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´╗┐Title: Consumers' Cooperative Societies in New York State
Author: Consumers' League of New York, The
Language: English
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CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE

_Published April 1922_

_by_

The Consumers' League of New York

289 FOURTH AVENUE

NEW YORK CITY

       *       *       *       *       *

This study was originally prepared for the Consumers' League of New York
in 1921 by Mr. Cedric Long. It has been revised by the League in April,
1922. The Consumers' League wishes to express its appreciation of the
valuable advice and assistance given by Mr. Louis B. Blachly of the
Bureau of Cooperative Associations of the State Department of Farms and
Markets both in the original preparation of the material and in its
revision.

       *       *       *       *       *



COOPERATIVE PRINCIPLES

The principles established by the Rochdale Pioneers in England in 1844
and observed consistently by successful societies since that time are as
follows:

1. Earnings of capital stock limited to legal or current rate of interest.

2. Surplus earnings to be returned to members in proportion to patronage.

3. One vote for each member regardless of amount of stock owned. No
proxy voting permitted.

In addition, the majority of societies adhere to the following principles:

1. Business to be done for cash.

2. Goods to be sold at current market prices.

3. Education given in the principles and aims of cooperation.



CONSUMERS' COOPERATIVE SOCIETIES IN NEW YORK STATE

The Extent of Consumers' Cooperation.

The Tenth International Cooperative Congress, held in Switzerland in
1921, disclosed the fact that since the last Congress, in 1913, the
number of cooperators in the twenty-five countries represented had
increased from approximately eight million to thirty million and that
cooperative trade had increased correspondingly.

Today in Great Britain the cooperative societies number more than four
million members, nearly one-third of the entire population being
represented in these societies. Switzerland, in 1920, boasted three
hundred and sixty-two thousand members and a third of the Swiss people
bought goods through their own societies. Cooperation is still alive in
Russia in spite of its unsettled economic conditions. In 1920 there were
twenty-five thousand societies with twelve million heads of families. In
the same year the German cooperative societies were two million seven
hundred thousand members strong.

In the United States cooperation has had an erratic development. Within
the past seven years, however, there has been a rapid increase in new
societies until today it is estimated that there are about three
thousand with a membership of half a million. In number of societies New
York is far behind most of its sister states. It has one hundred and
twenty-five genuine consumers' cooperative associations, seventy-five of
which are among farmer groups and the remaining fifty among city
consumers. There are in addition some twenty cooperative buying groups
connected with large commercial organizations. No complete tabulation
has been made of the total business of all these cooperative groups, but
in 1921 the five largest cooperative societies among the city consumers,
with an average membership of 1,800 persons, all located in New York
City, did a total business of approximately one million dollars. These
societies and many others are prospering. On the other hand there are
many cooperatives which have failed. Whether they have failed or
succeeded more knowledge of practical cooperation can be gained from
their experience than can ever be learned from books.

The Consumers' League feels that the experience of these societies
should not be wasted. For this reason it is telling the stories of
several cooperatives in New York, some of which are successfully
established and some of which have fallen by the roadside. In these
brief stories are written a hundred lessons that cooperatives should
heed.



SUCCESSFUL COOPERATION

The Utica Cooperative Society.

At the corner of Court and Schuyler Streets in Utica stands a grocery
store which is different from an ordinary store. It is different because
it is a cooperative store and it belongs to those who buy as well as to
those who serve. There is no need for the purchaser to be on guard lest
the bargain be to his disadvantage, for he is dealing with friendly
clerks who are there to help him find what he wants, not to sell him
something he cannot use. In this store the purchaser can find all the
articles carried by a first-class grocer, canned goods, green goods,
dairy products and, in addition, a complete supply of baked goods, baked
by the cooperative society itself.

The bakery is to be found behind the grocery. Large, high windows throw
a flood of light into the mixing room. The oven is of a modern type,
large, easily controlled and economical. Five men work at the baking and
a boy wraps bread in waxed paper with a mechanical device which
automatically folds and seals. The three delivery wagons bear the
cooperative motto, "Each for All, and All for Each." They are used in
the morning for the delivery of baked goods and in the afternoon for the
delivery of groceries. It keeps three boys busy all day covering the
territory between the cooperators' homes. The delivery system is
essential because the membership is scattered throughout the entire
city.

