NUMBER AND AGE OF CREDIT UNIONS REPORTING

Questionnaires were sent to 301 active credit unions, and returns for 1925 were received from 176 societies. Reports were also received from several organizations which were started late in 1925 or early in 1926, but as this study covered the year 1925, reports for such societies were not used. The schedule for one other society had to be omitted, as the person making the return failed to fill in the address in such a way as to show the identity of the organization. The total number of societies in operation at the end of 1925 and the number furnishing reports are shown, by States, in Table 7:

State Total Number Number reporting Arkansas 3 1 California 1 1 Florida 1 1 Georgia 3 1 Illinois 1 Indiana 7 7 Iowa 1 1 Kansas 1 1 Kentucky 2 2 Louisiana 2 1 Maine 1 Maryland 1 1 Massachusetts 86 53 Michigan 2 Minnesota 1 1 New Hampshire 1 New Jersey 4 4 New York 115 67 North Carolina 26 10 Oklahoma 2 2 Pennsylvania 1 1 Rhode Island 5 4 South Carolina 2 1 Tennessee 3 3 Texas 3 1 Virginia 4 4 Washington 2 1 West Virginia 3 1 Wisconsin 1 1 Total 284 176

Table 7.—NUMBER OF CREDIT UNIONS IN OPERATION AT END OF 1925 AND NUMBER REPORTING FOR THAT YEAR, BY STATES

01813

In addition to the credit unions shown in the above table 16 others of which the bureau has knowledge were started in 1926: 3 in Georgia, 2 in Illinois, 2 in Indiana, 1 in Iowa, 3 in Massachusetts, 2 in Michigan, 2 in Minnesota, and 1 in Montana. It is evident from the foregoing that the credit union movement has now spread to at least 30 states. Cooperative credit is at present the fastest growing of the phases of cooperative covered in the bureau's study, resembling in its rapidity of expansion that which took place in the consumers’ movement in the period 1919-1921.

These credit unions average in age not quite 5 1/2 years. All of those reporting have been established in the last 16 years, as in shown below:

Number

1910 2

1911 6

1912 5

1913 2

1914 4

1915 12

1916 7

1917 8

1918 7

1919 6

1920 12

1921 24

1922 10

1923 16

1924 27

1925 26

As is seen, the greatest development of the cooperative credit movement has taken place since 1920, mainly, as already stated, because only within these past few years has there been legislation authorizing the formation of credit unions.

At the end of 1925, 24 States had enacted credit union legislation, 2 and 13 of these have done so since 1921.

2 Georgia, Acts 1925, No. 429; Illinois, Acts of 1925, p. 225; Indiana, Acts of 1923, ch. 114; Iowa, Acts of 1925, ch. 176 Kentucky, Acts of 1923, ch. 114; Louisiana, Acts of 1924, No. 40; Massachusetts, Gen'l Laws, 1921 ch. 171, amended by Acts of 1922, ch. 147, and Acts of 1923, chs. 55 and 143; Michigan, Acts of 1925 No. 285, Minnesota, Acts of 1925, ch. 296, Mississippi, Acts of 1924, ch. 177; Nebraska, Comp. States., 1922, Sees, 649-670; New Hampshire, Pub. Laws of 1926, ch. 267; New Jersey, Acts of 1924, ch. 48; New York, Acts of 1914, ch. 389, arts. 450-479, amended by Acts of 1915, 1923, ch. 701, and 1925, ch. 383; North Carolina, Consolidated State, 1919, ch. 93, sub. ch. 111, amended by Acts of 1925, ch. 73; Oregon, Olson's Oregon Laws, sees, 6264-6298; Rhode Island, Gen'l Laws, 1923 sees. 3925-3960; South Carolina, Acts of 1915, No. 154, amended by Acts of 1923, No. 51; Tennessee, Acts of 1923, ch. 68; Texas. Civ. State., p. 548; Utah Comp. Laws, 1917, sees. 1060-1083; Virginia, Acts of 1922, ch. 449; West Virginia, Acts of 1925, ch. 36; and Wisconsin, State. 1923, ch. 186, secs. 186.01-186.18. amended by Acts of 1925, ch. 83.

MEMBERSHIP

Restrictions of some sort upon membership are quite common among credit unions. Among such restrictions are those limiting the membership to employees of a certain firm, 3 to a named organization or parish, or to residents in the locality. Thus, the postal credit unions quite commonly limit their membership to post office or to Federal employees. This is done in order that the credit union group may be composed of persons with like interests. It is desirable, for safety's sake, that the members in a credit union know each other and have common interests, and such membership restrictions are made to insure this homogeneity.

3 In New Jersey this is a requirement of the credit union law.

Many associations require that application for membership shall be made in writing, must be approved by a member of the board of directors, and shall be submitted by this director at the next regular board meeting. Two negative votes are sufficient to reject any applicant. A common provision in this connection is that “no director shall present the name of a person whom he can not recommend as being honest, industrious, and of good habits.”

01914

Although small groups are considered more nearly ideal for credit union purposes, some of the most prosperous and successful of the societies are those of large membership. The statement below shows the number of unions in each membership group:

Societies having membership of— Number of societies

Less than 50 6

50 and under 100 25

100 and under 200 35

200 and under 300 21

300 and under 500 25

500 and under 700 12

700 and under 1,000 25

1,000 and under 1,500 13

1,500 and under 2,000 8

2,000 and under 5,000 4

5,000 and under 10,000 2

Total 176

It is seen that more than three-fifths (63.6 per cent) of these credit societies have fewer than 500 members, and 25 per cent have between 700 and 2,000 members. The membership of all 176 societies averages 612 persons, a figure far in advance of that of the consumers’ societies.

The total membership of the credit societies numbers 107,799, of whom 45,672 are in Massachusetts, 47,783 are in New York, and 6,510 in Rhode Island, the three States in which the credit union growth is the oldest. The credit unions in these States have an average membership of 787, 713, and 1,628, respectively. Table 8 shows the membership distribution and the average size of the credit unions reporting, by States:

Members State Number Average per society Arkansas 1 390 390 California 1 117 117 Florida 1 215 215 Georgia 1 214 214 Indiana 841 120 Iowa 1 47 47 Kansas 1 61 61 Kentucky 480 240 Louisiana 1 265 265 Maryland 1 173 173 Massachusetts 45,672 787 Minnesota 1 395 395 New Jersey 1,659 415 New York 47,783 713 North Carolina 561 56 Oklahoma 240 120 Pennsylvania 1 350 350 Rhode Island 6,510 1,628 South Carolina 1 96 96 Tennessee 289 90 Texas 1 41 41 Virginia 608 152 Washington 1 235 235 West Virginia 1 62 62 Wisconsin 1 495 495 Total 107,779 612

Table 8.—MEMBERSHIP OF CREDIT UNIONS AT END OF 1925, BY STATES

1 1 society only.

SIZE IN RELATION TO AGE

Table 9 classifies the 174 credit unions which reported both as to number of years of operation and membership.

Societies in operation— Number of members Less than 1 year 1 year and under 5 years 5 and under 10 years 10 and under 25 years Total Number Under 100 13 10 5 2 20 100 and under 200 7 18 8 2 35 200 and under 300 3 11 6 2 22 300 and under 400 1 5 4 2 12 400 and under 500 7 3 3 13 900 and under 1,000 16 11 9 36 1,000 and under 2,000 1 4 6 9 20 2,000 and under 5,000 1 3 4 5,000 and over 2 2 Total 25 71 46 32 174 Per cent Under 100 43.3 33.3 16.7 6.7 100.0 100 and under 200 20.0 51.4 22.9 5.7 100.0 200 and under 300 13.6 50.0 27.3 9.1 100.0 300 and under 400 8.3 41.7 33.3 16.7 100.0 400 and under 500 53.8 23.1 23.1 100.0 500 and under 1,000 44.4 30.6 25.0 100.0 1,000 and under 2,000 5.0 20.0 30.0 45.0 100.0 2,000 and under 5,000 25.0 75.0 100.0 5,000 and over 100.0 100.0 Total 14.4 40.8 26.4 18.4 100.0

Table 9.—NUMBER AND PER CENT OF SOCIETIES CLASSIFIED BY SIZE AND BY NUMBER OF YEARS IN OPERATION

RESOURCES

Each new member is required to pay a membership fee, ranging in the various unions from 10 to 25 cents, and to subscribe for a certain amount of share capital, usually one share.

The shares are always of small denomination—$5 is the most common value, though in a few credit unions the share ranges as high as $25—and the member is allowed to pay for his share in installments of as little as 10 or 25 cents a week. Thus it is evident that no one is debarred from membership by reason of poverty.

In order to equalize to some extent the members’ holdings in the society, many organizations place a limit on the amount of stock held by any one member. In some organizations no member may own more than 5 per cent of the total share capital. In others placing a definite limit on the member's capital investment, the maximum amount allowed per member ranges from $100 to $5,000. While the 176 societies studied have an aggregate capital of more than $10,000,000, Table 10 shows that the amount of capital invested per member is small, averaging only $99.

02116

Table 10.—AVERAGE PAID-IN SHARE CAPITAL PER MEMBER, BY STATES

State

Average capital per member

Arkansas $27

California 22

Florida 58

Georgia 8

Indiana 21

Iowa 9

Kansas 82

Kentucky 34

Louisiana 15

Maryland $22

Massachusetts 79

Minnesota 17

New Jersey 1

New York 137

North Carolina 25

Oklahoma 18

Pennsylvania 257

Rhode Island 46

South Carolina $52

Tennessee 18

Texas 32

Virginia 27

Washington 28

West Virginia 12

Wisconsin 58

Total 99

1 Societies are all nonstock organizations.

Many credit unions receive savings deposits from their members, and a few State laws also allow the receiving of deposits from non-members. The deposits may be made in amounts as small as 25 cents. These deposits in the societies covered amounted to nearly $5,000,000, averaging $135 for each depositor.

In addition, most laws require that a certain amount be set aside for reserve-each year. In this way additional funds are accumulated.

Table 11 shows, for the societies reporting, the amounts of their capital, reserves, and deposits at the end of 1925.

