 Pacific________________________________________________ Washington______________________________________ Oregon___________________________________________ California____ _________ _________________________ 423 110 275 334 98 27 209 4,676, 792 769,595 408,172 3,499,025 5, 232,000 795,000 437,000 4,000,000 19 15 13,853 4 13, 853 Hawaii________________________________ _____________ 55 38 4,694 $82,139,281 3,031 73,048,636 1,663 9,090, 645 33 7 7 38 $88,012,706 78,600,900 9,411,806 1 Figures in this column represent in most cases the total number of credit unions in existence. 2 Includes 77 credit unions chartered but not yet in operation at end of year. 3 Only partly estimated; i. e., complete coverage either for State or for Federal associations. 4 Actual figure; i. e., complete coverage—for all associations in operation at end of year. 3 Revised figures. 130 CONSUMERS’ COOPERATION IN THE UNITED STATES The statement following shows the distribution of the reporting credit unions according to the amount of their assets at the end of 1936. The largest group of the State associations (some 30 percent) had assets of between $1,000 and $5,000 and nearly 80 percent had assets of less than $25,000. More than 45 percent of the Federal credit unions had assets of between $1,000 and $5,000 and about 87 percent had assets of less than $10,000. However, there were 115 associations whose assets at the end of 1936 totaled $100,000 and over, and, of these, 5 State credit unions each had assets of 1 million dollars or more. . . - A s s e t s OI State Federal associations associations ■ Under $1,000__________________________________ $1,000 and under $5,000______________________ $5,000 and under $10,000_____________________ $10,000 and under $25,000___________________ $25,000 and under $50,000___________________ $50,000 and under $100,000__________________ $100,000 and over_____________________________ 289 710 377 459 236 126 112 444 763 237 161 44 11 3 Total________________________________________ 2 ,3 0 9 1,6 6 3 Share capital and net worth.— The amount of paid-in share capital and the net worth of the reporting associations are shown in table 61. T able 61.—P a id -in Share C apital and N e t W orth o f Credit U n ion s , 1 9 3 6 , b y States Paid-in share capital Geographic division and State United States. __ _ _ . . . __________________________ State associations ___________________________ . . . Federal associations_______________________________ Associa tions re porting Amount 4,718 $62, 592,591 3,048 54,171, 564 8,421,027 1,670 Net worth Associa tions re porting Amount 3,626 1, 964 1, 662 $52,007,044 43,144,285 8,862,759 N ew England----------------------------- ------------------------- ------M aine______ _______ _____________________________ N ew Hampshire________________________ _________ Vermont__________________________________________ Massachusetts____________________________________ Rhode Island____ ______ _________________________ Connecticut________ _____________________________ 622 20 7 3 379 23 90 12,822,562 173, 622 116, 358 2,041 11,073,344 909,504 547, 693 344 20 6 3 206 19 90 8,938,995 117,839 159,443 2,158 7,021, 513 1,054,743 583,299 M iddle Atlantic------------------------------------------ ---------------N ew Y ork------------------------------- ---------- ------------------N ew Jersey-----------------------------------------------------------Pennsylvania_____________________________________ 715 338 117 260 11,777,932 8, 416,874 1, 249,104 2, 111, 954 625 270 101 254 9, 575,839 6,895,412 670,397 2,010,030 East N orth Central___________________________________ Ohio................. ................... ................................... .......... Indiana___________________________________________ Illinois_____ ______________________________________ M ichigan._____ ______________________ ___________ Wisconsin____________ _____________ ____ ________ 1,316 194 136 381 149 456 17, 450, 573 1, 721, 514 1,448, 240 8, 217,865 1,920,120 4,142,834 922 185 133 380 111 113 14,538,679 1, 604,039 1, 226, 667 8, 724,698 1,469,163 1,514,112 West N orth Central.____ _____________________ _____ _ M innesota_____ _________________________ ______ _ Iowa----- ------- --------------------------------------------------------Missouri__________________________________________ N orth Dakota____________________________________ South Dakota______________________ ____ ________ Nebraska_____ ____________________________ ____ _ Kansas.................. ........................ ......... - ............ - ......... 779 229 173 88 26 13 187 63 6,845,081 2,495,947 1,192, 362 1, 775,597 55,616 54,493 785,188 485, 878 480 135 99 80 26 13 80 47 5,309,179 1,738,493 884,768 1,784,887 58, 510 58,338 384,478 399, 705 131 CREDIT UNIONS T able 61.— P a id -in Share C ap ita l and N e t W orth o f C redit U n ion s , 1956, b y States— Continued Paid-in share capital Geographic division and State Associa tions re porting Amount Net worth Associa tions re porting Amount South Atlantic--------------Delaware___________ M aryland---------------District of Columbia. Virginia____________ West Virginia_______ N orth Carolina_____ South Carolina_____ Georgia_____________ Florida............ ............ 451 5 36 70 54 37 56 14 95 84 $4,198,804 1,921 395, 649 917,012 582,889 280,842 316,474 53,475 1,139,398 511,144 385 5 26 66 53 30 49 14 60 82 $4,241,287 1,804 353, 693 916,830 564,387 302, 315 258, 375 59,917 1, 228,021 555,945 East South Central-------Kentucky__________ Tennessee___________ Alabama-----------------Mississippi--------------- 164 42 74 34 14 2,340,976 948,779 991,183 339,886 61,128 154 41 71 29 13 2,459,654 928,044 1,090,047 385,915 55, 648 West South Central____ Arkansas___________ Louisiana___________ Oklahoma__________ Texas----------------------- 291 21 53 37 180 2,290,636 67, 738 518, 527 169,303 1, 535,068 257 21 52 36 148 2,150,002 72,955 563, 303 199, 693 1,314,051 M ountain.____ _________ M ontana___________ Idaho_______________ W yom ing___________ Colorado-----------------N ew M exico________ Arizona_____________ Utah_______________ N evada____________ 127 10 18 11 33 7 7 38 3 845,708 31, 556 21,333 16, 579 491,140 15,867 29, 764 237,912 1, 557 122 10 18 11 34 7 7 32 3 807,702 20,048 21,916 17,158 477,918 16,532 33, 954 218,681 1,495 Pacific__________________ Washington________ Oregon_____________ California__________ 338 99 27 212 4,007, 267 704,914 345,479 2,956,874 322 93 26 203 3,972,629 677,419 388,190 2,907,020 15 13,052 15 13,078 Hawaii. 132 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES The share capital, total assets, and net worth of the associations reporting as to field of membership are shown in the following table: T able 62.— Share C apital, T otal A sse ts , and N e t W orth o f C redit U nions o f Specified M em bersh ip , 1 9 3 6 Share capital Field of membership A ll fields of membership_____________________ Asso cia tions re port ing Amount 3,932 $45, 732,361 Employees of specified com pany_____________ 2,394 Coal mining--------------------------------------------1 Public utilities___________ _______ _______ 516 Telephone and telegraph_________ _ 95 Electric light and power, water, and gas-------------------------------------------------170 Steam railroads______________________ 192 Street railways and buses____________ 36 Other________________________________ 23 Trade—wholesale and retail______________ 193 Manufacturing. ..................... ........................ 708 Automobiles______ __________________ 20 Food products_______________________ 142 M achinery___________________________ 78 Metals and metal products__________ 160 Paper and paper products___________ 48 Rubber and rubber products_____ . . . 12 S h o e s _______________________________ 22 Textiles and textile products_________ 54 Miscellaneous________________ _____ 172 Hotels___ _____ _________________________ 30 Laundries and dyeing and cleaning______ 15 B an ks.. ________ _______ ___________ 4 Brokerage____________ ________________ 1 Insurance__________ _______ ____________ 42 Building construction____________________ 21 Loan companies__ __ _________________ 2 Printing and publishing_________________ 124 Slaughtering and meat packing__________ 140 Petroleum products____ _________________ 228 Cooperative associations 1_______ _______ 77 Industrial com pany, not specified___ _____ 76 Miscellaneous_______ __________________ 216 Employees of specified organizations_________ 139 Clubs____________________________________ 16 Colleges or universities___________________ 15 Farm organizations_____ _____ __________ 32 Fraternal orders___ _____________________ 70 Hospitals or sanitariums_________________ 6 Public employees____________________________ 971 Federal__________________________________ 536 State______________ ____________________ 54 C ounty or m unicipal____________________ 381 Firemen_______ _________________ 28 Police_______________________________ 18 Teachers and other school____________ 208 Other________________________________ 127 Specified occupation___________________ _____ 7 Members of specified labor organizations.._ . 63 Specified nationality___________________ ____ _ 15 Residents of specified locality______ _____ ___ 128 Residents of specified locality and members of specified religious sect or church................ 90 Professional and other self-employed: 2 Dentists. ____ _____ ____________________ 4 M eat dealers____________ ________ _______ N o restrictions_________ ____________ ________ 119 Asso cia tions re port ing Amount 3,893 $56,007,481 N et worth Asso cia tions re port ing Amount 3,418 $40, 775, 464 26,425,465 20, 792 6,033, 799 1, 552,555 2,386 1 510 95 30,524,631 21, 716 7,239, 260 2, 058,967 2,062 1 475 89 22,563,152 923 5, 545,367 1,098,494 1, 743,888 2,164, 298 323,088 249,970 1, 747,008 8,438, 901 148,027 1,488, 234 1,414, 612 2,150,838 315,834 50, 391 202, 648 587, 291 2,081,026 75, 032 55, 227 11,037 968 248, 835 73, 652 35, 945 1,142, 587 2,171,827 1, 531, 366 248,048 1, 746,161 2,844, 280 927,403 175, 718 79, 252 136,962 518,143 17, 328 13,407, 363 8,482,857 494, 563 4, 429, 943 320,206 397,911 1,893,168 1,818, 658 97,218 604,144 308, 275 1,935,851 168 188 36 23 192 711 20 142 77 162 48 12 22 55 173 30 15 4 1 42 21 2 124 141 224 76 75 217 139 16 15 30 72 6 956 528 54 374 26 18 206 124 6 63 15 125 1,792,891 2,722,927 358,019 306,456 2, 229,352 9,394,113 165,999 1, 732, 662 1, 533,166 2,406,916 368,400 55,181 219,877 664, 254 2, 247,658 82,142 61, 905 12,138 1,076 298, 777 78,689 54,177 1,342,511 2,412,677 1, 706, 085 281,161 1,866, 797 3, 442,055 1,083, 687 234, 215 89, 913 156, 624 569, 553 33, 382 16,406,029 10, 207, 078 509,179 5, 689, 772 326,825 453,172 2, 534, 539 2, 375, 236 83,439 825,976 658, 526 3,340, 558 164 166 34 22 178 657 19 137 68 154 34 12 15 51 167 28 14 4 1 40 21 2 107 127 218 53 55 81 122 13 12 27 64 6 887 504 46 337 24 15 192 106 3 61 9 113 1,507,777 2,336,147 319,817 283,132 1,615,457 7,365,093 91,594 1, 271, 235 1,005,975 2, 257, 548 235,478 52,868 113, 275 344,882 1,992, 238 78, 326 41, 910 11,676 1, 014 198,180 72,292 48,870 920,397 1,933,310 1, 600, 262 157,206 1, 698, 577 1, 274, 292 752,859 129, 398 35, 578 104, 283 464, 625 18, 975 13,061,871 8,871, 870 225, 303 3,964, 698 297, 619 436,381 1,976,401 1, 254, 297 64, 920 461,155 119, 736 1,919,248 528,162 87 756,627 63 490,933 7,745 92, 111 1, 398,624 2 4 110 8,390 102,890 2,216, 728 2 3 93 8,225 7, 551 1,325,814 1 Includes organizations open to members as well as employees. Total assets CREDIT U N IO N S 133 Losses From Bad Debts There were 3,311 credit unions which reported on the question of losses sustained through failure of borrowers to repay their loans. Of these, 2,697 (or nearly 82 percent) had never had any losses at all from this cause. Of the 614 associations reporting losses, 383 had suffered such losses in 1936, in a total amount of $92,318, or 0.38 percent of the loans made by them in that year ($24,134,408). The total amount lost through bad debts during their entire period of operation was reported by 608 associations. These sums aggre gated $509,356. Data are not available as to the loans made by these associations in the same period. On the basis of their loans in 1936, however, these losses would amount to about 1.4 percent of the total business done. Considering the fact that, for many of the asso ciations, the period of operation reported upon included the worst depression this generation has ever known, this is a remarkable record.1 For individual associations the percentage of loss reflects not only the general economic conditions and the employment situation among the members, but also the alertness and efficiency of the credit-union officers and committee members. A New England association, whose total losses were next to the highest reported, had to write off nearly $21,000 in 1936. It is extremely doubtful whether this was one year’s loss, especially as its total losses during 22 years’ operations amounted to $27,500; the 1936 figure probably represents an accumulation of doubtful accounts. In this connection it might be mentioned that many associations reported a large proportion of recoveries on amounts previously written off as uncollectible, and undoubtedly some part of the losses noted above will eventually be collected. One of the largest associations has a most excellent record. During its whole 20 years’ operation, its losses from bad debts amounted to only $603. Its loans in 1936 were over $2,000,000. 1 One association reported that it had had no losses from bad debts during its 9 years’ operation, but had lost $465 in 1932 through a bank failure, Chapter 6.— INSURANCE ASSOCIATIONS Insurance in the Consumers’ Cooperative Movement During the past decade the organized cooperative movement has been increasingly aware of the value of cooperative insurance. As early as 1926 the subject of insurance received a place on the agenda of the congress of the Cooperative League. In that year it consid ered the question, Should the League undertake the organization of a cooperative insurance society, or should it throw its support to existing societies? No answer was reached at the congress, but a committee was appointed to study existing organizations with a view to determining whether to authorize the League to undertake insur ance itself. The 1928 congress gave qualified endorsement to the New Era Life Association,1 conditioned upon its reorganization on an entirely cooperative basis and upon its securing a legal status in other States than its home State of Michigan. The subject of fire insurance was referred to a committee with power to enter into negotiations with the Workmen’s Furniture 2 Fire Insurance Association when it could comply with the cooperative terms. Indorsement of these organizations was continued by the 1930 cooperative congress, which also authorized the creation of a broker age agency through which to consolidate the casualty and fire insur ance needs of the cooperative associations. This agency was accord ingly formed, under the name Clusa Service. Writing no insurance risks itself, this organization acts as an insurance-purchasing service for cooperators and cooperative associations, in the lines of fire, automobile, and life insurance and employees’ fidelity bonds. Most of its business is done within the New York Metropolitan Area, though in obtaining fidelity bonds for cooperative employees, it operates on a Nation-wide basis. At the 1934 congress of the League it was reported that the League had been circularizing the various cooperative insurance associations. This was being done with a view to working out some plan whereby their resources and activities could be mobilized. It was hoped that a general service could be organized so that instead of many small societies writing various kinds of insurance, one society in each field 1 N ow the Michigan Union Life Association. * This word has since been dropped and the word “ mutual’ ' substituted, with the enlargement o f the association’s coverage to houses as well as their contents. 134 IN S U B A N C E ASSOCIATIONS 135 could specialize in the type of insurance for which it was best fitted, and could eventually become the national society of the consumers’ cooperative movement in that field. The subject of insurance came up again at the 1936 congress, and the executive board of the League was directed to call a meeting of insurance associations with a view to the elimination of competition. A representative from the Ohio Farm Bureau Cooperative Association described the insurance activities of the Farm Bureau groups in his State. In 1926 the Farm Bureau Mutual Automobile Insurance Co. was formed, with $10,000 capital furnished by farmer members. Successful from the start, in 1934 it furnished the capital to start the Farm Bureau Mutual Fire Insurance Co., and also $300,000 with which it purchased a controlling interest in the Cooperative Life Insurance Co. of America. At the end of 1936 the Farm Bureau life and automobile insurance companies were operating in 8 States and the fire insurance company in 6 States. As explained to the congress, it is the policy of these organizations to enter a new territory only when they have the sponsorship of the local cooperatives. The insurance is sold through the local cooper ative associations, which act as agents. The fees so earned have formed a source of revenue, from which over $500,000 has been used in cooperative education work and to furnish capital for other enter prises. This line of cooperative activity has had a wide acceptance both among farmers’ cooperative groups and those of urban dwellers. As yet the 1934 program of the League, calling for national asso ciations specializing in various fields, has not been realized. This may be due in part to the realization of the difficulties of obtaining effective member control in organizations operating over a very wide area. To some extent this difficulty is being met, where cooperative insurance associations are linked up with the consumers’ cooperative movement, by giving representation through the local cooperative. New organizations continue to be created, serving areas of one or two States, but real efforts appear to be made to prevent competition and overlapping of territory. Thus, it is reported that the Midland Mutual Fire Insurance Association (Minneapolis, Minn.), formed to write fire insurance on cooperative store and other property not cov ered by township mutual insurance, and the Mutual Cooperative Insurance Association (Superior, Wis.) have agreed between them selves to restrict their sales activities to Minnesota and Wisconsin respectively, although each is authorized to do business in both States. The Michigan Union Life Association (formerly the New Era), having failed to enlarge its territory beyond its one original State, can not qualify as a national association, and that position may eventually be filled by the Ohio life-insurance association mentioned above. 136 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES Meanwhile, Minnesota cooperatives have formed the Cooperators’ Life Association, which covers that State only. Other associations not writing insurance themselves, but acting as agencies, which have been formed by consumers’ cooperative groups are the Cooperative Insurance Association, which handles all kinds of insurance for the cooperative associations in Minnesota and Wis consin, and the Cooperative Management Association, acting as manager for the Cooperative Insurance Mutual, an agency writing all kinds of insurance through the local cooperative stores as agents. All of the associations mentioned above are connected, directly or indirectly, with the cooperative distributive movement. The credit-union movement has its own insurance association. This is the Cuna Mutual Society, formed in Wisconsin in 1935. This asso ciation writes insurance on outstanding loans of member credit unions. This insurance protects the credit union from losses arising from the death of a borrower during the term of his loan. Few general cooperative laws are phrased in such a way as to per mit the incorporation of cooperative insurance associations under them. Therefore, practically all of these insurance associations are organized as mutuals, as in this way the nearest approach to genuinely cooperative principles can be made. Scope of Bureau's Insurance Survey The insurance associations present a situation different from that in most other forms of cooperative activity. In order to obtain safe operation, either extreme selection of risks or wide coverage (to equalize the risks) is necessary. Thus the township fire associations have achieved success because, operating in a small area., all of the members know each other and can judge whether an applicant for insurance is a good moral risk. The larger companies, though for feiting this intimate knowledge of policyholders, attain financial safety by spreading the risk over a broad area. It is undoubtedly true, however, that the larger the area of operation the greater the difficulty of insuring actual control by the membership of the opera tions and policies of the organization. As the general principles of mutuality afford a close approach to cooperative principles, questionnaires were sent to all of the mutual insurance associations of which the Bureau had record. A certain percentage of the returns had to be discarded, either because the insurance w^as not consumers’ insurance (i. e., covered such things as plate glass in stores of private dealers, growing crops, etc.) or because the association was insufficiently cooperative. However, usable re turns were obtained from 1,334 associations, distributed bv States as follows: IN S U R A N C E T able 137 ASSOCIATIONS 63.— N u m ber o f In su ra n ce A ssocia tion s R ep ortin g, 1 9 3 6 , b y States Number reporting State T otal.......... ................. ........ __ _ 1,334 Arkansas_______ _________ ________ California____ ______ ______________ Colorado_________ . . . ________________ Connecticut__________________________ Delaware____________ _ __ ___ _ _ _ District of Columbia______ ____ . . . Georgia_____ _____ ___________ ____ _ Idaho____________ ___ _______ ______ Illinois___ ____ __ _ _______ . _____ Indiana___________ _ __ _ ________ Iowa_______ ______ ____ _______ Kansas______ _________________ _____ Kentucky______ ___ ________ _______ M aine________________ __ ___________ M aryland______ _______ _______ ___ Massachusetts__ _____ __________ _ M ichigan_______ ____ ____________ _ _ Minnesota_____ ______ ___________ Missouri____________________ __________ M ontana_______________________________ 9 24 7 6 2 1 7 7 162 49 127 12 13 24 10 9 64 142 27 8 State Nebraska___ N p,w Hampshire N ew Jersey_______ . __ _ N ew Y ork __ __ North Carolina___ _ _ _ _____ ______ North Dakota___________ _____________ Ohio_____ __ ____ O r e g o n .._____________ ____ _ Pennsylvania.. ___________ _______ _ Rhode Island_____ _______ ______ __ South C arolina... . . . _____ __ _ South Dakota Tennessee __ _ . Texas_________ . . . . . _____ Utah_________ . . Verm ont____ _____ V ir g in ia ..___ ____ W ashington__________ _ _ ________ West V ir g in ia ._____ ____ W isconsin....... W yom ing____ _____ _ _ ___ Number reporting 41 9 9 91 5 34 72 1 140 2 10 39 21 18 1 8 23 5 10 82 3 Year of Formation of Reporting Associations That the large majority of insurance associations dated from before 1900 is shown in the following statement covering the 1,317 associations that reported year of formation: Number of associations Number of associations 442 92 142 156 109 82 69 70 42 34 1880 or earlier 1 8 8 1 -8 5 _______ 1 886 -9 0_______ 1891 -9 5_______ 1896-1900____ 1901 -0 5_______ 1906-10______ 1911 -1 5______ 1916 -2 0______ 1921-25_______ 1926-29 1930 1931 1932 1933 1934 1935 1936 __________ __________ __________ __________ __________ __________ __________ Total 31 9 4 7 14 6 6 2 1,3 1 7 Membership, and Insurance in Force The membership of the insurance associations consists of the policy holders. More than 4% million persons held policies at the end of 1936 in the 1,248 associations reporting on this point. Insurance in force totaled more than 10% billion dollars, of which over nine-tenths was in fire insurance. 90621°— SO- lO 138 T able CONSUMERS’ COOPERATION IN THE UNITED STATES 64.— Policyholders and Insurance in Force in Insurance Cooperatives Writing Specified Kinds o f Insurance, 1936 Policyholders Associations writing— Associa tions reporting Number Insurance in force Associa tions reporting Amount ---------------------- 1,248 4, 774, 854 1,261 $10, 592,480,605 Fire insurance._ . _______________ ._ _____ _____ Life insurance____ _____ ______________ _______ ____Sickness insurance _ _ _ ________ . . ________ General accident insurance------------------------------------------Automobile insurance______________________ ________ Storm insurance ____ ___ ______ ________ ______ Hail insurance (not on crops)---------------------------------------Tinan insurance __ ______________ 1,167 31 1 5 20 21 2 1 3, 283, 260 211,936 49, 555 32,038 949, 590 162, 664 12,333 73,478 1,205 27 1 2 0) 24 2 9,848, 238,114 182, 511, 649 12,657, 760 20,038 0) 537, 554, 686 11, 498, 358 All types of insurance------------------- .. 1 Automobile insurance is written on actual value of car. The distribution of policyholders and of insurance in force, by States, is shown in table 65. More than 60 percent of the total was in the North Central States. T able 65.— Geographical Distribution o f Policyholders and Insurance in Force, in Insurance Cooperatives, 1936 Policyholders State and geographic division United States. Associa tions reporting Insurance in force Associa tions reporting Am ount 1, 248 4, 774,854 1, 261 $10, 592,480,605 43 18 9 5 5 205,435 16,707 8,318 54,816 40,704 777, 605, 704 47,025, 659 13,009,638 201,850,900 219, 580,873 181,935,059 114, 203, 575 6 84,890 53 20 8 8 9 1 7 M iddle Atlantic. _ N ew Y o r k ... N ew Jersey. _ Pennsylvania. 214 87 6 121 1,184,395 618,964 14, 540 550,891 225 89 9 127 2,097,221,372 784, 727,406 57, 663, 845 1, 254, 830,121 East North Central. Ohio___________ Indiana________ Illinois_________ M ichigan______ W isconsin_____ 408 69 49 151 62 77 1,966,948 543, 784 157, 731 678,779 292, 506 294,148 402 67 50 153 58 74 3, 348, 295,671 740, 271,439 495,183,031 983,020,116 531,082,821 598,738,264 West North Central. M innesota_____ Iowa___________ Missouri_______ North D akota... South D akota... Nebraska______ Kansas................ 405 141 121 25 34 36 38 10 1,002,651 330,113 287,008 79,166 63, 579 60,485 132, 867 49,433 404 136 120 27 32 38 41 10 3, 511,158, 354 952, 232,857 1,108, 622,676 124, 057,992 137, 740,908 216, 552,098 822, 279,356 149,672, 467 63 2 9 162,026 1,366 35,465 20 10 5 10 7 58,369 16, 648 4, 689 19, 282 26,207 65 2 10 1 21 10 5 10 6 376, 224,368 4, 331,465 126,049, 575 600, 000 113,685, 718 37,730,329 7, 755, 091 20,169,175 65,903,015 New England______ M aine_________ N ew Hampshire. Verm ont_______ Massachusetts.. Rhode Island___ Connecticut. South Atlantic__________ Delaware___________ M aryland___________ District of Columbia. Virginia_____________ W est Virginia_______ North Carolina_____ South Carolina______ Georgia........................ 139 INSURANCE ASSOCIATIONS T ab le 65.— Geographical Distribution o f Policyholders and Insurance in Force, in Insurance Cooperatives, 1936 — Continued Policyholders State and geographic division Associa tions reporting Number Insurance in force Associa tions reporting Amount East South C en tra l... _____________________________ Kentucky___________________ _____ ____________ Tennessee— ___ _____ ____ _______ . . . . ___ _ 32 12 20 38,487 21, 531 16,956 32 11 21 $86, 519,786 59, 668, 068 26,851, 718 West South Central. . _________ _____ . . . _____ _ Arkansas______________________ _______ ________ Texas___________________________________________ 27 9 18 44,293 10,476 33,817 25 9 16 47, 335,916 11,051, 024 36,284,892 M ountain----------------------------------------------------------------Montana _ _ ___ _ . . . ___ . . . __________ Idaho_________ _______ _______________________ W y o m in g ______________________________________ C olora d o_______________________________________ Utah___________________________________________ 26 8 7 3 7 1 47,072 4,975 14, 576 992 14, 529 12,000 25 8 7 3 6 1 104, 741, 644 9, 619,339 40,144,188 1, 866,657 39,067,952 14,043, 508 Pacific______________ ___________________ _________ W ashington.. ._ ... ... ______ . . . ._ Oregon___ ________________ . _________ _____ California. __________________ _______________ . 30 5 123, 547 28,064 3,179 92.304 30 5 243,377,790 60,172,194 6,974, 895 176, 230, 701 1 24 1 24 Five-sixths of the associations had fewer than 5,000 policyholders, as the statement below shows: Percent of associations Under 500 members____________________________________________ 500 and under 1,000 members_________________________________ 1.000 and under 5,000 members_______________________________ 5.000 and under 10,000 members______________________________ 10.000 and under 25,000 members_____________________________ 25.000 and under 50,000 members_____________________________ 50.000 and under 75,000 members_____________________________ 75.000 members and over______________________________________ 19. 