THE CO-OPERATIVE STORE IN THE UNITED STATES. IRA B. CROSS. CHAPTER I. INTRODUCTION. Few people realize how important a factor Co-operation has become in our social and industrial life. Competition, that principle so vigorously advocated by the laissez-faire economists as the forerunner and harbinger of prosperity and individual rights, has disappeared to a surprising extent from the economic world of today. Co-operation on the other hand has become the keynote of social and industrial progress. Its presence and application are to be noted upon all sides. We sce it in the co-operation of the capitalists who combine their resources, knowing that it is by this means alone that they can make use of the latest improved methods of production: in the unions of the workers, who realize that it is only by association that they can obtain higher wages and better conditions under which to labor; and in the establishment of cooperative stores, mines, factories and various other enterprises whereby an attempt is made to eliminate the middleman. It is with but a small portion of the latter group of acti ties that we shall deal in the pages which follow, i. e., the Cooperative Store. CHAPTER II. KINDS OF CO-OPERATIVE STORES. There are a large number of methods used in conducting co-operative distributing societies, but it will be necessary for us to consider only the most important and characteristic forms of these organizations, inasmuch as the remainder are but adaptations of those which are described below. Today there still remains, to a great extent, the old fashioned "dividing store" as it was called in the early days of the co-operative movement in Massachusetts. No stock is sold and no dividends are declared. All that is necessary is that some person act as manager of the so-called "store" and get his friends to "bunch" their orders which are then sent to some wholesale or catalog house. The goods in time are shipped direet to the manager who divides them among his neighbors according to the original individual orders, charging a very small sum extra above the wholesale price in order to pay the expenses of freight and drayage. Purchases are thus made. at a very low cost, and with but little trouble to those interested. Such trading is being encouraged more and more by the catalog houses, who by this means are able to compete vigorously and very often successfully, with the local retail merchants. Another method is often followed by secret organizations which obtain trade discounts for their members. Contracts are made with certain firms who agree to give specified discounts upon all purchases made by persons presenting a card of the order. This method cannot be used successfully for any length of time because of the fact that those who do not belong to the order, and consequently do not obtain a discount upon their purchases, soon become dissatisfied with the arrangement, and much antagonism and hard feeling is aroused against the merchants who are parties to such a contract, These two methods of co-operative distribution require no sale of stock and no declaration of dividends. In a regular co-operative store, however, shares of stock are sold to individuals in small amounts and the business is conducted upon ordinary trading and commercial principles. At the close of each fiscal period, the length of which varies from six to twelve months, a fixed rate of interest is paid upon the capital stock, while the remainder of the profits is paid as dividends upon purchases. As a rule dividends upon purchases are paid only to members of the association, although in some cases we find them being given to all customers of the store. In the latter case the rate paid to non-members is usually one-half that given to the stockholders in the association. The business is generally run upon a cash basis, although credit is sometimes given to responsible persons or to members of the society. Market prices are rigidly adhered to with but few exceptions. Many persons confuse a joint stock company with a cooperative trading society. The distinction between the two is very evident. In the former all the profits of the business are paid upon the capital stock, the rate of dividends varying with the net receipts of the trade. In the latter the capital stock receives but a fixed rate of interest, usually high, while the remainder of the profits goes to the stockholders in the shape of dividends based upon the amount of goods purchased. In a joint stock company the number of shares which can be held by one person is seldom limited. In a co-operative association is is usually a case of "one share to a person." In some instances we find a joint stock company possessing co-operative features, the only difference being that in addition to the distribution of the profits of the business among the stockholders upon the basis of the amount of stock held, the members of the company are permitted to purchase goods at a discount of from five to ten per cent. No dividends, however, are paid upon purchases. In 1844 a few poor weavers in Rochdale, England got together in a cellar and inaugurated a movement in the co-operative field which has since spread to all corners of the globe. Their efforts resulted in what is now called "The Rochdale Method." It was the first time that a successful basis had been given to the co-operative movement. It was simply a plan of "feeding capital upon the profits of the business." In brief the principles of this system, as practiced today, are as follows: 1. Money is hired but has no vote. A fixed rate of interest is paid upon the capital stock. 2. A person can hold but one membership and have but one vote. Voting by proxy is prohibited. 3. Goods are bought and sold for cash, and at regular market prices. Cutting of prices is not permitted. 4. Profits are returned to the members in proportion to the amount of their purchases. 5. Pure goods are sold and full weights and measures are given. 6. Retail stores are federated and own their own wholesale house.1 The application of these principles has resulted in the upbuilding of a movement in England and Scotland which surpasses anything in the commercial world of today. It represents more than 2,120,000 active members, over 10,000,000 customers, and an annual business which considerably exceeds $500,000,000.00. This system was first introduced into the United States in 1864 by a co-operative society in Philadelphia and was later popularized and practiced to a great extent by the Grangers and Sovereigns of Industry in their attempts at Co-operation. Today, in the United States, it finds its chief exponents and advocates among the co-operators of the Pacific states under the leadership of the Rochdale Wholesale Company, and in the North Central states where its doctrines are propagated by the Right Relationship League. The Rochdale stores as organized by these two associations are similar in every important regard. In the Pacific Coast movement, however, the wholesale house from which supplies are bought, is owned entirely by co-operative retail associations, located in California, 1Co-operative Journal, Oakland, Cal., April, 1904. 2 See page 32. See page 34. Idaho and Washington, while in the case of those organized . by the Right Relationship League, each store owns an interest in the Co-operative Merchant's Company of Chicago,' a wholesale purchasing association composed both of co-operatively and of privately owned stores. The portion of stock held by the former is exceedingly small although all stores, which are stockholders, share alike in the benefits of the association. The only real difference in the Rochdale system as advocated by these two agencies lies in the fact that the stores of the Right Relationship League are always capitalized at a definite amount while in the Pacific Coast societies the capital stock is unlimited, the price of the shares alone being fixed by the constitution of the association. As far as we have been able to ascertain there are no stores in the United States which are organized upon the same basis as are the Civil Service, and Army and Navy stores of England. The members of these associations come exclusively from the Civil Service, the Army, or the Navy, as the names signify. This method of co-operative distribution originated in 1864 in the establishment of a co-operative store by memhers of the Post Office Department in London. These stores sell at cost prices, or as near that as possible, the object, unlike that of other co-operative stores, being to supply the members with goods at the lowest possible prices rather than to afford them the inducement to acquire the habit of saving. An unique development of the co-operative movement in the United States is to be found in a number of so-called "College Co-operative Societies" connected either directly or indirectly with many of our educational institutions. In most cases, under judicious management, they prove to be very successful and of great benefit to the student body which patronizes them. Books, athletic goods, paper, and all those things needed by students in their college work are carried in stock. Membership is obtained by the purchase of a share or membership card, the price of which varies from $1.00 to $5.00. In some cases the membership has to be renewed each 1See page 33. Holyoake, History of Co-operation, Vol. II, p. 185. |