State Number of unions reporting Membership Paid-in share capital Reserve funds Number of depositors Amount of deposits Arkansas 1 390 $10,460 260 $24,885 California 1 117 2,579 $100 Florida 1 216 12,560 92 Georgia 1 214 1,783 24 Indiana 7 841 17,373 1 708 2 278 2 2,491 Iowa 1 47 424 16 2 10 Kansas 1 61 5,006 Kentucky 2 480 16,327 451 54 2,738 Louisiana 1 265 4,012 26 Maryland 1 173 3,878 29 Massachusetts 3 58 45,672 3,630,717 4 386,890 5 21,565 6 2,800,375 Minnesota 1 395 6,700 80 28 1,260 New Jersey 4 1,659 7 712 1,473 84,197 New York 67 47,783 8 6,532,982 9 522,789 10 4,468 10 393,293 North Carolina 10 561 14,016 11 6,189 12 327 12 47,978 Oklahoma 2 240 4,352 13 405 Pennsylvania 1 850 89,800 3,909 Rhode Island 4 6,510 299,340 14 49,593 6,239 1,279,307 South Carolina 1 96 5,000 97 3 5 Tennessee 3 269 4,897 15 119 13 5 13 22 Texas 1 41 1,295 Virginia 4 608 16,581 14 1,428 14 125 14 4,287 Washington 1 235 6,659 West Virginia 1 62 730 Wisconsin 1 495 28,694 716 Total 176 107,779 16 10,706,099 17 973,873 18 34,827 19 4,700,768

Table 11.—SHARE CAPITAL, RESERVES, AND DEPOSITS OF CREDIT UNIONS, 1925, BY STATES

2 4 societies. 2 6 societies. 3 Data are as of Oct. 31. 4 56 societies. 5 52 societies. 6 51 societies. 7 Nonstock societies. 8 Not including 1 nonstock society. 9 63 societies. 10 29 societies. 11 7 societies. 12 9 societies. 13 1 society. 14 3 societies. 15 2 societies. 16 171 societies. 17 155 societies. 18 114 societies. 19 113 societies.

Besides the resources shown above, 98 societies which furnished financial reports show an aggregate surplus and undivided profits of $420,910.

ADMINISTRATION OF THE SOCIETY 4 See Appendix A, p. 104, for typical by-laws of credit union.

The administration of the general affairs is vested in a board of directors, varying, in the unions reporting from 5 to 15 members. These directors are elected by the membership at the general meeting, and hold office for a term, generally, of three years, except in New York and North Carolina, where the term is usually one year.

The offices—president, vice president, secretary and treasurer—are elected by the directors from their own number. Many of the societies have incorporated in their by-laws a provision found in several of the State laws that no officer except the treasurer or the one who keeps the books shall receive any compensation for his services.

SUPERVISORY AND CREDIT COMMITTEES

There are also two committees, the credit and the supervisory committee.

The credit committee usually consists of three members, serving in the various societies, from one to three years. This committee passes upon all loans, determines the security which shall be required for each, the terms of repayment, etc. In many associations it must, under the cooperative law, give preference to the smaller loans if funds are not available for all applicants.

The supervisory committee is charged with the general oversight of the finances of the society and the auditing of the books. The credit union law of many States also gives this committee power, if the members of the committee so vote unanimously, to suspend any officer or director or member of the credit committee, and by a majority vote to call a special meeting of the stockholders to consider any violation of the law or any act by the above which the supervisory committee considers unsafe or unauthorized.

GENERAL AND SPECIAL MEETINGS

The final control of the society rests in the general meeting of stockholders held usually once a year. The by-laws of most credit unions provide (often in accordance with the requirements of the State law) that special meetings may be called at any time by the board of directors or the supervisory committee and must be called at the request of a certain number or proportion of the members.

The members have the final authority and may at any of these meetings reverse any act of the board or of a committee.

At meetings the members have one vote each, and not proxy voting is allowed, except that another association which is a member of the credit union may cast its vote through a delegate to the meeting. Thus rule is well-nigh universal among the societies studied, but one unusual instance was found on a credit union in a Southern State which allows each member one vote for the first $5 of share capital paid in by him and an additional vote for each additional $25.

REQUIREMENTS FOR LOANS, AND LOANS GRANTED

Only a member of the credit union can be a borrower from it, and even a member can not secure a loan (1) if he is not in good standing, (2) if he has failed to repay any previous loan or is in arrears on a current loan, or (3) if his indorsers have ever had to pay any of his obligations.

Any member desiring to secure a loan must make his application therefore in writing, stating the purpose for which he intends to use the money and what security, if any, he can offer. Some societies also require that the applicant shall certify that “no consideration has passed or will pass from the borrower to the indorsers for their indorsement.”

Practice as regards security required differs in the various credit unions. One or two societies have a rule that no loans may be made without security. In the majority, however, loans on character may be made in amounts up to $25 or $50 (usually $50); for loans above that amount security must be given. The security may be a note indorsed by one or more fellow members. One society studied accepts indorsement by nonmembers. In some instances, also, a surrender to the society of the borrower's share capital is required a security.

The loan must have the approval of all the members of the credit committee present at the meeting to consider the loan and these must constitute at least two-thirds of the full committee. In some societies, an unsuccessful applicant for a loan may appeal from the committee to the board of directors or to a meeting of stockholders.

Loans may be made in many societies “only for provident purpose or urgent needs,” or when they “promise to be of benefit to the borrower.”

The maximum amount of money to be lent to any one person varies widely. Some societies set a flat amount, ranging from $500 to (one society) $10,000. Some leave this to the discretion of the credit committee or to be determined by the general meeting of stockholders. One New York society whose membership is composed of persons in the same employment restricts the amount to 10 per cent of the borrower's annual salary. Another credit union allows loans in amount up to 30 per cent of the society's paid-in share capital. One society provide that in general no loan may be less than $5 nor more than $150; any greater amount must be passed upon by the directors as well as the credit committee.

A few credit unions also limit the term of loans, varying in period from three months to one year.

The number of societies which did each classified amount of business in loans granted in 1925 is shown below. About equal proportions of the societies did a business of between $5,000 and $25,000 and of from $100,000 to $500,000.

Number of societies Per cent Total loans granted: Under $1,000 10 5.8 $1,000 and under $2,000 6 3.5 $2,000 and under $5,000 11 6.4 $5,000 and under $10,000 23 13.4 $10,000 and under $25,000 25 14.6 $25,000 and under $50,000 15 8.8 $50,000 and under $100,00 22 12.8 $100,000 and under $500,000 54 31.6 $500,000 and under $1,000,000 2 1.2 $1,000,000 and over 3 1.7 Total 171 100.0 02419

The following table shows that during 1925 the 173 credit unions which reported made loans amounting to more than $20,000,000, nearly nineteen millions in Massachusetts and New York alone. The small amounts of business in the other States are of course due to the fact that the credit union movement has just begun there, and the societies in those States are as yet very new and small.

Loans granted in 1925 State Number of unions reporting Number of borrowers in 1925 Amount Average per borrower Loans outstanding at end of year Arkansas 1 220 $19,314 $88 $19314 California 1 66 4,520 69 2,502 Florida 1 258 24,805 96 11,521 Georgia 1 33 2,381 72 2,294 Indiana 7 251 29,085 116 15,588 Iowa 1 3 450 150 404 Kansas 1 1 5,947 2 2,750 Kentucky 2 185 33,748 182 10,180 Louisiana 1 64 6,320 99 4,060 Maryland 1 60 3,586 60 3,586 Massachusetts 3 58 19,289 4 5,931,418 308 5,608,836 Minnesota 1 95 122 1 6,900 New Jersey 4 1,327 53,691 40 19,619 New York 67 3 27,148 5 12,986,626 478 6,054,894 North Carolina 10 291 25,133 86 64,896 Oklahoma 2 136 9,680 71 4,041 Pennsylvania 1 1,000 177,572 178 144,257 Rhode Island 4 1,545 680,842 441 1,350,624 South Carolina 1 28 3,845 137 2.098 Tennessee 3 114 12,240 107 4,959 Texas 1 82 1 2 1,400 Virginia 4 339 45,304 124 23,835 Washington 1 97 7,280 75 7,280 West Virginia 1 9 658 73 658 Wisconsin 1 196 35,780 183 14,927 Total 176 6 52,836 7 20,100,356 381 13,390,423

Table 12.—LOANS GRANTED, AVERAGE LOAN PER BORROWER, AND LOANS OUT STANDING, BY STATES

1 Not reported. 2 Impossible to compute. 3 Data are for year ending Oct. 31. 4 57 societies. 5 66 societies. 6 174 societies. 7 173 societies.

INTEREST ON LOANS

The interest that may be charged on loans is quite often limited by the credit union law. A very common provision in both legislation and by-laws is that such interest may not exceed 1 per cent per month on the unpaid balances. One society studied limits the interest to 8 per cent per year and this way not be deducted in advance. Other societies require the “legal rate,” or have set specific rates such as 6 per cent, and one, 5.9 per cent.

EXPENSES OF OPERATION

Expenses of administration are very small in the credit union. As already stated, the officers receive no compensation; then too the credit union occupies modest quarters, and little equipment is required. 5 The following table, giving the 1925 expenses of operation of the 32 credit unions furnishing data on this point, on the basis of loans made during that year, shows that the average expense of operation was only 1.80 per cent of the loans.