5 21. 2 47. 5 5. 7 3. 6 1. 7 .6 .2 Total_____________________________________________________ 100. 0 The distribution of reporting associations according to the amount of insurance in force at the end of 1936 is shown in the statement below. As it indicates, somewhat over two-fifths of the associations fell in the group having in force insurance of from 1 to 5 million dollars. Percent of associations Under $50,000__________________________________________________ $50,000 and under $100,000____________________________________ $100,000 and under $500,000__________________________________ $500,000 and under $1,000,000________________________________ $1,000,000 and under $5,000,000______________________________ $5,000,000 and under $10,000,000_____________________________ $10,000,000 and under $25,000,000____________________________ $25,000,000 and over___________________________________________ Total 0. . 5. 8. 44. 20. 15. 4. 6 5 7 3 0 8 1 9 100 . 0 140 CONSUMERS’ COOPERATION IN TH E UNITED STATES Business Done in 1936 Over 1.4 billion dollars in new insurance was written in 1936 by the associations reporting, and the net premium income amounted to more than 50 million dollars, as table 66 shows. More than half (57.4 percent) of the associations reporting operated on the assessment plan, levying an assessment only when losses were incurred, 18.5 percent required advance premiums, and 24.1 percent operated on the premium basis but with the right to levy an assess ment also if this became necessary. T able 66.— N ew Insurance W ritten and Gross and N et Incom e, in 1936, by K in d o f Insurance Gross premium in come N ew insurance Major line of insurance written Asso ciations report ing Asso ciations report ing Am ount A ll kinds of insurance_________________ 1,067 $1,404,240,071 Fire insurance________________________ Life insurance-------------------------------------Sickness insurance____________________ General accident insurance_________ __ Automobile______________________ ____ Storm-------------------------------------------------Hail (not on crops)-----------------------------Loans_____________________________ __ 1,020 22 1 1,287, 241, 705 37, 075, 263 1,043, 460 21 2 1 63,872,339 8,008, 650 6,998,654 Amount N et premium in come Asso ciations report ing Am ount 1 1,171 i $71,925,068 805 $50,605,354 37,292,888 5, 751, 308 754,078 362, 777 26,654,148 662, 554 377,112 70,203 740 23 1 2 21 17 1 25, 551,198 2, 311, 680 754,078 66, 782 21,285,121 421,374 215,121 1,089 29 1 3 24 22 2 1 i Does not include 1 agency association whose gross premium income was $3,448. The same data are shown on a geographical basis in table 67. T able 67 .— N ew Insurance W ritten and Gross and N et Incom e, in 1936, b y States N ew insurance State All States___________ Arkansas----------------California___________ Colorado____________ Connecticut________ Delaware___________ District of Columbia. Georgia-------------------Idaho----------------------Illinois______________ Indiana............. .......... Iowa................ ............ Kansas................. ....... K entucky__________ M aine______________ M aryland---------------Massachusetts........ M ichigan----------------- Associations report ing Amount 1,067 $1,404,240,071 7 19 3 5 1 2,078,216 24,644,818 3,940,108 21,774,903 69,554 4 7 129 40 99 9 13 17 9 8 64 854,136 3,633,008 82,031,343 30,260, 230 158,376,940 47,681,451 6,021,439 9,810,181 11,995,918 20,238,406 43,674,669 Gross premium in come Associations report ing Amount i 1,171 i $71,925,068 805 $50,605,354 8 19 5 6 2 1 7 6 145 47 111 9 12 22 66,524 982,954 125, 531 664,068 23,084 1,535 420,042 89,626 18,146,911 1,444,309 4,946,030 411,642 217, 792 367, 952 457,057 1,691,567 5,542,661 4 20 4 7 1 43, 524 881, 624 59,294 406,666 11, 516 5 5 106 21 76 5 12 14 6 8 36 418,321 39,356 13, 761, 632 752,584 6,425,060 313,488 169,035 146, 716 319,419 1,037, 521 3,977.699 57 i Does not include 1 agencyi n Minnesota with gross income of $3,448. Net premium in come Associations report ing Amount 141 INSURANCE ASSOCIATIONS T able 67.— N ew In su ra n ce W ritten and G ross and N e t In com e , in 1 9 3 6 , b y States—Con. New insurance State Minnesota______________________ __ Missouri_____________________ ______ M ontana_____________ ____ __ _____ Nebraska________________________ __ N ew Hampshire_____ ___ ______ ___ N ew Jersey_______________________ _ N ew Y ork___________________ _ North Carolina____________________ North Dakota____ _ _ ____ _ __ _ Ohio................ . __________ --Oregon_____________ __ _________ Pennsylvania_______ ______ ______ Rhode Island ___________ ________ _ South Carolina____ _________ ______ South D akota. _ . . ________ _ Tennessee_______ __________ ____ _ Texas____________ _______ ____ Utah_________ _____________________ Vermont____ ____ ___ _______ ____ Virginia. _________________________ Washington__________ _____ _______ West Virginia_____________________ W isconsin________________ _____ W yom ing_________ _____ _______ _ Asso ciations report ing Amount 121 21 7 38 7 7 73 5 30 55 1 110 $163,623, 034 18,731, 234 682,802 134,230,896 1,285,366 21,785,561 93,145,630 293,075 27,802,651 108,662,147 529,472 143,833,678 8 26 20 10 1 7 15 4 10 64 3 11,804,413 23,124,486 2,324,954 3,088,291 461,969 42,850, 601 4,607,326 22,154,349 5,099,139 106,658, 561 375,116 Gross premium in come Asso ciations report ing 128 25 6 37 6 9 79 4 29 62 1 109 2 9 34 17 17 1 8 18 5 10 77 3 Amount N et premium in come Asso ciations report ing $2,517,300 517,078 29,669 1,380,817 65,528 266,769 7,209, 208 30, 936 1,228,168 8,365,250 25,184 5,055,783 1, 581, 773 322, 630 1,021,042 414,885 507,143 31,550 1,423,360 540,846 278,273 150,310 3,353,621 8,660 80 17 6 28 7 5 57 3 17 39 1 83 2 6 22 11 13 1 8 9 1 4 52 3 Amount $1,490,534 297,596 29,319 1,171,761 71,222 133,472 3,005,647 19,687 113, 550 5,478,420 25,023 4,135,290 966,147 200,944 336,738 78,107 218,363 18,461 1,046,901 1,230,659 6,445 53,938 1, 709, 752 3,923 The percentage distribution of associations according to amount of new insurance written in 1936 is given in the following statement: Percent of associations Under $25,000__________________________________________________ $25,000 and under $100,000____________________________________ $100,000 and under $500,000__________________________________ $500,000 and under $1,000,000________________________________ $1,000,000 and under $5,000,000______________________________ $5,000,000 and under $10,000,000_____________________________ $10,000,000 and over---------------- 8. 14. 34. 15. 22. 2. 2. 5 0 2 8 9 2 5 Total_____________________________________________________ 100. 0 The distribution according to amount of net income from premiums and assessments is given below: Percent of associations Under $5,000___________________________________________________ $5,000 and under $25,000______________________________________ $25,000 and under $100,000____________________________________ $100,000 and under $500,000__________________________________ $500,000 and under $1,000,000________________________________ $1,000,000 and over____________________________________________ 34. 37. 19. 6. 1. 1. 7 3 3 7 0 2 Total_____________________________________________________ 100.0 142 CONSUMERS’ COOPERATION IN THE UNITED STATES Relation of Amount of Insurance to Field of Operations More than 95 percent of all of the insurance associations reporting, which were sufficiently cooperative to be included in the tabulations, were writing insurance in a territory of less than one State. Table 68 brings out the relationship between the geographic scope of operations of the associations and the amount of business done. Thus, about 45 percent of the associations were writing insurance in areas of one county or less. These organizations had only about one-fourth of the total policyholders, but almost 35 percent of the total insurance in force. The associations of widest scope, on the other hand, forming less than 3 percent of all the associations, had 30 percent of the policyholders; they had only about one-eighth of the insurance in force, but this did not include business done in automobile insurance in which the insurance carrier is obligated not for a fixed sum (as in other types of insurance) but for a sum equivalent to the value of the car at the time of the claim. Most of the automobile insurance in the cooperative field is written by the larger associations (operating in more than one State), and if it were possible to include this business in the figures given for them in table 68 it would raise considerably the relative proportion both of new insurance written and of insurance in force. T able 6 8 .— D istribu tion o f M em bersh ip and B u sin ess , b y S cope o f In su ra n ce F ield o f R ep ortin g A ssocia tion s Percent accounted for b y associations of specified scope Scope of field in which authorized to write insurance Number of associ ations ________________________ Insurance in force 1 New in surance written, 1936 1 13.8 2.5 29.1 5.5 3.1 5.4 1.3 18.2 3.0 7.4 5.9 2.2 25.6 3.8 11.4 8.0 3.6 19.7 5.0 9.6 43.3 2.7 34.2 30.6 37.2 13.9 37.8 16.3 100.0 100.0 100.0 100.0 1 township _______ _____ _____ _______ ------M ore than 1 township but less than 1 county__________ 1 cou nty______________________________________________ More than 1 county but less than 1 State_________ 1 State----- ------- --------------- ------------------------------------------Territory not defined in report, but not more than 1 State________________________________________________ M ore than 1 State--------------------- ---------- -------- ------------All associations_______ Policy holders i Not including automobile insurance which is written on value of car. Claims Paid Disbursements for losses during the year 1936 aggregated nearly 14% million dollars, distributed, by type of associations, as shown in the following table. 143 IN S U R A N C E ASSOCIATIONS T a b l e 6 9 . — A m o u n t o f C laim s P a id b y In su ra n ce Cooperatives W ritin g S pecified T yp es o f In su ra n ce , 1 93 6 Claims paid T ype of insurance All types of insurance. _ _ ______________ ___ Associa tions re porting __ __ _ _ _ Fire insurance_________________ ____ - __________ ________ ______ _ Life in su ra n ce____ ___________ ______- ___ ___ - ___ _ . . . ................... _ _ Sickness insurance_________ ____ _ _______________ _____ ________ ____ _____ General accident insurance - __________________ _______ _________ _ - _ Automobile insurance _ ________ _ _ _____ Storm insurance __ ______________ _________________________ _______ __ __ Hail insurance (not on crops). ........... ............ ................................. ....... A m ount 760 $14, 469,950 708 16 1 3 11 19 2 11,957,936 278,368 721 210,270 1, 400,867 439, 862 181,926 The same data, for the various States, are shown in table 70. T a b l e 7 0 . — G eographical D istribu tion o f C laim s P a id b y In su ra n ce C ooperatives , 1 9 3 6 Claims paid State and geographic division Asso cia tions report ing Clai ms paid State and geographic division Amount United States____ __________ 760 $14,469,950 N ew England____ _____ ____ M aine___________________ N ew Hampshire_________ V erm ont____ ___________ Massachusetts___________ Rhode Island______ _ ___ Connecticut_____________ 20 9 3 2 4 1 1 699,969 114, 589 42, 781 96,128 112, 833 257, 287 76, 351 M iddle Atlantic. N ew Y ork__________ New Jersey_____ _ _ ._ Pennsylvania_________ 133 62 4 67 2, 368, 677 1, 220, 388 74, 898 1,073, 391 East North Central________ O hio___________ _______ Indiana_____________ _ Illinois______ _____ _____ M ichigan_______________ W isconsin. ............. .......... 259 38 26 100 50 45 6, 001, 451 1,122, 690 826, 225 2,002, 772 1, 265, 961 783, 803 West North Central_________ Minnesota___________ __ Iow a_________________ __ Missouri________________ North Dakota___ _______ South Dakota__________ Nebraska________________ Kansas. _ :_______________ 244 78 75 16 18 26 21 10 4,069,158 1, 286,178 1, 506, 004 298, 969 172, 362 327, 328 243, 274 235,043 Asso cia tions report ing Amount South Atlantic______ _______ M aryland. _______ _ _ District of Columbia. _ _ _ Virginia. ______ _______ W est Virginia___________ North Carolina___ _____ South Carolina _______ Georgia_________________ 30 5 1 8 6 3 4 3 $410, 356 100, 983 10, 669 82, 714 51, 801 8,554 32, 812 122, 823 East South Central______ .. . Kentucky ________ _____ Tennessee_______________ 16 9 7 151, 620 111, 966 39, 654 West South Central. __. _ Arkansas______________ _ Texas___________________ 16 6 10 145, 561 24, 684 120, 877 M ou ntain.. _______________ M ontana.-------------- . . . _ Idaho___________________ C olorado.. _____________ 18 6 5 7 351, 637 17, 995 158,178 175, 464 Pacific______________________ W ashington___________ _ Oregon__________________ California______ ________ 24 2 1 21 271, 521 52, 383 9, 748 209, 390 Dividends Returned Only a few of the associations reporting returned any dividends for 1936 on premiums paid. This was mainly due to the fact that as most of the associations operate either at actual cost (i. e., assessing members only for actual outlays for losses) or at premium rates set only high enough to cover estimated costs, there is little or no margin from which to return dividends. 144 C O N S U M E R S * C O O P E R A T IO N IN THE U N IT E D STATES T able 71.— A m o u n t o f D ividends P a id b y In su ra n ce C ooperatives W ritin g Specified T yp es o f In su ra n ce , 1 9 3 6 Dividends paid Type of insurance All types of insurance ____________________ ______________ ____- Fire insurance __ _ ____________________ ______ _____ __________ __ Life insurance ____________ ___ ___ _ _ ____________________________ Automobile insurance. __ _ ___ ______________ ______________ _ Hail insurance (not on crops) __ __ ____ _________________ ___ . - - - - Associa tions re porting Amount 80 $2,155,424 67 1,665,020 204, 511 258, 857 27,036 5 7 1 Chapter 7.— F E D E R A T IO N S The basis of the consumers’ cooperative movement is formed by the local cooperative associations, which carry on a wide variety of business activities. These local associations are organized into federations of various kinds. Just as the local associations are owned and controlled by their individual members, so the federations are owned and controlled by the local associations. It has been usual in the cooperative move ment in the United States for the educational and business activities to be carried on by separate organizations. Thus, the wholesale dis tribution of groceries, petroleum products, etc., is carried on by whole sale cooperatives, whose share capital is furnished by the local asso ciations and whose policies are determined by them. Federations may also be formed in the same way to perform specific business func tions, such as the provision of burial service, printing service, etc. The educational and propaganda work is carried on by the Coopera tive League of the United States of America and its five regional leagues.1 Both retail and wholesale associations may affiliate with the regional leagues; by doing so they become members of the national league also. Wholesale Associations Cooperative wholesaling is now firmly established in the United States. At the end of 1936 there were in operation 20 regional whole sales with a trading area of one or more States, dealing in consumers’ goods.2 In addition there were 2 interregional wholesales formed by the regional wholesales to pool their purchasing power and obtain the advantages of large-scale orders; and 9 federations of less than State wide scope, specializing in certain commodities. Data were obtained by the Bureau of Labor Statistics for 19 regional associations, both of the interregional, and all of the district associa tions. The 19 reporting regional wholesales in 1936 were serving more than 1,700 member associations and over 700 other cooperatives were mak ing wholesale purchases from them, though not affiliated. A wholesale business in excess of 40 million dollars was reported by the regional 1 But there has been some overlapping in educational training of employees; see page 171. 2Several of the wholesales for which data are given herein handle commodities used in farm “business” (such as fencing, feed, seed, fertilizer, etc.), but none was included here unless it also handled consumers' goods. A number of farmers’ organizations handle farmsupplies only, but they are not covered here. 145 146 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES cooperatives, a gain of 24.2 percent over 1935. All but one showed a substantial increase in business in 1936 over the previous year. Indeed, 8 of these associations in 1936 had the largest amount of sales in their history. Six associations had sales of more than 3 million dollars each and 3 of these had sales of over 5 million dollars. Increases were also shown in net earnings and refunds made on members’ patronage. Share capital of nearly 2 million dollars, total assets of nearly 6 mil lions, and an aggregate net worth in excess of 3% millions were reported. The year 1936 was a relatively uneventful period in cooperative wholesaling, though marked by substantial growth. Several organiza tions opened branch wholesale warehouses in new localities, others un dertook the production of new commodities, and practically all enlarged their field of merchandising by adding new lines of goods to their stocks. Almost without exception the wholesales making returns re ported a gain in the number of affiliated local associations as compared with 1935. Services and Facilities The goods handled and services rendered by each association are listed in table 72. As there shown, practically all of the associations handle petroleum products and nearly all handle automobile tires. More and more of the associations are beginning to handle household goods, and this trend is likely to continue, for an increasing number of the local cooperative gasoline service stations are putting in small stocks of groceries and household supplies. Field agents for the Bureau of Labor Statistics also noticed a tendency for the farmers’ local cream eries to undertake the purchase of such goods for their members. The effect of the rural electrification program is shown by the grow ing number of wholesales handling electrical appliances. T able 72.— L in es o f G oods H andled b y W holesale Cooperative A sso cia tion s , and O ther Services P rovided , 1 9 3 6 Type of association, State, and city Name of whole sale Goods handled Illinois: Chicago. National Cooper atives, Inc. Indiana: apolis. United Coopera tives, Inc.3 Petroleum products, auto tires and accessories, radios, elec trical supplies, uniforms, bind ery twine, farm machineryA Petroleum products; servicestation and bulk plant equip ment. Goods manu Other services factured Interregional Indian Regional Illinois: Chicago______ Illinois Farm Sup Petroleum products, paints, ply Co. solvents, auto tires, and tubes. Do_______ The Cooperative Groceries, motor oil, auto tires Wholesale. and accessories, electrical ap pliances. 1None of these goods actually handled; orders of member wholesales are pooled and goods are shipped directly to them. 3Name originally Farm Bureau Oil Co.; changed to present name in 1936. 147 F E D E R A T IO N S T able 72.— L in es o f G oods H andled b y W holesale C ooperative A sso cia tion s , and Other Services P rovid ed , 1 9 3 6 — Continued Type of association, State, and city Name of whole sale Goods handled Goods manu Other services factured Regional—Contd. Indiana Farm Household supplies, fuel, petro- Lubricating Bureau Coop leum products, auto tires and oil. erative Associa accessories, farm supplies and tion. machinery. Massachusetts: United Coopera Petroleum products, auto tires tive Farmers. and accessories, farm supplies Fitchburg. and machinery. Michigan: Lansing. Farm Bureau Fuel, dairy products, petroleum Services. products, auto tires and acces sories, farm supplies. Indiana: apolis. Indian- Minnesota: Minneapolis. Supervision of management of local, if re quested. Midland Coopera- Fuel, petroleum products, auto Lubricating Educational tive Wholesale. tires, tubes and batteries, elec oil. department; trical appliances, paint, steel merchandis and wire, bulk-station equip ing advice. ment. South St. Paul. Farmers’ Union Petroleum products, auto tires ___ do_____ Central Ex and accessories, flour, farm change. supplies and machinery, oilstation equipment. St. Paul.......... Minnesota Farm Petroleum products, farm sup plies. Bureau Service Co. Missouri: North Consumers’ Coop- Groceries, petroleum products, Lubricating Educational erative Associaauto tires and accessories, elecoil, axle Kansas City. department; tion. trical appliances, paint, farm grease, auditing; col supplies and machinery. paint. lective pur chase of emp 1o y e e bonds. Nebraska: Omaha. Farmers’ Union Groceries, clothing, shoes, fuel, Educational State Exchange. household supplies, stationery, department; students’ supplies, petroleum auditing. products, auto tires and acces sories, farm supplies and ma chinery. New York: New Eastern Coopera Groceries, dairy products, motor York. tive Wholesale. oil, auto tires. Ohio: Columbus... Farm Bureau Fuel, petroleumproducts, paint, Educational electrical appliances, farmsup Cooperative As department; sociation. plies and machinery, raw ma auditing. terials, twine. Oklahoma: Okla Farmers Union Dry goods, fuel, household sup Sales Depart plies, petroleum products, homa City. ment. farm supplies and machinery, building materials, twine. Pennsylvania: Pennsylvania Petroleum products, farm sup Feed, fertil Farm Bureau plies. izer, lubri Harrisburg. cating oil. Cooperative As sociation. Texas: Amarillo__ Consumers Co Fuel, petroleum products, auto mobile tires and accessories, operatives, As washing machines, refrigera sociated. tors, farmsupplies, windmills. W a s h i n g t o n : Grange Coopera- Groceries and meats, limited Feed______ Auditing. Seattle. ative Wholesale. lines of clothing and shoes, fuel, household goods, petro leum products, automobile tires and accessories, stu dents’ supplies, farm supplies and machinery. Wisconsin: Superior_____ Central Coopera Groceries, clothing, bakery B a k e r y Educational tive Wholesale. goods, petroleum products, goods, cof department; automobile tires and acces fee-roast auditing. sories, farm supplies. ing, feed. Madison_____ Farm Bureau Petroleum products, farm sup Fertilizer__ Federation Co plies. operative. Superior_____ Workers and Groceries, clothing, bakery Farmers Coop products, dry goods, house erative Unity hold supplies, hardware, pe Alliance. troleum products, farm sup plies, building material. 148 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES T able 72.— L in es o f G oods H a n d led b y W h olesa le C ooperative A sso cia tio n s , and O ther S ervices P rovid ed , 1 9 3 6 —Continued Type of association, State, and city Name of whole sale Goods handled Good smanu- Other services factured District Michigan: Bruce Crossing- H-O-B Coopera tive Oil Asso ciation. Rock................ Northland Coop erative Oil Asso ciation. Minnesota: Cloquet........... Trico Cooperative Oil Association. C-A-P Coopera Kettle River. tive Oil Assotion. Virginia........... Range Coopera tive Oil Asso ciation.3 Do............. Range Coopera tive Federation. Wisconsin: Ashland........... A & B Cooper ative Oil Asso ciation. Maple.............. Cooperative Serv ices. Prentice........... Price County Co operative Oil Association. Petroleum products. Petroleumproducts, automobile tires and accessories. Petroleumproducts, automobile tires and accessories. Petroleumproducts, automobile tires and accessories, farm machinery. Petroleum products................... Automobiles. Sausage, butter. Petroleum products. Automobile rerepair serv ice, insur ance, truck ing.* Petroleum products, farm sup plies and machinery, building material, explosives. Petroleumproducts, automobile tires and accessories, farm machinery. 3 Became a department of Range Cooperative Federation, July 1,1937. <Burial service added, Sept. 1,1937. Some indication of the plant and facilities of the wholesales is given in table 73. For 9 associations of regional or greater scope, the value of such fixed assets at the end of 1936 totaled $847,244; for the individual associations the value ranged from $2,468 to $187,558. T able 73.— P la n t and F a cilities o f Cooperative W holesale A ssocia tion s Association Plant and operating facilities Interregional Illinois: National Cooperatives, Inc................... Indiana: United Cooperatives, Inc..--------------- Office only. Office; oil-blending plant. Regional Illinois: The Coooperative Wholesale__________ Wholesale warehouse and show room. Indiana: Indiana Farm Bureau Cooperative 3 warehouses. Association. Massachusetts: United Cooperative Farmers___ Retail store, wholesale warehouse; branch of wholesale at Danielson, Conn. Michigan: Farm Bureau Services..... .................. 2 wholesale warehouses, 10 retail stores, 2 gasoline bulk stations. Minnesota: Farmers’ Union Central Exchange..... ....... . Wholesale warehouse, 9 retail stores. Midland Cooperative Wholesale__________ Wholesale warehouse, fuel yard; branch of wholesale at Milwaukee. Missouri: Consumers’ Cooperative Association. _ 7 wholesale warehouses,112 gasoline service stations, 12 bulk stations, 20 tank trucks, 1 blending plant. Nebraska: Farmers’ Union State Exchange......... Wholesale warehouse, 16 retail stores, 7 gasoline service stations, 7 bulk stations, 7 tank trucks. New York: Eastern Cooperative Wholesale____ Wholesale warehouse; branch of wholesale at Boston. Ohio: Farm Bureau Cooperative Association____ 3 wholesale warehouses. 1 At North Kansas City, Mo.; McPherson, Kans.; Lincoln and McCook, Nebr.; Aberdeen, Sioux Falls, and Rapid City, S. Dak. Additional wholesale warehouses were established in 1937 in Salt Lake City, Utah, and Denver, Colo. 149 E E D E K A T IO N S T able 73.— P la n t a n d F a cilities o f C ooperative W h olesa le A ssocia tion s —Continued Association Plant and operating facilities Regional—Continued Pennsylvania: Pennsylvania Farm Bureau Co Wholesale warehouse. operative Association. Texas: Consumers Cooperatives, Associated___ Wholesale warehouse, bulk plant. Washington: Grange Cooperative Wholesale....... Wholesale warehouse, 1retail store; wholesale branch at Spokane. Wisconsin: Central Cooperative Wholesale. .................... Wholesale warehouse, coffee-roasting plant, bakery, feed mill; wholesale branch at Virginia, Minn. Farm Bureau Federation, Cooperative........ Wholesale warehouse. Workers and Farmers Cooperative Unity Do. Alliance. District Michigan: H-O-B Cooperative Oil Association....... ....... Northland Cooperative Oil Association_____ Minnesota: Trico Cooperative Oil Association................. Range Cooperative Oil Association............... 2 bulk stations, 2 curb pumps. 1 bulk station, 1 gasoline service station. 2 bulk stations, 5tank trucks. 1 gasoline service station, at Hibbing, 1 bulk station, 1 tank truck. Range Cooperative Federation............. ........ Sausage factory, creamery, truck, insurance agency, auto-repair garage, auto salesroom.3 Wisconsin: A & B Cooperative Oil Association________ Bulk station, 2 tank trucks. Cooperative Services------------------------------- Warehouse, 1 gasoline service station, 1 bulk station, 3 tank trucks. Price County Cooperative Oil Association__ 1 gasoline service station, 5 curb pumps, 1 bulk station. * Undertaking establishment added, Sept. 1,1937. Trading Territory The 30-odd cooperative federations in the United States that handle consumers, goods vary considerably in scope. They have been classi fied here as interregional, regional, and district. During the past 15 years, wholesaling in the United States has been developing mainly on a State or regional basis. The wholesales spon sored by the local cooperative associations connected with the various farm organizations— Farmers’ Union, Grange, and Farm Bureau— generally function within the boundaries of a single State. The organizations which are strictly consumers’ associations usually have a trading territory covering all or parts of several States. All of these are here classified as regional wholesales. In order to obtain the advantage of large-scale buying, some of the regional wholesales have in turn combined to form the two inter regional wholesales included in table 72. The main function of Na tional Cooperatives thus far has been the pooling of the purchasing power of its member cooperatives.3 It makes a master contract and exhibit contracts with manufacturers for the commodities desired. *The original members of National Cooperatives were Central Cooperative Wholesale, Superior, Wis.; Consumers* Cooperative Association, North Kansas City, Mo.; Farmers* Union Central Exchange, St. Paul, Minn.; Midland Cooperative Wholesale, Minneapolis, Minn.; and United Cooperatives, Indian apolis, Ind. Consumers Cooperatives Associated, Amarillo, Tex., and Pacific Supply Cooperative, Walla Walla, Wash., were admitted in 1934; the Eastern Cooperative Wholesale, New York, N. Y., and United Farmers Cooperative Co., Toronto, Ont., in 1936; and The Cooperative Wholesale, Chicago, in 1937. Thus, at the end of 1936, National Cooperatives was serving about 1,000 local cooperative associations which were members of its affiliates. 