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Frances Perkins, Secretary
Isador Lubin, Commissioner (on leave)
A . F. Hinrichs, Acting Commissioner

Developments in the Cooperative
M ovem ent in 1943

o f the
Editorial and Research D ivision

{Reprinted from the M


7s[o. 768

L a b or R bvibw , March 1944, with additional data]


For sale by the Superintendent o f Documents, U. S. Governm ent Printing Office
Washington 25, D. C. - Price 10 cents

Letter o f Transmittal

n it e d



epartm ent







S t a t is t ic s ,

Washington, D . C., March 17, 1944.


Sec reta ry



I have the honor to transmit herewith a report on developments in the cooperar
tive movement in 1943, prepared by Florence E. Parker of the Bureau's Editorial
and Research Division,
A. F. H i n r i c h s ,

Acting Commissioner.





e r k in s ,

Secretary of Labor.

P age

Sum m ary.___________________________________________________________
Laws and decisions affectingcooperatives--------------------------------------------Cold-storage associations----------------------------------------------------------------Medical-care cooperatives-----------------------------Burial associations_________________________________________________
Electricity associations-------------------------------------------------------------------New associations and services— Local cooperatives_____________________
Medical care________________________ 1-------------------------------------------Insurance___________________________ i -------------------------------------------Developments among the federations:
Commercial organizations__________________________________________
Educational and service federations---------------------------------------------Cooperatives and the war---------------------------------------------------------------------Post-war reconstruction________________________________________________
Education and publicity-----------------------------------------------------------------------Cooperatives and labor--------------------------------------------------------------Endorsements and recogpition of thecooperative movement------------------



B ulletin 7S[o. 768 o f the
U nited States Bureau o f Labor Statistics
[Reprinted from the M onthly L abob R eview , March 1944, with additional data]

Developments in the Cooperative Movement in 1943
The spectacular expansion by cooperatives into production in 1943
overshadowed other developments in that year. According to the
Cooperative League, some $14,000,000 was invested in productive
facilities of various kinds in this one year. By far the greater part
of the money went into the purchase of petroleum refineries, pipe
lines, and oil-bearing lands. Other acquisitions included a printing
plant, a coffee-roasting plant, a cannery, a dehydration plant, a
chemical factory, five sawmills,1 two feed mills, and a number of
other plants related to agriculture and its products. These pur­
chases were made almost entirely by regional wholesale associations,
individually or in combination with other wholesales;
Among the local cooperatives the outstanding feature of the year
was the number of new food stores opened by new associations, by
store organizations previously in existence, and by petroleum associ­
ations which were diversifying their activities. The many problems
entailed by the war were being overcome fairly well and, notwith­
standing the poor supply situation, volume of goods handled and
amount of sales made appeared to be increasing.2 The greatest
difficulty appeared to be that of obtaining and retaining trained
workers, especially for the more responsible positions.
Cooperatives were the subject of a number of court and adminis­
trative decisions during the year, and were on the whole successful
in these, as well as in the legislative measures enacted.
Steps were taken to bring about closer relationships between the
credit-union and consumers’ cooperative movements, and between
the latter and organized labor. Much greater attention was paid to
publicizing the cooperative movement than in any previous year,
and this was assisted by several attacks upon the movement which
resulted in gaining it greater public notice.
Evidence of the widening horizons of the consumers, cooperatives
in this country was given in their increasing preoccupation with post­
war conditions and the part that cooperatives can play in the re­
habilitation of cooperative movements abroad. Conferences with
representatives of these movements in the fall of 1943 and early in
1944 explored the practical steps to be taken by cooperatives in
this country in the relief and reconstruction of associations in wartom countries. The formation of an International Cooperative
Trading and Manufacturing Association, through which this help
will be extended, was authorized.
i Early In 1944 it was reported that a shingle mill had also been purchased, in Vancouver, B . O.
* Data on operations of consumers’ cooperatives in 1943 will appear in a later article.



Cooperative M ovem ent

Laws and Decisions Affecting Cooperatives 9
Some of the more important legislation and decisions affecting
cooperatives, that occurred in 1943, are summarized below.
In Massachusetts, the cooperative associations endeavored to have
the “ blue sky” law amended, to permit them to sell shares to their
members under the same provisions as those governing credit unions
and “ cooperative banks” (building and loan associations). The
amendment passed both houses of the legislature but was vetoed
by the Governor on the ground that the amendment was too broad.
The cooperatives then appealed to the State Public Utilities Com­
mission for exemption. That commission had not yet rendered a
decision at the time this article was prepared.
The North Dakota Legislature passed a law (Acts of 1943, ch. 237,
p. 332) requiring State teachers’ colleges and the teachers’ college
at the State University to offer an elective course covering “ coop­
eratives and other business methods, their history, principles, organition and operation.” This course is to carry the same credits and
be rated in the same manner as other courses offered by these colleges.
A similar law, applying to high schools, was passed in 1937.
In Ohio many of the farmers’ associations incorporated under the
Ohio cooperative marketing act also carry on purchasing of consumer
goods as well as of farm supplies. For this reason it is of interest
here that the act was amended in 1943 (H. B. 400) to permit the
associations to provide, in addition to merchandise and marketing
service, other services except “ professional services otherwise pro­
hibited by law.” The amendment also permits any farmer to be­
come a member of an agricultural cooperative, instead of (as formerly)
only those who are marketing products through it. A proposed
provision which would have allowed the return of patronage refunds
to nonmember patrons as well as to members was defeated (according
to the Ohio Farm Bureau News, June 1943) by the opposition of
private coal and hardware dealers.
An attempt was made in Wisconsin to kill that part of the State
act which made it compulsory to include consumers’ cooperation in
the curriculum of all State-aided educational institutions.4 The bill,
which it was stated had been introduced at the request of certain
trade associations, was later withdrawn.
In the 78th Congress of the United States a bill (S. 1122) was in­
troduced by Senator Ellender which proposed to limit all auto tire
and tube distribution to independent dealers and farmers’ coopera­
tives that were in operation before June 1, 1942. Although the
measure was aimed at concentrated business, under its language
neither farmers’ cooperatives formed after that date nor urban co­
operatives whenever established could engage in the retail distribu­
tion of tires or in their production. Upon protest by the cooperatives,
Senator Ellender agreed to rewrite the bill so as to exempt coopera­
tives specifically from the prohibitions.
The Guffey Coal Act expired on August 26, 1943, when Congress
failed to extend it. Under that act the Bituminous Coal Commission
had ruled that patronage refunds of cooperatives would constitute an
illegal discount under the law, and refused to recognize consumers’
cooperative wholesale associations as coal dealers.3
3 See also page 7 for Arizona decision affecting war relocation cooperative.
* For a summary of the act see M onthly Labor Review, October 1935 (p. 991).