5 The small equipment needed is well brought out by the “Building, land, and equipment” column in Table 15. 02520 Per cent of total loans granted during year, formed by expense for— Society Labor Rent Light, heat, and power Bonds and insurance Office supplies Depreciation Bad accounts Miscellaneous Total Credit union— No.1 0.28 0.27 0.55 No.2 .85 .15 1.00 No.3 1.85 0.29 0.06 .03 0.47 2.71 No.4 3.02 .33 3.35 No.5 1 .88 2 1.38 .21 2.46 No.6 .47 .47 No.7 2.55 .07 .33 2.95 No.8 1.03 1 .19 2 .06 .07 .26 1.61 No.9 .67 .09 .02 .19 .03 1.00 No.10 1.15 .14 .03 .12 1.47 .34 3.24 No.11 1.01 .36 .07 .37 1.81 No.12 .26 .21 .12 .68 No.13 .78 .30 .58 0.13 .76 2.54 No.14 .67 .06 .29 1.01 No.15 1.15 .22 .15 .01 .07 1.61 No.16 .91 .20 0.01 .03 .04 .04 .04 1.26 No.17 .60 .43 .16 .09 .59 1.86 No.18 1.08 .08 .02 .12 .22 .19 1.71 No.19 2.63 .14 .12 2.90 No.20 .10 .17 .27 No.21 .55 .23 .02 .17 .06 1.02 No.22 .41 .05 .02 .07 .02 .58 No.23 .56 .19 3 .01 .21 .29 1.26 No.24 1.23 .97 .15 1.44 No.25 3.53 1.82 .38 5.73 No.26 1.11 .07 .06 2.37 3.61 No.27 .73 .19 .24 .18 1.34 No.28 1.22 .24 .03 .34 .45 2.28 No.29 .70 .12 .02 .12 .11 1.07 No.30 .59 .29 .05 .15 .09 1.17 No.31 1.17 .11 .09 .36 1.73 No.32 .85 .16 .02 .09 .13 1.25 Average 1.80

Table 13.—OPERATING EXPENSES OF 33 INDIVIDUAL CREDIT UNIONS IN 1925

1 Includes light, heat, and power. 2 Included with rent. 3 Less than one-hundredth of 1 per cent.

DIVISION OF PROFITS

Provision for reserve or “guaranty fund,” or both, is almost universally made, being required by nearly all the recent laws, the most general amounts set aside for this purpose annually being 20 or 25 per cent of profits. This continues until the amount so accumulated is equal to the paid-in share capital, or, in one case, until it equals 25 pr cent of the deposits. To this fund are also added the entrance fees, fines, and transfer fees.

Losses from bad debts or other causes are charged against the reserve. One society provides that the reserve is to be kept to take care of depreciation or for emergencies in connection with the business or for any expansion or development that the members see fit. Several credit unions allow the reserve, when it exceeds a certain amount, to be drawn upon for the relief of individual members “in cases of extreme urgency, such as sickness or death necessities.”

Deposits receive interest at a fixed rate, usually determined by the board of directors. Four percent is a common rate.

DIVIDENDS

The remainder of the profit is divided among the members in proportion to the stock held by them. One society stands alone in providing that the remaining profits are to be divided among the depositors and borrowers “upon their deposits and loans to the bank and upon their loans obtained from the bank.”

Only 135 of the 176 societies reporting paid dividends on the 1925 business. The amount returned by these aggregated $458,183, or 5.1 per cent, divided as follows:

Dividends returned State Number of societies returning dividends Amount Rate (percent) California 1 $80 3.1 Florida 1 678 5.3 Indiana 3 376 2.7 Kansas 1 300 6.0 Kentucky 2 965 5.9 Louisiana 1 60 1.5 Maryland 1 94 2.4 Massachusetts 55 213,300 6.2 New Jersey 3 2,175 1 New York 50 223,113 4.3 North Carolina 3 $846 9.4 Oklahoma 2 250 5.7 Rhode Island 3 12,451 4.2 South Carolina 1 95 1.9 Tennessee 2 418 9.6 Texas 1 126 9.7 Virginia 4 1,309 7.9 Wisconsin 1 1,457 5.1 Total 135 458,183 5.1

Table 14.—AMOUNT AND RATE OF DIVIDENDS RETURNED BY CREDIT UNIONS ON 1925 BUSINESS, BY STATES.

1 Less than one-tenth of 1 per cent.

BUSINESS PRACTICE

As already stated, the supervisory committee is charged with the duty of looking after the financial affairs of the organization and of auditing the books at regular intervals.

In a number of the States the laws require either that a regular financial report must be submitted to a designated State official or that the credit union must open its books to examination by the State bank examiner. The reports in the present study bring out the fact that in the absence of specific legal requirements on this point few credit unions have expert periodical examination of their books.

It is a universal principle among consumers’ societies that the books should at all times be open to the members’ inspection; this practice is also found to some extent among the credit unions. Many of the latter, however, take the position that each borrower's transactions with the society should be held in confidence by the credit committee, and therefore refuse access to the books except to the board of directors and the credit and supervisory committees, or in case fraud is suspected; any member may, however, look over his individual account at any time.

With only three exceptions among those reporting, the credit unions studied require from the treasurer or other officers handling money, bonds guaranteeing the honest and faithful performance of their duties.

FINANCIAL STATUS

Table 15 gives the balance sheet as of December 31, 1925, of the 121 credit unions supplying this information, which totals $14,967,563.

02722 Assets Surplus and deficit account Liabilities Society No. Cash on hand and in bank Investments Loans outstanding Building land, and equipment Miscellaneous Loss Gain Paid in share capital Members’ deposits Guaranty fund Reserve fund Accounts and bill payable Surplus and undivided profit Miscellaneous 1 $8,247 $19,314 $6,647 $4,299 $15 $10,341 $24,865 $500 $2,816 2 209 4,520 189 2,579 $100 $19 2,220 3 165 11,521 115 1,745 12,510 1,036 4 111 2,294 $25 1,783 597 5 461 $4,451 7,228 87 8,219 1,664 $293 1,000 367 684 6 200 509 67 752 24 7 53 297 256 88 6 8 56 1,427 499 1,880 48 10 44 9 57 12,481 15 10,643 757 285 188 650 10 81 4,060 129 4,012 11 1 2,727 53,400 1,130 46,146 2,939 3,410 4,762 12 1 2,211 100 35,572 360 7,370 1,875 38,111 8,198 1,818 577 34 13 1 16,522 83,974 8,378 24,526 58,606 4,207 215 9,564 14 1 10,827 154,473 56,056 1,058 16,752 202,181 823 542 15 1 1,223 32,488 29,480 25,042 34,403 1,261 2,485 16 1 3,102 9,867 39,127 197 3,639 44,515 1,814 2,842 483 17 1 729 285 14,986 40 609 13,651 872 494 366 48 18 1 777 3,878 40 359 3,349 433 207 107 40 19 1 21,293 5,977 609 7,721 17,549 572 111 708 20 1 1,355 8,073 113 7,114 1,684 229 318 21 1 2,632 5,673 2,671 2,311 68 1,705 11,068 275 45 126 22 1 367 15,260 36,349 597 20,392 24,145 2,040 2,299 2,500 23 1 583 14,163 1,135 963 13,971 857 70 24 1 54,810 515,459 1,251 13,394 9,959 185,138 349,142 40,168 507 25 1 37,534 2,314 33,147 2,874 54,949 11,667 3,106 399 26 1 22,681 405,553 7,627 73,749 232,388 11,681 2,789 27 1 2,514 95,692 318 3,258 74,432 15,574 2,716 1,561 983 28 1 31,803 2,500 466,381 800 6,851 41,923 416,999 6,470 2,709 11,000 15,532 29 1 2,703 199 29,466 200 863 16,055 14,923 561 18 141 7 29 1 2,703 199 29,466 200 863 16,055 14,923 561 18 141 7 30 1 8,969 99,176 8,087 19,752 66,030 7,850 2,426 31 1 10,872 343,629 517 9,692 73,665 231,304 17,805 22,552 32 1 3,430 12,000 43,044 401 2 493 41,214 12,285 2,271 321 2,000 203 33 1 2,767 800 815 150 657 3,449 81 45 34 1 4,277 14,475 4,159 20,788 270 799 1,054 35 1 630 5,644 412 4,377 874 324 129 158 36 1 250 1,000 4,800 400 4,305 295 963 87 37 1 8,993 26,546 337 16 1,898 25,330 4,864 701 1,028 2,071 28 1 2,180 8,106 263 6,234 3,452 145 252 02823 39 1 40,383 369,169 675,892 300 37 38,376 658,942 318,015 50,944 5,000 2,649 11,855 40 1 11,598 161,302 659 11,091 144,825 7,768 7,034 2,352 10 479 41 1 3,369 1,989 76,700 337 747 27,948 42,382 8,857 2,461 42 1 3,268 54,053 1,251 2,456 44,793 8,946 2,057 276 43 1 27,672 26,559 93,811 544 4,652 85,285 46,911 3,877 1,539 3,313 44 1 244,985 178,228 261,323 3,201 24,255 492,310 236,121 19,854 4,702 10,435 45 1 3,053 9,200 5,049 624 16,359 539 273 116 46 1 14,936 40,529 120,123 1,044 189 353 121,326 6,610 34,016 7,968 1,520 4,879 150 47 1 4,330 3,830 38,780 58,789 2,587 1,570 4,494 48 1 5,219 48,962 300 2,649 37,026 10,331 3,559 16 49 1 722 504 961 68 377 1,696 48 50 1 49,745 1,000 255,529 2,090 226,773 40,949 19,341 21,211 51 213 4,130 4,053 88 37 165 52 79 1,563 1,585 29 28 53 7,600 20,616 15,626 43,736 196 54 2,026 1,076 34,714 38 33,439 1,877 1,239 1,149 55 252,529 45,000 238,850 22,250 3,190 430,158 110,407 6,314 14,949 56 17,910 962 58,015 29 25 66,600 6,041 3,381 419 57 1,356 1,500 31,568 185 77,084 3,581 1,350 2,691 43 58 2,158 2,551 33 181 1,690 2,626 193 29 23 59 1,926 255 39,339 570 34,720 1,058 4,500 646 1,165 60 15,511 1,802 90,927 85 45 98,295 5,118 3,708 1,249 61 4,923 56,436 359 480 52,739 1,000 2,527 62 3,630 520 41,704 49 50 1,450 38,105 4,000 938 1,460 63 813 761 34,144 97 28,524 1,769 4,000 1,423 99 64 2,781 2,500 90,415 853 15 82,125 6,223 5,309 2,907 65 1,223 2,896 3,014 384 75 108 28 66 8,187 104,418 14,565 31,321 104,105 40,778 6,904 2,131 4,573 67 6,962 1,582 73,798 265 73,960 65 3,632 2,651 2,299 68 19,289 5,514 164,101 186 178 164,929 2,532 10,017 6,708 6,082 69 8,314 2,000 91,562 247 313 3,000 90,926 3,232 5,158 120 70 16,042 2,463 217,034 743 75 203,091 1,011 10,283 170 12,312 9,510 71 708 12,135 18 204 12,415 650 72 33,218 7,921 291,933 2,389 83 217,530 13,712 8,386 5,750 73 6,461 1,065 4,956 53 426 10,096 1,009 770 174 74 2,118 20,361 22,287 2,029 46,821 72 5,779 65 75 8,725 12,220 52,629 199 36,255 27,940 4,304 5,158 116 76 1,335 209 13,939 129 14,438 422 155 588 77 2,324 24,931 23,578 780 4,524 43,599 1,733 1,757 20 78 1,405 9,247 3,607 169 8,908 4,361 548 611 79 861 656 38,607 32 33,633 390 1,345 2,408 2,374 80 4,486 2,850 228,721 810 211,169 5,734 19,281 692 81 5 101 36,434 17 433 33,778 799 1,384 1,029 82 5,670 6,838 410,258 1,222 354,650 14,353 22,623 9,000 14,404 8,968 83 7,002 407 66,647 430 43 68,859 1,980 3,690 84 1,111 3,091 152,699 549 82 121,512 4,700 5,403 20,000 4,377 940 85 718 10,182 820 420 11,185 140 25 86 11,115 5,016 175,542 208 282 167,161 828 12,639 6,908 5,527 87 1,088 930 112,894 73 285 100,449 2,522 4,262 5,539 2,500 88 22,118 13,240 544,295 858 10 481,972 31,942 37,074 29,534 89 17,548 6,500 200,565 73 194,919 15,246 9,826 4,695 02924 90 $3,026 $105,153 $53 $432 $558 $99,450 $399 $4,740 $4,546 $32 $56 91 26,077 138,500 589 225 144,406 10,101 3,025 7,731 48 92 214 $200 58,928 162 35 53,988 401 1,136 2,522 1,492 93 6,982 11,660 17,375 576 691 94 2,106 38,040 $137 32,900 2,623 429 $2,000 1,957 100 95 9,762 110,277 1,328 160 109,733 457 4,000 4,112 3,225 96 2,040 31,702 193 145 32,280 800 106 834 97 3,715 2,003 42,731 39,578 4,729 114 2,424 1,604 98 9,255 1,250 183,179 787 1,243 175,505 368 9,080 16,753 58 99 751 214 9,306 132 7,333 153 390 2,000 435 92 100 33,788 57,553 1,033,846 4,892 935,720 82,676 76,883 34,750 101 21,103 612 78,364 78,320 10,890 2,770 3,000 5,095 4 102 7,701 37,500 12,165 100 44,250 418 9,722 3,019 48 103 5,771 204 90,618 54 3,355 88,113 1,414 400 3,365 104 2,643 4,000 149,054 142,800 3,863 9,034 105 226 3,945 123,042 1,579 108,322 2,738 10,645 134 5,512 441 106 2,000 165,604 145,350 8,293 6,095 7,866 107 482 5,333 2,628 600 272 1,300 1,015 108 150 8 86 62 10 109 69 2,095 811 2,475 45 405 39 11 110 25 1,950 83 1,877 181 111 171,778 24,020 1,222,940 58,800 214,425 1,214,736 3,240 16,048 24,080 13,609 112 3,311 2,183 38,222 1,549 26,584 13,274 1,026 673 538 72 113 6,296 9,375 342 4,018 11,253 88 654 114 9,049 11,738 83,088 590 73 10,507 56,314 40,044 2,203 479 115 190 2,098 3,085 5,000 5 97 271 116 62 3,718 3,390 90 300 117 316 6,862 4,087 60 331 1,500 600 118 12 3,385 2,788 3 293 363 119 91 12,483 94 209 8,172 237 131 2,500 1,017 820 120 36 1,011 985 62 121 3,135 10,500 17,425 127 237 28,694 710 1,555 459 Total 1,505,298 1,362,901 11,885,412 123,513 80,811 9,628 165,610 9,210,5474 4,094,833 733,350 56,582 82,099 420,910 203,716