150 CON SU M ERS’ C O O P E R A T IO N IN THE U N IT E D STATES The goods ordered do not pass through the central organization but are delivered by the manufacturer directly to the regional wholesales. One of the features of these contracts is the provision that additional orders may be entered, at the same price. All goods dealt in are put up under the cooperative label. United Cooperatives, the other interregional wholesale, was formed in 1930 (under the name of Farm Bureau Oil Co.) by the Farm Bureau cooperatives of Ohio, Indiana, and Michigan, to serve the oil associations in those States. Its scope was later enlarged, additional associations were admitted, and its name was changed in 1936 to the present one. At the end of 1936 it was serving farmers’ cooperatives in 9 States.4 In Michigan, Minnesota, and Wisconsin some of the local associa tions in a given district or in one or more counties have formed central organizations (here termed “district” associations) to handle certain commodities or services for them. The Bureau of Labor Statistics knows of 9 such organizations in the United States, all of which are included in table 72. Of those shown in the table, the Range Coopera tive Federation, originally organized as an educational association which would also provide a medium for the exchange of experience among the member associations, is outstanding. Its character has gradually changed and it is now primarily a productive and service association. As indicated, the members of these district and regional federations are the local (retail) associations; with one exception,5 the members of the interregional wholesales are the regional wholesales. It is evident from the above and from table 72, that there is a good deal of overlapping and duplication of wholesale service in some sec tions. This arises mainly from the presence of rival farm organiza tions, each sponsoring its own cooperatives, and is further complicated by the presence of purely consumer organizations in the same territory. AJthough in general each of these reaches a different group of consum ers, there has been some conflict, as where a farm organization set up its own wholesale in a district where its members were already being served by the wholesale facilities of another organization, or where an association overstepped its original geographic boundaries. One of the requirements for membership in National Cooperatives, adopted with a view to prevention of competition between member wholesales, is that the prospective member must submit a map showing the trading *The membership at the end of 1936 consisted of the Farm Bureau Cooperative Association, Columbus, Ohio; Indiana Farm Bureau Cooperative Association, Indianapolis, Ind.; Farm Bureau Services, Lansing, Mich.; Southern States Cooperatives, Richmond, Va.; Consumers' Cooperative Oil Co., Sauk City, Wis.; Maryland Farm Bureau Federation, Baltimore, Md.; Farmers' Cooperative Exchange, Raleigh, N . C.; Cooperative Q. L. F. Exchange, Ithaca, N . Y.; Pennsylvania Farm Bureau Cooperative Association, Harrisburg, Pa. * United Cooperatives, itself an interregional organization, is a member of National Cooperatives which is also an interregional association. 151 F E D E R A T IO N S territory claimed by it. This provision probably operates also to keep out other organizations which might otherwise join but which are already doing business in territory claimed by present members of National Cooperatives. Membership and Resources Share capital amounting to over 2 million dollars and total assets of over 6 million dollars were reported by the 30 associations covered in table 74. T able 74.—M em bersh ip , P a tron s , and R esources o f Cooperative W holesale A ssocia tion s at E n d o f 1 9 3 6 Association and State Retail branches of whole sale Unaf filiated cus tomer associa tions Year of organization Affil iated asso cia tions 1933 1930 9 9 $3,600 124,300 $9,778 187,939 18 127,900 197, 717 36 110,768 1,709 562,900 7,788 300 399,700 4,945 71,979 2808,512 39, 358 3614,174 18 22 10 175 (4) (4) (7) 124 5 0) 223,278 115,100 (4) 100,000 305,023 5,145 307,988 (4) 728,406 483,139 (4) 527,784 696,635 42,619 673, 770 (4) I 20 20 25,000 17,785 13,540 50 (4) 183,292 (9) Paid-in share capital Total assets i Interregional Illinois: National Cooperatives, Inc.. Indiana: United Cooperatives, Inc.. Total . Regional Illinois: Illinois Farm Supply Co............................ The Cooperative Wholesale________ ____ Indiana: Indiana Farm Bureau Cooperative Association____________________________ Massachusetts: United Cooperative Farmers.. Michigan: Farm Bureau Services____ ______ Minnesota: Farmers’ Union Central Exchange_______ Midland Cooperative Wholesale________ Minnesota Farm Bureau Service Co_____ Missouri: Consumers’ Cooperative Association. Nebraska: Fanners’ Union State Exchange__ New York: Eastern Cooperative Wholesale__ Ohio: Farm Bureau Cooperative Association.. Oklahoma: Farmers’ Union Sales Department. Pennsylvania: Pennsylvania Farm Bureau Cooperative Association_________________ Texas: Consumers Cooperatives, Associated. . Washington: Grange Cooperative Wholesale... Wisconsin: Central Cooperative Wholesale_________ Farm Bureau Federation Cooperative___ Workers’ and Farmers’ Cooperative Unity Alliance___________________ ________ Total. 1927 1936 62 36 1921 1927 1920 88 31 118 1927 1926 1928 1929 1914 1928 1933 1922 240 148 30 «342 «275 33 83 0) 1934 1931 1919 10 52 840 1917 1923 109 13 1931 9 (0 (4) 36 1, 746 District 3 3 12 68 (4) (4) (4) 481,185 15,171 5 4,156 16,302 745 1,889,408 5,697,743 Michigan: 5,706 12, 740 H-O-B Cooperative Oil Association......... 1932 7 I 2 Northland Cooperative Oil Association... 1930 (4) (4) 1 Depreciation deducted. 2 1935. 3As of June 30, 1936. 4No data. 6Does not include cooperative wholesales of Estonia, France, and Scotland, which became members through refunds earned by their patronage. 6And about 6,500 individual members. 7“ Only a few.” 8Under reorganization, Mar. 1, 1937. Nonstock organization. 152 CON SU M ERS’ T able 74.—M em bersh ip , C O O P E R A T IO N IN THE U N IT E D STATES P atron s , and R esources o f C ooperative W holesale A sso cia tion s at E n d o f 1 9 3 6 —Continued Association and State Year of organization Affil iated asso cia tions Retail branches of whole sale 1929 1929 1929 1933 14 10 15 15 1 1930 1928 1934 8 5 5 Unaf filiated cus tomer associa tions Paid-in share capital Total assets District—Continued Minnesota: Trico Cooperative Oil Association----------C-A-P Cooperative Oil Association______ Range Cooperative Oil Association---------Range Cooperative Federation...... ........ . Wisconsin: A & B Cooperative Oil Association............ Cooperative Services....... ......... ................. Price County Cooperative Oil Association. _ Total______________________________ Grand total________________________ 81 5 $11,603 5,100 9,043 4,703 $43,286 (<) io29, 111 42, 730 1,850 12,500 2,030 12, 263 41,679 7,870 2 5 52, 535 189,679 70 750 2,069,843 6,085,139 *No data. ioAs of Feb. 29, 1936. A combined net worth of over 3 million dollars was reported, distributed by type of association as follows: Net worth Interregional associations_________________________________ Regional associations______________________________________ District associations_______________________________________ $180, 127 3, 370, 807 120, 362 OPERATION OF RETAIL BRANCHES Some years ago it was almost unheard of in this country for a gen uinely cooperative wholesale to be operating retail branches. The opening of such branches, to serve localities with no local retail associa tion of their own, is a comparatively repent tendency. Of 8 regional wholesales for which data were obtained in 1933, 4 were operating a total of 50 branches. In 1934, 6 associations (out of 9 reporting) had 87 retail outlets; and in 1935, 6 (out of 11 reporting) had 67 retail stores. Of the 19 regional associations covered in the above table, 7 had a total of 68 retail branches. It is, of course, preferable from the cooperative standpoint for the retail store to be owned by the local cooperators rather than for these persons to be supplied through a store over which they have no direct control. In recogni tion of this, in some localities local cooperative associations have been organized to take over from the wholesale the operation of the retail stores there. The Farmers’ Union State Exchange is a case in point. The Ex change was organized as a department of the Farmers’ Union of Nebraska in 1914, when there were very few local cooperatives in the State. It was incorporated in 1917 as a separate organization, but the Farmers’ Union of Nebraska held all the shares. In 1919 it was rear- 153 F E D E R A T IO N S ganized, with membership restricted to individual members of the farm organization. That same year the Nebraska cooperative statute was amended to permit cooperatives to hold stock in other coopera tives, but very few local associations took advantage of this to buy shares in the wholesale. The usual procedure was for the individual farmers in a locality to subscribe for shares in the Exchange (the whole sale) and the latter would then open up a branch retail store in their locality. In this way some 15 retail branches were established. The number of affiliated local associations has gradually increased and numbered 275 at the end of 1936; membership was also held by over 100 Farmers’ Union locals and about 6,500 individual members of the Farmers’ Union. The present tendency in that State is toward the formation of local cooperative associations to take over the operation of the retail branches operated by the Exchange. Business Operations A wholesale business of more than 40 million dollars was reported by the 19 regional wholesales for 1936, in addition to sales through their retail branches amounting to $2,847,882. On this business net savings of over $1,045,000 were realized, of which nearly $637,000 was refunded to member associations on their patronage. As com pared with 1935, the associations reporting for both years showed gains of 24.2 percent in sales, 8.4 percent in net earnings, and 41.8 per cent in patronage refunds. Substantial increases in all of these items were also shown by the district wholesales. T a b l e 7 5 .— B usiness Operations o f Cooperative W holesale A ssocia tion s, 1 9 3 5 and 1 9 3 6 Amount of business i Net earnings Patronage re funds 1935 1936 1935 $5,406 $1,991 Association 1935 1936 1936 Interregional Illinois National Cooperative, In c___________ Indiana: United Cooperatives, Inc_______ T otal. ________ _______ ________ ____ (2) (2) $418,000 $468,067 418,000 468,067 3$3,307 (9 (9 (9 (9 3,307 5,406 1,991 (9 Regional Illinois: Illinois Farm Supply C o_________ ______ _ 6,291, 506 219,160 “ 274,942 180,000 $233,701 (9 The Cooperative W holesale.__________ _ 635,276 5916 Indiana: Indiana Farm Bureau Cooperative Association______ _________ ____ __________ 4,403, 858 5,187,457 110, 799 131,336 59,855 93, 291 Massachusetts: United Cooperative Farmers. 491,040 647,941 2, 607 9,048 3,000 4,500 f 1,968,968 2,222, 761 | 75,882 70,757 35,000 Michigan: Farm Bureau Services. __________ \ (9 6917,828 61,087, 409 ° Does not include brokerage on direct-invoice sales. 1Unless otherwise noted figures represent wholesale business. 3Not available. Orders of members are pooled and goods are shipped directly to them. 3 From date of organization to May 1935. 4No data. 59 months’ operation. 6 Retail. 9 0621°— 39- -11 154 CONSUMERS’ COOPERATION IN THE UNITED STATES T able 75.— Business Operations o f Cooperative Wholesale Associations, 1935 and 1936— Continued Amount of business1 Net earnings Patronage re funds 1935 1935 Association 1935 R egional —Continued Minnesota: Farmers' Union Central Exchange_______ M idland Cooperative Wholesale_________ Minnesota Farm Bureau Service C o.......... Missouri: Consumers’ Cooperative Association. Nebraska: Farmers’ Union State Exchange — N ew Y ork: Eastern Cooperative W holesale... Ohio: Farm Bureau Cooperative Association. Oklahoma: Farmers Union Sales Department. Pennsylvania: Pennsylvania Farm Bureau Cooperative Association___________________ Texas: Consumers Cooperatives, Associated.. Washington: Grange Cooperative W holesale.. Wisconsin: Central Cooperative W holesale---------------Farm Bureau Federation Cooperative___ Workers and Farmers Cooperative Unity Alliance_____________________________ J$4,028,087 \ M56,987 2 , 423,107 277, 619 / 2 , 660,861 \ 6333,649 f 1,635,125 \ 6969,407 206,515 4,216,176 264,402 1936 1936 $3,783,991 }$129,768 $85,241 (4) (4) 6351,492 3,033,080 63,441 71,574 $27,000 $48,601 397,232 (4) (4) (4) (4) 3,397,809 } 103,838 71,151 31,680 39,810 6358,487 1,721,221 61,050,494 } 71,805 62,903 49, 258 40,847 88 71,617 285, 512 6,781,144 111, 580 162,577 41,395 94,492 288,380 9,698 12,400 511,000 324,121 1,807,443 9,800 14, 646 18,277 11,700 19,461 2,185,245 2,845,741 249, 790 251, 534 37,027 1,724 1,461 284,000 236,895 1,447,334 1936 (8) (8) 10,895 14,368 18, 338 16,000 56,710 2,609 30,213 44,461 3,714 1, 361 2,832 (4) 197,633 J27,176,655 261,375 »42,026 22,337 " 60,424 146,281 98,950 136,158 123,779 171,996 (4) 17,318 9,673 8,275 1,640 17,673 167,103 230,229 38,660 108, 261 28,059 744, 511 56,606 135,821 37,853 860,032 3,618 5,985 1,208 51,620 2,976 8,187 2,091 52,584 43,062 2,976 6,828 1,450 47,938 623,224 860,032 40,188 52, 584 34,389 46,488 40,074, 524 Total, all associations.......................... \62,677,871 6 2,847,882 } 981,601 1,045,422 484.025 636.873 Total, identical associations report /27,176,655 33, 747,742 } 963,324 1,044, 506 449.025 636.873 ing for both 1935 and 1936________ \®2,677,871 6 2,847,882 D istrict Michigan: H-O-B Cooperative Oil Association______ Northland Cooperative Oil A ssociation... Minnesota: Trico Cooperative Oil A ssociation........... . C -A -P Cooperative Oil Association_____ Range Cooperative Oil Association______ Range Cooperative Federation___________ Wisconsin: A & B Cooperative Oil Association______ Cooperative Services_____________________ Price C ounty Cooperative Oil AssociationTotal, all associations____ _____. . . I ____ Total, identical associations reporting for both 1935 and 1936........................ (4) 2,144 1, 759 3,764 2,144 2,924 (4) (4) (4) 11,926 5,967 13, 787 8,673 8,275 1,600 16,034 11,926 5,800 3,618 4, 965 4 N o data, e Retail. 7 Loss. s Patronage refund at rate of 2.9 percent in 1935 and 1.87 percent in 1936; amounts not reported. • Figures for amount of business include a small amount of retail sales. Of 18 reporting regional organizations which were in operation the whole 12 months of 1936, the distribution according to amount of wholesale business done in that year was as follows: Number Under $500,000___________________________________________________________________ $500,000 and $1,000,000__________________________________________________________ $1,000,000 and under $2,000,000________________________________________________ $2,000,000 and under $3,000,000________________________________________________ $3,000,000 and under $5,000,000________________________________________________ $5,000,000, and over______________________________________________________________ 6 2 2 2 3 3 FEDERATIONS 155 B U S IN E SS W IT H N O N M E M B E R S Five of the 25 wholesales which reported as to their business with nonmembers stated that they had sold no goods to them, but only one of these declared that it refused to sell to nonmembers. Of the others one stated that it sold “hardly any” goods outside its own mem bership, in one 1 percent of its business was done with outsiders, in two 2 percent, in one 4.5 percent, in two 5 percent, in one 5-10 per cent, in one 9 percent, in one 11 percent, in two 15 percent, in two 20 percent (one of these, mainly to new buying clubs), in one 25 percent, in one 40 percent, and in three 50 percent. One association reported that 15-20 percent of the business done in its retail branches was with nonmembers. It should be emphasized here that although cooperative wholesales sell to nonmember cooperatives and in some cases to nonprofit or ganizations, they do not sell to private retail dealers. The local member cooperatives, however, are bound by no such restriction but may and do buy from private sources (even though the goods may be available through the cooperative wholesale), if they find it ad vantageous to do so. SOURCES OF SU PPLY Every association was asked how much of the goods handled was obtained from cooperative sources. The reports indicate that to some extent the proportion of goods so obtained depended on the commodities handled. One or two associations pointed out that there were no sources of cooperative supply for the lines they dealt in. Six stated that none of their stock of merchandise was obtained from other cooperatives. Three reported very small amounts so obtained; one bought tires only and one gasoline and motor oil only. One association, however, bought “nearly all” of its goods from co operative sources. Of those which gave definite percentages, one purchased 8-10 percent of its goods from cooperatives, one 10 per cent, one 10-20 percent, one 15 percent, one 20 percent, one 33 % percent, one 50 percent, one 65 percent, one 80 percent, one 90 per cent, and two 100 percent.6 The associations purchasing the largest proportions of cooperative goods were mainly gasoline and oil associations in the Middle West. Four of the wholesale associations have contracted for practically all of the light oil produced by a refinery in Oklahoma. Their con tract with the refinery provides for control not only of the quality but also of the cost of operation, by a clause which permits the partici« Since the beginning of 1937 several of the cooperative wholesales have added to the merchandise handled b y them, women’s dresses, suits, and coats manufactured b y a cooperative workers’ productive association in N ew Jersey. A separate wholesale was formed in 1938 to handle these garments. 156 CONSUMERS’ COOPERATION IN THE UNITED STATES pating wholesales to maintain an auditor and chemist at the refinery. The savings made are to be divided between the refinery company and the wholesales. GOODS P R O D U C ED As was evident from table 72, few of the wholesales do any manu facturing and these mainly of lubricating oil or feeds. The seven asso ciations which reported the value of goods produced in 1936 had a combined volume worth $1,009,039. The commodities included butter, sausage, canned goods, coffee (roasted), bakery goods, lubri cating oil, feed, and fertilizer. Consumers’ Cooperative Association (North Kansas City) reported that it was supplying not only its member organizations but also 2 other wholesales with grease and paint pro duced by it. This organization in 1936 joined with other cooperative wholesales in the production of a “ co-op label” tractor. O P E R A T IN G E X P E N S E S Operating expenses formed only 6.4 percent of sales in the whole sales handling general lines of merchandise and 6.6 percent in those handling gasoline and motor oils in 1936. Data on the various items of expense are shown in table 76.7 T able 76 .— Operating Expenses o f Cooperative Wholesale Societies, 1936 Percent of sales expended for specified items Item of expense General Petroleum merchandise associations i associations * Sales expense: Wages, salaries, and commissions__ ____ _________ ________ ___________ Advertising________________________________________________ 1 ________ _ Wrappings_____________________________________________________________ Total__________ ________ ______ ________ - ____________________________ Miscellaneous delivery expense (except wages)_____ ________________________ R ent_______________________________________________________________________ Light, heat, power, and water. _ ___________________________________________ Insurance, taxes, and licenses_______________________________________________ Interest on borrowed money____________________ _____ _____________________ Office supplies and postage___________ ____ ________ ______ ________________ Telephone and telegraph___________________________________________________ Repairs___________________________________________________ ________________ Depreciation__ ____________________________________________________________ Bad debts__________________________________________________________________ Miscellaneous ____________________________________________________ _____ Inventory, auditing, and le g a l_________________ ___________________________ Warehouse expense (except wages)__________________________________________ Traveling and field expense_________________________________________________ Directors’ fees and expenses. _ _____________________________________________ Collection expenses_________________________________________________________ Education, promotion, and publications________________ __________________ M em bership dues and subscriptions________________________________________ Factory, laboratory, and plant supplies_____________________________________ Grand total_________ __ ______________________________ ____ ________ 1 5 associations reporting. .0 1 1 2.858 . 152 2.009 3.090 3.019 .383 .315 .124 .345 . 157 . 117 .440 .005 .265 . 109 .106 .371 .078 . 141 .046 .074 .727 . 153 .065 .203 . 127 .025 6 . 410 6 . 573 .0 0 1 . 187 . 112 .128 .055 .004 .248 .092 .811 .056 .080 .591 .075 .0 0 1 .045 .0 1 2 2 Includes drum expense. 7For data on em ploym ent and wages in wholesale associations, see p. 159. 2. 885 . 194 FEDERATIONS 157 Cooperative Practice Membership in cooperative wholesales is now, without exception, limited to local cooperative organizations. Requirements for mem bership in National Cooperatives are that the wholesale applying must sell at least 75 percent of its goods through cooperatives and at least 85 percent of its voting stock must be held by affiliated coop eratives. Wholesales connected with some farm organization usually, also, limit the membership to local cooperatives whose members are also members of the sponsoring farm organization. However, one such wholesale in 1937 voted to admit local cooperative associations which had by their patronage earned enough in refunds on purchases to pay for a share of stock in the wholesale. The question of admis sion of nonfarm cooperatives which are patrons of the wholesale has also been raised in some of the other farmers’ wholesales. As about one-fourth of the organizations reporting do 20 percent or more of their business with nonmember cooperatives, the question of admission of the patrons furnishing this business is one which deserves consideration. Voting.— Of 28 wholesales reporting on their basis of voting, in 20 each member association has one vote. In one of these, however, no member association is entitled to a vote unless it holds at least 52 shares of stock in the wholesale, and the by-laws of another specify that voting shall be in proportion to patronage— one vote for the first $10,000 of purchases and one vote additional for every $5,000 in purchases after the first $10,000.8 One organization allows every member local one vote, plus 1 vote for the first $1,000 of patronage and 1 vote for each additional $5,000. In 5 wholesales votes are in proportion to the membership of the locals. One specifies that, in order to vote at all, the local must hold 25 shares; it is then allowed 1 vote for every 25 members, or part thereof, but the total votes may not exceed 5. In another, 10 shares for every 500 members is a prerequisite; votes are then allowed at the rate of 1 for each 500 members. In a third the local must have 1 share for every 20 members, being then allowed 1 vote for every 10 members. Of the other 2 organizations voting on the membership basis, one allows a single vote for every 25 members, and the other one vote for every 50 members. The 2 remaining organizations which reported both voted by shares. Of 28 wholesales reporting, all but 6 prohibited proxy voting and in one of these the number of proxies was limited. Interest on capital.— Four wholesales pay no interest on capital stock and one other pays it only on preferred stock. One association is a nonstock organization and does not, of course, make any return 8 One of the wholesales which in 1936 was voting on the straight membership basis, in 1937 changed to vote in proportion to patronage. 158 CONSUMERS* COOPERATION IN THE UNITED STATES on the membership certificates. Of those which do pay interest on share capital, 20 impose a definite limit on the rate, and an additional society limits to 6 percent the rate paid on its preferred stock. Three percent is the maximum paid by 1 association, 5 percent by 5 associa tions, 6 percent by 7 associations, and 8 percent by 5 associations; 1 limits the return on common stock to 3 percent and on preferred to 5 percent. The remaining association did not report the maximum rate. The rate actually paid in 1936 was 3 percent in 2 associations, 4 percent in 3 associations, 5 percent in 6 associations, and 6 percent in 4 associations; and an additional organization paid 4 percent on common and 6 percent on preferred stock. Credit.— Five associations refuse credit to either members or nonmembers, 11 allow credit to members but not to nonmembers (but in one of these members’ accounts must be paid within 7 days), and 9 allow credit to both (but in 2 of these only in limited amounts). Pointing out that it was not in the banking business and therefore not in a position to extend credit to member associations for any length of time, the Midland Cooperative Wholesale was instrumental in establishing in 1936 the Midland Credit Corporation. This organi zation, as its name implies, provides credit (up to $50,000) upon trade acceptances, for local associations, enabling them to take their discounts for cash and to obtain credit at moderate rates. As aids in solving the problem of credit in local cooperatives, several of the wholesales are urging the formation of credit unions among the membership of the locals. Patronage refunds.—All the wholesales practice the return of patron age refunds, though not necessarily in cash. All or part of such refunds may be retained to be applied on the purchase of stock until the required amount for full membership is obtained. An increasingly popular practice is the declaration of such dividends, but with the proviso that they shall not actually be paid until the end of a specified period (2-5 years), being retained meanwhile as working capital. One of the handicaps of the wholesales (as of the retail associations, also) has been inadequate capital and this method has been adopted to remedy the situation. A provision of the by-laws of the Farmers’ Union Central Exchange (St. Paul, Minn.) sets up a check-off system which prohibits the pay ment of any patronage refunds until the members’ dues are paid in the Farmers’ Union. Although the financial advantage accruing from membership in and patronage of the wholesales is evident from the fact that nearly $637,000 was received by the retail associations on their patronage during 1936, this becomes even more clear when examination is made of what the patronage refund means to the individual local association. FEDERATIONS 159 Data were obtained on this point in the spot study made in St. Louis County, Minn. There the patronage refunds of 18 associations ranged from $83 to $3,416. Seven associations saved more than $1,000 each in 1936 through their purchases from central organizations. Naturally, the societies which obtained large percentages of their merchandise from cooperative sources were the chief beneficiaries from refunds. All associations combined realized a net saving of 4.1 percent as a result of their trading operations and an additional 1.1 percent in refunds from the wholesales. Altogether the sum received in patron age dividends amounted to 27 percent of the amount saved through the local associations’ own operations, in three associations it was over 35 percent, and in one association over 50 percent. Employment in Wholesales The 23 associations for which data were obtained as to employment and wages were in 1936 employing 747 workers and had a total pay roll in that year of $845,909. Per capita annual earnings varied rather widely, but in 10 of the 23 were less than $1,000. For the group the average was $1,132. Weekly hours ranged from 36% and 37% hours (for a 5-day week in both cases) to 60 hours, the weighted average for the group being 42.8. T able 77 .