Developments in 1943



Uneasiness was expressed in Nebraska4 over the passage of a law
(L.B.51) providing for the licensing and regulation of cold-storage
plants. It was pointed out that its effects upon the possible extension
of cold-storage lockers by cooperatives would depend on the regula­
tions adopted by the State Department of Agriculture, and that
regulations calling for a showing of “ public convenience and neces­
sity^ could very well be used to prevent the formation of additional
cooperative plants. The law also calls for annual renewals of licenses.
Similar laws were passed in Indiana (ch. 264) and Ohio (H.B. 206)
in 1943.

On January 18, 1943, the United States Supreme Court affirmed
the decision of the United States Court of Appeals for the District
of Columbia, holding the District Medical Association and the Ameri­
can M edical Association guilty of conspiracy against Group Health
Association, and levying fines upon both physicians’ organizations.6
The Supreme Court decision held that the cooperative was engaged
in business or trade; it was immaterial whether physicians and medical
societies are so engaged, as the Sherman Antitrust A ct prohibits
“ any person” from imposing restraints on trade, irrespective of whether
he is himself engaged in it. The Court found that the dispute
between the cooperative and the medical societies was not one con­
cerning terms of employment, and the societies could not therefore
claim immunity under the laws designed to exempt labor unions from
the application of the Sherman Act. The Court concluded: “ These
independent physicians, and the two petitioning associations which
represent them, were interested solely in preventing the operation
of a business conducted in corporate form by Group Health.” It
therefore affirmed the decision of the Court of Appeals. (American
Medical Association v. United States, 317 U. S. 519, 613.)
A bill introduced in the Wisconsin Legislature in behalf of coop­
erators, which would have forbidden discrimination against either
physicians or patients participating in a medical-care cooperative,
was defeated.

Iowa is one of the few States having cooperative associations
providing complete funerals (including embalming) or selling caskets
and funeral supplies. These associations are organized under the
consumers’ cooperative law of the State which permits cooperatives,
among other things, to conduct a mercantile business; it does not
specifically authorize funeral service. Some funeral associations—
especially the larger ones— employ the full-time services of an embalmer who acts as funeral director. The associations have generally
been quite successful, have reduced the cost of burial to their members,
and have expanded in membership. Several now have in member­
ship over 1,000 families each. In 1937 the private funeral directors
obtained an amendment to the State law which regulates the licensing
and practice of embalming (Code of Iowa, 1939, ch. 124.1, secs.
2585.01-2585.09). The code specifies who shall be considered as
4 Nebraska Union Farmer (Omaha), M a y 26, 1943.
• See M onthly Labor Review, March 1942 (p. 685) and March 1943 (p. 500) for summaries Of the decisions
of the courts.


Cooperative M ovem ent

embalmers, and as amended (Acts of 1937, ch. 106) continues (italics
show amendment) as follows:
“ It is further provided that nothing in the provisions of this chapter
shall apply to any person, firm, or legally established funeral home
other than cooperative burial associatiomy except that each such legally
established funeral home shall comply with the provisions of this
chapter as to State control, licenses, and license fees, engaged in the
undertaking business on July 4, 1935.” It is evident from this that
corporations (“ firms” ) were not affected by this amendment unless
they were also cooperatives; in other words, not corporate practice
but cooperative practice was aimed at.
About the middle of 1943 the funeral cooperatives were attacked
by the State attorney general in an “ ouster” suit, maintaining that
they were doing business not authorized by cooperative law, and
violating the embalming law by engaging in the practice of em­
balming. In the first case to be heard, the association concerned
was an organization serving about 1,100 families in three counties;
its embalming was done by a licensed embalmer whom it employed
full time. The case was dismissed by the court on June 29 and in
August the attorney general withdrew the charges against the re­
maining associations. However, a month later he brought suit
against two other large associations. No report has been received
as to the outcome of these cases.
In Kansas the consumers, cooperative law permits cooperative
associations to undertake “ any business or industrial pursuit,” but
the embalmers’ and funeral d ire cto r law (Gen. Stats. 1935, secs.
65-1701 et seq. and secs. 74-1702 et seq.) was amended in 1941
(ch. 297) to prohibit corporate practice in the undertaking field, even
though the embalming is done by a licensed embalmer. The amended
law provides for the examination and licensing of embalmers aifd
funeral directors. Undertaking establishments (funeral homes) may
be operated only by individuals who are either licensed embalmers or
funeral directors; if the funeral director is not himself an embalmer
he must employ one. The law states that no funeral directors’
license shall be issued to “ organizations, institutions, corporations, or
establishments” and specifically prohibits embalmers or funeral direc­
tors from “ using, participating in, selling, promoting, servicing or
operating, directly or indirectly, any burial association.” A co­
operative association organized to operate a funeral home was denied
a charter on the ground that this would be illegal. In 1943 a bill was
introduced in the Kansas Legislature which would have specifically
authorized the chartering of nonprofit cooperatives if a licensed
funeral director was employed. The bill was killed in the house of
representatives committee on State affairs.
A law was passed in 1943 by the Wisconsin Legislature, prohibiting
the sale, in connection with a funeral establishment, o f shares or
membership or other certificates providing for “ burial benefit or any
rebate at time of death to the holders thereof.” (Wis. Stats. 1943,
sec. 156.12 (7).)

The right of the rural electricity associations to extend their service
into the villages was challenged in two cases before public utilities
commissions of Arkansas and Oklahoma. The suit in each case was
brought by a private utility corporation.