Table 15.—ASSETS AND LIABILITIES OF INDIVIDUAL CREDIT SOCIETIES AS OF DECEMBER 31, 1925

1 Data as of Oct. 31. 1 Data as of Oct. 31.

RESULTS OF COOPERATIVE CREDIT

Glowing reports of the beneficial results of credit unions are common, especially from countries where the economic condition of the lower classes is bad, where debt is prevalent, and where thrift is lacking. The work accomplished by the credit societies in these countries in raising the economic level and in developing thrift has been noteworthy. Such improvement, however, has come through self-help by the cooperators and through the development of character and self-reliance in members capable of such development. No amount of cooperative effort will help those who fail or refuse to do their part.

As one of a generally small group in which each member knows the others, the borrower's wish to stand well with the others is usually a dominant factor in impelling him to meet his obligations to the society promptly. If he does not, his indorsers must bear the loss, and his standing suffers.

Credit cooperation is generally successful, although, where the membership has lacked or failed to develop character, the opposite has been true. The secretary of one society which was unsuccessful states that its failure to succeed was due to “the bad faith shown by the borrowing members.”

Ofttimes it is the untruths that are sworn to by applicants for loans; sometimes the falsity in the character of the individual recommending a loan to an applicant; and then again the selfish reasons of the officials in favoring certain of their henchmen when it is a question of whether or not to grant a loan.

The —— Credit Union of —— was forced out of business because of its bad loans mad uncollectible through the bankruptcy of the borrower and the bad faith of those who had the means to pay but who by divers methods successfully contrived not to pay the balances due.

In another instance, a representative of a firm whose employees had a credit union writes as follows concerning the discontinuance of the cooperative organization:

In the first place, it was formed principally for the purpose of making loans to employees; additional features such as a savings department and a Christmas club were added incentives, which undoubtedly were very helpful to the employee. However, after a study of the loans was made, it was discovered that 90 per cent of them were character loans involving 350 or less. Coincident with this, it was found that the number of attachments being made against employees and the company by downtown installment houses had materially increased. The conclusion was reached that instead of the loan having a beneficial effect upon the employees, it was stimulating them toward tieing up with installment houses with the feeling that if they were unable to pay, they could fall back on the credit union for a loan. Since the abandonment of the credit union, the number of attachments has materially decreased. Another factor causing us to abandon the credit union was that the number of employees who became members of it was not sufficiently large to put it on a thoroughly paying basis. Considerable work was necessary to keep the books correctly and a great deal of employees’ time was necessary toward administering it. Summing it all up, it was decided that the benefits obtained did not in any way approach the cost of operating, and at a vote of shareholders it was decided, therefore, to dissolve.

From the tone of this letter it is quite possible also that an additional factor may have been a paternalistic attitude on the part of the company. The letter suggests, at least, that the company may have taken a part, perhaps a leading part, in establishing the credit union and in operating it, so that the employees felt it was a company project and not theirs, and therefore did not have the proper personal interest in or responsibility for it. Such an attitude on the part of members is always fatal to a cooperative enterprise.

03126

On the other hand, reports as to losses from bad debts by the societies reporting in the present study show that members are generally honest and anxious to meet their obligations. One society which has been in operation for nearly 10 years and has made loans to its members aggregating $5,855,528, has in that time had only on a borrower default on his loan, the loss being $40. Another has during its term of existence paid out $3,209,977 in loans and has had bad debts of $8,046, or one-fourth of 1 per cent of its loans.

Of the 176 credit unions which have reported in the present study, losses through failure of borrowers to repay loans have been sustained by 58 societies. The losses sustained by 54 of these, for the whole period of their operation, have amounted to only $63,122, or an average of $1,169 per society having such losses. The sums so lost by the individual associations range from $9 to $15,000. On the basis of the total number of societies covered (including those which have lost no money in this way) the sums so lost average $359 per society. Data as to the total amount of loans granted by all the societies during their entire period of operation, necessary for an accurate basis for computing the per cent of such loss, are not available. The losses of these societies, however, form only three-tenths of 1 per cent of the loans made in the single year 1925 and would form a much smaller proportion of the total loans made throughout the societies’ existence.

The bright side of the picture is still further emphasized by the experience of the societies which extend loans without security. Although some credit societies require security of some kind on practically all loans, others do a large proportion of the business in unsecured loans. One organization, which at the end of 1925 had outstanding in loans the sum of $95,692, of which $39,106, or 41 per cent, was in unsecured loans, has been in operation 7¼ years and had never had a borrower who failed to repay his loan. Another, a small society in operation for three years, has also lost no money through bad loans; of $815 in outstanding loans at the end of 1925, $497, or 61 per cent, was unsecured. A third had outstanding loans of $120, 123, of which $88,165, or 73 per cent, was unsecured; this association reported that it has had some losses through this practice but did not state the amount of the loss. A fourth society had outstanding at the end of the year $14,163, all unsecured. This organization has been lending money to its members for nearly six years and has never lost a cent.

GENERAL CHARACTERISTICS OF WORKERS’ PRODUCTIVE SOCIETIES

The “ideal” workers’ productive society is composed of workers in the shop who have contribute all the capital of the enterprise and do all the work, the business being managed by men elected by and from the members. The worker-owners work on a wage basis, but receive in addition any profits made from the business, these being divided among the members by various methods. The cooperative workshop, however, is exposed to a temptation not present in other forms of cooperation. In the consumers’ society, for instance, it is to the interest of the members to enlarge the membership, for each new member helps, with the purchasing power he brings in, to increase the business of the society. The increased volume of business reduces the percentage of overhead expense and increases the savings made in the business and therefore, also, the benefits accruing to each member. In the workers’ societies the situation is exactly reversed. Every additional member increases the number who must share in the profits, though not necessarily increasing the business done or the amount of profits to be shared. Each new member, therefore, is apt to be looked upon as reducing the profits of the others. Especially if the society achieves business success, there may develop an increasing tendency among the members to limit their numbers so as too retain all the savings from the business for themselves, and, if additional workers are needed, to secure these as employees, not as members. The impetus to such an 03328attitude is also all the greater in a workers’ productive organization, inasmuch as the society represents the member's livelihood; and as the matter is a serious one to them an exclusive membership policy is understandable and excusable. In direct proportion as this occurs, however, the society loses its cooperative character.