— Em ploym ent and Wages in Cooperative Wholesales, 1936 Am ount paid in wages Num ber of um ber of associations N reporting employees Type of wholesale Total Average weekly hours per Average per em ployee i employee All associations__________________________ 23 747 $845,909 $1,132 42.8 Interregional_____________________________ Regional_________________________________ District__________________________________ 1 17 691 39 19,027 789, 520 37,362 1,119 1,143 958 50.0 42.5 47.6 15 7 1 Weighted b y number of employees in each case. The following statement shows the number of associations in each classified average annual earnings group: . . . , , N um ber o f Annual earnings, per employee, of— associations $500 and under $600_____________________________________________________ 2 $700 and under $800_____________________________________________________ 2 $800 and under $900_____________________________________________________ 1 $900 and under $1,000___________________________________________________ 5 2 $1,000 and under $1,100_________________________________________________ $1,100 and under $1,200_________________________________________________ 4 $1,200 and under $1,300_________________________________________________ 2 $1,300 and under $1,400_________________________________________________ 2 $1,400 and under $1,500_________________________________________________ 1 $1,500 and o v e r ,_________ __________________________________________ 2 160 CONSUMERS’ COOPERATION IN THE UNITED STATES Development of Individual Associations Available data on membership, business, net earnings, and patron age refunds are shown for individual associations in table 78. T able 78.— Development o f Individual Cooperative Wholesale Associations Association, State, and year of organization Year N um ber of mem ber associ ations Am ount of sales i Net gain Patron age refunds Interregional Illinois: National Cooperatives, Inc. (1933)_____ _______ Indiana: United Cooperatives, Inc. (1930)______________ 1935 1936 1934 1935 1936 7 9 $1,991 5 9 (2) (2) $375,000 418,000 468,067 $3,307 5.406 (2) (2) (2) 60 62 36 (2) 6,291,506 8 35,276 219,160 274,942 3 916 180,000 233,701 3, 225,827 4,403,858 5,187,457 375,841 491,040 647,941 938,807 1,348,491 1,968,968 2,222, 761 80,059 110, 799 131,336 7,549 2,607 9,048 (2) 37,439 75,882 70,757 57,310 59,855 93,291 (2) 3,000 4,500 (2) 15, 000 35,000 (2) 906, 272 1,678, 346 1, 549, 223 2, 615, 528 4,028,087 3, 783,991 269,863 417, 956 448,013 598, 751 615, 388 883, 736 1,073, 567 1, 751,007 2,423,107 3,033, 080 216,041 277,619 397, 232 309,261 489,437 981,491 1,328,629 1,493,843 1, 776,839 2,660,861 3,397,809 2,387,972 1,468,133 1,148,133 1,335,662 1,347,605 1,521,312 1,512,024 1,618,288 1, 774,143 2,001,725 2,118,212 1,571,028 1,192,838 1, 244,993 1,356,896 1, 635,125 1, 721, 221 4,959 24,014 22,066 98, 788 129, 768 85, 241 3,473 3, 926 7,798 14,804 21,163 26, 906 25,466 44, 799 63,441 71, 574 (2) (2) (2) 5, 279 23,679 43,346 27,464 48,373 68,501 103,838 71,151 (2) * 83,000 * 24,832 9, 655 20,647 36,633 34, 222 49,096 37,930 50, 583 70, 850 64, 732 34, 912 56,082 57, 785 71,805 62, 903 (2) (2) 15,488 31,948 (2) (2) 3,436 1,938 4,798 11,811 19,000 21, 906 18,000 18, 500 27,000 48, 601 (2) (2) (2) 3,049 14,805 26,135 11,667 14,639 20,346 31, 680 39,810 (2) (2) (2) (2) (2) Regional Illinois: Illinois Farm Supply Co. (1927)...... .............................. 1935 1936 The Cooperative Wholesale (1936)_______________ __ 1936 Indiana: Indiana Farm Bureau Cooperative Association (1921)________________________________________________ 1934 1935 1936 Massachusetts: United Cooperative Farmers (1927)____ 1934 1935 1936 Michigan: Farm Bureau Services (1920)............. ................ 1933 1934 1935 1936 Minnesota: Farmers’ U nion Central Exchange (1927)___________ 1931 1932 1933 1934 1935 1936 M idland Cooperative Wholesale (1926) ............... ......... 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 Minnesota Farm Bureau Service Co. (1928)_________ 1934 1935 1936 Missouri: Consumers’ Cooperative Association (1929)___ 1929 1930 1931 1932 1933 1934 1935 1936 Nebraska: Farmers’ Union State Exchange (1914).......... 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 (2) 88 88 (2) 31 31 30 73 113 118 91 156 172 211 225 240 37 38 40 62 77 92 103 120 137 148 (2) (2) 30 21 61 90 143 199 259 313 342 (2) (2) (2) (2) (2) (2) (2) (2) (2) 180 8 (2) 260 (2) 265 275 i Figures relate to wholesale business only; for sales of retail branches in 1935 and 1936, see table 75. 8 N o data. 8 9 months’ operation. 4 Loss. 12,136 22,068 44,142 39, 236 21, 786 35,963 37,891 49, 258 40,847 161 FEDERATIONS T able 78 .— Development o f Individual Cooperative Wholesale Associations— Continued Association, State, and year of organization Year N um ber of mem ber associ ations Patron age refunds Amount of Net gain $1 ,0 0 0 1,490 1,645 1040 $203, 756 175, 534 268,044 233,584 183,374 187,828 206,515 285, 512 4,639,928 4, 573,086 4,470,273 5, 744,189 6,029,044 3,946,889 2, 401,867 3, 265, 702 1, 261,044 4, 216,176 6 , 781,144 199,862 264,402 288,380 284,000 511,000 51,453 8 6 , 662 128,384 251,993 236,895 324,121 53,570 44,254 156,122 135,161 246,096 102,677 (2) 105,880 109,862 116, 721 119,855 243,487 173,854 102,378 » 977,125 8 1,447,334 9 1,807,443 1,617 135,126 112 , 900 134, 244 207,469 4 42,342 4 124,475 4 52,875 4 1, 747 6,228 111, 580 162,577 7,587 9, 698 12,400 9,800 11, 700 10,561 12,473 10,382 10,364 14, 646 19,461 (2) (2) (2) (2) (2) (2) (2) 1,786 1,321 1,074 1,013 1,274 1,984 2,091 1,854 18.277 (2) 15 25 40 48 56 56 56 60 65 74 76 84 90 97 99 98 97 97 99 109 25, 574 132,423 313, 064 409, 591 312,347 337, 567 504,177 613, 215 835, 532 1, 048, 293 1, 255, 676 1, 517, 813 1, 755, 627 1, 767, 760 1, 509, 752 1,309, 698 1,383, 290 1, 787, 556 2,185, 245 2,845, 741 268 2,063 7, 330 6 , 798 3,499 1,183 5,181 5,973 8,869 11, 648 18, 335 23, 894 35, 798 29, 735 12 , 035 9,091 13,133 31,696 37, 027 56, 710 R egional —Continued N ew York: Eastern Cooperative Wholesale (1928). Ohio: Farm Bureau Cooperative Association (1933)6. Oklahoma: Farmers Union Sales Department (1922)___ Pennsylvania: Pennsylvania Farm Bureau Coopera tive Association (1934). Texas: Consumers Cooperatives Associated (1931)______ Washington: Grange Cooperative Wholesale (1919). Wisconsin: Central Cooperative Wholesale (1917) 1929 1930 1931 1932 1933 1934 1935 1936 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1934 1935 1936 1935 1936 1931 1932 1933 1934 1935 1936 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 7 7 7 8 10 11 11 33 (2) 00 (2) (2) (2) (2) (2) (2) 61 78 83 (2) (2) (2) 6 10 13 (2) 32 34 45 52 00 (2) (2) (2) (2) 35 (2) (2) (2) 6 10 10 22 35 53 73 10 5 $900 778 ® 866 88 4 130,827 98,935 125,921 175, 344 190,568 36,436 41, 395 94,492 (7) (8) 9,185 7,572 6 , 790 7,765 10,895 18,338 (2) (2) (2) (2) (2) (2) (2) 3, 561 14,368 16,000 (2) (2) (2) (2) (2) (2) (2) (2) 5,506 7, 722 13,752 17, 296 28,266 26, 809 9,158 9, 088 13,129 30, 208 30, 213 44, 461 2 N o data. 4 Loss. « Accumulated. 6 Data for years prior to 1934 cover operations of Ohio Farm Bureau Service Co., the wholesale depart ment of which was purchased b y the Farm Bureau Cooperative Association in that year. 7 2.9 percent; amount not reported. 8 1.87 percent; amount not reported. 8 Including direct-invoice oil sales. Under reorganization, M ar. 1, 1937. 162 CONSUMERS’ COOPERATION IN THE UNITED STATES T able 78.—Development of Individual Cooperative Wholesale Associations—Continued Association, State, and year of organization Year N um ber of mem ber associ ations Amount of sales 1934 1935 1936 13 13 13 $177, 334 249, 790 251, 534 4 $1, 305 1,724 2,609 1934 1935 1936 (») 36 36 181, 235 197,633 261,375 21 1,461 3,714 $1,361 2,832 5 6 6 7 7 2 2 13,145 20,412 33,039 42,026 60,424 19, 285 20,175 19,751 24,436 22,337 427 604 2,139 2,144 3,764 735 1, 074 540 1,305 1,759 427 604 2,139 2,144 2,924 (2) (2) (2) (2) 00 6 8 (2) 10 12 (2) 14 14 10 10 10 10 10 10 10 (2) 12 13 14 14 14 15 (2) 15 15 25,000 54, 297 83, 604 87, 669 102, 528 130,035 146,281 171,996 46, 283 73, 876 74,686 79,805 66,161 72, 563 98,950 115, 083 98,605 91,504 93, 798 112,131 136,158 167,103 11,908 123, 779 230,229 3,340 8,915 11,187 11,069 14,020 14, 515 17,318 17, 673 7,076 10, 544 13, 590 14,927 7,640 7,881 9,673 18, 576 10, 483 10, 265 9,000 7,020 8, 275 11,926 191 1, 640 5,967 00 (2) (2) (2) (2) 13,141 13, 787 16,034 (2) (2) 14, 705 23, 853 25,260 (2) (2) 38,660 56,606 14,827 30, 739 51, 672 71, 768 76,400 72,221 91,622 108,261 135,821 14, 650 28,059 37, 853 (2) 2,207 3,162 (2) (2) 3,618 2,976 1,268 4,108 6,022 4,770 6, 077 4,177 8,497 5,985 8,187 865 1,208 2,091 Net gain Patron age refunds R egional —Continued W isconsin—C ontinued. Farm Bureau Federation Cooperative (1923)________ Workers* and Farmers* Cooperative U nity Alliance (1931).............................. ...................................... .......... District Michigan: H-O-B Cooperative Oil Association (1932)___________ 1932 1933 1934 1935 1936 Northland Cooperative Oil Association (1930) ............ 1931 1932 1933 1934 1935 Minnesota: 1929 Trieo Cooperative Oil Association C1929L .... __ _ 1930 1931 1932 1933 1934 1935 1936 C -A -P Cooperative Oil Association (1929) 1929 1930 1931 1932 1933 1934 1935 Range Cooperative Oil Association (1929)___________ 1930 1931 1932 1933 1934 1935 1936 Range Cooperative Federation (1933)_______________ 1934 1935 1936 Wisconsin: A . & B . Cooperative Oil Association (1930) ________ 1930 1931 1932 1933 1934 1935 1936 Cooperative Services (1928)........... - ................................ 1928 1929 1930 1931 1932 1933 1934 1935 1936 Price C ounty Cooperative Oil Association (1934)____ 1934 1935 1936 2 No data. (2) (2) (2) (2) (2) 7 8 8 4 4 4 5 5 5 5 5 5 (2) 4 5 4 Loss. 9,832 10,873 6,607 7,742 8,673 (2) 7,750 00 9,000 00 8,275 11,926 1,600 5,800 (2) 00 (2) (2) 3,618 2,976 1,021 (2) 2,858 3, 507 5,925 3, 677 7,998 4,965 6, 828 1,450 Figure 9.— headquarters of central Cooperative Wis. Wholesale, Superior, This association also operates a bakery, a feed mill, and a branch warehouse in the same city and a feed mill and branch warehouse at Virginia, Minn. Figure 10.—One of the warehouse departments of the central tive Wholesale. Superior, wis . Coopera Figure 11.— scene at northern Wisconsin Cooperative Park (Near Brule) O wned by Cooperative associations in T hat district . Figure 12.—class (Under Sponsorship of O hio Farm bureau Cooperative association ) T raining leaders of Recreational activities for Coop eratives . 163 FEDERATIONS Service Federations Local cooperative associations have formed a number of organiza tions to perform services which they were not fitted or did not desire to undertake themselves. Of 12 such associations for which reports were received, 5 were publishing associations (including 1 printing credit-union forms only), 4 were auditing associations, 2 were recrea tional associations, and the function of 1 was to organize local asso ciations. The following table shows, for the various types of associations, the number of members and the total income of the service federations in 1936. T able 79.— Membership and Income of Service Federations, 1936 Type of federation Number of member asso ciations Num ber re porting Total income, 1936 Auditing associations____ _ ____ _ __________ _ _ Organization associations. _ _____________________ . _ Printing and publishing associations________ _____ Recreation associations________ _________ _______ __ _ 4 469 5 2 388 368 1$37,364 (2) 216,905 (2) T otal__________ __________ _______ _______ 12 931 254,269 1 6 1 3 associations. 2 N o data. 3 1 association also has 400 individuals in membership. Net earnings in 1936 were reported by four printing associations, and amounted to $16,927. Only one association returned patronage refunds, which amounted to $1,400. In addition to separate organizations doing auditing for cooperative associations, most of the cooperative wholesales have an auditing department.9 The increasing emphasis upon the importance of adequate accounting systems in local cooperative associations, and of the annual or semiannual appraisal of the financial status of the organization that is furnished by the audit, is one of the encouraging tendencies in the cooperative movement today. Noncommercial Federations As already indicated, the distributive associations have their own system of wholesaling, although as yet not all sections of the United States have access to cooperative wholesale facilities. The distributive associations also have their own regional and national noncommercial federations; these are educational, propa ganda, and defense organizations. To the national association, the Cooperative League of the U. S. A., may be affiliated (either through the regional leagues or directly, where no such league exists) any bona fide consumers' cooperative association. The League in 1936 had in ®See pp. 146-148 of this report. 164 CONSUMERS’ COOPERATION IN TH E UNITED STATES affiliation, directly or indirectly, such diverse types of associations as stores, petroleum associations, buying clubs, bakeries, creameries, laundries, housing associations, telephone associations, credit unions, insurance associations, organizations providing lodging and meals, burial associations, garages, medical-care associations, recreational associations, and such federated associations as wholesales, printing and publishing associations, and auditing associations. There is no central cooperative federation especially for the tele phone associations, though a few local associations of this type are members of the cooperative league in their region. The burial asso ciations in two States each have a State federation and, as noted, some of the local burial associations are also members of the Coopera tive League of the U. S. A. Federations in the Distributive Movement The Cooperative League of the U. S. A., national educational asso ciation for the consumers' cooperative movement, was formed in 1916, when the wave of cooperative interest started by the rising living costs accompanying the World War first began. At that time there was almost no intercourse between local cooperative associations. Each association was going its own way, making mistakes that could have been avoided, and unaware in many cases that there were other similar organizations with which experiences could be exchanged. Although the new organization called itself The Cooperative League, it was not at that time a league in the sense of being a federa tion of cooperative associations. The organization reversed the usual procedure abroad, under which the existing local societies federated to form a central body. At the time the League was organized, there were only a small number of consumers, cooperatives in existence and few of these knew of the League's formation. Much of its early work was done by the volunteer efforts of a few persons. Its expenses were met by its president. Only a few of the associations which became members in those early years were able to spare funds for the League's support. A congress called in 1918 received widespread cooperative atten tion, and the delegates voted for the formation of a national educa tional body or to transform the League into such an organization. The latter course was followed in the congress of 1920, which organ ized the League as the permanent national body of the movement. Its purposes were to be “ to promote the cause of cooperation; to develop mutual aid in place of antagonism; to favor the spread of knowledge of cooperative methods; to unite all consumers of the United States for the above purposes and for the purpose of inter national federation; and to encourage the acquirement of the agencies of production,” The plan adopted provided for State leagues with FEDERATIONS 165 local autonomy and for district federations within the State. The national organization would have no control over the constituent bodies except that they must be acceptable to it. The influence of the League has been gradually expanding year by year. During the early years of its existence its affiliates were mainly associations in industrial centers. Of late years the farmers7coopera tives have shown an increasing tendency to become identified with the consumers’ cooperative movement through affiliation with the League. At the end of 1936 it had in membership 1,500 associations. The network originally planned has been modified somewhat. Under the present arrangement, regional leagues are provided for. Thus far, five have been created, and as local cooperative development warrants it, others will be established. Local societies which affiliate with the regional leagues automatically become members of the na tional league. The five regional leagues are the following: 1. Northern States Cooperative League, with headquarters in Minneapolis, Minn., established in 1922. Its territory includes northern Michigan, Minnesota, Montana, the Dakotas, and Wisconsin. 2. Eastern Cooperative League, with headquarters in New York City,10 established in 1925. Its territory includes the New England States, New York, New Jersey, Pennsylvania, Maryland, and Delaware. 3. Central States Cooperative League, with headquarters in Chi cago, established in 1926. Its territory includes Illinois, Indiana, Ohio, and lower Michigan. 4. Northern California Cooperative Council, with headquarters in Oakland and territory covering northern California. 5. California Cooperative Education Association, with headquarters in Pasadena. All of these leagues are nonstock associations supported by dues from local associations, by income from services rendered by them (legal, auditing, etc.), and by the sale of pamphlets and other printed material. They are governed by boards of directors elected by the member associations. Generally, voting is on the proportional-repre sentation plan, with each local association allowed one vote by virtue of membership, plus an additional number of votes based upon the number of its members. The leagues carry on general educational work in the theory and practice of cooperation, give information and advice on cooperative problems and on organization procedures, issue pamphlets on cooper ative subjects, furnish' articles for the press, provide speakers for meetings, and lecturers and instructors for cooperative schools and institutes and other interested groups. One important activity is the giving of short courses for selected young people and technical train ing courses for employees and managers of cooperative societies. io M oved to Brooklyn in 1938. 166 CONSUMERS’ COOPERATION IN THE UNITED STATES Other services include legal advice and auditing service for local associations. In addition to the regional and national leagues, there are many lesser educational federations or councils. One of the most interest ing developments of recent years has been the creation of such organi zations in a metropolitan district, a county, or other district. These organizations form a clearing house of experience of the different associations, assist in the solution of local problems, and take over to some extent the educational work of local associations. Such federations have also furnished a medium for joint activities such as an annual picnic, a summer institute, a children’s camp, or a winter festival. In some cases membership in a local league is restricted to associa tions which are also members of the regional cooperative league; in such cases only consumer organizations are admitted. Some of the county-wide federations or councils, however, contain in their membership all types of cooperative associations in the county, whether producer or consumer organizations. The Clearwater County Cooperative Council, at Bagley, Minn., for example, included in its membership at the end of 1936 one store association, two petro leum associations, one casket association, one electricity association, one telephone association, two grain elevators, six creameries, one publishing association, two livestock-shipping associations, one wool pool, and one warehouse association. The following table gives the membership of the 15 federations which furnished data. These organizations reported a combined income, from all sources, of $20,702 for 1936; this figure is not, however, very significant, for the services they render cannot be measured in money. T able , 8 0 . — M em b ersh ip o f R ep o rtin g E d u ca tion a l F ed eration s 1 9 3 6 Scope of federation Number report ing Num ber of member associa tions 1 General educational federations whose scope is— National___________________________________ Regional (more than 1 State). ___ State-wide__________ __________ . . . . ___ M ore than city but less than S tate-w id e___ C ity-wide__________________________________ 1 2 1 7 2 1,500 396 19 119 26 Federations of special groups: W om en’s guild___________ _______ ______ Youth league______________________________ 1 1 62 33 1The figures shown in this column should not be added, as the different classes o f associations are not mutually exclusive (i. e., the associations which are members of city and State leagues are also members of the regional leagues). FEDERATIONS 167 In addition to the federations shown above, the Bureau had reports for three local educational associations with 2,215 individual mem bers.11 SPEC IALIZED F E D E R A T IO N S There are two organizations, auxiliary to the consumers’ coopera tive movement, which are devoted to activities among women and among young people. Both of these are in the “ Northern States” region, but local units of the same type are now found in various other parts of the United States, and it is very likely that eventually both will expand into national bodies. Northern States W o m en 's Cooperative Guild .— Organized as an unin corporated educational association in 1929, the guild began with 20 local units having a total membership of about 250 individuals. In 1935 there were about 58 units, and at the end of 1936 there were 62. Membership in the local units varies from 12 to 60 individuals. In the beginning, the organization was almost wholly made up of Finnish women, and they still form about 75 percent. There has been a slow infiltration of younger, Americanized Finnish women, and a few non-Finns. The guild cooperates with the educational department of the Cen tral Cooperative Wholesale (Superior, Wis.), the Northern States Cooperative League (Minneapolis), and the Cooperative Youth League of the North Central States in educational work and financing of summer institutes and youth camps. A large part of its program is devoted to cultural activities. The local units have drama, music, and social-problem groups, and they arrange hundreds of mixed social get-togethers during the year. In 1936, the income from cul tural and social programs was $1,485. Propaganda against war and against intemperance is carried on, and a woman’s section is main tained in the Cooperative Builder and the Finnish Cooperative Weekly, issued by the Central Cooperative Wholesale. Meetings of the local units are held either weekly or twice a month, those of section committees are held semiannually, and those of the district organization are held annually. Dues of 4 cents per month for each member of the local unit are paid by the unit to the district organization. Dues paid to the local unit itself are from 5 to 10 cents per month. According to the secretary, heavy snows, long distances, and sea sonal work on the farm are among the chief obstacles to growth. Many of the members live in scattered rural areas and cannot afford travel expense. The Northern States organization is also taking the initiative in forming a National Cooperative Women’s Guild. 11 These were included in the figures for “ miscellaneous’ ’ associations shown on p. 62. 168 CONSUMERS’ COOPERATION IN THE UNITED STATES Cooperative Youth League of North Central States.— Designed to fulfill the same functions in behalf of youth as the Guild fulfills for women, the Youth League was organized in 1930 as an unincorporated association. It was sponsored and fostered by the C. C. W .’s educa tional department. The first local unit was started in Superior, Wis., from which the league spread throughout Minnesota, upper Michigan, and upper Wisconsin. The high point was reached in 1932, with 50 locals, embracing a total number of 2,000 individuals. From 1933 on, the movement declined, partly because of the depression and partly (the secretary of the league believes) because of insufficient interest and cooperation from the adult cooperators. In June 1937 the membership consisted of 33 local units (with an aggregate membership of 780) and 20 individual members. An execu tive committee of 9 members is elected at the annual convention in September, every local unit being entitled to one delegate, and one additional delegate for every 10 members exceeding the first 10. A general district committee, meeting twice a year, is composed of the 9 members of the executive committee plus the various secretaries of the sections (the latter are coordinating units for adjacent locals). The local units have about 15 or 20 members on the average. They generally meet weekly or twice a month. They contribute 6 cents per member per month to the district organization. Only about $72 was raised in 1936 through membership dues, with $319 received as donations, and $53 as receipts from sale of pins, songs, and the staging of plays. A monthly educational bulletin is issued by the league, and a “ youth page” is conducted in the Cooperative Builder. At the annual cooperative youth course at Brule, Wis., the aims and program of the league are further publicized. These aims, according to its con stitution, are to “ further the fundamental principles that the cooper ative movement is a part of the general labor movement, seeking with impartial neutrality the cooperation of all workers’ and farmers’ movements for the benefit of the exploited toiler * * * encourage working-class organization of the youth in other fields—industrial, political, and cultural— and assist in the class education and organi zation of the working-class children.” Federations in the Credit- Union Movement Although, strictly speaking, the credit unions are service coopera tives intended for the benefit of the consumer of credit, generally that branch of the cooperative movement has developed separately, along side the general consumers’ movement but with very little contact with it. Few credit unions have regarded themselves as consumer coopera tives. The distinct lines of separation have become blurred to some FEDERATIONS 169 extent in recent years as individual credit unions have become aware of the basic similarities and have affiliated with regional cooperative leagues, and as the local cooperative distributive associations have organized credit unions among their members. As in the general consumers’ cooperative movement in the United States, so in the credit-union movement the central educational organ ization appeared on the scene when there was only a small number of local credit unions in existence. Financed by the late Edward A. Filene to the amount of nearly a million dollars, the Credit Union National Extension Bureau was formed in 1921. The purposes of this bureau were to work for the passage of adequate State laws permitting the formation of credit unions, to assist in the formation of credit unions on approved methods, and finally to aid in the federation of these local associations into State credit-union leagues. To this organization goes the greater share of the credit for the rapid enactment of State credit-union laws since 1921. Its work was capped in 1934 with the passage of the Federal act making possible anywhere in the United States or its territorial possessions the formation of a credit union. In States where for some reason the State law is not satisfactory, a credit union therefore has an option of incorporating under either the State or the Federal statute. During these years the Credit Union National Extension Bureau remained, not a federation of local associations, but a privately financed promotional organization. In 1934 it went out of existence, and its place was taken by the Credit Union National Association, which in May 1937 had in affiliation State-wide credit union leagues of 41 States. This national association is governed by a board of 59 directors, consisting of 1 director from each State and 1 additional director for each 15,000 individual members in the State league. The Credit Union National Association has its headquarters in Madison, Wis. Besides the State leagues, city and district chapters have also been formed to deal with local problems and perform certain mutual-aid services. In M ay 1937 there were 250 such chapters. None of the leagues perform any commercial service. They are purely educational organizations. There are, however, two associa tions which the national association has formed to perform certain business functions. These are the Cuna Mutual Society— a mutual insurance organization writing insurance on the outstanding loans of the credit unions;12 and the Cuna Supply Cooperative— a wholesale association which deals in accounting ledgers, deposit slips, and other supplies used by the local associations. 