There are fourteen employees in the grocery and bakery. Hitherto they
have received wages higher than those generally prevailing throughout
the city for the same kind of work, but recently on their own initiative
they voted themselves a ten per cent decrease. In a cooperative all
members may know the financial status of the business and the employees
found that, due to the diminishing margin of profit, the business could
not support such a high scale of wages. Their wage cut followed because
as members of the cooperative they were interested not only in their own
wages but in the good of the society as a whole.

The Utica Cooperative Society was organized in 1915 by a group of
Germans. Half a dozen nationalities are now represented, although
Americans predominate. Although they had only ninety-two members and
$1,250 to start, they bought out a private store and began cooperative
business. Their bakery was originally in the cellar under the store. The
former owner was employed as manager. For three or four years they
experienced many difficulties. Within two years two managers proved
inefficient and had to be replaced. Only the tenacious loyalty of a few
kept the society alive. But they had the foresight and determination to
fight through those lean years.

Now for five years they have had the same manager. He insists upon
scrupulous bookkeeping methods, careful buying, close supervision of his
work by the board of fifteen directors, strict regard for the needs and
desires of the membership, and exceptional precautions against waste and
leakage. The president, a man having a private business of his, own, has
an idealism almost religious in quality. These two men cooperate closely
on matters of policy and provide much of the leadership which has
brought success.

The membership is now 380. The capital stock has increased from $1,250
to $27,594. The business in 1921 amounted to $105,598, forty per cent of
which was done by the bakery. Since 1915 the rebates to members on
patronage have totaled $8,207, fluctuating from nothing at all in some
years to eight per cent and ten per cent in other years. During this
period the lump sum saved to purchasers, including rebates, the earnings
on stock shares, and reserve fund, amounted to $12,642. This sum would
have gone into the pockets of private storekeepers except for the
cooperative store.

The Utica Society has succeeded because it has met the prime
requirements for effective cooperation. The greater part of the
membership was loyal during critical times when the easy way would have
been to withdraw and trade at chain stores. The management worked
unceasingly to put the business on an economical basis. Finally they won
out because they put Service over Profit and carried out that rule in
the most practical and businesslike way they could find.

       *       *       *       *       *

Our Cooperative Cafeteria.

If you should drop in for lunch at any one of the three branches of our
Cooperative Cafeteria in New York City the first thing that would strike
you would be the friendly spirit of those back of the serving tables.
Before you paid your check you would observe further that the food had a
variety and flavor not found in the ordinary restaurant. If you were
discerning you would detect that a complex machinery was at work which
had nearly escaped you because of its smooth operation.

That genial spirit which infects the whole place and those subtle things
which appeal to your eye and palate explain the success of the
cafeteria. But there are some underlying causes for these things that we
must get hold of and to do that we must go back to the year 1919. In
October of that year a private cafeteria was started by two women with a
record of successful cafeteria experience behind them. The experiment
proved successful and the following April a momentous step was taken. It
was proposed that the persons who ate there become the owners. A
cooperative society was formed and in two weeks shares were sold to the
value of two thousand dollars. The new owners took over the cafeteria
and the former owners became their hired employees. This was the
beginning of Our Cooperative Cafeteria.

The cafeteria had from the outset advantages which are gained by many
cooperatives only after bitter and costly experience. They had skillful
and experienced management to which they immediately gave over all
technical control, holding them responsible through an active Board of
Directors and an accounting system devised by experts. The management
justified the confidence of the shareholders. On April 1, 1921, after
one year of operation they had outgrown the first plant and a new branch
had been running for two months. There were in all 379 members. The
year's business had been $96,000, of which $6,000 were net earnings. The
stockholders had received six per cent on their investment, a reserve
fund had been laid aside, and every month the member-patrons had
received rebates on the food eaten of from six per cent to sixteen per
cent. At the end of the second year the third branch, larger than either
of the others, located in the Wall Street business section, had been in
operation for three months. The membership of the society had increased
to 750. The business for the year had been $190,000 and the net earnings
were $12,000.

The cafeteria now employs sixty-eight workers, most of whom are
shareholders and vote as such in membership meetings. The worker
receives the same food as the patrons, served at the same counter.
Against all restaurant traditions the worker is served before the meal
so that she may have the best there is and have it before she is too
tired to eat it. The minimum wage is higher than the customary rate for
restaurant workers in New York. The forty-eight hour week is the
standard, although as yet some of the help work over that time. Overtime
is one thing that the management has not yet been able wholly to
eliminate.