Some unavoidable limitation upon membership is, of course, imposed by the nature of the business or work carried on and this becomes greater with the degree of skill required. If the principle that all the members are to be workers in the business is lived up to, then obviously in a highly specialized undertaking, such, for instance, as the manufacture of hand-blown window glass, only persons skilled in the various trades can be admitted to the society as members.

The present study has disclosed all degrees of cooperativeness among the workers’ productive societies. Some of these cooperative companies are in reality more of the nature of trade-union or even joint-stock enterprises than of cooperative workshops and this fact is recognized by the companies themselves. Often the greater part of the capital has been furnished by the local trade-union of the members’ craft and in a number of cases only unionists are eligible for membership in the company. One of the most successful fish cannery societies has reached the point of being more nearly a profit-sharing than a cooperative society, as only a small proportion of the workers are stockholders and of the employees only the actual producers—the fishermen—share in the profits.

These societies could not, therefore, be measured by the same strict standard as the consumers’ societies. In the consumers’ movement, while material benefits from the enterprise and desired, there is usually also a strongly ethical quality, a vision of something above and beyond the shopkeeping activities, with shopkeeping simply a first step toward a better ordering of society to be striven for patiently but hopefully in the interest of all consumers. This may not be true of individual cooperators nor of each individual society, for many have material benefit as their main and only object, but it is true of the consumers’ cooperative movement as a whole. This wider vision seems to be less characteristics of the workers’ productive societies, and in some instances complaint is made of lack of cooperative spirit even in the small sphere within the company. One report states that “the greatest difficulty is making the stockholders work toward the success of the business and not just a job. It is hard to convince them after a few losing years that the success of the business will mean theirs. * * * About the easiest thing they do is vote for a raise in wages. Some of us feel that we should be conservative and try to build up a reserved instead of just getting by.”

To some extent, no doubt, this is due to the fact that the cooperative productive societies have no central organizations whose duty it is to work for the increase of cooperative knowledge and spirit among the members. The shingle mills of Washington had a central organization, but this was a marketing rather than an educational body, and it failed a few years ago.

YEAR AND CAUSE OF ESTABLISHMENT OF SOCIETIES

These societies average just under 10 years of age. Four were started in each of the years 1915 and 1920, two each in 1916, 1921, 1922, and 1924, and one each in 1886, 1896, 1908, 1910, and 1925.

03429

Three were started as a result of a strike or lockout in the industry. Difficulty in coming to terms with the employers led to the opening of a cooperative factory by the strikers to provide employment for some, at least, of their number. In one of these cases the formation of the new company was assisted by the local chamber of commerce. A fourth factory was started by the former employees of a cigar factory which dealt almost exclusively with saloons. Upon the advent of prohibition this outlet for the product was closed, sales fell off, and more than 300 employees lost their positions. Certain of the displaced workers organized the cooperative company with the hope of providing employment for their members, and of disposing of the product through cigar and confectionery stores.

Six factories came into being because of the desire of the workers to secure better wages and working conditions. A seventh states simply: “We wished to progress.” Two were organized to provide steady employment for the workers, “with profits a minor factor”; in one case there was extreme depression in the industry and the men had been idle for a year. One society puts the cause for its formation on a broader ground, “the public convenience.”

MEMBERSHIP

As already stated, a number of the societies limit their membership to trade-unionists in general, or to members of the particular craft of the society. Others make no specific limitation, admission being open to anyone who purchases a share of stock, though, expect in a society doing unskilled work which anyone could do, this could hardly be carried out cooperatively. One society admits to membership “workers only,” and one society specifically provides that—

No person shall become or remain a stockholder in this company unless he is actually engaged in working in some capacity in and about or for the company, devoting his entire time, energy, and attention to the promotion and conduct of the business of the company, and shall remain a stockholder only so long as he continues in such connections and employment of the company unless excused for a fixed period by a majority vote of the trustees of the company.

EMPLOYMENT AND WAGE POLICIES

How far these societies have attained the state in which the working force and the owners are one and the same is shown by Table 16.

Society Shareholders Number Number employed in factory Non-shareholder employees Society No. 1 200 1 2 Society No. 2 650 70 30 Society No. 3 8 4 4 Society No. 4 69 14 Society No. 5 110 17 Society No. 6 150 23 3 Society No. 7 203 25 250 Society No. 8 25 25 Society No. 9 80 3 3 Society No. 10 45 38 3 Society No. 11 16 13 14 Society No. 12 11 11 21 Society No. 13 382 13 63 Society No. 14 21 10 8 Society No. 15 22 16 15 Society No. 16 200 20 180 Society No. 17 9 9 Society No. 18 16 16 22 Society No. 19 89 86 45 Society No. 20 40 40 Society No. 21 92 15 150 Total 2,438 485 807

Table 16.—NUMBER OF MEMBERS AND OF EMPLOYEES OF WORKERS’ PRODUCTIVE SOCIETIES, 1925

1 Not reported. 2 10 per cent of working force. 3 This society has not yet started operation. 03530

It is seen that in only three societies are the shareholders identical with the workers. One of these is not a workshop, but an aggregation of fishermen who have combined to market their catch. Two other societies employ no workers outside their own membership, but the business is unable to give employment to all the members. Society No. 10 comes very near the standard, while Societies Nos. 7, 16, and 21 show the most pronounced trend toward the joint-stock practice. Society No. 10 follows recognized cooperative practice quite closely in most respects, ranking high among the societies studied. The besetting temptation of the workers’ productive society already mentioned—restriction of membership for profit's sake—has had little or no effect upon it. A special effort is made to induce employees to become members. “So far as possible all the employees of the company shall be stockholders, holding one share each of the capital stock.”

The 21 societies reporting give employment to nearly 1,300 workers.

All but four of them work the 8-hour day. One of these works a day of 7 hours, one of 8 hours and 40 minutes; in the third the skilled workers have the 8-hour day, but the unskilled workers have one of 9 hours. The fourth society has a 48-hour week, 5 hours being worked on Saturday and 8 3/5 hours on each of the other days.

Fifteen societies pay the union scale of wages; 1 reports that it pays the current rate, but that there is no union scale in the locality; 1 society pays more than the scale; 1 has not yet commenced business; and 2 failed to report on this point.

CAPITALIZATION AND BUSINESS

The value of the share ranges higher in the workers’ productive societies than in the consumers’ organizations. The lowest found was $10, in one society; $100 was the common value, and $200 the highest. One society allows an investment of $5,000 per stockholder. In another, which is gradually paying off the indebtedness on its plant, the worker-owners, in order to meet these regular payments, leave in the company 25 per cent of the amount due them in wages, this applying on the purchase of stock up to a limit of $2,000. When the amount so accumulated to any stockholder's credit exceeds $2,000, under a refunding system the surplus is to be returned, and this will continue until all members hold an equal amount of stock in the company. In four societies the stock is divided equally among the members.

Table 17 shows the paid-in share capital and the amount of surplus and reserve accumulated by the societies reporting:

Kind of business done Number of societies Paid-in share capital Surplus and reserve Cigar factories 4 $53,952 1 $900 Fish canning and sales societies 3 205,074 1 445,677 Glass (window) factories 2 1 75,000 Laundries 2 53,283 1 4,700 Potteries 1 71,900 2 Shingle mills 6 158,500 3 75,435 Shoe factories 2 140,700 53,956 Veneer factories 1 265,000 73,922 Total 21 4 1,025,509 5 653,590

Table 17.—PAID-IN SHARE CAPITAL AND SURPLUS AND RESERVE OF WORKERS’ PRODUCTIVE SOCIETIES, DECEMBER 31, 1925, BY KIND OF BUSINESS DONE

1 1 society. 2 Not reported. 3 3 societies. 4 20 societies. 5 9 societies. 03631

Table 18 shows the amount of business done in each of the six years, 1920 to 1925, by the 18 societies reporting on this point:

Kind of business Number of societies reporting Amount of business 1920 1921 1922 1923 1924 1925 Cigar factories 4 1 $45,055 1 $94,101 1 $104,570 1 $131,842 2 $112,136 $141,824 Fish canning and sales societies 2 3 1,019,054 3 601,298 3 632,812 3 721,043 1 668,756 764,192 Glass (window) factories 2 3 621,548 3 438,466 2 231,653 2 214,334 3 102,398 295,979 Laundries 2 144,643 125,142 123,729 143,495 177,711 173,585 Shingle the mills 6 3 361,781 4 640,068 5 809,196 5 807,450 5 837,903 992,900 Shoe factories 2 3 1,702,611 3 853,509 1,191,989 1,301,842 1,262,414 1,419,698 Veneer factories 1 ( 6 ) 536,854 924,812 712,275 743,535 Total 19 7 3,834,692 8 2,752,584 9 3,630,803 10 4,245,818 11 3,873,603 4,533,329

Table 18.—AMOUNT OF BUSINESS DONE BY WORKER'S PRODUCTIVE SOCIETIES, 1920 to 1925.

1 2 societies. 2 3 societies. 3 1 societies. 4 4 societies. 5 5 societies. 6 Not reported. 7 9 societies. 8 11 societies. 9 14 societies. 10 15 societies. 11 16 societies.

AMOUNT AND DIVISION OF PROFITS

In addition to the wages received, the stockholder employees are also entitled to a share of any profits made by the business. In all but two cases the societies studied divide the profits on the basis, not of wages, but of stock, just as in a joint-stock company; in one of the two exceptions profits are divided according to the output of each worker-owner, while in the other they are divided equally. In 1925, however, though profits aggregating $248,804 were reported by 12 societies, in only 4 were any returns from profits received by the shareholders. These societies divided the sum of $109,470. The other 8 societies retained all of the net earnings for use in the business. Some of the societies, even though now on a profit-making basis, are in debt, due to deficits in previous years, to losses from fire, etc. The shingle mills also lost money when their marketing organization, and later a logging organization, failed.