12 See also p. 136, and tables 64 and 66. 90621°— 39- -12 Chapter 8.— EDUCATION AND RECREATION IN THE COOPERATIVE MOVEMENT Continuous educational work is regarded by cooperators themselves as the keystone of the movement, and this work is the primary function of the Cooperative League of the U. S. A. and its five regional leagues. This was pointed out by Dr. J. P. Warbasse, president of the League since its inception, as follows: Time and experience have proved that education must precede business and dominate the general program if cooperation is to be built soundly. The primary task of the League, it would seem, is not to see how many people can be gotten into the cooperative movement, but to see how many people can be made to understand cooperation. Obviously, the first duty is not to increase the size of the League, but to aid always to improve its quality— to build in this country a body of intelligent and understanding cooperators. W ith this policy the League should continue to thrive and our cooperative business to expand. Education Educational work in the cooperative movement is of two kinds— education of the members and the public in the cooperative philosophy; and education of the employees, not only in the basic philosophy but also in the technical requirements of their jobs. General education in cooperation.— During the entire course of its existence the Cooperative League has centered its attention on the problem of making genuine cooperators of the members and of broad ening the public’s knowledge of the cooperative movement. Through its many pamphlets on cooperative subjects, answers to letters of in quiry, lecturers and speakers, and in later years through radio pro grams, it has labored unceasingly in this field. Since the early years of its existence the Cooperative League has been giving courses in the theory and practice of cooperation. The number and variety of subjects have increased year by year, and in 1936 the League established what is now known as the Rochdale Institute. The curriculum of the first classes (given in the fall of 1937) included a 2-month lecture course on various types of cooper ative associations (including visits to associations), followed by 2 months’ field work in which the students did practical work in associ ations selected by themselves. Similar courses are planned to be held annually in the spring and fall. Study courses in theory and practice have also been given by three of the regional leagues. 170 EDUCATION AND RECREATION 171 Education and training o f em ployees .— In the early years of the Coop erative League, the regional leagues (especially the Northern States Cooperative League) gave training courses for cooperative employees. In recent years the tendency has been for the wholesales to take over this phase of the educational work, although the regional leagues still collaborate with the wholesales in this activity to some extent. In the period 1923-31, the Northern States Cooperative League held six training schools in which, altogether, 156 students received training. In 1926 a correspondence course was given.1 Since 1931 the league has held no training school of its own, but has cooperated in those given by its affiliated wholesales. It has, however, each summer held a 1week institute; these institutes are educational courses given in sur roundings offering opportunity for camping, sports, and other outdoor activities. The league has also furnished instructors for educational programs and training schools given by central organizations in other sections of the Middle West. The training schools of the Central Cooperative Wholesale, in which the league has participated, have been increasing in length of sessions and in attendance. Nearly 500 young persons have attended these schools. In this way the cooperative movement is acting to insure that the employees in the movement shall have both the cooperative view point and the required occupational techniques. The courses run for about 8 weeks, with a maximum registration of 35 students. These students include persons already employed by local cooperatives (often the cooperative assists with a scholarship which it pays for), promising young people chosen for their abilities, and others who, attracted by the philosophy of the movement, wish to enter its service. In addition to the training courses, the Central Cooperative Whole sale holds 4-to-6-week summer courses for selected young people, as well as 1- and 2-week summer institutes for adults, and 1- and 2-week summer camps for children (combining schooling and vacation).2 Recreation In recent years cooperative associations have undertaken increas ingly to enliven their educational and business activities with various features of recreation and entertainment, with the aim of making the cooperative association a factor in the members* social lives as well as in their bread-and-butter economy. Dinners and social gatherings in connection with the regular membership meetings, concerts, plays, and the showing of cooperative films are some of the measures adopted. 1 This activity was taken over and continued b y the National League. 3 Because so m any of the league’ s early duties have gradually been taken over b y the wholesales, the question of reorganization of the league as a conference b od y for the wholesales in its region was under con sideration in the fall of 1938, 172 c o n s u m e r s ’ c o o pe r a t io n i n t h e u n it e d s t a t e s The greater proportion of such work is carried on by the local store associations, or by the women’s guilds and cooperative youth leagues 3 formed among their members. There is also a small but growing number of federations whose only or chief function is the provision of recreational material or the fostering of social activities. The Bureau had reports from 11 recreational associations, 4 of which owned and operated cooperative “ parks” (i. e., tracts of land utilized for games, camping, fishing, and other recreational purposes), 4 were operating clubhouses, 2 owned halls used for dances, dramatics, and other social functions, and the remaining association sold games, puzzles, books, and other recreational material, besides operating a farm and a clubroom. One recreation association was in Michigan, two were in Minnesota, two in New York, one in Ohio, one in Oregon, and four were in Wis consin. Of the associations reporting on this point, one was formed in 1905 and one each in 1922, 1923, 1924, 1930, 1932, 1933, and 1935. Their membership totaled 914 at the end of the year, ranging from 27 to 300 and averaging 102. Among the most interesting of these associations are those which have purchased land for recreational purposes. Two of these were in St. Louis County, Minn., one was in Michigan, and the fourth was in northern Wisconsin. One of the Minnesota associations was started about 1928 and at the end of 1936 owned a tract of 160 acres (including a lake). Only local associations were accepted into membership; 40 were affiliated at the end of 1936. Water sports (summer and winter), games, theatricals, dancing, and summer festivals were available free to the members of affiliated organizations, but non members paid a fee for service. A frame building 50 by 72 feet provided space for dancing and meals. The development of the park area had been retarded by the fact that when the Rochdale-Com munist split occurred in 1930, this association came under the control of the Leftist group and after that, although the “ orthodox” groups still held membership, they had withheld their active patronage. The other Minnesota association was started in 1932. At the end of 1936 it owned an 8-acre tract which included a lake. The land was entirely paid for, but only camping facilities and water sports were provided; arrangements had been made for serving meals over the week ends during the summer. The land owned by the Wisconsin association also contained a lake. Cottages for the use of the mem bers, camping facilities, and the usual water sports were provided, as well as games, lectures, and dances (see fig. 11 facing p. 163). One of the hall associations owned a three-story building with a gymnasium, swimming pool, dance floor, study rooms, and dining 3 For a discussion of these associations, see pp. 167, 168. EDUCATION AND RECREATION 173 room. In this building were held study classes, dances, dramatics, and other social and educational events. Most of the recreation associations have been formed among persons who already had other cooperative ties, but the reporting associations included two which operated community clubhouses on a cooperative basis, in communities in which, as far as the knowledge of this Bureau goes, there were no other cooperative associations. One association in the reporting group grew out of a study club among students from graduate schools of religion. At first emphasis was laid upon party programs, games, and “stunts,” but this was shifted to “creative activities, folk arts, crafts, music, and hobbies which give lasting satisfaction.” 4 The association, in its present form, was the result of a merger of Recreation Cooperative, Inc., with Church Recreation Service. It operates an 80-acre farm containing woods, play spaces, a large colonial house (for living quarters, office, and library), and a large barn, with fireplaces, which provides space for a shop and a clubroom. Although it deals in recreational materials, the association emphasizes that it is an educational rather than a merchandising agency. The idea, promoted by the association, of teaching children to make their own games was, it reports, so favorably received that in 1937 more than a hundred shops for making such games were set up in summer schools and camps. In the summer of 1936 a 2-week cooperative recreation school was held in which 51 students from 11 States were enrolled. The primary purpose of this school was to train leaders from cooperative, farmer, labor, church, and similar groups in the use of modern recreation methods and materials. The scope of this school is shown by the following schedule of subjects covered: 8 :3 0 -9 :5 0 . 10 -1 2. 1 :3 0 -2 :3 0 . 2 :4 0 -3 :3 0 . 3 :4 0 -4 :3 0 . 4 :3 0 -5 :3 0 . 7 :3 0 -8 :1 5 . 8 :1 5 -9 :3 0 . Lectures and discussions. Dramatic directing and acting. Instrumental and vocal music. Group gam es and folk recreation. Puppetry. Lectures and discussions dealing with administrative policies, tech niques of organization, leadership, social-educational function of recreation. Advanced folk dancing. Beginners’ class in singing games. Equipment games. Group singing. Play party games and folk dancing. 4 Consumers’ Cooperation (N ew York), Novem ber 1937, p. 172. Chapter 9.— COOPERATIVE ASSOCIATIONS AS EMPLOYERS Summary In the cooperative movement in the United States there cannot be said to be any real personnel policy such as has been worked out in Great Britain and the Scandinavian countries. The young and strug gling movement here has been too preoccupied with the primary busi ness problems to give much time to consideration of a well-reasoned policy of industrial relations. The conditions accorded to employees have depended on the good will of the directors of the individual as sociation, the financial status of the association, and the association’s degree of acceptance of the Rochdale fair-wage standards. Detailed field studies were made in a number of localities in con nection with the Bureau’s survey of cooperative associations. These revealed that, in general, relationships between the workers and the associations were good. Certainly, unrest and dissatisfaction as exemplified by strikes have been infrequent. This may have been due to a number of factors: The large majority of associations have been in small rural places where there was little labor organization and no tradition of concerted labor action; the associations were generally small and employed only one or two workers; the employees were cooperators as well as employees and as such were imbued with the idea of promoting the cause; and they were convinced that it was the desire of the members to provide as good wages and hours as condi tions would permit. With the development of large associations employing considerable numbers of workers, with the expansion of the cooperative movement more and more into industrial communities having a strong labor consciousness, and especially as a result of the unionization drives, disputes may be expected to occur with greater frequency unless machinery is adopted to deal with them. That this is realized by the cooperative leaders is indicated by frequent articles and editorials in the cooperative papers. The provision of good wages and working conditions is one of the approved practices of Rochdale cooperation. That such conditions are in fact, provided in most foreign countries where the movement is well developed is borne out by a study recently made by the Inter national Labor Office.1 The data gathered by the Bureau of Labor Statistics in its survey of cooperatives, covering the year 1936, indi cate a wide range in both wages and hours among the consumers’ cooperatives in the United States. Further, on the basis of such figures as are available for private retail trade, both wages and hours in cooperative employment appeared to be somewhat less favorable than those in private business in 1936. 1 International Labor Office, Cooperative Information (Geneva), Nos. 1 and 2,1938: Conditions of W ork of Employees of Consumers’ Cooperative Societies. 174 COOPERATIVE ASSOCIATIONS AS EMPLOYERS 175 Average annual earnings per employee in some 1,500 retail distribu tive associations for which such data were obtained amounted to $1,155 for 1936.2 In this connection it should be borne in mind that 72.5 percent of the total cooperative retail trade in that year was done in places of less than 5,000 population, where living costs are likely to be lower than in the cities. However, this average included the re muneration of the managers as well as clerks. Although there is not so wide a gap between wages of the manager and those of the clerks in cooperatives as in private business, inclusion of the manager’s salary does bring up the general average and the clerks’ earnings would therefore be below even the average noted above. As the membership of cooperative associations is composed quite largely of industrial workers and farmers, undoubtedly the wage levels in the associations were influenced by the fact that the wages in in dustrial employments and the farmers’ incomes fell to extremely low levels during the depression. As a result, in some cases the earnings of the workers employed in the cooperative stores were above those of a considerable proportion of the members. It was hard in such cases for the membership to bear in mind that their employees’ rates should be fixed on the basis of the kind of services performed for the association, and not necessarily in relation to the earnings of the members in totally different lines of work. Hours of work were still long in many cases. At the end of 1936 only 26.8 percent of the employees were working the 48-hour week or less, which is prevalent abroad in cooperative employment. Cooperative employees do have the advantage of patronage re funds on their purchases from the association. It may be that clerks in private stores have the privilege of obtaining their supplies at re duced prices, but there is no information available regarding the preva lence of such a practice. Reduced prices to employees are not com mon in the cooperative movement. Such data as are available regarding vacations, absence on account of sickness, and occasional time off during working hours indicate that cooperative associations are quite generous in their treatment of employees in these matters. From the information at hand it appears, also, that cooperatives provide relatively stable employment and that the average period of service of their employees is quite long. Undoubtedly this security of tenure is a factor of considerable importance. Personnd Policies H irin g and firing .— Authority for the employment and discharge of cooperative employees is generally vested in the board of directors, 1 The average annual earnings of employees of wholesale cooperatives for 1936 were $1,132. 176 CONSUMERS’ COOPERATION IN THE UNITED STATES but in practice may be delegated by it to the manager. Wage rates are generally set by the directors, often with the advice of the manager and in exceptional cases by him alone. A study of personnel relations in cooperative associations under taken by the Bureau of Labor Statistics at the end of 1930 3 indicated that few even of the larger organizations had any provision for regu lar increases in wages or any definite line of promotion within the organization. One exception was an association whose policy it was to appoint the managers of departments and the head clerks from among the employees of the department having the vacancy. In another association, without a definite policy in this regard, all of the department managers had in fact arisen from the ranks. New employees of cooperative associations may be obtained from among the membership, from students trained in courses given by the cooperative wholesales and central educational organizations, or from trade-union sources. In sections where the movement is well developed, as in the North Central States, there is considerable shift ing of employees from one association to another; managers in that district are quite often drawn from rank-and-file employees of other associations. Notices of positions open frequently appear in the cooperative papers. That the entrance wage in such cases may be largely a matter of individual bargaining is indicated by the frequency, in such advertisements, of the clause, “please state salary required” ; the amount offered by the association is almost never mentioned in the notice. A djustm en t o f grievances .— The 1930 industrial-relations study revealed that joint meetings of employees and management were quite common. These were, however, designed in most cases rather to increase the employees7working efficiency and their understanding of cooperative methods than to solve their problems as employees. The employee in the cooperative movement is in an unusual situa tion. In addition to his role of employee, he is in most cases also a member of the association that employs him. In that association he is of equal importance with every other member. If his grievances cannot be ironed out by appeal to the manager and then to the board of directors, they may be brought before the members at a general or special meeting. This, of course, is a situation not found in the ordinary stock company. In most of the associations visited the wage rate was set by the board of directors and all complaints regarding remuneration had to be taken to the board. An exception was an association where the manager not only hired and fired the employees, but fixed their rates of pay. In one of the older organizations, where the board of direc tors set the wage levels, a special board had been created to deal with * Increased pressure o f work and lack of funds, because of the depression, prevented the completion of this study. It was to have covered associations with 10 or more employees. EDUCATION AND RECREATION 177 complaints regarding wages; this board, which met regularly once a month, consisted of the general manager and two of the directors.4 Overtime .— Overtime work is uncommon in cooperative associations. It must be said, however, that certain conditions peculiar to the move ment tend to shorten the free time of the employees, and especially of the manager. Some of the associations hold weekly, biweekly, or monthly meetings of the employees, at which business problems and other topics are discussed. The manager must, of course, be present also at all general and special membership meetings, recreational activities, etc. Quite often he is invited to speak before the youth league or the women’s guild, or to take part in other extra-business activities. It is well known among observers of the movement that many demands are made upon the time of the manager and workers outside of working hours. Vacations .— Information on this point was not requested in the general survey, but was obtained in the spot studies. It was custom ary for the cooperative stores in St. Louis County, Minn., to give em ployees a paid vacation. Generally the vacation was 1 week, after a year’s service. Exceptions were one association which allowed a 2-week vacation, and one in which the period of service required was only 6 months. One association whose policy it was to give a week’s vacation with pay had to discontinue the practice, for financial reasons, during the depression. Four associations gave no paid vacation. Of the private stores in the same territory for which data were obtained, only four gave a paid vacation of 1 week; an additional firm used to to do so but had discontinued the practice. Another store had recently been sold to a new owner and no vacation policy had been decided upon. Both private and cooperative stores were lenient with em ployees as regards occasional time off during working hours. Gen erally, no deduction of pay was made in such cases, or for short periods of sickness. One of the largest cooperative associations allowed casual time off, but deducted from the employees’ pay for any time lost, however short, because of sickness. All but one of the five associations in the northern Wisconsin district allowed their employees a week’s paid vacation; two of these required at least 1 year’s service. One association gave no paid vacations. Both the Cleveland and Chicago associations included a large pro portion of new associations which had not yet formulated a vacation policy. Of 13 associations reporting in Chicago, 3 gave a paid vaca tion of 1 week, 2 a vacation of 2 weeks, and 1 a 1-week vacation after 1 year’s service and a 2-week vacation after 2 years’ service. Of 7 associations which did not give their employees vacations, 2 had given such leave until the onset of the depression. 4 In some of the foreign countries central wages boards have been created to which wage com plaints impossible of local adjustment m ay be referred. Usually there is also a provision that in case of a general strike in any trade the cooperative employees of the craft concerned shall remain at work, the cooperative associations undertaking in advance to meet any terms won from private employers. 178 CONSUMERS’ COOPERATION IN TH E UNITED STATES One association in Cleveland gave a week’s vacation with payeach year. Another had done so until 1935. Most of the other associations in that city were either buying clubs without paid em ployees or were groups which had only recently opened their store. S pecial fa cilities and services .— Certain of the largest associations provided special facilities for employees. One provided lunchroom facilities, lockers, shower baths, and a lounging room for the woman employees. Another, which ran a lunchroom as one department of a store and creamery business, gave lunch service to its employees at reduced rates. In this organization, also, a rest period during which coffee and rolls or pastry were served at cost was provided morning and afternoon.5 About half of the associations visited in 1930 had provided life insurance for their employees, the cost of which was paid by the association in all but one case; in the exceptional instance half the premium was paid by the employee concerned. Wage bonuses are very uncommon in the cooperative movement. One of the larger Michigan associations had always paid bonuses to employees at the same rate as the rate of patronage refund to members. A Wisconsin association in 1936 voted to pay its clerks, in addition to salary, a commission of 1% percent on all sales over $4,500 per month. Many of the petroleum association employees were regularly paid on a commission basis. Employment in Distributive Associations Because so large a proportion of the employment in the credit, telephone, and insurance associations is on a part-time basis, the average hourly, weekly, and annual earnings there are of little sig nificance. For the retail distributive associations— i. e., the stores, petroleum associations, and associations retailing other commodi ties— the proportion of part-time work was reported and could be allowed for. For this reason the following analysis of wages and hours of cooperative employees has been restricted to the retail dis tributive associations. Almost five-sixths of the associations reporting in the Bureau’s survey furnished data as to employment and pay rolls. On the basis of these reports it is estimated that the retail distributive associations gave full-time employment to some 15,000 persons and disbursed about 17% million dollars in wages in 1936.6 Nearly half (47 percent) of the distributive associations reporting were employing from one to three workers at the end of 1936. There were, however, slightly over 13 percent which had 10 or more em ployees each (table 81). All associations combined had an average of 6.5 employees each. * This practice appears to be fairly com m on among the larger Finnish cooperative associations in the United States. < The wholesale associations had 747 employees and a pay roll for 1936 of $845,909. 179 COOPERATIVE ASSOCIATIONS AS EMPLOYERS T able 81.— D istribu tion o f R eta il D istribu tive C ooperatives , b y N u m ber o f E m p lo yees , at en d o f 1 9 3 6 Store associ ations Total Number of employees Petro leum associa tions Distrib utive depart ments of mar keting associ ations All associations________ ____ _______________________ 1, 531 714 680 127 1 employee_____ _________________ ________________ 2 employees________________________________________ 3 employees________________________________________ 4 employees________________________________________ 5 em ployees.. _________ _____ _____________________ 6 to 9 employees____________________________________ 10 to 14 employees__________________________________ 15 to 19 employees__________________________________ 20 to 24 e m p lo y e e s.__ ___ ______ ___ _________ 25 to 49 e m p lo y e e s.________ ___ _________________ 50 to 99 employees__________________________________ 100 employees and over_____________________________ 194 259 265 193 120 294 104 46 21 23 9 3 88 123 127 99 52 132 45 20 10 10 7 1 87 103 117 77 59 139 52 25 10 11 19 32 21 17 8 21 5 1 1 1 1 Cream eries and bakeries 10 1 1 2 2 1 1 1 1 Earnings of Cooperative Employees AVERAGE ANNUAL EARNINGS For all types of retail distributive associations the average per capita earnings during 1936 were $1,155, ranging from $990 in the store associations to $1,749 in the creameries and bakeries. These averages are based upon full-time workers in associations reporting both number of employees at the end of the year and the total wage payments during the year. They include managers’ as well as other employees’ remuneration. Probably the actual averages would be slightly higher were they based upon the average number of persons employed throughout the year, for it is known that many associations increased their labor force during the year. Table 82 indicates considerably higher wage levels in New England and on the Pacific coast than in the other sections of the country. In both cases, however, the average was raised by one large association paying relatively high wages. T able 82.— A vera ge A n n u a l E arnings o f E m p loyees in R eta il D istribu tive C ooperativesy 1936' Geographic division Distribu All types Retail store Petroleum tive depart Creameries ments of and bak of associa associa associa marketing tions tions tions eries associa tions United States................................................ . $1,155 $990 N ew England____________________________ M iddle A tla n tic___ ____________ ______ East North Central_________ ______ _____ W est North C entral.......................... ............ South A tlantic_____________________ ____ _ East South Central......... ............ .......... ........ West South Central____ _______________ M ountain________________________________ Pacific....... .................................. ................... 1,316 1,001 1,138 1,155 783 869 858 990 1,306 1,337 1,059 963 852 783 856 778 949 1,130 $1,224 $1,208 $1,749 1,186 1,345 1,146 904 891 906 856 1,170 2,054 1,050 916 983 1,024 881 1,382 1,379 1, 263 1 Data are based upon only those associations which reported both number of employees and amount paid in wages. 