Developments in 1943


The cooperatives were buying from these corporations energy
which they distributed through their own power lines to their mem­
bers. Although the contracts in force between the corporations and
the cooperatives are reported to have made no distinction between
individual and industrial uses, the corporations contended that the
cooperatives should confine their activities strictly to farm users
and stay out of the villages. They therefore applied for permission
to charge a higher rate for energy resold by the cooperatives in
villages of over 250 population or to industrial consumers using over a
specified amount of current.
The Arkansas commission ruled that the cooperative in the case
was entitled to the same rate on power distributed in towns as in the
country, except for the larger consumers on which it should pay a
higher rate to the utility company.
In Missouri the Public Service Commission gave the Sho-Me
Power Cooperative (a federation of 29 of the 31 cooperatives in the
State) permission to buy the properties of a private power company.
The right of the cooperative to do so was contested by 14 other power
companies in Missouri, the main ground being that this purchase by
the cooperative association was a first step in the socialization of the
electric-power industry of the State. The Commission found no
evidence of this and noted, in passing, that none of the intervening
companies had made any move to purchase the properties concerned
(which the owning company had been ordered to dispose of) and, as
stated above, granted the cooperative permission tb buy them.
The 1942-43 annual report of the Rural Electrification Administra­
tion notes the passage of an enabling act in Vermont, making it the
twenty-seventh State to adopt legislation authorizing the formation
of electricity cooperatives.
New Associations and Services— Local Cooperatives
A very decided expansion in local cooperative distributive and
service associations took place in 1943. The crop of new associations
appeared to be somewhat larger than usual and many existing associa­
tions opened new branches. The mergers of existing associations
that took place in a number of communities represented not restriction
of services but a move to strengthen cooperative organization.
The greater part of the new facilities were stores, opened either by
existing store associations or by petroleum associations which were
diversifying their business. The petroleum associations, as noted in
previous reports, had closed some of their branch service stations as
early as 1942 when they began to be affected by scarcity of rubber
and rationing of petroleum. Additional branches were closed in 1943,
but the tendency to expand into other businesses, notably the sale of
food, continued. N ot so many new petroleum associations as stores
were started in 1943, but there were a few, and several that had
previously been branches of other organizations became independent
All parts of the United States shared in this spread of the cooperative
idea in 1943. An active interest in cooperation was reported to be
resulting in the formation of a group of stores and buying clubs in
and around Seattle. That city, which contained a thriving coopera­
tive movement in the period 1918-20, is the headquarters of the Grange
cooperatives in the State but, since the collapse of the early movement


Cooperative M ovem ent

in the depression of 1921-22, has been more or less of a desert as regards
urban associations. The new associations formed in 1943 and the few
organizations already in existence (including a large students, asso­
ciation and 2 store associations) have formed a league to carry on
educational work in the territory.
Late in 1943 the national Cooperative League reported that at
least 91 new food stores had been opened by existing or new coopera­
tive associations in the territory of its regional affiliates. Nearly threefourths of these new stores were in the Midwest, where expansion from
petroleum to food is going forward apace. In many cases the coopera­
tive bought or leased the business of a local private merchant. Several
retail store associations bought from local dealers their feed stores and
fuel yards. In Indiana, it was reported, 35 county-wide Farm Bureau
cooperatives had opened shops to service and repair farm machinery.
One unusual development noted in 1943 was the taking over, by the
cooperative in one of the “ greenbelt” towns, of a local tavern formerly
run privately. Avoidance of sale of intoxicants was one of the most
vigorously practiced tenets of the Rochdale Pioneers and a number of
the early associations in the United States had the promotion o f
temperance as one of their aims. Although not now stressed, very few
associations in this country carry alcoholic drinks. As far as known
to this Bureau there are only four, three of which run taverns. Two
of the four are Italian cooperatives; it may be that others of the Italian
group also handle intoxicants.
A feature of the year’s developments, which was encouraging to
cooperative leaders, was the improved financial structure of the move­
ment, brought about by the widespread use of earnings to increase
capital. Another was the greatly reduced extension of credit by co­
operatives. On the other hand, leaders were noting with some alarm
the tendency toward larger inventories, purchased at war prices,
which will cause losses when the post-war decline in prices occurs.
One cooperative, which for many years has operated a number o f
cafeterias, opened one grocery branch in 1943 and plans a number of
others for 1944. On the other hand, a store association in Montana
opened a restaurant in 1943.
Another, in North Dakota, bought from the local undertaker his
funeral home, in preparation to supplying complete funeral service;
the store association had previously carried caskets, but provided
burial only on a contract arrangement.
Among the burial associations, most of the expansion took place
in Wisconsin. Two new associations were formed there, one of
which was of the federated type. In another locality three local
associations joined in sponsoring cooperative funeral service, to pro­
vide which the store association opened a mortuary department.
Another existing association opened a branch in another town and
plans a second during 1944. In the Philadelphia area cooperatives
arranged for funeral service on a contract arrangement with a private
undertaker. In Minnesota a service federation which acts as an
educational body but also writes insurance and operates a funeral
department, in 1943 opened a second funeral establishment.
The year 1943 was notable for the formation of a cboperative
telephone association, to serve patrons in four towns of M innesota;
few associations of this type have been started in recent years. Sev­
eral trucking associations were established and at least three recrea­

Developments in 1943


tional associations. In Minnesota a service organization was formed
which expected to begin operations in January 1944, carrying on a
cold-storage and slaughtering business. Another cold-storage locker
association was started in Texas and in California a store association
opened a locker department. Several other associations in various
parts of the country authorized their boards of directors to undertake
this new type of service in 1944.
For 1942 it was noted 7 that some of the campus cooperative houses
for male students were being forced to close, as their members left
college to join the armed forces. This trend appears to be still going
on but is counteracted, to some extent at least, by an increase in
the number of cooperative housing associations for girl students. In
some cases the girls have taken over and are operating the houses
formerly run by the young men’s groups.
A t least three Negro cooperatives were started in 1943; two of
these were buying clubs and the third opened a store. It is reported
also that cooperative associations were organized in a number of
low-cost housing projects during the year, but the Bureau has been
able to get little direct information regarding them. In Alabama a
cooperative store was started by sharecroppers; this was reported
to be the first such venture among this group.
Early in 1943 cooperatives of various types were reported to be
in operation in all of the 10 war relocation centers. The 109 associa­
tions included food and general stores, shops providing dry goods,
shoes, and shoe repair, beauty parlors, barber shops, laundry and
dry-cleaning establishments, optical service, and motion-picture
theaters. These associations were started without share capital, on
credit advanced from various sources. Capital accumulated had by
April 1943 ranged in the different associations as high as $29,000.
The associations were being supervised in their business transactions
and cooperative educational work by veteran cooperators from the
consumers’ cooperative movement. It was reported, in June 1943,
that the articles of incorporation of one of these Japanese-American
associations (at Rivers, Ariz.) had been canceled by the Arizona
Corporation Commission on the ground that although the association
had been incorporated under the nonprofit law, its articles of incor­
poration provided for return of patronage refunds to the member­
ship. The commission ruled that this provision removed the asso­
ciation from the nonprofit category of “ nonprofit corporation as
contemplated by our laws.”
The rural electricity associations, which had been halted in their
expansion by W PB restrictions on wire and other critical materials,
expanded somewhat as the restrictions were relaxed.8