The statement below shows the profits reported for 1925 by the 12 societies which were able to make a profit that year:

Societies reporting profit or less Amount of profit reported Cigar factories 2 1 $861 Fish canning and sales societies 1 27,017 Glass (window) factories 1 2 9,198 Laundries 2 4,858 Shingle mills 6 3 18,331 Shoe factories 2 143,346 Veneer factories 1 54,391 Total 15 4 248,804 1 1 society; the other reported a loss of $10,148. 2 Loss. 3 5 societies; 1 other society reported a loss but did not state the amount. 4 12 societies.

MARKETING PROBLEMS

Workers’ societies are often handicapped by the fact that even though the members be skilled workers in their trade they have had little or no knowledge of salesmanship or of market conditions. They 03732therefore are at a disadvantage and sometimes experience difficulty in disposing of their product. Inquiry was made as to whether such was the case in the societies studied, and also as to the channels through which they dispose of their output. Six societies report that they have some trouble in disposing of their goods. One of these societies found the marketing of its products so serious a problem that, notwithstanding the fact that the officers served without salary, the sales did not cover the overhead expenses and it was obliged to close out its business early in 1926. Another attributes its sales difficulties to a “prejudice against cooperation.” The remaining societies report no difficulty on this score.

Seventeen of the workshops sell their goods on the open market, three others find an outlet also through consumers’ cooperative societies, and only one society (which also sells to other cooperative societies and on the open market) uses trade-union channels in selling its goods.

BUSINESS METHODS AND MANAGEMENT

The final authority over the operation of the society lies, of course, in the general meeting of stockholders where in the majority, 16, of the societies studied each stockholder has but one vote irrespective of his capital holdings in the company, and in 9 no proxy voting is allowed. The immediate responsibility, however, rests upon the board of directors and upon the manager. The manager receives his position by election—by the board of directors in 10 societies and directly by the shareholders themselves in 9 societies. One factory has no manager, the affairs being carried on by the board of directors and the officers. The remaining society, which is just building its factory, has not reached the point of selecting its manager.

Check is kept upon the manager by the board of directors and by audit of the books. All but two of the societies in operation in 1925 for which reports were received have a regular audit of accounts, this being done by a professional accountant in 12, by a committee in 3, and by the board of directors in 1. Of the two factories which do not audit their books regularly, one has an occasional audit by a professional auditor and the other by a committee of members.

EXPENSES OF OPERATION

Table 19 shows for three societies—a laundry, a shingle mill, and veneer mill—which furnished detailed expense accounts, the per cent of total sales which went for each item of operation:

Item of expense Per cent 1 spent for each item, by— Laundry Shingle mill Veneer mill Materials and supplies 8.0 64.7 46.8 Wages and salaries 71.1 28.4 39.6 Depreciation 3.6 1.1 2.9 Rent 2.0 .1 Heat light, and power 4.9 .1 2.0 Advertising .8 .2 2 Taxes and insurance 1.8 1.8 2.8 Office supplies .5 .4 .1 Repairs .4 2.4 Bad debts 2 2 2 Delivery 2.5 .5 Interest 1.6 1.7 Miscellaneous 1.3 .1 .6 Total 98.5 98.6 97.7 Not profit on sales 1.5 1.4 2.3

Table 19.—EXPENSES OF OPERATION OF THREE WORKER'S PRODUCTIVE SOCIETIES FOR 1925

1 Based on sales. 2 Less than one-tenth of 1 per cent.

ASSETS AND LIABILITIES

A detailed statement of assets and liabilities as of December 31, 1925, for the 11 societies which furnished financial statements is shown in Table 20. As is seen, the combined balance sheet of these 11 societies amounts to $2,627,834.

03934 Society No. Total business for 1925 Assets Surplus and deficit account Liabilities Cash on hand and in bank Merchandise inventory Buildings, land, and equipment Bills and accounts receivable Miscellaneous Loss Gain Share capital Bills and accounts payable Reserve fund Surplus and undivided profits Loan capital Miscellaneous 2 $795,000 $13,063 $57,613 $70,018 $177,998 $2,441 $3,326 $117,200 $72,855 $76,442 $33,146 $18,164 6 50,000 69 16,608 3,570 8,587 1,891 $2,466 27,100 109 $6,091 7 749,192 27,598 79,954 287,063 232,527 83,988 175,074 83,724 452,332 10 282,008 433 17,108 50,367 4,658 4,088 1,635 54,600 12,777 7,777 12 144,929 741 20,232 27,873 3,413 2,508 20,000 28,445 6,322 13 145,985 377 3,421 39,250 9,386 2,069 15,919 40,283 3,506 23,738 2,895 16 223,794 362 88,090 44,183 14,923 4,207 50,793 150,000 38,131 16,427 17 155,921 1,210 21,301 21,341 6,755 1,170 4,176 15,000 6,844 25,757 18 188,297 81 24,981 99,167 5,595 1,265 43,200 25,048 43,356 7,614 11,871 19 743,535 30,972 117,681 200,434 25,451 4,351 275,000 4,679 73,922 25,288 21 623,608 191,463 159,932 28,597 173,234 42,368 400 25,500 22,955 522,034 25,500 Total 266,369 606,916 872,008 662,527 150,441 69,578 9,137 942,957 274,109 481,378 747,833 64,498 107,922

Table 20.—ASSETS AND LIABILITIES OF INDIVIDUAL WORKER'S PRODUCTIVE ASSOCIATIONS AS OF DECEMBER 31, 1925

04035

Some indication of the financial status of the societies is given by Table 21 (derived from the table preceding), which shows the percentage of working capital represented by fixed assets (buildings, furniture, fixtures, lands, etc.), and bills and notes payable and receivable, and the number of time the capital was turned in sales, for the 11 societies for which information was available. In this table paid-in share capital, loan capital, reserve, and surplus are all regarded as “working capital.” This was done because in many of the societies all these funds are in use as capital and merely to use the paid-in share capital would not represent the true situation.

Society Relation of— Fixed assets 1 to capital 2 Accounts and notes payable to capital 2 Accounts and notes receivable to capital 2 Ratio of sales in 1925 to capital 2 Per cent Per cent Per cent Society No. 2 30.8 32.1 78.5 3.5 Society No. 6 10.8 .3 25.9 1.5 Society No. 7 45.8 13.3 37.6 1.2 Society No. 10 92.5 23.4 3.5 5.2 Society No. 12 105.9 108.1 12.9 5.5 Society No. 13 61.3 5.5 14.7 2.3 Society No. 16 29.4 24.1 9.9 14.9 Society No. 17 52.4 16.8 16.6 3.8 Society No. 18 105.3 26.6 5.9 2.0 Society No. 19 57.4 1.3 7.3 2.1 Society No. 21 5.0 30.4 1.1

Table 21—RELATION OF FIXED ASSETS, ACCOUNTS PAYABLE AND RECEIVABLE, AND SALES TO CAPITAL IN 11 WORKERS’ PRODUCTIVE SOCIETIES

1 Buildings, land, and equipment. 2 Share and loan capital, reserve, and surplus.

The constitution and by-laws of two associations, one a cigar factory and the other a mill, are given in Appendix B (p. 110) as representative of these types of organizations.

CHARACTERISTICS OF THE CONSUMERS’ MOVEMENT

The consumers’ society in its organization varies little from country to country. The fundamental laid down by the Rochdale weavers have been adopted as guiding principles wherever the movement has spread.

1. Unrestricted membership, with capital shares of low denomination which may be paid for in installments. This is an important feature. Since the cooperative movement is above all a movement of the working classes, it is essential that the financial undertaking be made easy and within the workingman's means.

2. Limitation of the number of shares to be held by any one member. Members of means are not excluded, but in order that democracy may prevail, it is well that there should be no wide inequality in the members’ financial standing in the society.

3. Democracy in government, with officers elected by an responsible to the members, and each member entitled to one vote only, irrespective of the number of shares he holds. This feature immediately eliminates any tendency toward control of the society by the more well-to-do members, as in the stock company.

4. Sale of goods at prevailing market prices. It is the policy of cooperative societies to sell only pure goods and as far as possible only goods produced under favorable working conditions. For this reason “union-label” goods are in demand by cooperative societies, since the label is a guaranty of productive under fair wage and working conditions. Prevailing market prices are charged, for two reasons: Under the “cost-plus” system—sale at cost, plus a small percentage estimated as sufficient to cover expense of management, handling, etc.—it is next to impossible to foretell accurately what the expense will be, and the slightest miscalculation leads to the failure of the store, since there is in the very nature of the plan no reserve to fall back on. Again, price cutting at once attracts the attention and arouses the hostility of the private dealer; it is also unnecessary, since the purpose of price cutting can be accomplished through the return of the patronage dividend.

5. Cash sales to avoid the loss attendant upon the extension of credit and to enable the society to make the best use of its capital.

6. Return of dividend to each member, not on the stock held, but in proportion to the amount of business he has done with the store. The dividend is the member's share of the savings or “profits,” that is, of the sum remaining after the deduction from the trading surplus of the amounts to be set aside for educational purposes, reserve, and depreciation fund. The dividend is computed not upon the share capital but upon the total sales, and is distributed in accordance with the amount purchased by each member. It is evident that the member's patronage, not the money he has invested in the store determines the amount he receives in dividend. This feature is peculiar to the cooperative movement. Thus the member whose trade at the store has amounted to $100 during the quarter would receive, on a 6 per cent dividend, $6.

04237

Not all cooperative societies, however, conform to all of these principles, as will appear.

An attempt has been made to include in this report, as in the previous one, only societies that are genuinely cooperative. To determine this, the Rochdale principles were taken as a standard of what the cooperative associations should be, the returns of the societies being carefully scrutinized and the societies tested according to this standard, with particular reference to the return of patronage dividends and the method of voting. Allowance was made for the fact that some of the associations are organized under the regular state corporation laws which often specify that voting and distribution of profits shall be on the basis of shares, and that in some States there is no cooperative law. Not all of the societies for which information is here given are Rochdale in every respect. Some are included which lack certain cooperative features but which nevertheless conform to the standard in enough respects, especially considering the requirements of corporation law, to warrant their being classed as cooperative societies.

It is recognized that statistical returns give no indication of the spirit of the society and that the organization may conform in structure and practice to every one of the accepted cooperative tenets and at the same time be utterly lacking in the cooperative spirit and vision. The spirit of the society can be determined only by close first-hand study, and this was unfortunately impossible. The figures, therefore, may and probably do cover associations uncooperative in spirit. With this exception, however, it is believed that the figures can be accepted as covering only true cooperatives.