It has been found that the policy determining function of the
stockholders and Board of Directors cannot operate independently of the
plans of the management. The two in a business organization must be
closely inter-related. The stockholders have not tried to supervise the
details of the business, as has sometimes been done to the disaster of
cooperatives. The general manager instead has gone to the Board of
Directors and sits there practically as a full member. As a result the
policy function of the Board and the management function are closely
linked together as they must be in a business that is to be permanent.

The stockholders are not idle, however. Through their committees, they
have amended the by-laws. They have recently called a general meeting
for the consideration of labor policy, and they publish monthly a little
paper known as "The Cooperative Crier." The average attendance at the
shareholders' monthly meetings is sixty or sixty-five.

To an unusual degree the success of Our Cooperative Cafeteria is bound
up with its management, not only because it is technically expert, but
because it is thoroughly imbued with the cooperative spirit. Around the
first nucleus has grown a staff of intelligent young men and women,
usually college bred, who are devoting all their brains and energy to
see that this cooperative cafeteria succeeds. They seem to find a
peculiar satisfaction in knowing that their efforts will not enrich a
few individuals at the expense of patron and employee alike, but will
increase the common welfare of the community itself.

Like other cooperatives, the cafeteria has found the need for expert and
trained workers in place of the hard-pressed volunteer. Much of the work
on education and cooperative organization is carried on by trained
members of the staff. This interest of the paid employees in things
other than mere technical efficiency contributes much to that friendly
spirit which makes Our Cooperative Cafeteria unique among the
restaurants of New York.

       *       *       *       *       *

The Village Cooperative Society, Inc.

After nearly two years of discussion and meetings and after long
consultation with experts a group composed largely of the housewives in
Greenwich Village in the heart of New York City started in January,
1921, a cooperative laundry. The second-hand machinery which they
purchased was not a laundry unit, the capacity of the washer being
one-fourth that of the ironer; they had insufficient capital, half of it
borrowed; they employed an inexperienced manager and a green bookkeeper;
and for the first eight months the supervision was almost entirely
carried on by volunteers, hard working, but without the foresight and
power of control so essential to a new organization. Under these
handicaps the cooperative laundry lost money every month.

It existed through those months due largely to two things. First, they
were forced almost immediately to employ a new manager who consistently
turned out high grade work, and secondly, a small group of volunteers
put all their energy into making the thing a success.

Then the causes of the continued failure were one by one eliminated. A
business manager who had an intense interest in cooperation was hired to
supervise general operations. He took over much of the work of the
volunteers and for the first time the laundry developed a well thought
out policy. The inexperienced bookkeeper was eliminated and all
supervision headed up in the new manager. Better service brought more
work, and new machinery made greater output possible without additional
labor. The manager found labor cost too high and introduced methods
which saved both labor and money. He found the machinery badly arranged.
When the plumber told him it would cost twenty-five dollars to rearrange
it he spent a dollar and forty cents and did it himself. After a
discussion in the Board of Directors which nearly wrecked the
organization, a Board policy of leaving all details of management to the
manager and chairman of a managing committee was determined upon, while
the Board devoted itself to the determination of general policies.

The results of these changes were soon apparent. For the first time the
dead line between losses and earnings was crossed and net earnings
gradually began to mount. In September, 1921, the amount of business
wavered around a hundred dollars a week. In March, 1922, it averaged
about $330 per week, and net earnings have run as high as $75 per week.

The laundry is still small and is located in quarters for which it pays
a regular commercial rent. It has expanded several times and now has
three power washers, an ironer or mangle, a dry room and other
equipment. It employs a business manager, who supervises the plant and
does everything from keeping the books to collecting the laundry in a
pinch, a work manager, a washer, a sorter and marker, four ironers and a
delivery boy. It still holds hard to the policy of putting out the very
best kind of work and economizing in every particular.

Its very success has in a way embarrassed the laundry. The manager has
been offered special inducements to leave. The delivery system has been
tampered with. There has even been acid thrown on the clothes by
outsiders jealous of its business. But this has only stimulated the
whole membership to fight harder to realize their aim of getting their
own laundry work done the way they want it, and without profit.