180 CONSUMERS’ COOPERATION IN THE UNITED STATES Although the general average annual earnings were $1,155, over two-fifths of the associations were paying average wages ranging from $700 to $1,100 per year. T able 83.— N u m ber and P ercen t o f R eta il D istribu tive C ooperatives P a yin g A n n u a l W ages o f C la ssified A m o u n t , 1 9 3 6 Annual per capita earnings Under $300__________________ $300 to $400................................. $400 to $500................................. $500 to $600................................. $600 to $700................................. $700 to $800.................................. $800 to $900................................. $900 to $1.000.............................. $1,000 to $1,100........................... $i,iont.n$i,2nn $1,200 to $1,300........................... Number of asso ciations 3 15 52 71 117 135 146 156 155 111 116 Percent 0.2 1.1 3.9 5.3 8.7 10.0 10.8 11.6 11.5 8.2 8.6 Annual per capita earnings Number o f asso ciations Percent $1,300 to $1,400_____ _________ $1,400 to $1,500........................... $1,500 to $1,600........... ............... $1,600 to $1,700................ .......... $1,700 to $1,800........................... $1,800 to $1,900........................... $1,900 to $2,000........................... $2,000 and over........................ 69 44 34 32 20 23 15 36 5.1 3.3 2.5 2.4 1.5 1.7 1.1 2.7 Total.............................. . 1,350 100.0 rAnalysis of the annual earnings of employees in 1,344 associations in places for which population figures were available showed no con sistent correlation between size of city and amount of wages paid. The distribution is shown below: Average annual earnings per employee Under 100 population________________________________________ 100 to 500 population________________________________________ 500 to 1,000 population______________________________________ 1.000 to 5,000 population____________________________________ 5.000 to 10,000 population___________________________________ 10.000 to 25,000 population_________________________________ 25.000 to 50,000 population_________________________________ 50.000 to 100,000 population________________________________ 100.000 to 500,000 population_______________________________ 500.000 to 1,000,000 population_____________________________ 1,000,000 population and over_______________________________ $938 960 1, 031 1, 092 1, 115 1, 188 1, 241 989 1, 261 1, 091 999 AVERAGE HOURLY EARNINGS Tabulation of average hourly earnings showed that the most com mon rate per hour was between 25 and 30 cents; 17.7 percent of the reporting associations and 16.1 percent of the employees were in this rate range. Some 43 percent of all the employees were earning from 25 to 40 cents per hour. More than 80 percent of the total were being paid less than 50 cents an hour. in COOPERATIVE ASSOCIATIONS AS EMPLOYERS Hourly earnings of— Under 10 cents_______ 10 and under 15 cents. 15 and under 20 cents. 30 and under 35 cents. 45 50 55 60 65 70 75 80 85 90 and under 50 cents. and under 55 cents. and under 60 cents. and under 65 cents. and under 70 cents. and under 75 cents. and under 80 cents. and under 85 cents. and under 90 cents. cents and over_____ Total_______________ Percent of asso ciations . 0 .3 181 Percent of em ployees 0. 1 _ 3. 3 _ 7 .7 4. 7 _ 1 2 .0 9. 8 _ 1 7 .7 16. 1 . 15. 3 13. 9 _ 1 3 .4 1 3 .3 _ 10. 9 10. 4 _ 6. 1 10 . 1 _ 5 .3 5. 4 . 2 .2 1. 8 . 1 .8 2. 7 1. 2 3. 4 1. 2 1. 6 . 8 1. 4 _ 3. 5 . 2 .2 . 3 0 . 6 1. 5 _ 1 0 0 .0 100 . 0 i Less than Ho of 1 percent. COMPARATIVE WAGES IN COOPERATIVE AND IN PRIVATE EMPLOYMENT The Bureau of Labor Statistics has made no general survey of wages, by occupation, in retail trade. However, reports are received each month from employers throughout the United States giving the number of employees and total pay rolls, from which average per capita weekly earnings are computed. In the statement below, the information for private employment is based upon these monthly trend-of-employment reports, and that for the cooperatives is based upon data obtained in the cooperative survey. The statement shows comparative weekly earnings in cooperative and private retail stores and in gasoline service stations in 1936. Retail stores____________________________________________ Gasoline service stations________________________________ Cooperative employment Private employment» $19. 04 23. 54 $20. 17 24. 95 1 Computed on basis of returns to the Bureau of Labor Statistics, for December 1936, from 21,897 chain and independent retail grocery establishments and 1,649 service stations. This statement indicates that in 1936 the average wage level of cooperative employees was about 5 percent below that in private employment in the same lines. Increases in wage rates took place in many cooperative associations during the spring of 1937, but the same was true in private employment as well. The situation shown by the above comparison is confirmed by data obtained from private and cooperative associations in the course of the spot studies made in several localities in M ay and June 1937. In these cases actual rates on an occupational basis were obtained for the 182 CONSUMERS’ c o o p e r a t io n in the u n it e d states cooperative associations covered and for private independent and chain stores in the same locality. In most of the organizations wages were paid on a monthly basis. Because of the wide variation in hours worked, all rates were reduced to an hourly basis. The results are shown, by region covered and by occupation, in table 84. As the table indicates, with a few exceptions the cooperative asso ciations handling groceries were paying lower hourly wages than were the private stores in the same locality. In some cases there was a marked discrepancy between the cooperative and private rate. The employees of the Chicago cooperative restaurant associations, how ever, were receiving considerably higher pay than the workers in nearby private companies. T able 84.— A vera g e H o u rly R ates P a id b y Cooperative and P rivate O rganizations in M a y 1 9 3 7 , b y O ccupation Chicago, 111. St. Louis County, M inn. Northern Wisconsin Occupation Grocery stores: Managers____________________________ Branch managers____________________ Bookkeepers, male . ___ ___________ Bookkeepers, female_____________ - ___ Clerks, male_________________________ Clerks, female_______________________ M eat cutters_________________________ Truck drivers________________________ Restaurants: Cooks, m ale________ ________________ Cooks, female________________________ Dishwashers_________________________ Waiters______________________________ Waitresses___________________________ Coopera tive rate Private rate Coopera tive rate Private rate Coopera tive rate Cents 44.6 Cents 61.4 Cents 57.5 41.6 41.8 32.4 30.9 24.4 46.6 31.8 Cents 56.8 Cents 60.6 46.9 32.6 31.0 23.3 48.9 36.5 48.6 39.1 34.5 27.7 41.6 43.2 37.8 32.9 26.6 50.8 40.5 50.6 38.9 27.9 39.6 29.2 24.6 34.2 34.4 54.8 Private rate Cents 0) 0) 0) 46.3 33.3 66.7 44.4 36.5 19.2 24.9 1 N o data. The proportion of the total operating cost that was spent for wages in cooperative and in private stores is shown below: n ,. Percent wages formed of total operating Cooperatives! expense All store associations reporting, 1936________________________59.4 Store associations in St. Louis County, Minn., 1936_______ 56.5 Petroleum associations reporting, 1936_____________________ 62.2 All store associations reporting, 1933________________________ 51.8 Petroleum associations reporting, 1933_______________ 59.5 Private dealers: Country general stores (Dun & Bradstreet), 1935___________61.1 82 chains, 1929______________________________________________ 56.6 All retail stores, Census of American Business, 1933________ 44.8 The 1936 wage bill in cooperative stores in St. Louis County ap proximated that in the chain stores in 1929, but that for the whole group of cooperative stores was smaller than that of the general stores of private dealers. Comparison of the 1933 data indicates a much 183 COOPERATIVE ASSOCIATIONS AS EMPLOYERS higher proportion of wage expense in cooperative than in private stores. Hours of Labor The weighted average weekly working time 7 of employees, all types of associations combined, was 49.5 hours. For the associations in the different lines of business activity the range was from 44.1 for cream eries to 56.2 for distributive departments of marketing associations. With the exception of the garage associations, all of the service groups had average weekly hours of 48 or less, whereas in the distributive group only the creamery employees had hours as short as these. A slightly longer workweek was found in the farmers, than in the other distributive associations, as shown in the following statement: Average weekly hour8 All types of associations______________________________________ 49. 5 Distributive associations_______________________________________ 54. 5 Stores______________________________________________________ 55. 0 Farmers’ _____________________________________ 55. 8 Other consumers’ _____________________________________ 53. 5 Petroleum associations____________________________________ 55. 5 Farmers’ ______________________________________________ 55. 6 Other consumers’ _____________________________________ 55. 4 Distributive departments of marketing associations_____ 56. 2 Bakeries___________________________________________________ 48. 1 Creameries________________________________________________ 4 4 1 Service associations_____________________________________________45. 2 Associations providing— Meals only____________________________________________ 48. 0 Meals and rooms_____________________________________ 44. 7 Laundries and cleaning establishments____________________ 48. 0 Garages____________________________________________________ 52. 0 Printing and publishing associations______________________ 46. 8 Recreation associations____________________________________ 47. 9 About one-fifth of the employees of cooperative stores and over onethird of the employees of cooperative petroleum associations were working 48 hours or less per week at the end of 1936 (table 85). The largest proportions of both types of associations were working 48 or 60 hours. About 62 percent of the store employees and 56 percent of the petroleum employees were working 54 hours or more per week. That the larger associations had the shortest workweek is indicated by the fact that although only 15.8 percent of the stores and 29.1 percent of the petroleum associations had a workweek of 48 hours or less, they were employing 21.3 and 34.6 percent of the total workers. 7 Weighted b y number of employees in each reporting association. CONSUMERS’ COOPERATION IN THE UNITED STATES 184 T able 85.— Percentage Distribution o f Cooperative Associations and o f Employees Accord ing to W eekly Hours in 1936 Percent of associations with specified work week Percent of employees with specified work week Hours per week Store as sociations TTnrip.r 4 0 4 0 a n d n n f if t r 4 4 44 _ _ _ ............. . . . . _ _ Over 44 and under 48_________________________ ______ 48................................................................................................ Over 48 and under 54_____________________________ ____ 54........................................................................................... . Over 54 and under 60__________________________________ 60................................................................................................ Over 60 and under 72__________________________________ 72 and over___________________________________________ _____ T o ta l Petroleum Store as associations sociations Petroleum associations 1.3 1.5 1.0 1.5 10.5 8.7 10.0 15.3 24.3 19.6 6.3 0.5 2.5 .5 .9 24.7 5.8 9.7 3.9 27.5 14.1 9.9 0.8 1.7 1.5 2.3 15.0 17.1 8.9 16.0 20.1 13.7 2.9 0.1 1.8 2.4 .4 29.9 9.1 8.4 3.5 24.7 12.7 7.0 100.0 100.0 100.0 100.0 Comparison of working hours in cooperative stores and in the pri vate retail stores and gasoline service stations reporting monthly to the Bureau of Labor Statistics indicated that there was a difference in favor of the private employees of over an hour a day. Hours per week— Cooperative Private employment employment Retail stores____________________________________________ Gasoline service stations------------------------------------------------- 55. 0 55. 5 46. 1 46. 1 Most of the private organizations reporting to the Bureau of Labor Statistics are in urban places, whereas the majority of the cooperative associations reporting are in places of 5,000 population or less. This would account for some of the spread in hours shown above. How ever, that hours in cooperative associations were sometimes longer than those in private organizations in the same locality is indicated by the following table showing data collected in the various spot studies. Males working in cooperatives had shorter hours than those in private stores in northern Wisconsin and in St. Louis County, Minn. As regards the woman workers in cooperatives, however, only those in St. Louis County were working shorter hours than similar employees in private stores. T able 8 6 . — Comparative Working Hours in Cooperative and Private Employment, M ay 1937 W om en M en Locality Chicago, 111.................... ............... .................... .................. Cleveland, Ohio ____ ___ ____________________________ Northern Wisconsin______________ ___________________ St. Louis C ounty, M in n .......................... ........... ................ * N o data. Coopera tive stores 56.1 52.9 52.8 54.9 Private stores 52.8 0) 56.0 56.2 Coopera tive stores 56.7 43.7 50.4 53.7 Private stores 48.9 0) 48.0 56.2 COOPERATIVE ASSOCIATIONS AS EMPLOYERS 185 The Cooperatives and Organized Labor In Cleveland the older associations and most of the newer cooper ative associations were found to be definitely “ prolabor.” Among the older groups this had found expression in assistance to strikers, in the form of coal at cost and donations of food. Both old and new groups expressed preference for union-label goods and for goods made or sold under good labor conditions. Concerted effort was being made to bring more wage earners and trade-unionists into the cooper ative movement. In one large association studied in 1930 all employees were union ists ; this was in a city where labor organizations had at that time made little headway. In fact, the office employees of this association formed practically the whole membership of the local office workers’ union. The truck drivers received the union scale, and the wages of office employees were considerably higher than the union scale. The cooperative associations whose members were industrial workers were more apt to encourage unionization of their employees than were the associations whose members were farmers. Some of the former group, in fact, required their workers to be members of the union of their craft or to become such within a specified time after being hired by the association. The bakery and dairy associations were almost without exception unionized. In fact, a number of them were started by striking employees of private plants. These associations have always been strong supporters of organized labor. C O O P E R A TIV E W O R K E R S ’ U N IO N In 1930 the workers in the cooperative stores of Virginia, Minn., took the initiative in the formation of the Cooperative Workers’ Union, along industrial lines. At that time there was practically no labor organization of retail clerks in that region. The preamble to the bylaws of the union stated that the workers felt “ the need for cooperative employees to create some bond of unity among themselves, to promote common interests both as wage earners and as responsible cooperators, and through organizing to assure acceptable standards of wages and working conditions.” Other objectives were to act as an employment agency and to do educational work on cooperation among the members. The union pointed out that its intention was not to compete against craft labor organizations where cooperative employees were already organized. When the national congress of the Cooperative League met in 1930, the union petitoned for recognition. The petition was tabled, after much discussion, on the ground that recognition might cause the cooperative movement to seem to be encouraging dual unionism. 90621°— 39---------- 13 186 CONSUMERS’ COOPERATION IN TH E UNITED STATES The union reached its peak at the end of 1930, when it had about 450 members. Thereafter it declined considerably and by May 1937 had only from 180 to 200 paid-up members. Several factors contributed to its decline: (1) After the formation of the union in 1930, a number of A. F. of L. locals of retail clerks were formed, and in such places the cooper ative employees generally preferred to join the craft union. (2) Its membership was in small groups scattered throughout the territory and it was hard to keep up interest. (3) Some of the cooperators— especially those belonging to craft unions— were inclined to regard it as a “ company union.,, Realizing this, the union made overtures for affiliation to the A. F. of L. in communities where a federation local was not already in existence. (4) Although several associations gave recognition to the union, in only a few cases was the union able to obtain a signed agreement. (5) The plan of the organization to act as an employment agency never materialized, although openings and plans for changes of per sonnel, discussed at local meetings, did result in some members* obtaining new jobs. (6) The union was handicapped in not having a full-time organizer. Its officers, also, worked only part time and on a volunteer basis. (7) Many of the cooperative stores were in farming districts and it was hard to get the farmer members to see the value of labor organization. The officers of the union stated, however, that in most cases as conditions improved, the farmers* as well as the other cooper ative associations took steps to revise the wage scale upward. (8) The union never had any great strength outside the Northern States district, although it had a few scattered locals elsewhere. The Cooperative Trading Co. at Waukegan, 111., for instance, recog nized the union and had an agreement with it. Gradually losing ground, the union late in the fall of 1937 conducted a referendum among its members as to whether it should be dissolved. The vote being in the affirmative, the organization disbanded toward the end of the year. On February 2, 1938, the employees of the Waukegan Cooperative Trading Co. and of the Waukegan-North Chicago Cooperative Asso ciation met and voted to organize a new union of cooperative workers, with the same name, to replace the defunct organization. The new union went into operation M ay 1,1938, and 2 months later was negoti ating a collective agreement with these two associations. C O LLE C TIVE B A R G A IN IN G The spot studies disclosed few instances in which collective bar gaining, as exemplified by a signed agreement, was in force in cooper- COOPERATIVE ASSOCIATIONS AS EMPLOYERS 187 ative associations. However, practically all either were sympathetic to the unionization of their employees, or expressed no opposition. In Chicago, the employees in most of the store associations were not unionized. Exceptions were two associations where the employees had joined a C. I. O. union, and one association whose meat cutters were A. F. of L. unionists. Of three restaurant associations, the cooks and waitresses in one and the bakers in another belonged to the A. F. of L. union of their craft. In no instance was there a signed agreement. In the two long-established associations covered in Cleveland the butchers were members of the A. F. of L. union, but had no agreement. In the m ajority of the associations visited in St. Louis County, Minn., there were or had been locals of the Cooperative Workers’ Union. Some were still active. Although in several instances the employees were still nominally members of that union, actually they were not in good standing, and the local was inactive. Others were in places too small to have a local. Five associations had recognized the union but had signed no formal agreement with it. In one case the manager had been pressing for recognition of the local; he was finally successful in obtaining it, but himself resigned from the union in order to remove any appearance of company unionism. In the five local associations covered in the northern Wisconsin spot study, the truck drivers were, without exception, members of the A. F. of L. union and union conditions and rates were in force. Retail clerks, however, were but little unionized in that district. A unionization drive early in the summer of 1937 resulted in consider able gains. Strikes were called against a number of private retail establishments in Superior, Wis. One of the first organizations to reach an agreement with the union was the People’s Cooperative Society (operating two stores, a service station, and an automobilerepair garage), the labor force of whose two stores had long been entirely unionized. Its agreement, signed with the A. F. of L. retail clerks’ union, provided for minimum scales ranging from $18 for female clerks (50-hour week) to $25 (55 hours) and $27 (60 hours) for males. The agreement also provided for pay for holidays, and annual vacations. The year 1937 also saw considerable strides in the unionization of cooperative employees in other places. A mail-order cooperative in New York City, unionized in 1936, renewed its agreement with Department Store Employees’ Local Union No. 1250 in 1937. The 1938 agreement provided for a closed shop; a minimum weekly wage of $21; a 39-hour week; pay for vacation, for sick leave, and for 9 holidays; and time and a half for overtime. A dispute occurred among the employees of a large cafeteria association in New York City early in 1937. This dispute, which involved the questions of unionization and wages, dragged on for weeks and then was referred to a board of arbitration. One question 188 CONSUMERS’ COOPERATION IN TH E UNITED STATES at issue was how much higher rates than paid by its competitors the organization could afford to pay 8 and still remain solvent. (During the dispute it had “ gone into the red” for the first time in more than 15 years’ operation.) In accordance with the decision of the arbi trators an agreement with the Cafeteria Workers’ Local Union No. 302 was signed on July 26, 1937, which established wage rates 10 percent above the average rates provided by the 10 best contracts in force between the union and private cafeterias in the city. This clause made effective (retroactive to May 1) increases in pay of about 15 percent. Under the agreement all employees must be union mem bers or become so within 6 weeks after hiring. Disputes between management and workers which cannot be settled by negotiation with the union are to be referred to an impartial chairman. •It had always paid rates in excess of those paid b y most of its local private competitors. Chapter 10.— L E G A L ST A T U S O F C O O P E R A T IV E S Medical-Care Associations 1 The future of medical cooperatives in America will in large part depend upon the courts. Two major charges of illegality have been brought against these cooperatives: (1) That they are actually en gaged in the insurance business, without compliance with the in surance statute; and (2) that they are practicing medicine in violation of the rule against a corporation’s practicing medicine. THE INSURANCE CONTROVERSY Those who claim that a medical cooperative is engaged in insurance point out that it is agreeing, in return for periodic payments made to it (analogized to insurance premiums), to indemnify the member of the cooperative against the loss which may occur to him upon the happening of a contingency. And the fact that reparation for the loss is made not in money but in medical services should, they say, make no fundamental difference. They feel that the public should be protected in this situation as it is protected in other insurance companies— by having the association maintain a large monetary reserve within the requirements of the insurance statute. However, many definitions of insurance, the cooperators point out, are framed in terms of a monetary payment by the insurer, and at any rate the latter usually makes the payment, not a third party such as the doctors in this situation. Further, it is said that in an insurance company the payment is made upon the happening of a contingency, whereas arranging for the rendering of medical service upon the happening of a contingency is not the essential function of a medical cooperative, which emphasizes preventive medicine— the encourage ment to members to come in for periodic examinations and to consult the doctor throughout the year for preventive measures against illness. In other words, it is a continuing and not a contingent medical care which is provided for. Cooperators also hold that the following practical factors which differentiate cooperative from insurance-company practice should be considered: The insurance company needs its large reserve mainly because of the financial danger of an emergency: the maturing upon an unforeseen scale of the contingencies insured against. In the case of a health cooperative, the only situation comparable to such an 1 This section was prepared b y Samuel Mermin, Consumers’ Counsel Division, A. A. A ., Department of Agriculture. 189 190 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES emergency is an epidemic of illness. It is perhaps inferable from the emphasis of the cooperative upon preventive medicine that the likeli hood of an epidemic among its members is negligible. Even if it be assumed otherwise, it would seem that no such substantial mone tary reserve as is needed by an insurance company would be necessary to cope with the situation. One possibility is an increase in the “ load” carried by each doctor; at worst, the association would be led to contract with a few additional doctors for the furnishing of their services during the brief duration of the emergency. No extraordinary outlays on a huge scale would be necessary. Other practical or “ common sense” considerations are also invoked. The cooperators point to such organizations as typewriter agencies which agree to maintain typewriters in good condition for a certain period of time for pre-arranged fees, or the paving companies which agree, under similar conditions, to keep roads in repair, or any of a number of associations which will service, or arrange for the servicing, of machinery and equipment of various kinds on a similar basis. Also common is the practice of furnishing any needed legal services over a certain period on a pre-fixed retainer basis, and also, indeed, the practice of a physician’s agreeing with an individual to furnish all necessary medical services over a certain period of time, on a pre-fixed payment basis. Does it suddenly become insurance, cooperators ask, because more than one individual and more than one physician are involved? THE IS S U E OF CORPORATE P R A C T IC E OF M E D IC IN E The point of view of those who claim that medical cooperatives are violating the rule against corporations practicing medicine is illus trated by the following contention made in the legal brief of a recent controversy: Although the corporation may employ licensed physicians to render medical service to its members, nevertheless this does not afford evidence that the cor poration is not engaged in the practice of medicine. A corporation, being an artificial entity, can only act through agents, and the physicians employed by it are necessarily its agents. It is the corporation which holds itself out to render the medical service. In addition, the great weight of authority in the United States establishes the rule that a corporation cannot engage in the practice of medicine. In reply, the cooperators declare that “ making contracts,” as the Nebraska Supreme Court has declared, “ is not practicing medicine * * *” ; that there is an obvious distinction between practice and business arrangements for practice. This principle, it is contended, is illustrated by such cases as Liggett v. Baldridge (278 U. S. 105 (1928)), in which the United States Supreme Court held unconstitutional a State statute requiring all stockholders of a pharmaceutical corpora tion to be licensed pharmacists. The Court pointed out that the LEGAL STA TU S OF COOPERATIVES 191 safeguarding of the public health could not be used as a defense of the statute, since the public health was related only to the preparation of the drugs and not to the ownership of the corporation. The opposition claims that this argument is irrelevant, being nullified by the fact that though the corporation may not be practicing medicine directly, it is doing so indirectly through its agents, the doctors. On the other hand, analysis of the law of agency is said to reveal at least two factors which weaken the assertion that the corporation is practising through the doctors as agents. Thus, it is pointed out that the familiar situation in the law of agency is one where the legal issue of liability for the acts of the agent is raised, and in dealing with that legal issue the court creates (in order to effectuate certain objectives of policy, proper distribution of loss, etc.) the convenient fiction that the act of the agent is the act of the principal. In those very same cases, however, when the purely factual question as to who actually performed the action is put in issue as a preliminary matter, the answer is not at all fictional. Similarly, the problem here, it is argued, is not a legal one like liability of the corporation, but essentially the factual problem: Is the corporation actually practicing medicine? And that question requires no distortion of facts for its answer. The second reason for urging the inapplicability of the idea that the act of the agent is the act of the principal, rests on the lack of control exercised by the corporation over the professional conduct of the doctors. Since there is no such control, the doctors are in the position of independent contractors rather than of agents; hence it cannot be said that the corporation is practicing through its agents. In response, the critics of medical cooperatives declare that such a view empties of any meaning the well-recognized rule against a corpo ration practicing medicine. Obviously, the framers of the rule knew that a corporation could not actually practice medicine; hence, it is argued, the rule must have been directed against the corporation’s agents or others bearing a close relationship to the corporation. This raises the important query as to what actually were the reasons behind the courts’ enunciation of the rule. Reference to the exact language of judicial opinions will be helpful. For instance, the Supreme Court of Iowa has observed: * * * There are certain fields of occupation which are universally recognized as “ learned professions.” Proficiency in these occupations requires long years of special Study and of special research and training and of learning in the broad field of general education. The law recognizes them as part of the public weal, and protects them against debasement, and encourages the maintenance therein of high standards of education, of ethics, and of ideals. It is for this purpose that rigid examinations are required and conducted as preliminary to the granting of a license. The statutes could be completely avoided and rendered nugatory if one or more persons who failed to have the requisite learning to pass the examination might nevertheless incorporate themselves formally into a corporation, in whose i9 2 C O N S U M E R S ’ COOPERATION IN THE U N IT E D STATES name they could practice lawfully the profession which was forbidden to them as individuals. * * *. ( Iowa v. B ailey Dental Co., 211 Iowa 781 (1931).) And more recently, the Supreme Court of Illinois explained: * * * These requirements are spoken of generically as that good moral character which is a prerequisite to the licensing of any professional man. No cor poration can qualify. It can have neither honesty nor conscience, and its loyalty must, in the very nature of its being, be yielded to its managing officers, its director and to its stockholders. Its employees must owe their first allegiance to their corporate employer and cannot give the patient anything better than a secondary or divided loyalty. * * * (Dr. A llison , Dentist , Inc. v. John T . A llison , 360 111. 