TYPES OF SOCIETIES INCLUDED

Data are at hand from 479 consumers’ societies, distributed according to type as shown below. It will be noted that, although housing societies are consumers’ societies, they have been treated separately in a succeeding section of the report. This was done because of the peculiar interest attaching at present to the cooperative provision of homes because of high rents and scarcity of housing accommodations. The data given in the present chapter are therefore exclusive of the housing organizations.

Retail store societies dealing in— Number Per cent General merchandise 324 67.6 Groceries 49 10.2 Groceries and meats 38 7.9 Students’ supplies 11 2.3 Other commodities 9 1.9 Total 431 90.0 Wholesale societies 3 .6 Gasoline filling stations 10 2.1 Bakeries 9 1.9 Laundries 2 4 Boarding houses 12 2.5 Restaurants 5 1.0 Water supply societies 2 .4 Miscellaneous societies 5 1.0 Grand total 479 100.0

The societies, listed above as dealing in “other commodities” include organizations handling coal only, 1 art supplies, 1 dry goods and 04338furniture, 1 men's clothing, and 4 miscellaneous articles. The “miscellaneous” societies include 1 milk-distributing society, 1 garage, 1 light and power society, 1 printing office, and 1 undertaking establishment.

The term “general merchandise” covers a variety of goods, such as groceries, meats, light hardware, shoes, various articles of clothing, etc. The farmers’ societies usually handle farm supplies, feed, lumber, and even farm machinery, and in Illinois the general cooperative store is likely to carry also miners’ supplies and equipment. Several of the general-store societies of Michigan and Wisconsin also deal in forest products.

Considerable versatility in branching out into new lines is shown by the societies studied. Nine societies, in addition to their regular business, handle coal; one of these sells ice as well, and another also operates a milk route. One store society also deals in gasoline, another in automobile tires, another in oil and tires, and two others in gasoline and oil. One of the gasoline filling stations also carries tires and accessories. A milk station as well as a grocery and meat business is operated by one organization, three others run bakeries in connection with the store, and still another has both a milk station and bakery. One of the Finnish societies supplements its store business with a bakery and restaurant, and another with a milk station, coal yard, restaurant, and bakery. An Italian general-store society also has a pool room and an assembly hall for its members. A northern society which has a general store also does a public dock and ship-chandlery business, and one of the older students’ societies, in addition to the textbooks, etc., can supply its members with clothing, tailor service, kitchen utensils, and paints. But perhaps the most varied activities are found in a New York society which has four cafeterias, a bakery, food shop, lending library, and credit union; the policy of this society is to add to the service offered rather than to “spread thin” a single service over one new group of members after another.

Five of the societies are buying-clubs which have no store but simply pool the orders of their members.

The cooperative gasoline and oil stations are a very recent development in the cooperative movement.

The cooperative boarding houses represent an interesting phase of the cooperative idea. These are mainly Scandinavian and Finnish societies composed of unmarried men who band together to supply themselves with board and lodging without profit. Many of these organizations also accommodate transients. In some cases the building is owned by the society. Many of these societies are operated at cost, each man paying in advance the amount estimated as needed to cover the week's expenses. The boarding houses reporting have housing accommodations for 312 roomers and serve meals to an average of 1,513 persons per day. The number of persons served varies considerably from season to season. One northern society reports that in the summer when the ore docks in the locality are active the number of boarders runs up to as high as 80 but in the winter the number may fall as low as 10.

The four restaurants which reported as to persons fed average 4,400 meals per day.

04439

A total of 534 establishments is operated by 456 societies and 447 of these societies give employment to 3,409 full-time and 49 part-time workers.

GEOGRAPHICAL DISTRIBUTION

Table 22 shows the geographical distribution of the 479 societies making returns.

State General stores Other retail store societies Boarding houses and restaurants Gasoline filling stations Bakeries Other types of societies Total Alabama 1 1 Alaska 2 2 Arkansas 3 3 California 3 2 5 Colorado 1 1 Connecticut 6 1 7 Idaho 2 1 3 Illinois 16 8 3 1 28 Indiana 2 2 4 Iowa 13 5 1 19 Kansas 25 2 27 Kentucky 2 2 Maine 1 5 6 Massachusetts 9 17 1 5 32 Michigan 17 8 6 31 Minnesota 99 9 3 8 1 120 Missouri 2 2 4 Montana 2 2 Nebraska 21 2 1 1 25 New Hampshire 2 2 New Jersey 5 1 6 New York 1 6 2 2 1 12 North California 1 1 North Dakota 13 1 14 Ohio 10 6 16 Oklahoma 3 1 4 Oregon 1 1 2 Pennsylvania 9 4 1 14 Rhode Island 2 1 3 South Dakota 10 2 12 Tennessee 2 2 Texas 1 1 Virginia 1 1 Washington 16 3 3 22 West Virginia 5 1 6 Wisconsin 30 3 2 3 38 Wyoming 1 1 Total 324 107 17 10 9 12 479

Table 22.—GEOGRAPHICAL DISTRIBUTION OF SOCIETIES FURNISHING REPORTS FOR 1925

YEARS OF OPERATION

The 423 retail store societies reporting as to age have had an average business life of 10 years and 1 month, 2 the other types of societies, 6 years and 4 months, and both classes combined had been in operation, on the average, just under 10 years. The number falling within each age group is as follows:

2 In the 1920 study (see Bul. 313) the averages was 4 years and 11 months. Retail stores Other societies Less than 1 year 1 1 year and under 3 years 13 8 3 and under 5 years 22 3 5 and under 10 years 235 27 10 and under 25 years 130 10 25 years and over 22 Total 423 48 04540

It is evident from the above that more than four fifths of the societies have been in business from 5 to 25 years (56 per cent for from 5 to 10 years and 30 per cent for from 10 to 25 years).

Twenty-two store societies, 4.7 per cent of the total, have been in operation more than 25 years; six of these have been in business 25 and under 30 years, eleven, 30 and under 40 years, four, 40 and under 50 years, and one society for half a century. Of these, 13 are general stores, 3 are grocery stores, and 6 are students’ societies. There are 1 each in Connecticut, Indiana, New York, Ohio, Rhode Island, and Texas, 2 each in Massachusetts, Michigan, and Wisconsin, and 3 each in California and Kansas, and 4 in Minnesota. Of the three Kansas societies, one has been in operation 32 years, one 49 years, and the third, 50 years.

Table 23 shows the number of each type of society reporting which were started in each year or period fro 1876 to 1925.

Store societies Nonstore societies Grand total Year or period General Other Total Boarding houses and restaurants Gasoline filling stations Bakeries Other Total Number Percent 1876-1880 2 1 3 3 0.6 1881-1885 2 2 2 .4 1886-1890 3 3 3 .5 1891-1895 6 2 8 8 1.7 1896-1900 3 3 6 6 1.3 1901-1905 5 3 8 1 1 9 1.9 1906-1910 29 6 35 1 1 36 7.7 1911-1915 65 10 75 4 2 6 81 17.3 1916 19 7 26 1 1 2 28 6.0 1917 22 13 35 2 2 4 39 8.4 1918 31 12 43 2 2 4 47 16.1 1919 47 10 57 1 1 58 12.4 1920 51 19 70 4 2 4 10 80 17.1 1921 25 8 23 1 1 34 7.3 1922 6 1 7 2 1 3 10 2.1 1923 5 3 8 8 1.7 1924 4 2 6 1 5 1 7 13 2.8 1925 1 1 1 1 2 .4 Total 323 103 426 15 8 9 9 41 467 100.0

Table 23.—YEAR OF ESTABLISHMENT OF CONSUMERS’ SOCIETIES, BY TYPE OF SOCIETY.

The situation shown in this table is typical of the development of the cooperative movement in this country. A slight increase in cooperative development became noticeable at the beginning of this century, gradually growing in volume and reaching its high points in the war of high prices—1918, 1919, and 1920—when nearly two-fifths of the societies reporting were formed. Then followed a period of depression and rapidly falling prices when cooperative as well as other business found it difficult to survive. Even though the need of such societies may have been felt, the workers have also suffered from the deflation and from unemployment and have had no money to put into new enterprises, and consequently the number of societies formed since 1920 has been small.

MEMBERSHIP

The membership of the 450 societies which reported on this point for 1925 aggregated 139,301, distributed by States as shown in table 24.

04641

Table 24.—MEMBERSHIP OF ALL TYPES OF CONSUMERS’ SOCIETIES REPORTING IN 1925

State

Number of members

Alabama 150

Alaska 309

Arkansas 235

California 2,044

Colorado 160

Connecticut 3,176

Idaho 274

Illinois 9,599

Indiana 643

Iowa 3,051

Kansas 5,245

Kentucky 461

Maine 1,204

Massachusetts 21,676

Michigan 8,873

Minnesota 23,889

Missouri 458

Montana 195

Nebraska 3,028

New Hampshire 285

New Jersey 4,732

New York 6,577

North Carolina 124

North Dakota 1,400

Ohio 13,494

Oklahoma 727

Oregon 3,030

Pennsylvania 1,498

Rhode Island 264

South Dakota 1,166

Tennessee 46

Texas 857

Virginia 215

Washington 3,551

West Virginia 1,049

Wisconsin 8,116

Wyoming 540

Total 139,301

The greatest membership reported in any State was that of the Minnesota societies, comprising 23,889 cooperators, but followed closely by Massachusetts societies with 21,676 and Ohio with 13,494. Twelve other States reported a membership of 3,000 or more.

Table 25 shows the total membership and the average per society of the various types of consumers’ organizations.