A t the beginning of 1943, as noted, the medical-care cooperatives
received the encouragement of the decision of the United States
Supreme Court. The cooperative organization involved, Group
Health Association of Washington, D . C., although hard hit b y drafts
upon its professional staff, nevertheless increased its membership
from 3,375 at the end of 1942 to 3,566 in December 1943. A t the
7 M on th ly Labor Review, April 1943 (p. 709, footnote 5).
1 For detailed data on these associations, see M on th ly Labor R eview, February 1944 (p. 326).

580836— 44----- 2


Cooperative M ovem ent

end of 1943 some 9,200 persons were being served by the association.
This association, which provides both medical and hospital care, has
its own medical staff of general practitioners and specialists and
operates its own pharmacy. Its total business in 1943 amounted
to $281,942, of which $82,800 represented the pharmacy’s sales. A t
the end of the year the directors announced a plan calling for expan­
sion of the clinic facilities and for the installation of dental service
on a small scale, starting with 2 units (capable of serving 1,000
persons each) and expanding to 3 or 4 units by the end of 1944.
These plans for expansion were submitted to the membership for
Two prepayment medical-care associations— one in New York and
the other in Minnesota—both of which contract for medical service
from private physicians, reported considerable growth during 1943.
The former has a panel of some 2,500 physicians serving its members
at a cost of about 2% cents per day; the plan covers 5 counties as well
as the city of New York. Optical service also became available to
cooperators in the New York metropolitan area, under a contract
arrangement made by the Eastern Cooperative League.
In Oklahoma a cooperative hospital association, organized in 1942,
opened its hospital in July 1943; this is the second cooperative hospital
in Oklahoma and can be said to have been inspired by the first
association, which has been in successful operation for over a decade.
Another hospital association (in Texas), which started giving medical
care in a small way in 1941, completed the first unit of its hospital in
1942 and added another wing in 1943. In Wisconsin an association
was being organized late in 1943 and expected to take over the
local hospital in January 1944.
At the end of the year there were in operation three cooperative
hospitals and another— at Hardtner, Kans.— that could be termed
at least semicooperative. The oldest of these, at Elk City, Okla.,
which was started in 1929, provides not only hospitalization but
also medical, dental, and optical care, and drugs.

The distributive and service cooperatives of Minnesota and Wis­
consin have a companion movement in the six insurance associations
of those States, most of which they helped to organize. In general,
the cooperative stores are agents of the insurance associations9 and
write policies for all the kinds of insurance handled b y the various
insurance associations. Democratic control is insured both by direct
representation of policyholders and by delegates to annual meetings,
chosen by the local cooperatives.
A tendency toward unification and coordination of the insurance
service in these two States has been under way for several years, and
further strides were taken in 1943.
In 1941 the insurance associations in Minnesota and Wisconsin,
with the help of Central and Midland Cooperative Wholesales,
formed Cooperative Insurance Services. The purpose of this organi­
zation was to coordinate the insurance program, provide a common
field force of agents writing life, automobile, and fire insurance, and*
• In a meeting in February 1943, delegates at the annual meeting of the Cooperative Insurance M utual
and Cooperative Life M utual (both in Wisconsin) voted to allow individuals also to become agents
authorized to write policies.

Developments in 1943


give financial assistance where needed. Eventually, it was planned
that this association should become a joint management agency for
the affiliated insurance cooperatives. Four of the six insurance
associations in Minnesota and W isconsin1 became members of
Cooperative Insurance Services. The final step in realization of the
plan came in September 1943 when the two remaining associations 1
joined. As soon as possible, arrangements were to be made for
joint sales, actuarial and underwriting, claims, and accounting
departments, and a single general manager chosen by the boards of
directors of the six groups.
In these two States cooperators now can obtain health, life, accident,
fire, and windstorm insurance through their local store associations.
M any associations take out group insurance for their employees,
also; the Cooperative League News Service reported in September
1943 that 77 consumers' cooperatives in Minnesota had such policies.
In addition, an unusual kind of insurance is being offered by a growing
number of local cooperative associations— patronage group life in­
surance. Under this plan the family of a cooperator who dies receives
insurance proportioned in amount to the family's patronage at the
cooperative store during the preceding year. Early in 1943 it was
reported that 29 Wisconsin cooperatives and 15 Minnesota associa­
tions had this kind of insurance.
In Ohio the Farm Bureau Mutual Automobile Insurance Co. was
reported to have become the fourth largest mutual organization in­
suring automobiles in the United States and the largest insurer in the
State. At the end of the year the various Ohio Farm Bureau insurance
companies (writing workmen's compensation, life, accident,, fire, and
casualty risks) were operating in 12 States (Connecticut, Delaware,
District of Columbia, Maryland, New York, North Carolina, Ohio,
Pennsylvania, Khode Island, Vermont, Virginia, and West Virginia).
Developments Among the Federations

The chief development among the cooperative wholesale associations
consisted of the spectacular expansion of the productive facilities by
both national and regional organizations. Some new lines of goods
or of services were also added during the year.
Expansion by national or joint enterprises.— The Cooperative Con­
gress of 1940 authorized the formation of a national organization to
mobilize the surplus funds of cooperators and their associations and
to make these available for aiding new enterprises and existing associa­
tions. In March 1943, the board of directors of the Cooperative
League signed articles of incorporation for the National Cooperative
Finance Association. Its constitutional committee was directed to
bring before the 1944 Congress a recommendation for the formation of
a general policy board to coordinate the activities of the national
League, National Cooperatives, Inc., and the new finance association.
Only regional cooperatives will be eligible for voting membership in
the new association. Memberships are $5,000 each. The association
1 Cooperators’ Life Association (Minnesota), Cooperative Insurance M utual (automobile, W isconsin),
Cooperators’ Life M utual (W isconsin), and Central M utual Fire Insurance Co. (W isconsin).
1 American Farmers’ M utual A uto Insurance Co. (Minnesota) and M idland M utual Fire Insurance
C o. (M innesota).