638 (1935).) The cooperators hold it to be clear, from the above, that the rule against corporate practice of medicine is not intended to prohibit, as such, the contractual relation between a corporation and a physician, but rather to protect the public from (1) medical practice by unqualified persons who could not obtain a license individually and who therefore form a corporation in the hope of getting a license in the corporate name; (2) interference by the corporation with the personal responsi bility and loyalty between physician and patient. The first of these evils is obviously not present in the case of a typical medical cooperative, contracting with licensed physicians. The second evil, also is declared to have no existence in the case of a medical cooperative. Its applicability to an ordinary corporation, organ ized for profit, is quite understandable; but how, it is asked, can there be the above-mentioned undesirable allegiance by doctors to “ managing officers” or “ stockholders” or the “ corporate employer” as against the patient, when these “ officers,” “ stockholders,” and “ employers” are the patients? The medical cooperative is not a profit corporation interested in exploiting patients through the medium of doctors; it is a nonprofit organization of patients, and in order to effectuate its plan for an efficient rendering of medical services to its members, it contracts with doctors. Is the personal relationship between physician and patient impaired by the restrictions in the typical medical cooperative upon “ free choice” of physician? The cooperators argue that there is no real restriction, since the member, though he does not choose one doctor as he does under the system of private practice, does freely choose a group of doctors, by the act of joining the association. And it is further claimed that the association, through collective inquiry and investigation, is better able to engage competent doctors than the single individual under the present system, who generally chooses his doctor on the basis of hearsay. Finally, it is pointed out that many incorporated bodies, such as hospitals, universities, and business corporations, have customarily employed salaried physicians without being accused of violating any rule against corporate practice of medicine. LEGAL STA TU S PRESENT OF COOPERATIVES LEGAL 193 STATUS The court cases which have been quoted from above, did not involve genuine, nonprofit medical cooperatives employing licensed physicians, and operating on a periodic prepayment basis. In fact, it was not until very recently that the legal controversy could depart from merely analogous cases and be concerned with a precedent squarely in point. This precedent is the decision in the case of Group Health Association, a cooperative organized in 1937 for em ployees of the executive branch of the Federal Government in Wash ington, D. C. The United States District Court for the District of Columbia, in a declaratory judgment proceeding brought by the cooperative against the District attorney and District Superintendent of Insurance, ruled on July 27, 1938, that there was “ no reason why an individual may not without violating the statute [i. e., the Healing Arts Practice Act of the District of Columbia] contract with a physician for medical services for a stipulated period or a fixed compensation; and it would seem that a group of individuals might make the same arrangement with a group of physicians.” It would seem that this group of individuals might incorporate themselves for their own mutual benefit for the same purpose. Such a corporation, not for profit but for the mutual benefit of its members, is in m y opinion not engaged in the practice of medicine or in holding itself out as doing so. It is true that a corporation can act only through its agents and employees, but the physicians with whom the plaintiff makes contracts are rather in the position of independent contractors, and the plaintiff does not in any way undertake to control the manner in which they attend or prescribe for their patients.2 On the heels of this decision, it was charged by the United States Department of Justice on July 31, 1938, that the antitrust laws were being violated by the American Medical Association and the District of Columbia Medical Society by the use of the following methods of combating Group Health Association: (1) Threatened expulsion from the District Medical Society of doctors accepting employment with the association, and of doctors taking part in medical consultations with doctors on the association staff. (2) The exclusion from Washington hospitals of the Group Health Association staff doctors. According to the Department of Justice announcement— This has been accomplished either in combination with the various hospitals or by means of influence, which may or may not have amounted to coercion, upon them. This exclusion has made it impossible for doctors affiliated with Group Health Association to practice their profession in the hospitals and it has prevented members of the association who enter the hospitals as patients from having the services of the physicians of their own choice. Still another development in the Group Health controversy came on August 12, 1938, when three doctors of the District Medical 2 An appeal by the Superintendent of Insurance to the TJ. S. Court of Appeals for the District of Columbia was filed early in October 1938. 194 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES Society filed suit in the United States District Court for the District of Columbia to enjoin Group Health Association from engaging in the “ practice of medicine.” The doctors took the position that they were not parties to the “ friendly suit instituted by Group Health Associa tion under the Declaratory Judgment Act, and therefore are not bound by the decree entered by Judge Bailey.” Participating in the fight for legality of the association, in the case decided by Judge Bailey, were the Association of Medical Cooperatives and the District of Columbia chapter of the National Lawyers’ Guild, both of which filed amicus curiae briefs in the court case (as did also the District of Columbia Medical Society, for the opposite side). The campaign to aid medical cooperatives has not been limited to aiding them in the courts. The Bureau of Cooperative Medicine, in New York, for instance, gives practical advice in the setting up of these associations anywhere in the country. Legislative efforts have also been enlisted. Thus, the Biemiller bill, unsuccessfully introduced into the Wisconsin Legislature in 1937, declared the public policy of the State of Wisconsin to be the encouragement of medical coopera tives; prohibited discrimination by hospitals or medical societies or others against doctors or patients affiliated with a medical cooperative; punished direct or indirect interference with the organization of such a cooperative; and provided exemption from the insurance laws. Still a further legislative remedy suggested in some quarters is to authorize supervision by the public health authorities to safeguard the quality of the service and adequacy of the fees. This special type of legislation embodying some features of insurance supervision with out its onerous financial requirements (such as very large reserve funds) is defended as being analogous to special statutory provisions now existing for fraternal benefit societies and for nonprofit group hospitalization plans.3 E lectricity A ssocia tion s The electricity-supply associations are organized under various kinds of statutes in different States. Some Stales already had cooperative acts which were broad enough in their terms to permit the 3 Since this was written, two pertinent cases were decided in California. In Peoplev. PacificHealthCorp.r 82 Pac. 2d 429 (1938)—three judges dissenting—a profit corporation supplying medical services through licensed physicians on a prepayment basis was held to be illegally practicing medicine; but the court indi cated the decision would have been different if it were a nonprofit corporation. In Butterworthv. Boyd, 82 Pac. 2d 434 (1938)—one judge dissenting—a medical cooperative for San Francisco municipal employees, established by amendment to the city charter, was held not to violate the insurance laws or the State Medical Practice Act, since “general words in a statute which might have the effect of restricting govern mental powers are to be construed as not applying to the State or its subdivisions.” LEGAL ST A T U S OF COOPERATIVES 195 incorporation of electricity associations, and in others incorporation was feasible under a nonprofit act. In certain States having neither of these types of laws, electric-power cooperatives have been obliged to incorporate under the general corporation act, but have made provision for cooperative practice through the medium of their bylaws. A number of States, in which the existing legislation was not regarded as adequate for the purposes of this new type of cooperative, have passed laws dealing exclusively with rural electrification. By July 1937, according to the Rural Electrification Administration,4 14 States had passed electric membership corporation acts. These were Alabama, Arkansas, Georgia, Indiana, Kentucky, Mississippi, Nebraska, New Mexico, North Carolina, North Dakota, Pennsyl vania, Tennessee, Texas, and Virginia. These statutes vary somewhat from State to State, but in general have for their purpose the furthering of the rural electrification pro gram and the protection of the cooperative associations formed under them. Usually, the law authorizes the cooperatives to purchase, generate, and distribute power, to assist their members in wiring their premises and in acquiring and installing electrical or plumbing equip ment, and to borrow money for these purposes; exempts the members from personal liability for debts of the association; provides for maintenance of adequate reserves and for refunds of surpluses in proportion to patronage, either in cash or lowering of rates; and exempts the associations from excise taxes, levying instead a small annual license fee (generally $10). Existing cooperatives organized under either the nonprofit act or the general cooperative act are usually given permission to take advantage of the electrification act. Although most of the acts are liberal in their terms, an occasional one is so phrased as to hinder the development of the program. Thus, the New Mexico act forbade the building of fanners’ cooperative lines in such a way as to interfere with any existing system or to serve persons in a territory in which any other organization already had any lines. It was pointed out in the Rural Electrification News (July 1937) that the effect of this was “ to freeze the claims of utility com panies to territories which they not only do not now serve but have no immediate intention of serving” and “ to protect utilities in the enjoyment of unserved territories.” The immediate effect of the New Mexico act was to cause the R. E. A. to rescind an allotment of $56,000 which had been tentatively made for a project in Valencia County, where a power company, between the time of the allotment and the passage of the law, built into the territory which was to have been served by the cooperative. In order to prevent just such a situation as this, the Wisconsin Legislature in 1937 passed an act expressly forbidding the construc- *Rural Electrification News (Washington), July 1937, p. 26. 196 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES tion of new lines or a plant in any territory in which a cooperative electricity association had been incorporated and had filed a map of its territory, until 6 months after the date of such filing. This period of prohibition was extended to 12 months if the cooperative association had entered into a loan agreement with any Federal agency and had so notified the Wisconsin Authority. THE Q U E S T IO N OF S T A T E R E G U L A T IO N The question of whether rural electrification cooperatives should be subject to public control like privately owned public utilities operating for profit, and if so, upon what points and to what extent, has been a subject of considerable controversy. A small number of the State rural electrification acts specifically provide for such control. In the absence of specific provision the private power companies have naturally taken the position that the cooperatives should be subject to the same control as themselves. In this view they have been joined by the officials and public utility commissions of several States. The cooperatives, on the other hand (and the farmers’ organizations sponsoring them), have contended that, as the cooperatives serve their own members only and have as their purpose not the making of profit but the provision of service, only the reasonableness of their charges should be passed upon by the public utilities commissions and otherwise they should be subject only to the same type of supervision as are other forms of cooperative associations. The latter stand has been supported by the National Rural Elec trification Administration, in the following terms: R. E. A. feels that rigid control of cooperatives by utility commissions is unde sirable and detrimental for several reasons. Commission control was established to accomplish two things: First, to intervene between the buyer and the seller of electricity in matters of rates, and secondly, to supervise the issuance of securi ties. In the case of cooperatives, the buyer and the seller of electricity are one and the same, and cooperatives do not issue securities for public distribution. Rural electrification is extremely simple from the engineering point of view, and cooperatives need only a minimum of engineering talent and legal advice. But if these relatively small, nonprofit rural organizations are forced to appear before a commission to plead their right to serve themselves, they must either equip themselves with a battery of high-powered and high-priced lawyers and engi neers similar to the array of talent which seems to be required in utility cases, or run undue risks of losing out regardless of the realities of the case. Perhaps the strongest argument against commission control of cooperatives is that it may operate to stop the normal development of cooperative action in electricity distribution. W ith present technical knowledge and methods, only a minority of our farms can be served on a profit basis. W ith the elimination of any charge for profit, in other words by the establishment of cooperatives, lines can be extended into much leaner territory and serve a much larger percentage of farms on a self-sup porting basis. LEG AL ST A T U S OF COOPERATIVES 197 But for cooperatives to come into existence, for protection of this still infant movement which promises so much to the Nation in the immediate future, it is necessary to give them every reasonable advantage. Appearances and proceedings before regulatory bodies, petitions for certificates of convenience and necessity involve legal and engineering fees. The resources of a budding cooperative are tenuous at best. The mere thought of the lawyer’s bill is enough to discourage most of them right at the start. There is absolutely no good which can come of squandering the price of several miles of line to estab lish formally the public convenience and necessity of a proposed rural line, when the mere proposal of the line by the farmers goes far toward establishing that fact beyond any question. The attitude of State officials on this point has varied from State to State, but seems to be swinging toward the more lenient point of view. COU RT CASES The other types of consumed cooperative associations have only infrequently been parties to legal disputes involving questions of con struction, interpretation, and constitutionality of the cooperative statutes. The electricity associations, however, have already figured in a number of court cases. Almost invariably these have been brought by private power companies seeking to prevent the opera tion of a particular cooperative association. One or two of these have been carried to the highest State court. Almost without ex ception the right of the cooperative associations to operate and the constitutionality of the State act have been sustained by the courts. Recognition of the cooperative association as an agency serving its own members and therefore not subject to State commission regula tion as a public utility has been accorded by at least two State supreme courts (Alabama and Wisconsin) and a lower court in another State (North Carolina). By decision or opinion the associations in other States have been upheld on such other points as the right of municipally owned plants to resell power to cooperatives (Alabama) and the cooperatives* right to permits for the erection of lines along State highways (Illinois). In Washington State, however, a large cooperative association seek ing exemption from the State gross-receipts tax on the ground of being a nonprofit organization was declared subject to the tax. T elephone A ssocia tion s The so-called “Rochdale principles” practiced among the distribu tive and service associations are somewhat modified in the telephone associations by conditions in their field of business, by the wish of the members, or by the terms of the acts under which they operate. Although unincorporated associations may operate on any basis they choose, the business procedure of any incorporated organization is determined to a certain extent by the statute under which it has 198 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES been incorporated. Thus, the general corporation acts usually specify that the stockholder shall have one vote for every share of stock he owns, that any dividends paid shall be paid on the stock, and that proxy voting must be permitted— all of which requirements are in direct contravention of the cooperative principles. Sometimes also the State constitution contains sections covering such business procedure as voting by shares or by proxy. The cooperative statutes vary considerably in their requirements from State to State. The best ones enumerate the cooperative principles, in defining what constitutes a cooperative, and specify adherence to these standards as a requirement for operation under the act. But by no means can all of these cooperative statutes be said to be adequate in the sense of defining and compelling compli ance with the Rochdale principles. Wide variations from the ac cepted practice, and equally unfortunate omissions, are found in the provisions of the State acts. Of the 1,292 telephone associations which reported their legal status, 787 were incorporated and 505 were unincorporated. The small service lines appeared to be more likely to remain informal asso ciations, while the larger organizations giving switchboard service were generally incorporated. That this distinction was by no means always true, however, is indicated by the fact that some service-line associations with as few as half a dozen members were found to be incorporated. There were, nevertheless, some service-line groups that not only had not incorporated but had never even had what could be called an association. One such association reported that there had never been even a signed agreement among the members. A few neighbors had assembled, strung their poles and wire, and negotiated for switching service from the telephone company in the nearest town; one member acted as secretary in collecting “ switching fees” to be paid to the company and in carrying on any necessary correspondence. That was all there was to it. A great many of the telephone associations were formed before there was any State cooperative law under which they could be established and they therefore incorporated as stock companies under the general corporation act; a good many of these, in practice, how ever, have operated as mutuals. Comparatively few appear to have been established under the cooperative statutes. In 1933, the Wis consin Public Service Commission had a check made of the incorpora tion records in that State. This revealed that, although the State cooperative statute is broad enough to cover telephone operation, only four associations had elected to incorporate under it; most of the others had been formed as mutuals. Again, telephone companies are in many States regarded as public utilities or common carriers and, as such, are subject to regulation by LEG AL STA TU S OF COOPERATIVES 199 State commissions. A number of States exempt from such regulation associations operating as pure mutuals (i. e., serving members only and having no predetermined rates but assessing all members their pro rata share of the cost of operation); service extended to even one nonmember subjects the association to regulation by the State com mission. Some of the regulations imposed by these State commissions also place obstacles in the way of completely cooperative practice. Thus, in States where operating territory is apportioned, company by company, and exclusive rights are given therein, State commissions generally require the companies to serve all applicants for service whether they are stockholders or not. And in some cases the com panies are specifically prohibited from making any distinction in the rates charged to members and to nonmembers. The result is that where nonmembers can get the same service as members and at the same rate, there is little inducement to take out membership in the cooperative association. Such has been the effect of this that, in States where this regulation is in force, many associations have a greater number of nonmember than member subscribers. As is evident, therefore, the rate of observance of the cooperative principles among the telephone associations is dependent to a consider able extent upon these legal and regulatory requirements. P U B L IC R E G U L A T IO N In order to ascertain to what extent telepnone associations are regarded as public utilities or common carriers in the various States and, as such, are subject to regulation by State commissions, the Bureau addressed an inquiry to the 14 States 6 known to have 50 or more telephone associations operating on the cooperative or mutual plan. It was found that no public regulation of any type of telephone com panies was provided for in the States of Iowa and Texas, nor were such companies required to obtain from the State a certificate of con venience and necessity before being allowed to operate. Any tele phone company, however, which operated within the corporate limits of a city or town must generally obtain a franchise from the municipality. In Oregon, by opinion of the State attorney general, cooperative telephone companies were held to be not within the purview of the public-utilities act and were therefore not subject to regulation. In some States all telephone companies of whatever type— private profit, cooperative, or mutual— were regarded as public utilities and as such were subject to regulation by the State commission. Such regulation usually covered reasonableness of rates, adequacy of serv* Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, North Dakota, Oregon, South Dakota, Texas, Virginia, Washington, and Wisconsin. 200 C O N S U M E R S ’ COOPERATION I N THE U N IT E D STATES ice, keeping of records, issuance of securities, use of highways, con formity with safety regulations, etc. States in this class were Michi gan, Minnesota, North Dakota, and Wisconsin. The Michigan Public Utilities Commission stated that the only two powers of regu lation not conferred upon it were the power to prevent the payment of dividends when conditions did not warrant this, and the power to fix rates of depreciation. “ Mutual” associations were found to be exempt from regulation in Illinois, Indiana, and Missouri; and in California cooperative associa tions formed under the State cooperative a c t 6 and doing business only with members were exempt. In most of these States mutual associations were defined as those owned by and doing business only with members; in Illinois they must also operate on the assessment basis. In Kansas, associations were regarded as mutual only if they provided a means of communication without profit within their own membership; if connection was had with the lines of any other company or if they extended service to even one nonmember they automatically forfeited their status as mutuals and became subject to the public-utility regulations. This proviso, of course, operated to bring the majority of the associations under the control of the State corporation commission. Associations in that State desiring to connect with other lines must obtain a certificate of convenience and authority permitting the erection of lines and the operation of a switchboard. No certificate of necessity and convenience was required for tele phone companies or associations in Washington State. Farm lines desiring exchange and toll service from a regular telephone utility must limit their construction to the exchange area from which con nection was desired. One telephone company, however, filed a foreign exchange rate for farmer-line service which would permit farmers in one exchange area to receive farmer-line service from another exchange area that had a reciprocal schedule. “ Farm lines that are operated only on an intercommunicating basis where no regu lar exchange service is desired are not restricted in the areas in which they operate and may be constructed if franchise can be obtained on the highways.” Exclusive rights were not given, but a mutual operating as a common carrier must serve all applicants for service within a “ reasonable distance” of its lines. In North Dakota the operating territory was specified at the time construction of lines were authorized, but might be expanded later on permission of the board of railroad commissioners. Under the State constitution no public utility may be granted exclusive rights in any territory; such a utility may, however, be required to serve all « This act was repealed in 1931, and associations organized prior to that time are regarded as operating under general corporation law. LEGAL STATUS OF C O O P E R A T IV E S 201 applicants for service, either by permitting them to become members or by making a flat charge upon them for service.7 Under the pro cedure in Minnesota and Wisconsin, the territory was strictly limited at the time authority for operation was granted, and exclusive rights therein were given. In Michigan the territory was defined at the time that the franchise was given. Although exclusive rights were not given, the public utilities commission had refused to allow duplica tion of facilities “except upon a clear showing that the public conveni ence and necessity would be served by such duplication.” As coop erative and mutual associations were regarded as on the same plane as privately owned telephone companies in Michigan, Minnesota, and Wisconsin, they were, like them, required to provide service for all applicants, whether or not they were stockholders.7 The rates of “strictly mutual” telephone associations were not sub ject to public determination or review in Kansas; those of associations giving service to nonmembers or connecting with lines of other com panies were, however, subject to the same regulation as the rates of public utilities operating for profit. In Michigan and Minnesota the rates were fixed by the commission. In North Dakota and Wis consin the commission did not set the rates for telephone service, but passed judgment upon the reasonableness of those set by the com panies themselves. No supervision was exercised over rates of mu tuals in Washington unless they operated as common carriers in which case their rates were subject to review. 