       *       *       *       *       *

The Finnish Cooperative Societies of Brooklyn.

What is it that makes the Finns so successful at Cooperation? Industry
and cleanliness. At any rate those are the striking characteristics of
the Finns of Brooklyn.

Up to the present time they have never paid any dividends. It has been
explained to them, as their manager says, that if the business is to
serve them properly it must grow, and in order to grow it needs all the
surplus earnings for expansion. And so, because the members are
industrious and far-sighted, they have foregone their dividends. The
cleanliness of their stores, too, is an inspiration not only to their
membership but to hundreds of others who have visited their plant. This
is one of the biggest business assets they possess.

These virtues have enabled the Finnish group in Brooklyn to build
cooperatively a three-story modern business block, to run therein a
wholesale bakery, a retail bakery, a meat shop and grocery store, a
cooperative restaurant and a cooperative pool room, to build adjacent to
this two modern cooperative apartment houses and to lay the foundations
for a third now under construction. Outside of the housing venture the
business done last year was $175,000 and today there are nearly two
thousand members.

Although these undertakings are practically a part of the same group
there are three separate corporations. The largest of these is the
Finnish Cooperative Trading Association, Inc. The restaurant is operated
as the Workers' Cooperative Restaurant, Inc., and the housing
association as the Finnish Homebuilders' Association, Inc.

The restaurant is the oldest. Seven years ago a group of Finns in this
locality boarded together. Their capital was a hundred dollars which
some one had loaned to them. They ran their little business on a
cooperative basis, paying for the meals and putting back any surplus
into a reserve. No one contributed anything, but before long they paid
back the one hundred dollars. Early in 1922 they incorporated. They then
owned a fine modern restaurant, had done $70,000 worth of business in
1921, and had three thousand dollars in the bank. And no one had ever
paid a cent into the business. With all this they sell their food at
unusually low prices, well cooked, wholesome, and clean.

In 1917 a larger group determined to have a bakery which came up to
their standards. In 1919 they had raised enough money to start
construction. Then they faced their first test Their money gave out.
Undaunted they organized a money raising "army," as they called it, of
thirty or forty men. The money was raised. By the time the new bakery
was opened they had fourteen hundred members and had raised $140,000.
The total organization expenses for three years came to $400, less than
three-tenths of one per cent for promotion expenses.

The new business block was opened in May, 1920. All but the restaurant
was under one general manager. He was bonded for $10,000. He had had
business experience in running a cooperative bank in Wisconsin. To him
was delegated a large degree of freedom, but he was held strictly
accountable to the Board of Directors. A thorough and comprehensive
system of bookkeeping and accounting was installed. Each separate
business, the bakeries, the pool room, the meat shop, was put on a cost
accounting basis and the manager knew just which one was making or
losing money.

All the branches of the business, however, have made money. Over $12,000
in net earnings, after allowing for interest on the investment, have
been made since the business started. Last year the bakery did business
to the extent of $135,000, the meat market and grocery $58,000, and the
pool room $12,000. Already the business has outgrown its quarters. A new
oven has been added to the bakery. The third floor, which was used
exclusively as a pool room, has been invaded and the thirteen pool
tables rearranged and put closer together so that more room may be had
for bakery products. Adjacent land has been purchased so that the
building itself may be added to. The membership of the Trading
Association alone is eighteen hundred and forty.

The employees of the association work among almost ideal conditions. The
twelve bakers are all union men and members of the cooperative
association as well. They work seven and one-half hours a day and are
paid from forty-five to fifty dollars per week. The light, airy bakery
is always kept spotless. Adjacent to it is a commodious room with
lockers for each man and two shower baths make it easy to keep clean.
Down on the first floor the retail bakery is so immaculately clean that
you would be willing to defy anyone to find one speck of dust in the
place. Every article of food is under shining glass. The floor is white
tiled. But the food is what attracts one. The pies swell out as if about
to burst. To look at the bread and rolls makes one hungry and to smell
them hungrier still. This, you are told, is because only the purest
ingredients are used. Many bakers use powdered eggs for baking, commonly
imported from China; this cooperative uses only fresh eggs. They buy a
better grade of flour than their competitors do. The same thing is true
of the meat shop next door. They do not aim to make money on their meat.
Their sole aim is to sell only the best. This policy has been so popular
that the quantity sold the first three months of 1922 was almost treble
that for the same months in 1921. And the meat store, too, has made
substantial net earnings.