Cooperative M ovem ent

is capitalized at $200,000 and will not begin to function independently
o f the Cooperative League until at least nine regional organizations
have joined and paid up their membership share. The first function
of the finance association is expected to be that of selling securities,
making loans, and handling commercial paper for the regional
Another new association formed in 1943 was the National Co­
operative Kefinery Association. It will operate the $5,000,000 re­
finery and oil properties which five regional wholesales 1 joined in
buying in the middle of the year. Included in the purchase were a
refinery capable of turning out 175,000,000 gallons of refined fuels per
year and a 229-mile pipe line.
National Cooperatives, purchasing agency for 16 regional coopera­
tives, took its first steps into production in 1943 with the purchase of
a chemical plant (making cosmetics, shampoo mixtures, and various
household products) and a milking-machine factory. The chemicals
factory is reported to have paid for itself out of earnings in the first
6 months of operation. The war has occasioned a drastic change in
the activities of National Cooperatives. Formerly this organization,
which makes master contracts for joint purchase of “ co-op label”
goods, dealt mainly in electrical appliances, auto tires and accessories,
steel fencing, and various other supplies. War conditions have either
wiped out or seriously reduced the business in these items. On the
other hand, the grocery purchases, formerly relatively small, suddenly
became the most important line of business.
The National Farm Machinery Cooperative at Shelbyville, Ind.,
owned by 13 regional wholesales, was formed to manufacture farm
tractors, but since the war has been in war production. In 1943 it
purchased a privately owned farm-machinery plant, all the output of
which had previously gone to cooperatives anyway. The plant was
merged with the Shelbyville plant and will make various tillage tools.
Later in the year a cultivator plant was also bought, at a cost of
approximately $1,000,000.
The Farm Bureau Milling Co., an organization owned by the
Illinois Farm Supply Co., Wisconsin Farm Bureau Federation, M ichi­
gan Farm Bureau Services, and Indiana Farm Bureau Cooperative
Association, was formed in 1926 to do purchasing and provide laboraJ
service. In 1943* it launched into production by leasing a feed
In December, steps toward joint buying of commodities over a
4-State area were taken with the calling of a conference representing
Grange Cooperative Wholesales in Idaho, Montana, Oregon, and
Washington. The conference recommended that a joint purchasing
agency be established, and later a central accounting office. It was
stated that there was no immediate prospect of a central warehouse.
Details of organizations were to be worked out later.
In the Minnesota-Wisconsin area, Central Cooperative Wholesale
and Midland Cooperative Wholesale have worked out a joint insur­
ance program, have mapped out a system to prevent competition or
the overlapping of functions, and have cooperated in other ways. In
1943 the two organizations hired an educational field worker to serve
in the “ borderline” area in western Minnesota. Later in the year a
1 Central Cooperative Wholesale (Superior, W is.), M idland Cooperative Wholesale (M inneapolis),
Farmers Union Central Exchange (South St. Paul),' Consumers’ Cooperative Association (N orth Kansas
C ity ), and Farmers Union State Exchange (Omaha).

Developments in 1943


conference of CCW and Midland educational workers was held to
discuss mutual problems.
Expansion by individual regional and district wholesales.— In
Colorado, where the Farmers’ Union in 1941 embarked upon a pro­
gram for the wholesale supply of its affiliated cooperatives, a market­
ing association was started in 1942 which also does purchasing of
supplies. Another step in the program was taken with the acquisition
in 1943 of two sawmills and a central plant and the formation of a
subsidiary, the Farmers’ Union Lumber Co., to operate them.
Central States Cooperatives (Chicago) moved into a larger building
and undertook the handling of fresh fruits and vegetables. Central
Cooperative Wholesale (Superior) also expected to resume this line
of merchandise on January 1, 1944, taking it over from Cooperative
The Indiana Farm Bureau Cooperative Association bought 2
lumber mills in 1943, capable of producing about 17 million board
feet of lumber, and some timber land. It also became a joint owner
(with the Farm Bureau Mutual Insurance Co.) of a printing plant
large enough to meet the owning associations’ needs and to do some
work for other cooperatives also.
A refinery with a capacity of 4,500 barrels of crude oil per day was
bought by Midland Cooperative Wholesale. It was estimated that
the refinery would supply about 40 percent of the gasoline, all of the
kerosene, and about half of the distillates needed by the wholesale’s
local affiliates. This wholesale is also a member of National Cooper­
ative Refinery Association and will share in the petroleum produced
by its refinery. Midland also acquired a feed mill with a capacity of
about 10 carloads of mixed feeds daily and equipment for the manu­
facture of breakfast cereals.
Another entrant into petroleum refining was the Farmers Union
Central Exchange, which bought a million-dollar refinery. Although
this plant has a productive capacity of about 96,600 gallons of gasoline
per day, plus codimer (a component of aviation gasoline), the whole­
sale stated that it would furnish supplies for less than half of the area
served by the association. The wholesale, however, will also get
supplies from the National Cooperative Refinery Association, of
which it is a member.
Consumers’ Cooperative Association, the pioneer in the production
field, accelerated its expansion rate in 1943 with the formation of a
finance association; the purchase of a second cannery; construction of
a dehydration unit in the first cannery; acquisition of 80 million feet
o f standing timber and a second sawmill with annual capacity of 14
million board feet, to serve some 250-300 cooperative lumber yards
in the 10 States of the wholesale’^ territory; a feed mill producing 75
tons per day; and a group of properties including a petroleum refinery
producing 81 million gallons of refined fuel annually, a 10-milliongallon lubricating oil refinery, 270 oil wells, 768 miles of pipe line, and
leases on 104,408 acres of oil-bearing land. A furfural plant to im­
prove the quality of the lubricating oil was put under construction.
Four new oil wells were brought in, in Kansas and Texas, which,
added to the 12 it had at the end of 1942, brought its total number of
wells to 286. At the end of the year the association therefore owned 3
refineries, 2 canneries, 2 sawmills, a feed mill, a bottling plant for


