The Masses (periodical)/Volume 1/Number 1/The American Co-operative Movement

by William James Ghent

The American Co-operative Movement

 

How Co-operation Can be Made Successful in the United States
By W. J. Ghent
Drawing by Alex. Popini

P. VLAG

PERHAPS the first question that comes to the student of co-operation is this: "Why has the co-operative movement in the United States so far generally failed?"

I myself have asked this question many times. Many replies, none of them wholly satisfactory, have been given. So I have asked it again—this time of Piet Vlag. This is his reply:

"Because the main spirit of the movement has almost invariably been to obtain at once one dollar's worth of goods for seventy-five cents, instead of uniting the working class against exploitation. The aim has been too narrow, the impatience too great. The earlier co-operators did not see the necessity of building up their own wholesale co-operatives. Eeven now we do not expect the assistance of the earlier co-operators until we have developed to a point where they will see that it is to their immediate economic advantage to be connected with us. With the Socialist co-operators the matter is different. They see further ahead than the others, and are willing, in order to build up a strong central body, to make some present sacrifices and suffer some present inconveniences."

Consumers' leagues and buying associations have often been urged as a substitute for co-operative stores. I asked Mr. Vlag about these, and he replied:

"The consumers' leagues offer an interesting problem. It is undoubtedly true that, under certain circumstances, more immediate economic benefits are derived from them than from co-operative stores. But the co-operation store gives accommodation in the matter of stock on hand to choose from, and of small purchases and relatively frequent deliveries, that cannot be given by the consumers' leagues. The main fault of the buying association, however, is its defective organization. In most cases people simply put their orders together and depend upon a volunteer to distribute the provisions. The volunteer soon gets tired of his task, and the association ceases to exist.

"If, however, small associations were organized on a membership basis, with, say, an investment of $10 by each member, they might be made more effective. Goods could then be bought in larger quantities and sold to the members at wholesale rates. A certain percentage could be charged for the cost of operation. The invested $10 of each member could be used for buying stock in small quantities to insure a greater profit, and as a security for the payment of the consumer's quota of the operating expenses. For example: A woman purchases $200 worth of goods during six months paying wholesale prices. After the operating expenses have been totalled, it is found that 4 per cent. on all purchases must be charged. This woman, in order to maintain her membership, must pay $8.

"In this manner a fairly well-organized movement might develop. The method is, however, against the principles of the European co-operatives. The fundamental principle of the European co-operatives is to sell at the established retail prices, deduct from the profits the cost of operation, and declare dividends according to the net profits.

"As to whether stores or collective buying associations will be the form which the co-operative movement will assume in this country in the future, only experience can tell. For the present, it would seem that the buying association is often best fitted for the smaller cities and for relatively small groups of consumers, while the store is best adapted for larger centers and groups. Every buying association should, however, look forward to a growth of its numbers and buying power that will enable it to start a store."

"Is it your intention to establish small grocery stores in the industrial districts throughout the Eastern States?"

"Not grocery stores exclusively, for we aim at utilizing the purchasing power of the workers for their own benefit in many other commodities."

"Is is not true that the grocer is underpaid, and that he has to work long hours in order to make his store profitable?"

"Often, that is true, but the purpose of the co-operative movement is not merely the elimination of the grocer, but the centralization and the systematization of the purchasing power of the working class. In order to be of economic benefit to the working class, the co-operative movement must develop to a point where, through centralized buying, it will eliminate the middleman and commission merchant, as well as the small storekeeper."

"Does not an enterprise of that sort require a large capital?"

"We fully realize that, but we expect to secure all the capital we need."

"From the working class?"

"Why not? The workers in Europe are not as well paid as the American workingmen; yet they have raised sufficient capital to maintain some of the largest establishments in the world. A large percentage of present business enterprise is conducted with money loaned at from six to 7 per cent. from the banks. These banks usually get the largest bulk of their investments from the savings of the working class, to whom they pay from three to four per cent. As soon as the workingman begins to realize that it is safer to invest his money in his own enterprise, than to allow the capitalist to exploit him, there will be a different story to tell.

"A Wholesale Co-operative's capital is supposed to come from the sale of shares to the retail stores. Each store in our system is obliged to purchase one share at $25 for every fifty members. But the organization of the American Wholesale Co-operative preceded a general organization of retail stores, and so the capital had to be raised in other ways. At present, with but about 18 stores in operation, the capital from this source would be inadequate. Our capital has come largely from the sale of shares to individual members—people who are interested in the progress of the co-operative movement and determined to help it to the limit of their ability. Futhermore, we have recently declared a $20,000 bond issue. These bonds pay 5 per cent. interest. They are secured by mortgages on our property, and are redeemable within five years. The sale of these bonds, which is now proceeding, will give us an ample working capital."

"Then the outlook is altogether favorable?"

"There is no other way to speak of it. Of course, hard work is necessary to build up the movement; and it is sometimes difficult to overcome pessimism so frequently found, regarding the success of an American co-operative enterprise. But all the while this pessimism is gradually declining, and new adherents are coming to us. The future looks more hopeful."