The two cooperative apartments which lie adjacent to the business block
house thirty-two families. The apartments contain five rooms and bath
and are thoroughly modern. They are light and airy with high ceilings
and hardwood floors. Needless to say their tenant-owners keep them in
the most immaculate condition. Recently a group of business men, several
of them builders, went through the buildings and many expressed the wish
that they could get similar apartments for three times the money that
these cooperators were paying. For the best apartments the rent has
recently been raised to $31.50 per month. But out of this amount the
tenant-owner is not only paying all upkeep but is paying off the
mortgage at the rate of $1,000 per year. Similar apartments in the
locality rent from $75 to $80 per month. The tenant-owners, of course,
run their apartments on the cooperative plan of one vote per member.

The members of the Finnish Cooperative Societies of Brooklyn are fast
becoming independent of the middlemen, for cooperation touches them on
many sides. They have learned to serve themselves and they get what they
want, honest goods--and clean.



COOPERATIVES THAT FAILED

When one has made mistakes the importance which is attached to them
depends upon the gravity of the consequences. This being the case, the
stones of cooperatives which follow are worth attention, for, as a
result of their mistakes, they are now dead. One of the most pitiful
aspects of cooperative failures is that one group after another will go
on making the identical mistakes that have brought ruin to others.
Sometimes it is the result of sheer ignorance, and sometimes of shameful
negligence. In either case the result is the same--the stockholders lose
their savings and cooperation feels the blow.

Two years ago the State authorities were called upon to investigate a
cooperative that was about to fail. Several members made the claim that
the officers had defaulted with property of the association. An
accountant was called in to examine the books. After considerable
coaxing the secretary-treasurer unearthed them and turned them over.
They consisted of an old black bag full of all the bills, vouchers and
other scrap paper for the previous six months! Those were his books. He
had sold the store without taking an inventory. When an inventory was
finally made it was found that some of the stock had not turned over for
a year. On one top shelf two hundred pepper shakers full of pepper
stretched half the length of the room. Full value had been paid for this
dead stock and several hundred dollars to boot for "good will." From the
cooperative standpoint the most dangerous thing was that half the
directors had become disgruntled and, though remaining on the Board,
refused to attend meetings. A quorum could not be obtained and for
months the president and treasurer had run the business without
reference to directors or stockholders. The cooperative society failed
and every cent of the four thousand dollars of the cooperators was lost.

Another cooperative store, this time in the Bronx, was taken over by the
manager within one year. Upon inquiry its directors proudly exhibited
its books. It was a beautiful set costing, they said, nearly
seventy-five dollars. The store had started in November. For November
and the first three days of December everything was kept in good shape.
But during the entire next year not an entry had been made. The
directors had the books, but the manager had the store. The stockholders
lost all their capital.

A thriving business was being done by still another cooperative store in
New York. At the outset the directors had voted to bond the manager. But
the matter was put off and put off. One day the manager disappeared and
with him two thousand dollars belonging to the cooperative. After a few
months the manager was found, but the money was gone. The loss of the
total sum was more than the cooperative could stand, however, and after
struggling along for a few months, it closed its doors.

A clever organizer two years ago started organizing a cooperative store
in New York. On the society's letter heads he had printed a picture of
the world and across the world the word "BIG." He was going to start a
whole chain of stores. In three months the first and only store was put
into the hands of an assignee and the man left the city. An audit of his
accounts showed that he had collected $3,600. One-fourth of this had
gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving
only $350 for operating expenses. Where the Finns spent three-tenths of
one per cent for promotion he had spent twenty-five per cent. This had
forced the association to start with so small an operating capital that
it was soon badly embarrassed for lack of funds and could do nothing but
close its doors.

It would be possible to go on with many other illustrations. Such
failures as these are not really a test of genuine cooperation. Any
ordinary business with such management would also have failed. But it is
significant that most of the recent cooperative failures have been among
grocery stores. In this particular business the margin of profit is so
small that only the most skillful and economical management can bring
success. A recent survey of all the private grocery stores in one city
showed that the average annual profit was only $400 per grocer.