Cooperative Movem ent

soft drinks, an insurance agency, a paint factory, grease factory,
printing plant, fly-spray factory, and 2 oil-compounding plants, in
addition to an interest (as member and part owner) in the refinery
facilities of the National Cooperative Refinery Association, in the
farm-machinery plants of the National Farm Machinery Cooperative,
and in the chemical factory and milking-machine plant of National
Cooperatives. It was stated that the petroleum-products facilities
should be sufficient to supply the entire requirements of CCA’s
affiliated associations. The association’s annual meeting endorsed a
further program including a central testing and research laboratory
and additional productive units.
The Missouri Farmers’ Association, a farm organization with a
number of commercial subsidiaries, announced the purchase of a
petroleum refinery, 115 miles of pipe line, land, storage facilities,
etc.— a $321,500 transaction.
Eastern Cooperative Wholesale, which in 1943 purchased a building
reported to be one of the 10 largest wholesale grocery warehouses in
New York City, soon after its removal to the new quarters 1 installed
a coffee roaster with capacity of 500 pounds in a single roast.
The Ohio Farm Bureau Cooperative Association and Consumers
Cooperatives Associated (Texas) each bought a grain elevator, in­
cluding also a flour and feed m ill; and a 7-story seed-treating and
processing plant was acquired by the Pennsylvania Farm Bureau
Cooperative Association. The Pennsylvania association also had
under way a soybean crushing mill and a plant for blending vegetable
In the State of Washington the State Grange formed a new asso­
ciation, the Chemurgy Cooperative, which built and put into opera­
tion a plant for the manufacture of glucose syrup. It had previously
purchased a starch-glucose factory. These steps were taken as part of
a plan for creating processing units “ to convert low-grade and cull farm
products into starch, glucose, and other war-needed commodities.” 1 1
The financing of a third plant was under way at the end of the year.
In the same State, Pacific Supply Cooperative, an open-membership association,1 bought two seed-cleaning plants. This organiza­
tion became a member of the National Cooperative Refinery Asso­
ciation, entitling it to a share in the products of that association, and
it then disposed of its holdings in a privately owned refinery.
There is increasing recognition of the value of research to coopera­
tives. In Wisconsin the board of directors of Central Cooperative
Wholesale recommended to the annual meeting the establishment of
a research department under a full-time specialist, to “ study and
work out details of fields and projects into which CCW might expand
most advantageously.” 1 Funds to create a research and service
bureau were made available to National Cooperatives by the Filene
Good W ill Fund. The president of Consumers Cooperative Associa­
tion, an organization which is spending $10,000 a year, for 5 years,
on research, declared in an editorial:
* * * regional cooperatives engaged in manufacture must begin to do in­
creasingly what other corporations have been doing for many, many years;
1 This was the association’s third m ove since 1936, each of which was forced b y the need for more space.
In the same period 2 branch warehouses (in Boston and Philadelphia) were opened.
u The Grange News (Seattle), November 6, 1943.
1 As contrasted with associations auxiliary to a general farm organization which admit into voting mem­
bership only cooperatives of members of the sponsoring farm organization,
u Cooperative Builder (Superior), February 25, 1943.

Developments in 1943


that is, to provide more jobs for the best technical brains turned out annually
by our colleges and universities.
Nor would I confine research to the physical and mechanical sciences only.
The social sciences, in which we as a people are most backward, offer great fields
for the specialist. And the findings of such specialists can be of tremendous
value to cooperatives. * * *
Research is so important, particularly to associations representing consumers,
that regional and national cooperatives should make it one of the next steps in
a general advance.1

There was much less expansion among the district wholesales than
among the regional organizations, the only steps reported being the
purchase of a creamery and cheese factory by Northland Cooperative
Federation (Rock, M ich.), the entrance of Federated Co-ops of East
Central Minnesota into the marketing of timber products, and the
addition of a bulk station and a service station by Trico Cooperative
Oil Association. The last named referred to its member associations,
for study, a proposal by the board that the handling of farm machin­
ery should be the next step in its expansion.

Several new federations came into existence in 1943. Among them
was Southern California Cooperators, educational and service organi­
zation for the cooperatives in and around Los Angeles.
In Georgia a county-wide federation of cooperatives was started
in Carroll County, as an educational medium; it plans to undertake
a cold-storage locker business later. The Southeastern Cooperative
League with headquarters in Carrollton, Ga., formerly acting as
educational body for the southeastern States, suspended operations
in August, partly because of lack of financial resources and partly
because of desire to remove to a city nearer to the center of develop­
ment and closer to other cooperative centers.
The Twin Cities Consumer Cooperative Council was formed by
16 consumers’ cooperatives in Minneapolis and St. Paul, to further
the development of the movement in that area. A similar organiza­
tion, the Northwest Consumers Cooperative League, was started by
the cooperative associations in and around Seattle.
Some 40 cooperative oil associations in Montana and western North
Dakota formed a petroleum-trucking association to haul their supplies
of petroleum products. Two oil associations in Nebraska also joined
in the formation of a transport association.
In the national field the Council for Cooperative Business Training
went out of existence and was succeeded by the Council for Coopera­
tive Development. The function of the new council will be to promote
the spread of consumers’ cooperation in urban areas. The first centers
of activity are New York City and Chicago.
The National Farmers Union which, with its State branches, has
been very active in fostering cooperatives among its members, early
in the year formed what it termed an “ over-all cooperative.” The
purpose of this new association will be to coordinate the services of
Farmers’ Union cooperatives on a national scale, and possibly also to
provide new services not previously covered. Voting membership in
the organization is limited to the National Farmers Union and Farm­
ers’ Union cooperatives.
*7 Cooperative Consumer (North Kansas C ity), February 15, 1943.