7 This fact was taken into consideration in determining the “ cooperativeness” of the associations. 9 0 6 2 1 ° — 3 9 --------14 IN D E X A Page A & B Cooperative Oil Association, Ashland, W is______ ____ _______________________ 148,149,152,154,162 Age of associations_______________ 9,30-32,34,64-66,73-76,80,88,93,100,101,118,119,137,151,152,160-162,172 Amalgamation of cooperative associations_________________________________________________________ 40 Assets of cooperatives____________________________ 22, 52, 53, 59,62,63, 78,84, 111, 112,128-130,132,148,151,152 Auditing associations----------------------------------------------------------------------------------------------------------------- 21, 22,163 Auditing service of cooperatives_______________________ ___________________________________ 3,146-148,163 Automobile repair. (See Garages.) Automobiles, sale of, b y cooperatives___________________________________________________________ 61,74,148 Automobile workers’ cooperatives________________________________________________ 64,119,122,125,128,132 B Bad debts, losses from _______________ _________ ______ _____________________ ____ ___ _______ _ 43,133,156 Bakeries.________ _________________ ____________ _______________ 21,22,32-36,45,46,50-52, 54,61,64,179,183 Beauty parlor, cooperative--------------------------------- ----------------------------------------------------------------------------- 4, 35 Beer tavern, cooperative------------------------------------------ ----------------------------------------------------------------------- 4,35 Branches, retail, of wholesale associations_____________________________________________________ 151-153 Building and loan associations, number, membership, and statistics of operation, 1936______________ 7 Building materials, handling of, b y cooperative associations______________________________________147,148 Building-trades workers’ cooperatives____________________________________________ 83,119,122,125,128,132 Bureau of Cooperative M edicine__________________________________________________________________ 194 Burial associations________________________________________________________ 6,21,22,59,61,62,74-80,148,149 Bus service, cooperative___________________________ ___________ ___________________________________ 4 Business done b y cooperatives_______________________________ ____________________________________ 13, 14,21,40-43, 57-59,61-63,65,76,78,84,95,113,114,123-126,140-142,145,146,153-155,160-163,166,167 15, Business practice and methods of cooperatives_____ ______ ______________ _________ _______________ 16,14, 78, 79, 81,82,85-87,105-108,110,116,117,126,135,136,197-201 Buying clubs______________________________ ___________ 9,21,22,3U-32,36, 37, 41,45,47,49, 51, 52, 54, 58, 59, 74 c C -A -P Cooperative Oil Association, Kettle River, M in n .......................................................... 148,152,254,162 California Cooperative Education Association, Pasadena, Calif_______________________ __________ 165 Capital of cooperative associations___ 11,17,22,48, 51-52,59, 62-64,78,84,89,105,112,113,127,130-132,151,152 Central Cooperative Wholesale, Superior, Wis__........... ....................... ......... 147,149,151,154,161,167,168,171 Central States Cooperative League, Chicago, 111______________________________ _____ ______________ 165 Classification of cooperatives, m ethod used in survey----------------------------------------------------------------------32 Cleaning, dry, establishments__________ ____________________________________________________ 21,22,62,65 Clearwater County Cooperative Council, Bagley, M in n ___________________________________________ 166 Cloquet (M inn.) Cooperative Society_____________________________________________________ _____ 41 Clothing, handling of, b y cooperative associations______________________________ 4,23,31,50,65,146,147,155 Club rooms, cooperative___ ____ ________________________________ ___________________________ ____ .3 5 ,6 1 Clusa Service, New York, N . Y _____________________________________________________________ ____ _ 134 Coal mining b y cooperative associations__________________________________________________ _____ 4,35 Cold storage____________________________________________________ 61 Competition between cooperatives______________ _____ _____ ____________________________________ 135,150 Consumers’ Cooperative Association, North Kansas C ity, M o ___________________ 147,148,151,154,156,160 150 Consumers’ Cooperative Oil Co., Sauk C ity, W is___________________ _____________________________ Consumers Cooperatives, Associated, Amarillo, T ex ____ ______ ____________ ____ ____ 147,149,151,154,161 Consumers’ cooperatives, definition o f_________ 17-18 Cooperation, courses in (see also Educational activities)____ _______________________________________ 27 Cooperative G. L. F. Exchange, Ithaca, N . Y _ _ ______ _______________________________ ___________ _ 150 Cooperative Insurance Association____ _______________________________________ 136 CooperativeInsurance M u t u a l __________ __________ ____________________________ ____ __________ 136 Cooperative League of U . S. A ____________ ____ _______ _______ ________ 15,21,134,145,163-165,170,171,185 Cooperative Life Insurance Co. of America, Columbus, Ohio............ ...................................... .................. 135 203 204 IN D E X P age Cooperative Management Association_______________________________________________________ ______ 136 Cooperative practices_____ 38-40,48, 64,69,76, 77,81,82,89,90,95,96,104-106,115,127,135,157-159,174,197-199 Cooperative Services, Maple, W is___________________________________________________ 148,149,152,154,162 Cooperative Trading Co., Waukegan, 111------------------------------------------------------------------------------------------ 41,186 Cooperative Workers* U nion____________________________________________________________________ 185,186 Cooperative Y ou th League of the N orth Central States, Superior, W is__________________ ____ ____167,168 Cooperatives as sources of supply______________________________________________ 34,48,49,64,79,80,155,156 C ©operators’ Life Association, Minneapolis, M in n _________________________________________________ 136 Cost-plus operation_______________________________________________________________________________ 16 Councils, local cooperative.--_____ _______ 166 Court decisions involving cooperatives. ( See Legal status.) Coverage of studies b y Bureau of Labor Statistics.____________________________________ 5,20,21,24,96,136 Creameries_____________________________________________________ 11,21, 22,32,34-36, 45, 46, 51, 52,54,179,183 Credit, extension of, b y cooperatives, to members--------------------------------------------------------------------- 16,116,158 Credit, sources of, to cooperatives.._____ ___________________________________________________________ 90-92 Credit Union National Association, Madison, W is-------------------------------------------- -----------------------------169 Credit Union National Extension Bureau, Boston, M ass------------------------ ------- --------------------------------169 Credit unions___________________________________________________ 6,12,19,21,22,87,115-133,136,158,168-169 Cuna M utual Society, Madison, W is____________________________________________________ 138,138,140,169 169 Cuna Supply Cooperative, Madison, W is_________________________________________________________ Czechoslovak cooperatives in United States------------------------ ---------------------------- --------------------------------28, 40 D Depression, effect of, upon cooperatives_______________________________________________________ 11,133,177 Distributive departments of marketing associations_______ 13,21,22,31,36,43,45,47,49,51,52, 54, 58,179,183 Dividends, patronage. ( See Patronage refunds.) E Earnings, net, b y cooperatives.............. . 10,14,16, 21,24,44-46,57-59,62,63,78,85,113,114,153-154,160-162 Eastern Cooperative League, N ew York, N . Y ______________ ____ _______________________________ 165 Eastern Cooperative Wholesale, N ew York, N . Y ___________________________________ 147,148,151,154,161 Econom y M utual Health Association, E conom y, In d ______________________________________________71,72 Educational activities of cooperatives_________________________________________ 88,146-148,163-169,170,171 Electricity associations____________________________________________________________ 6,61,62,88-92,194-197 Employees, cooperative, training o f______________________________________________________________165,171 Employees, number of, in cooperatives__________________________________________________ 110,159,178-179 Employees, relations w ith ____________________________________ ______ ___________________ 174-178,185-188 Employment, stability of, in cooperatives_____________________________ ___________________________ 175 English cooperatives in United States_____________________________________ _______________________ 28 F Farm Bureau Cooperative Association, Columbus, Ohio___ _____ ___________ 135,147,148,150,151,154,161 Farm Bureau cooperative associations____________________________________________ ____ _______ 56,135,149 Farm Bureau Federation Cooperative, Madison, W is________________________________ 147,149,151,154,162 Farm Bureau M utual Automobile Insurance Co., Columbus, Ohio------------------------------------------------135 Farm Bureau M utual Fire Insurance Co., Columbus, Ohio________________________________________ 135 Farm Bureau Oil C o., Indianapolis, In d ___________________________________________________________ 150 Farm Bureau Services, Lansing, M ich _______________________________________________ 147,150,151,153,160 Farm organizations, attitude toward cooperatives____________________________________ 3,28, 30,39,67,69, 75 67 Farm Security health cooperatives_______________________________________________________________ _ Farmers’ cooperatives_________________________ 17,18,24,28-30,38,39, 57-60,65, 66,74,75,149,150,152,153,183 Farmers Cooperative Exchange, Baleigh, N . C ____________________________________________________ 150 Farmers’ Union Central Exchange, South St. Paul, M in n ___________________________ 147,148,151,154,160 Farmers’ U nion cooperative associations___________________________________________________________ 149 Farmers’ U nion Cooperative Hospital Association, E lk C ity, Okla_________________________________67-69 Farmers’ Union Sales Department, Oklahoma C ity, Okla_______________________________ 147,151,154,161 Farmers’ Union State Exchange, Omaha, N ebr______________________________________ 147,148,151-154,160 Federations, educational________________________________________________________________ 15, 21,22,163-169 Federations, service_____________________________________________ 21,22, 76,99,100,103-105,110-112,114,163 Federations____________________________________________________________________________________ 12,13, 25 Federations, wholesale____________________ ____ ________________________________ 6,13,15,21,22,40,145-162 Fidelity bonds for cooperative employees__________________________________________________________ 134 Finnish cooperatives________________________________________________________________________ 28,33,34, 64 Franklin Cooperative Creamery Association, Minneapolis, M inn____________________________ ______ 41 205 INDEX Page French cooperatives in United States................................................................. .............................................. 40 Fuel yards, cooperative---------------------------------- --------------------------------------------- 35,36,41,45,47,49, 51, 52, 54, 58 Funeral associations. ( See Burial associations.) G Grange Cooperative Wholesale, Seattle, W ash_______ Garages---------------------------------------------------------------------Geographic development of cooperative associations: Bakeries________________________________________ Burial associations______________________________ Buying clubs___________________________________ Credit unions___________________________________ Electricity associations__________________________ Garages--------------------------------------------------------------Housing associations____________________________ Insurance associations___________________________ Laundries and cleaning establishments__________ Medical-care cooperatives_______________________ Petroleum associations__________________________ Printing and publishing associations_____________ Recreation associations__________________________ Service associations______________________________ Store associations________________________________ Telephone associations__________________________ Water-supply associations_______________________ Goods handled b y cooperatives______________________ Grange cooperatives_________________________________ Grievances, adjustment of employees, in cooperatives. Group Health Association, Washington, D . C .......... .. __________ 147,151,154,161 21,22,35, 61, 62, 73, 74,149,183 _____ _____— -......... 7,32 ___________ 75,76,78 _ .... 37 .. 8,120,121,124,127,129-131 ______________ 8,88,89,91 __________________ 73 ________________ 7,8,80,85 _________________ 137-141 __________________ 65 __________________ 66 7, 8,36,37,40,42,45,46,51-53 __________________ 74 __________________ 172 _____________ 63 ______ 7,37,42,45,46,51-53 8,97-101,103,104, 111, 112 __________________ 34 _________ 4,31,32,146-148 __________ 3,28,30,39,149 _________________ 176-177 ......................... 67,193,194 H H-O-B Cooperative Oil Association, Bruce Crossing, M ich __________________________ 148,149,151,154,162 Halls, cooperative____________________________________________________________________________ 61,172,173 Hospital, cooperative_______________________________________________________________________ 61,66, 68,69 Hours of work in cooperatives_______________________________________________________________ 175,183,184 Housing associations____________ ___________________________________ ____ _____ _____ 6, 21,22,61, 62,80-88 T Illinois Farm Supply Co., Chicago, 111___________________________ Indiana Farm Bureau Cooperative Association, Indianapolis, Ind. Insurance agencies, store associations as__________________________ Insurance associations___________________________________________ Insurance controversy over medical cooperatives_________________ Iowa State Federation of Burial Associations____________________ Italian cooperatives in United States......................... . . ....................... ................... 146,151,153,160 . . . 147,148,150,151,153,160 ________ 135,136 6,19, 21, 22,134-144,189,190 __________________ 189,190 ____________________ 76 ............................... 28,33,40 J Jewish cooperatives in United States______________________________________________________________ 33 K 3 Knights of Labor cooperatives L Labor banks, number, membership, and statistics of operation, 1936. Laundries_________________________________________________________ Lawn mowing, cooperative________________________________________ Legal status of cooperatives________________________________________ Legislation affecting cooperatives__________________________________ Lithuanian cooperatives in United States____________ ____________ _ Litigation involving cooperatives. ( See Legal status.) Lodgings. ( See Rooms, associations providing.) Losses, operating, b y cooperative associations---------------------------------- _______________________ 7 __________ 21, 22, 59, 61, 62,64, 65,183 ____________________________ 4 ________________________ 75,189-201 27, 67,88, 89,116,136,153,169,189-201 ............ 28,33,40 45, 59, 73, 74,85,113,114,142,143 206 IN D E X M Manufactures, cooperative. (See Production b y cooperatives.) Page Maryland Farm Bureau Federation, Baltimore, M d ______________________________________________ 150 Meals, associations providing______________________________________ 6,21,22,35, 59,61,62,64,65,182,183,187 Medical profession, attitude toward cooperatives-----------------------------------------------------------------------------67 Medical service______________________________________________________________ 6,21,22, 62,65-73,88,189-194 Membership of cooperatives_______ _______________________________________ 10,13,21,35-40,58,62, 63,65,68, 69, 76-78,88,99,101-104,120-123,137-139,142,151,152,160-162,163,166-168 Michigan Union Life Association, Grand Rapids, M ich__________________________________________134,135 M idland Cooperative Wholesale, Minneapolis, M in n ------------------------------------------- 147-149,151,154,158,160 158 M idland Credit Corporation, Minneapolis, M in n _________________________________________________ M idland M utual Fire Insurance Association, Minneapolis, M inn__________________________________ 135 Miners* cooperatives__________________________________________________ 26-28,38,74,75,119,122,125,128,132 Minnesota Farm Bureau Service C o., St. Paul, M in n ___________________________________ 147,151,154,160 M utual Cooperative Insurance Association, Superior, W is______________________ _____ ______ _____ 135 Mutual savings banks. (See Savings banks, mutual.) Mutuals, cooperative features of_________________ _______________________________ 5,19,98,105,136,198-201 N National Cooperative Wholesale-------------. ---------------------------National Cooperatives, Inc., Chicago, 111___________________ Needle-trades workers’ cooperative--------------------------------------Negro cooperatives------ ------- -------------------------------------------------N ew Cooperative C o., Dillonvale, Ohio_____________________ N ew Era Life Association, Grand Rapids, M ich -------- ---------Nonmembers, business w ith ________________________________ Northern California Cooperative Council, Oakland, Calif___ Northern States Cooperative League, Minneapolis, M in n — Northern States W om en’s Cooperative Guild, Superior, Wis. Northland Cooperative Burial Association, Cloquet, M in n .. Northland Cooperative Oil Association, R ock, M ich________ Northwestern Cooperative Burial Association........................... ____________________________ 15,28 __________ 146,148-151,153,157,160 ____________________________ 80 _____________________________ 29,30 ____________________________ 41 ___________________________ 134,135 34,42,43, 63, 65,102-104,117,155,157 ____________________________ 166 ______________________ 165,167,171 _____ ______________________ 167 _____________________________ 75,76 ______________ 148,149,151,154,162 ..... ............................................ 76 o Operating expenses____________________________________________________________________________ 43,44,156 Operating plant and facilities________________ 35,61,64,65,68,69,78,79,82,83,93,94,107,108,146-149,172-173 Opposition to cooperatives______ ____ __________________________ ____ _________________ 67,75,189-194,197 Organized labor, attitude of cooperatives toward----------------------------------------------------------------------- 33,185-188 Organized labor, attitude toward cooperatives_______________ _______ _____________________ ______3,28,29 Overtime work in cooperatives.................................................... ....................................................................... 177 P Pacific Supply Cooperative, Walla Walla, W ash----------------------- ---------- -------------------------------------------149 Parks, cooperative_________ ____ ____________________________________ _____ __________________ 61,172,173 Patronage refunds_______________ _______________________________ 10,11,14,22,24,33,46-48,59,62,69,85,90, 105,106,127,128,143,144,153,154,158,159,160-163 Pennsylvania Farm Bureau Cooperative Association, Harrisburg, Pa------------------- 147,149,150,151,154,161 People’s Cooperative Society, Superior, W is_________ ___________ ______ ______________ ___________ 187 Personnel policies of cooperatives___________________________________ ____ ____ ____ _____________ 175-178 Petroleum associations____ ____ _____ _____ _________________ 6,13,14,21,22,30,31,35-37,40-61,179,181-184 Polish cooperatives in United States_____________________ ________ ________________________ _____ 33,40 Population, cooperatives in relation t o ........... . .................................................. ....................................... 56,57,180 Prices and charges, level of, among cooperative associations............................. 10,34,68,70,72,76,78,79,85-87, 90,95,106-110,126,196 Principles, cooperative. (See Rochdale principles.) .......... 21,22,59,62,74,163,183 Printing and publishing associations.._____ _______ _____________ 43,44,179-183 Private stores: Wages and wage expenses--------------_____________ 17,18 Producer cooperatives, definition of________________ ____ 22,23,50,60,146-148,156 Production b y cooperatives.......................................... Profits. (See Earnings, net.) ...... ........... 27,88-92,195 Public assistance to cooperatives------ ------- -------------81,83,116,119,122,125,128,132 Public employees’ cooperatives------------------------------________ 93,117,118,189-201 Public regulation of cooperatives---------------------------........... 119,122,125,128,132 Public-utility employees’ cooperatives...... .............. . R Railroad workers’ cooperatives________________________ Range Cooperative Burial Association. Virginia, Minn. 28, 38,116,119,122,125,128,132 __________ ___________ 75 IN D E X 207 P age Range Cooperative Federation, Virginia, M inn_____ __________________________ 75,76,148-150,152,154,162 Range Cooperative Oil Assn., Virginia, M inn_______________________________________ 148,149,152,154,162 Recreation associations----------------------------------------------------------------------------------- 21,22,61,62,163,172,173,183 Recreation Cooperative, In c_______________________________________________________________________ 173 Recreation in cooperative m ovement__________________________________________________ 34,88,167,171-173 Restaurants, cooperative. ( See Meals, associations providing.) 170 Rochdale Institute, N ew York, N . Y ____ ______________ ____ _____________________________________ Rochdale principles........ ........ 2,18,19, 38-40,48, 64,76,77,81, 82,89,90,96,104-106,115-117,135,157-159,197-201 Rochdale Society of Equitable Pioneers-------------------------------------------- ------------------- ------------- ------- 1,2,18,19 Rooms, associations providing_____ ___________ ____ __________ ____ ____________ 6,21,22,35,62,64,65,183 Rural cooperatives_______________ ______________ ______ ____ ________ ___________________ 8,9,50-60,75,93 Rural Electrification Administration, cooperatives under program of_________________ 8,90-92,146,195-197 Russian cooperatives in United States____ ___________ ____________________________ ____ __________ 64 S St. Louis County, M inn., cooperation in___________________ ________ _______ 4,5,159,172,177,182,184,187 Sales. ( See Business done b y cooperatives.) San Diego Beneficial Society, San Diego, Calif______________ _____ ________________ ____ __________ 69-71 Savings banks, mutual, statistics for 1936__________ ______________________ ____ ___________________ 7 Scandinavian cooperatives in United States......... ....................................... ......... .............................. .......... 28, 64 Self-help cooperatives__________________________________ ____ _____ _______ _____________________ 29,83,84 Service associations____ ______ ________ ___________________ ____ _____ ______ ____ 4,6,21,22,30,61-92,183 Share capital. (See Capital.) Shoe-repair cooperatives_______________ _______ _______ _____ _____ ______ ________________________ 61,65 Size of associations______________ _____ 10,12,34,36,41, 58, 59,74-78,88,94,101-104,122,123,126,139,141,154 Slovenian cooperatives in United States______________ _______________ ____ ____________ __________ 28 Southern States Cooperatives, Richm ond, V a_______________________________ ____________ ____ ____ 150 Steel Workers’ cooperatives___________________________ __________ _______ ________________________ 64 Stock turns____ ________ ___________________________________________________ ______ _______________ 16,49 Store associations_____ ______________________________ 1,4,6,13,14, 21,22,31,35-37,40-61,74,179,181-184,187 Students’ cooperatives_______________________________________________ 29,36,40,41,45,47,49,51,52,54,64, 65 Subsistence-homesteads projects, cooperatives in______________________________________ ______ ______ 29 Supply, sources of, cooperative associations as. ( See Cooperatives as sources of supply.) Teachers’ cooperatives__________________ ____ _________________________________ 32,38,119,122,125,128,132 Telephone associations_____________________ ______ _________________________ 6,12,19,21,22,93-114,197-201 Textile workers’ cooperatives___________ ____ ____________________ ____________ 28,38,119,122,125,128,132 The Cooperative Wholesale, Chicago, 111________________________________________ 146,148,149,151,153,160 Trico Cooperative Oil Association, Cloquet, M inn____ ___ _____ ______ _____________ 148,149,152,154,162 u Ukranian cooperatives in United States_________ Unionization of cooperative em ployees............ . United Cooperative Farmers, Fitchburg, M a ss.. United Cooperatives, Inc., Indianapolis, In d ____ United Farmers Cooperative Co., Toronto, Ont. Urban cooperatives_____________________________ _____________ 64 _________ 185-188 147,148,151,153,160 146,148-151,153,160 _____________ 149 . . . 9,28,29,56,57,65 Vacations for cooperative employees. Voting in cooperative associations___ _______________________ 175,177,178 2,18, 66,69, 70, 76, 81,105,116,117,157 w Wage Earners’ Health Association, St. Louis, M o ______________________________________ ____ 72,73 Wage and wage expense in cooperatives_____________________________ 43,44,79,110,156,159,175, 176,178,183 Water-supply associations______ __________________________________________ 21,22,32,34-36,45, 46, 51, 52, 54 Waukegan-North Chicago Cooperative Association, North Chicago, 111_________________ _____ 186 White-collar workers’ cooperatives_______ _______ ______________________________________ 28,38,64, 80 Wholesales. (See Federations, Wholesale.) Workers and Farmers Cooperative U nity Alliance, Superior, W is____________________ 147,149, 151,154,162 Working conditions in cooperatives_________________________________________ 43,44,82,106,107, 159,174-188 W orkm en’s Furniture Fire Insurance Association, Brooklyn, N . Y ___________________________ ____ 134 W orth, net, of cooperatives............................................ ....................... 22, 53-55,59,62,63, 78,110-112, 130-132,152 O
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