There is no longer any excuse for cooperatives to follow the blind into
the pit. There are many sources of information and advice available to
cooperatives that should be fully utilized before any money is spent in
a cooperative enterprise that promises only failure.



FALSE COOPERATIVES

The impractical cooperative which fails is bad enough, for it
discourages many people from making a second attempt, but the false
cooperative is a greater menace to the cooperative movement. The private
promoter with his selfish interests rigs up a scheme to look like
cooperation, but the actual purpose is to provide a channel whereby
thousands of dollars will flow from the pockets of the working people
into those of the promoter. Inasmuch as New York State has a law which
forbids the use of the word cooperation by any concern which is not
organized under the Cooperative Law, such promoters have to be
uncommonly shrewd.

       *       *       *       *       *

The Glynn System.

Early in 1920 a group of three or four private business men in Buffalo
established a promoting corporation and then set out to organize a
cooperative wholesale which was to be a separate concern from their
promoting enterprise but was to be controlled by it. The promoters sold
shares in the Buffalo Wholesale to individuals in fifteen or twenty
cities and towns all the way across the central part of the State. They
opened up six or seven stores and handled goods in large quantities
through their wholesale plant.

The capital was solicited chiefly through labor unions. Elaborate
promises were made to prospective shareholders: they were to have a
local store in their neighborhood, dividends were to be paid regularly,
goods could be bought at prices below those prevailing at the chain
stores and the local group was to have local autonomy. As a matter of
fact the ultimate control was always in the hands of the few promoters
in Buffalo.

These men had two large sources of revenue from the many transactions
carried on. They exacted from each member five dollars "for organizing
expenses," and they took a commission on all the business handled
through the wholesale.

By the spring of 1921 some of the members in one or two centers became
suspicious, and began an investigation. They found that stores were in
many cases grossly mismanaged. One manager had absconded with $600.
Organizing or promoting expenses in some places were as high as
thirty-three per cent. The weekly newspaper was discontinued for lack of
funds. Some wholesale merchants finally refused to give further credit
to the Buffalo headquarters and at the end of the first year of
operation one of the office force confided to a friend that there was a
ten thousand dollar deficit. When bankruptcy was finally declared in
midsummer, the promoters were not to be found. The principal organizer,
an ardent friend of labor for many years, had been completely duped by
these promoters and was left penniless and alone to face hundreds of
investors. Cooperation was put in disrepute for thousands of men and
women in dozens of cities and towns throughout the State.

Cooperation cannot be developed downward from a central wholesale
organization with a corps of organizers, nor will it grow when built
upon mercenary motives. In this case organized labor in the state was
partly to blame for not heeding the warning of a few groups of
cooperators who were aware of the nature of the concern early in its
history. But the ultimate blame lies with the individual men and women
who joined the corporation without looking carefully into its
organization.

       *       *       *       *       *

The Cooperative Society of America.

In 1920 The Cooperative Society of America was doing a flourishing
business in Chicago and vicinity. One of the leaders of the enterprise
went to Europe in 1921 and convinced most of the leading cooperators of
those countries that he was the greatest power in the cooperative
movement in the United States. By the summer of 1921, the agents of the
principal promoter of this scheme, Harrison Parker, were operating in
New York City, and scores of salesmen were covering the various boroughs
selling stock. Within two weeks all the agencies interested in
protecting cooperation were organized to fight this fraud. The matter
was placed in the hands of the Attorney General and a special deputy
appointed to prosecute. The leading newspapers ran an expose of its
operations. At this juncture, the Chicago headquarters suddenly went
into the hands of a receiver and the New York office closed its doors.

Late in the year federal action was instituted against Harrison Parker
in Chicago. The entire business of the so-called cooperative was
disclosed to the courts. It was found that 81,000 people had invested
fifteen millions in this gigantic fraud. Here in New York there were
many hundreds, if not several thousands, of men and women who lost large
sums of money in the ensuing bankruptcy. These people were taken in by
the dramatic appeal to their selfish interests. The Chicago organization
showed them photographs of the "massive buildings" in Chicago in which
it was doing business, spoke glibly of its banking and insurance
departments, and then promised them a share in the spoils if they would
pay $75 for their certificates which were worth only $25 or $50 at their
face value.