Cooperative M ovem ent

Cooperatives and the War
M any problems were encountered by cooperatives in 1943 but it
appears that they have been able to adjust themselves fairly well to
wartime conditions.
The quantity, quality, and variety of commodities needed by co­
operative associations were greatly diminished. Because of deterio­
ration in quality, the central associations had difficulty in obtaining
goods meeting “ co-op label” standards, and inability to obtain
sufficient quantities of commodities under the label forced them to
handle larger amounts of regular brands. However, nearly all the
reports indicated that the physical volume of goods handled by co­
operatives increased rather than decreased, the diminution in some
departments being more than offset by increases in others. A number
of wholesales reported 1943 as their peak year of operation.
Because of classification by the OPA as “ retailer-owned” instead of
“ service” wholesales, the cooperative grocery wholesales had to
operate on a margin insufficient to cover expenses. One of the asso­
ciations in this class reported that this ruling was largely responsible
for the association’s going into the “ red,” for the first time in 7 years’
operation. Reclassification was finally obtained after a year’s con­
test. In the interval, the association estimates, its affiliated cooper­
atives benefited by at least $25,000 in lowered prices.
Wholesales handling fresh produce were forced in many cases to
handle certain commodities at a loss. This resulted, they said, from
an OPA regulation which permits the “ first receiver” of shipped-in
commodities to take the whole mark-up between the grower’s price
and the retail-store ceiling and has led, it is charged, to evasive, blackmarket methods. The cooperatives, believing thoroughly in rationing
and price control and trying to conform, have been placed under a
severe handicap.
Cooperative associations handling petroleum products complained
of discrimination in the allocation of supplies of these products. The
matter was included in the topics under investigation in the fall of
1943 by the subcommittee on food of the Senate Committee on Agri­
culture, under the chairmanship of Senator Aiken.
Notwithstanding the supply difficulties, the general manager of one
of the wholesale associations was of the opinion that the cooperatives’
greatest handicap was “ not lack of capital or goods, but lack of com­
petent manpower to fill key positions.” This was being overcome to
some extent by more intensive training of workers showing ability.
The general manpower shortage was offset in many places by greater
use of women as employees, and some cooperatives were hiring Japanese-Americans released from war relocation centers. In the Mesabi
Range district of Minnesota an emergency management supervisory
committee was formed to provide supervision in stores suddenly losing
their managers, to help with the training of employees, to provide
bookkeeping assistance, etc.
Increased operating costs and the deterioration and wearing out of
equipment, some of which could not be replaced under present con­
ditions, were other difficulties faced by the associations.
At the end of 1942 the wholesales were reported to be encouraging
the extension of buying clubs but rather discouraging the opening of

Developments in 1943


new stores, under the conditions prevailing at that time. A year later
the consensus was that the cooperatives had faced the war situation,
felt that they could cope with it, and that the formation of new store
associations should be encouraged wherever it was possible to obtain
competent personnel.
Mention has already been made of the expansion of productive
facilities by the regional and national cooperatives. Much of the
product of the new facilities, as well as of those previously owned, will
go for war purposes. Thus about half of the output of the Indiana
sawmills and about 80 percent of that of the CCA plant will go to the
Government. The latter organization stated that half of the pack of
its canneries (some 150,000 cases of goods) and all of the product of its
dehydration plant would be used by the armed forces. This organiza­
tion and the Farmers Union Central Exchange are both supplying
codimer for aviation gasoline, and the latter also supplied some of the
asphalt and road oil used in the construction of airports in its terri­
tory. The National Farm Machinery Cooperative has converted to
the manufacture of war products but is also carrying on experimental
work in its own field.
Post-War Reconstruction
The consumers’ cooperative movement during 1943 devoted a good
deal of time and thought to the relief and reconstruction of cooperatives in devastated or occupied countries after the war. The agenda
of the 1942 Congress of the Cooperative League included this subject
and several resolutions dealt with it. A standing committee on
post-war planning was provided for, as well as a committee on inter­
national cooperative action for post-war reconstruction.
The latter committee was active during 1943, drawing up plans and
making contacts with other agencies, both official and unofficial, here
and abroad. The president of the national Cooperative League
participated in the United Nations Food Conference in M ay, as a
member of the delegation appointed by the United States Government.
That conference passed a resolution acknowledging the importance o f
the cooperative movement and recommending study of the possibili­
ties of cooperative expansion by all countries.
In October a small conference of United States cooperative leaders
and representatives of foreign cooperative movements was called by
the League Committee on International Cooperative Reconstruction,
in preparation for a general conference later. The general conference,
in January 1944, was attended by 60 delegates from 22 countries.
The conference received a cordial message from President Roosevelt
and was addressed by Sir Arthur Salter, Senior Deputy Director
General of the United Nations Relief and Rehabilitation Adminis­
tration, which body had already stated that in its work European
cooperative agencies for distribution of goods and services would be
used to the maximum extent possible. The conference approved a
plan for the formation of the International Cooperative Trading and
Manufacturing Association, capitalized at $12,000,000, the members
of which would be the national cooperative bodies of each country,
and which would carry on production, processing, and distribution of
goods. The conference also endorsed a program calling for an inter580336-44-



Cooperative M ovem ent

national cooperative bank, the establishment of a cooperative division
in U N RRA, and the raising by cooperatives in the United States of a
fund (through popular subscription) to help rehabilitate cooperatives
in war-torn countries.1 Immediately after the conference the direc­
tors of the Cooperative League of the U. S. A. and of National Coop­
eratives (the national educational and wholesaling agencies of the
United States consumers' cooperative movement) took steps to get
the plan under way and authorized the sending of a representative
abroad to work with cooperative associations in other countries.
Education and Publicity
An unusual amount of attention was given by the cooperative
movement, during 1943, to acquainting the public with its philosophy
and accomplishments. At least 9 motion-picture films covering
various phases of the movement, such as international cooperation,
testing of cooperative merchandise, credit unions, and certain new
facilities of cooperatives (sawmill, cannery, etc.) were completed for
showing in 1943. Early in 1943, the consumers' cooperative move­
ment launched its first large-scale radio program with a series of 10
broadcasts on the general subject of “ the world of tomorrow,” from
36 stations throughout the United States. Well-known speakers dealt
with such subjects as foods, clothing, electric power, new jobs, housing,
medicine, etc.
The Cooperative League announced, in February, that newspapers
and magazines published by regional consumers' cooperatives had a
circulation of nearly a million.
The training of cooperative employees continued in 1943. R och­
dale Institute offered its usual general course in cooperation, as well
as afternoon and evening courses for persons already employed in
cooperatives. Its food-store instruction courses were omitted. In
addition, special or regular courses were conducted by the regional
cooperative wholesale associations. A correspondence course in Co­
operative Administration was sponsored by the wholesales in Superior,
Minneapolis, North Kansas City, and New York City. A School of
International Cooperation was started in New York City, in associa­
tion with Rochdale Institute, to train “ persons who have the experi­
ence and aptitude for cooperative leadership in post-war reconstruc­
tion, to be executives in organizational and administrative cooperative
work and educators in the field of international cooperation.” 1
Among the public educational institutions giving courses in co­
operation were three colleges in North Carolina and four in Ohio.
The teaching of cooperation is required in all State-aided schools in
Wisconsin. In North Dakota it has been required in the high schools
since 1937, and under a new 1943 law will hereafter be contained in
the curriculums of State teachers' colleges and the teachers' college of
the State University.
A special committee was formed in the Cooperative League to
explore the possibilities of a national cooperative college or training
w Accumulation of a similar fund has been under way in Great Britain since the spring of 1943.
i* Rochdale Cooperator (Rochdale Institute, N ew Y ork), September 1, 1943.