That so many people could be duped by these "get-rich-quick" methods is
an indication of the amazing lack of cooperative understanding which
prevails in the United States. It is a part of the purpose of this
Bulletin to correct the misunderstanding which prevails because of the
fraudulent use of the word cooperation. In the case of a suspected false
cooperative, test it by the Rochdale principles. If it fails to measure
up to them take the matter up directly with the State authorities or the
Cooperative League of America.



HOW TO START A COOPERATIVE ENTERPRISE IN NEW YORK STATE

In starting a cooperative enterprise two things must be considered:
first, the kind of business to go into and, second, the method of
organization. Any group desiring to engage in a cooperative venture
should first of all, through a committee and by consultation with
experts, determine what type of enterprise will serve them most
effectively. Where competition is unusually keen and profit margins are
low, cooperation is less likely to be of service than where the opposite
is the case. Whatever enterprise is started men experienced in that
business should be consulted as to the location of the business, the
stock and equipment needed, the operating capital necessary, etc.

Preliminary organization should likewise be handled by a committee which
might estimate the number of persons who would become members, the
service each could contribute to the society, etc. Meetings should be
held to educate the group in both cooperation and the special need of
the undertaking. For this purpose many educational bulletins may be
obtained from the Cooperative League of America and other reliable
sources.

Actual organization of the society consists of incorporation, election
of officers, the adoption of by-laws, and the immediate adoption of a
sound system of bookkeeping. No action undertaken before incorporation
has any legal effect on an incorporated body, so early incorporation is
desirable. The New York State law requires that all firms using the word
"cooperation" incorporate under one of the three state cooperative laws.
Outside of farmers' cooperatives practically all cooperative societies
are incorporated under the Stock Law known as Article III. Copies of
these laws may be obtained from the State Department of Farms and
Markets. The Department has prepared simple forms for incorporation
under this law. When these are filled out and sworn to and the papers
filed with the Secretary of State and the County Clerk, the society may
legally begin business. The fee of the Secretary of State is $30. A
board of directors is named in the incorporation papers and this board,
through a paid manager, will transact the society's business. Model
by-laws, upon which the by-laws controlling the organization may be
based, may be obtained from the State Department of Farms and Markets or
from the Cooperative League of America.



THE PRESENT TREND OF COOPERATION

There have been significant developments in the cooperative enterprise
in New York in the last two years. In the first place while a number of
small groceries closed their doors, the larger cooperatives have grown
larger and more prosperous. At last there appear to have developed
cooperatives which have passed that critical stage connected with the
life of a newly-organized business. One of these larger cooperatives,
which did over $200,000 worth of business in 1921, has turned its
surplus into its business ever since it started and is now buying more
land to erect a second business block in order to take care of expansion
which is forced upon it by the growing trade. Another cooperative has
established two prosperous branches and is now doing a business of a
quarter of a million dollars a year. A third, following a profitable
year in which its business amounted to $205,000, is likewise building a
new plant. The balance sheets of each of these associations would be the
envy of most business undertakings.

A second development is the appearance of a new type of management. A
group of younger men and women with a broad background, an intense
interest in cooperation and a capacity of growing up with the business
is working now to make these cooperatives even more successful. The
cooperative movement is likely to grow in pretty close proportion to the
ability of these leaders and the men and women they can attach to
themselves. Heretofore the greatest handicap of the cooperative movement
in this country has been the lack of trained and able leaders.

A third significant development is the adoption by cooperatives of the
best methods of management and accounting. Until this had been done the
cooperatives had small chance of succeeding. It is probable that
cooperatives which lack some of the incentives of the ordinary
commercial business will be compelled constantly to adopt the most
efficient and advanced type of machinery. In setting this up as a
definite standard they will escape the inertia and conservatism that
ordinarily characterize large groups, a condition which at the present
time is retarding the British cooperative movement. Two years ago
accurate accounting was an unusual thing among cooperatives. At the
present time practically all the cooperatives in the State have their
books gone over periodically by trained public accountants.

A still further trend in the cooperative development is the extension of
the movement into new lines of business. To this extent the failure of
cooperative grocery stores has had a beneficial effect since it has
forced groups to undertake different kinds of cooperative business. In
New York City at the present time cooperatives are engaged in such
diverse business as that of restaurants, cafeterias, bakeries, coal
associations, pool rooms, printing establishments, meat stores and
laundries. This means that the cooperatives are not following tradition
but are thinking for themselves and are selecting that enterprise which
will serve them most effectively. In going into these businesses where
profits are greatest they are not only prospering themselves but they
are performing one of their most legitimate functions, that of
protecting the consumer from extortionate profits.



BIBLIOGRAPHY

Books

  Bubnoff, J.V. The Cooperative Movement in Russia. 162 p. Manchester,
  1917.

  Faber, Harold. Cooperation in Danish Agriculture. 176 p. London, 1918.

  Gebhard, Hannes. Cooperation in Finland. 190 p. London, 1916.

  [A] Gide, Charles. Consumers' Cooperative Societies (trans. from the
  French). 251 p. Manchester, 1921.

  [A] Harris, Emerson P. Cooperation, The Hope of the Consumer. 328 p.
  New York, Macmillan Company, 1918.

  Howe, Frederick C. Denmark, A Cooperative Commonwealth. 203 p. New
  York, Harcourt, Brace and Company, 1921.

  Johns Hopkins University Studies, Vol. VI. History of Cooperation in
  the United States. 540 p. Baltimore, 1888.

  Nicholson, Isa. Our Story. 80 p. Manchester, 1918.

  Powell, G. Harold. Cooperation in Agriculture. 327 p. New York,
  Macmillan Company, 1913.

  Redfern, Percy. The Story of the Cooperative Wholesale Society. 439 p.
  Manchester, 1913.

  Redfern, Percy. The Consumer's Place in Society. 107 p. Manchester,
  1920.

  Smith-Gordon and Staples. Rural Reconstruction in Ireland. 279 p.
  London, 1917.

  [A] Sonnischsen, Albert. Consumers' Cooperation. 223 p. New York,
  Macmillan Company, 1919.

  [A] Webb, Catherine. Industrial Cooperation. 278 p. Manchester, 1917.

  [A] Webb, Beatrice and Sidney. The Consumers' Cooperative Movement.
  504 p. London, 1921.

  [A] Woolf, Leonard. Cooperation and the Future of Industry. 141 p.
  London, 1918.

  Woolf, Leonard. Socialism and Cooperation. 129 p. London, 1921.

  Transactions of American Cooperative Convention. New York,
  Cooperative League of America, 1918 and 1921.

  People's Year Book, Annual of the English and Scottish Wholesale
  Societies. London, 1921.

[Footnote A: Best books on the subject.]


Magazines

  Cooperation. The Cooperative League of America, New York, N.Y.

  The Canadian Cooperator. Brantford, Ontario, Canada.

  The International Cooperative Bulletin. 14 Great Smith Street,
  Westminster, London, England.


Pamphlets

Historical

  Consumers' Cooperation in New York City. Bulletin of the Division of
  Foods and Markets for May, 1920. Prepared in cooperation with The
  Consumers' League of New York City.

  An Idea That Grew. Genevieve M. Fox. National Board, Young Women's
  Christian Association, 600 Lexington Avenue, New York City.


The following are pamphlets of the Cooperative League of America:

  Story of Cooperation.

  British Cooperative Movement.

  A Baker and What He Baked.

  The Control of Industry by the People through the Cooperative Movement.

  Cooperative Consumers' Movement in the United States.

  Cooperative Movement (Yiddish).


Technical.

  Credit Union and Cooperative Store. Arthur Ham. The Russell Sage
  Foundation, 130 East 22nd Street, New York City.


The following are pamphlets of the Department of Farms and Markets:

  Cooperative Housing.

  Article 3, Stock Cooperative Law.

  By-laws for Cooperative Associations organized under Article 3, Stock
  Cooperative Law.

  Article 21, Membership Cooperative Law.

  By-laws for Cooperative Associations organized under Article 21,
  Membership Cooperative Law.

  Article 13 A, Farmers' Cooperative Law.

  By-laws for Cooperative Associations organized under Article 13 A,
  Farmers' Cooperative Law.


The following are pamphlets of the Cooperative League of America:

  How to Start and Run a Rochdale Cooperative Store.

  System of Store Records and Accounts.

  A Model Constitution and By-Laws for a Cooperative Society.

  Cooperative Education. Duties of Educational Committee Defined.

  How to Start a Cooperative Wholesale.

  Why Cooperative Stores Fail.

  Cooperative Housebuilding.

  Cooperative Housing for Europe's Homeless.





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