Developments in 1943


Cooperatives and Labor
The chairman of the standing committee on labor and cooperatives
of the Federation of Churches of Christ in America stated that by the
autumn of 1943 there were at least 130 consumers’ cooperative asso­
ciations whose membership consisted largely of trade-unionists. Most
of these were in midwestern cities, with scattered associations on the
West and East Coasts.
Among the labor organizations which endorsed the cooperative
movement in 1943 and directed further study with a view to organizing
cooperatives were the Automobile, Aircraft and Agricultural Imple­
ment Workers of America and the International Photo-Engravers
Union of North America.
The annual meeting of Central Cooperative Wholesale, a large pro­
portion of the membership of which consists of farmers, passed a
resolution reaffirming its belief in the right of labor to organize and
bargain collectively, and condemned the antilabor legislation being
promoted by certain farm groups. Increase of hours of CCW em­
ployees from 40 to 44 per week, in order to offset the manpower
shortage, was approved.
Central States Cooperatives, a wholesale association with head­
quarters in Chicago, adopted a general labor program. It calls for
(1) payment of the prevailing scale of wages (or better, if the financial
condition of the association warrants it ); regular wage increases in pay,
after a probationary period of 6 months, until the maximum rate is
reached, and recommendations for wage adjustments “ in the light of
ideal wages for the respective positions” before providing for patronage
refunds; (2) working hours conforming to Government regulations,
to be reduced as soon as conditions permit, and payment of time and
a half for overtime beyond 8 hours per day and 40 per week; (3)
opportunity for employees on routine jobs to qualify for higher-grade
positions; (4) 1 week’s paid vacation after 1 year’s service (proportional
leave for employees of 6 months’ service) and 2 weeks after 2 years’
service, and 1 day of sick leave per month cumulative to 5 days;
(5) group life and hospital insurance and medical care, half to threefourths of the cost being paid by the employing association; (6) collec­
tive bargaining, and representation of "employees at meetings of
directors and oi department heads. The policy calls for careful exami­
nation of employee grievances and resort to arbitration if necessary.
It pledges that “ there shall be no sudden firing.”
Late in the year Consumers’ Cooperative Association installed a
“ health unit” to give first aid to injured workers and to inaugurate a
program of preventive medicine throughout the labor force.
National Cooperatives has a hospital and medical-care plan for the
employees of one of its manufacturing plants, part of the cost of which
is paid by the association. Midland Cooperative Wholesale has a
similar plan for the employees (and their families) of both its wholesale
and refinery departments. This association and Central Cooperative
Wholesale have been carrying on a study looking toward the estab­
lishment of a joint pension plan for their employees. This move,
approved by the annual meetings of both wholesales, will be carried
out through Cooperative Insurance Services.


Cooperative M ovem ent

The 1942-43 report of the Rural Electrification Administration
stated that relations between REA cooperatives and their employees
reatly improved during the year. Compliance with the Fair Labor
tandards Act was quite general, and the Administration worked out,
in collaboration with the International Brotherhood of Electrical
Workers,, a guide for collective bargaining between cooperatives and
their employees.
In Michigan the farmers’ organizations affiliated with the State
Farm Bureau joined with it in the formation of a Public and Labor
Relations Service. It appeared from the announcement2 that the
purpose of the new service would be that of resisting organization of
the cooperative employees by labor unions, rather than of cooperating
with them. Other announced duties were to assist the member farmer
cooperatives in changing from a wartime to a peacetime economy,
in conforming with Government regulations, and in suggesting “ proper
educational and public relations methods to farm cooperatives.”



Endorsements and Recognition of the Cooperative Movement

As already noted, the president of the Cooperative League of the
U. S. A. was appointed as one of the United States delegates to the
United Nations Food Conference at H ot Springs, Va., in M ay 1943.
That conference recommended encouragement of producer and consinners’ cooperatives and urged that the various nations study
their laws to insure the removal of any obstacles to cooperative
Representatives of cooperatives were also appointed to the U. S.
Department of Agriculture’s national wholesale food industry advisory
committee and to the OPA farm-equipment advisory committee.
The National Rural Life Conference of 29 national organizations
concerned with rural life problems noted that producer, consumer,
and credit cooperatives could assist in reversing the “ long-time trend
to absentee ownership” of farm lands. Regarding post-war problems
the conference favored the rehabilitation of cooperatives in all the
countries of the world and urged that the relief programs “ be organized
on a cooperative basis so that relief will not pauperize but will con­
tribute to self-help activities on the part of those so assisted.”
The first Catholic conference on consumers’ cooperation, held in
Chicago on M ay 22 and 23, 1943, endorsed cooperatives already in
operation in Catholic schools and colleges, voted for a program of
adult education in cooperation, and recommended the holding of
regional Catholic conferences on cooperation.
The committee on the church and cooperatives of the Federal
Council of Churches of Christ in America voted at its meeting, early
in 1943, to call an Interfaith Conference on Self-Help Cooperatives.
8 Michigan Farm Bureau News (Lansing), February 6,1943.