Membership Type of society Number of societies reporting Total Average per society Retail store societies dealing in— General merchandise 310 55,431 179 Groceries 47 11,129 237 Groceries and meats 38 21,399 563 Students’ supplies 9 30,848 3,428 Other commodities 5 953 191 Total 409 119,760 293 Gasoline filling stations 7 3,615 516 Bakeries 9 4,834 537 Laundries 2 263 132 Boarding house 11 1,578 143 Restaurants 5 2,783 547 Water supply societies 2 76 38 Miscellaneous societies 5 6,442 1,288 Grand Total 450 139,301 310

Table 25.—TOTAL AND AVERAGE MEMBERSHIP OF CONSUMERS’ COOPERATIVE SOCIETIES IN 1925

The above table shows a somewhat greater average membership than was disclosed by the 1920 study—269 members—but it is open to the objection that it does not cover identical societies for both years. Therefore, in order to test the accuracy of this indication of the growth of consumers; cooperative societies, the 215 societies which furnished membership data in both studies were taken for comparison in Table 26. Because the general stores form the largest group of the societies reporting, separate figures are also given for them.

04742 General stores All other consumers’ societies Total Members Members Members State Number reporting 1920 1925 Percent of change Number reporting 1920 1925 Percent of change Societies reporting 1920 1925 Percent of change Alaska 1 200 194 -3.0 1 200 194 -3.0 Ark 1 100 120 +20.0 1 100 120 +20.0 Calif 1 42 85 +102.4 2 6,014 8,618 +43.3 3 6,056 8,703 +43.7 Colo 1 175 100 -8.6 1 175 160 -8.6 Conn 3 329 722 +119.5 Idaho 2 334 227 -32.0 1 84 53 -36.9 3 413 280 -33.0 Ill 7 2,357 2,076 -11.9 3 2,659 1,262 -52.5 10 5,016 3,338 -33.5 Ind 1 283 200 -1.5 1 203 200 -1.5 Iowa 2 154 169 +9.7 2 475 414 -12.8 4 629 583 -7.3 Kans 14 3,046 3,019 -.9 14 3,046 3,019 -.9 Ky 1 280 261 -6.8 1 280 261 -6.8 Ms 2 586 559 -4.6 2 586 559 -4.6 Mass 4 940 938 -.2 14 13,147 18,788 +42.9 18 14,087 19,726 +40.0 Mich 11 4,182 4,458 +6.6 6 1,261 1,385 +9.8 17 5,443 5,343 +7.3 Minn 36 6,092 6,478 +6.3 6 3,076 6,261 +103.5 42 9,168 12,739 +39.0 Mo 1 150 148 -1.3 1 150 148 -1.3 Mont 2 146 195 +33.5 2 146 195 +33.6 Nebr 11 1,581 1,470 -7.0 2 204 182 -10.8 13 1,785 1,652 -7.5 N.J. 3 554 932 +68.2 3 554 932 +68.2 N.Y. 5 3,614 6,043 +67.2 6 3,614 6,043 +67.2 N.C. 1 135 124 -8.1 1 135 124 +8.1 N. Dak 5 614 484 -24.4 1 230 215 -6.5 6 844 679 -19.5 Ohio 4 522 428 -18.0 4 2,943 13,397 +355.2 8 3,465 13,825 +299.0 Okia 2 340 277 -18.5 2 340 277 -18.5 Oreg 1 690 3,000 +334.8 1 890 3,000 +334.8 Pa 5 509 382 -25.0 3 361 318 -11.9 8 870 700 -19.5 R.I. 1 192 164 -14.6 1 97 100 +3.1 2 289 264 -8.7 S. Dak 5 469 428 -8.7 5 469 428 -8.7 Tex 1 1,375 857 -37.7 1 1,375 857 -37.7 Va 1 218 215 -1.4 1 218 215 -1.4 Wash 9 1,956 2,580 +31.9 1 100 100 ( 1 ) 10 2,056 2,680 +30.4 W. Va 3 692 787 +13.7 1 100 53 -47.0 4 792 840 +6.1 Wis 19 4,284 4,407 -2.9 1 84 235 +179.8 20 4,368 4,642 +6.3 Total 151 29 913 30 454 +1.8 64 37,983 63,494 +87.2 215 67,896 93,948 +38.4 Average per society 198 201 +1.5 593 992 +67.3 316 437 +38.3

Table 26.—MEMBERSHIP OF IDENTICAL CONSUMERS’ SOCIETIES IN 1920 AND 1925, BY STATES

1 No change.

These societies showed an increase in membership of 38 per cent from 1920 to 1925. In other words, the cooperative societies which survived the depression period have more than held their own in point of membership. The combined membership of the societies handling general merchandise increased from 29,913 in 1920 to 30,454 in 1925, or about 2 per cent, but the membership of all other types of consumers’ societies combined from 37,983 to 63,494, or 67.2 per cent. The grocery societies, which are not given separately in the table, showed an increase in membership of nearly 50 per cent. The consumers’ societies which reported in both years had an average membership per society in 1925 of 437 persons, nearly two-fifths larger than in 1920, when it was 316.

Among the 23 States represented by more than one society 12 show gains in membership, these ranging from 6.1 per cent in West Virginia to 299 per cent in Ohio. In 10 of these States the cooperative societies gained more than 25 per cent in membership in the six-year period. Losses ranged from 0.9 per cent in Kansas to 33.5 per cent in Illinois and 37.7 per cent in Texas. Labor troubles (especially among the miners and railroad employees) and the resulting unemployment among the members in such States as Illinois and Pennsylvania may have had an influence on the losses shown there.

SIZE IN RELATION TO AGE

Table 27 shows for the 451 societies reporting on both points the size of societies that have been in business each classified number of years.

Societies in operation— Number of members Under 5 years 5 and under 10 years 10 and under 25 years 25 years and over Total Under 5 years 5 and under 10 years 10 and under 25 years 25 years and over Total Number Per cent Store societies: Under 100 17 88 41 7 153 11.1 57.5 26.8 4.6 100.0 100 and under 200 8 87 44 3 142 5.6 61.3 31.0 2.1 100.0 200 and under 300 5 32 14 1 52 9.6 61.5 26.9 1.9 100.0 300 under 400 1 10 7 1 19 5.3 52.6 36.8 5.3 100.0 400 and under 500 5 8 13 38.5 61.5 100.0 500 and under 1,000 3 3 9 3 18 16.7 16.7 50.0 16.7 100.0 1,000 and under 2,000 3 1 3 7 42.9 14.3 42.9 100.0 2,000 and under 5,000 2 1 2 5 40.0 20.0 40.0 100.0 5,000 and over 1 2 3 33.3 66.7 100.0 Total 34 230 126 22 1 412 8.3 55.8 30.6 5.3 100.0 Other societies: Under 100 4 8 1 13 30.8 61.5 7.7 100.0 100 and under 200 1 2 3 6 16.7 33.3 50.0 100.0 200 and under 300 3 1 4 75.0 25.0 100.0 300 and under 400 1 1 1 3 33.3 33.3 33.3 100.0 400 and under 500 1 1 100.0 100.0 500 and under 1,000 4 3 7 57.1 42.9 100.0 1,000 and under 2,000 2 1 3 66.7 33.3 100.0 2,000 and under 5,000 1 1 100.0 100.0 5,000 and over 1 1 100.0 100.0 Total 11 21 7 2 39 28.2 58.8 17.9 100.0 All types of societies: Under 100 21 96 42 7 166 12.7 57.8 25.3 4.2 100.0 100 and under 200 9 89 47 3 148 6.1 50.1 31.1 2.0 100.0 200 and under 300 5 35 15 1 56 8.9 62.5 26.8 1.8 100.0 300 and under 400 2 11 8 1 22 9.1 50.0 38.4 4.5 100.0 400 and under 500 1 5 8 14 7.1 35.7 57.1 100.0 500 and under 1,000 7 6 9 3 25 28.0 24.0 36.0 12.0 100.0 1,000 and under 2,0009 5 2 3 10 50.0 20.0 30.0 100.0 2,000 and under 5,000 3 1 2 6 50.0 16.7 33.3 100.0 5,000 and over 1 1 2 4 25.0 25.0 50.0 100.0 Grand Total 45 251 133 22 3 451 10.0 55.7 29.5 4.9 100.0

Table 27.—NUMBER AND PER CENT OF CONSUMERS’ SOCIETIES, CLASSIFIED BY SIZE AND NUMBER OF YEARS IN OPERATION

1 Not including 5 societies which did not report years of operation, 9 which did not report membership, and 3 which did not report on either point. 2 Not including 2 societies which did not report years of operation, 2 which did not report membership, and 2 which did not report on either point. 3 Not including 7 societies which did not report years of operation, 11 which did not report membership, and 5 which did not report on either point.

The table shows that of the 22 societies that have been in operation 25 years or more, 7 have fewer than 100 members and 10 fewer than 200 members. On the other hand, 22 societies which have been in business less than 10 years have 500 members or more. All the societies having more than 1,000 members have been operating 5 years or more, and 2 of the 4 societies that have 5,000 or more members have been in existence for more than a quarter of a century.

GENERAL ORGANIZATION 3 3 For typical by-laws of a consumers’ society, see Appendix O, p.104.

In the 1920 study an attempt was made to ascertain the number of societies operating, respectively, under cooperative and corporation law. The replies of the societies brought out the fact that more societies were operating under corporation than under cooperative law. Although the reasons therefor were not apparent, it may have been due partly to the fact that some of the older associations were organized before the passage of the cooperative act. No attempt was made to obtain similar data for the present report. The present data had almost entirely to be gathered by correspondence because of the expense involved in personal visits. In order for the questionnaire method to be successful to any degree, the number of questions must be held to a minimum, and it was felt that other points were more important than that of legal status. In connection with the following paragraphs, however, the reader should bear in mind that many of the provisions are determined by the law under which the society is operating. In States having no cooperative law an incorporated society must perforce do business under the corporation law and be bound by its provisions. These may stipulate bases for voting and disposition of profits which are in direct opposition to cooperative practice.

Although the newer cooperative laws contain many more or less standard provisions, there is still need of uniform State cooperative laws by which a general standard of what constitutes a genuine cooperative society may be set up.

LIMITATIONS ON MEMBERSHIP

Few consumers’ cooperative societies impose any limitations upon membership. In general, any person is eligible for membership if he is over 16 (or 18) years of age and is indorsed by a member in good standing. Of 140 store societies which furnished copies of their by-laws only 25 have any membership restrictions.

Thirteen societies require in their by-laws that the prospective cooperator must be a member of a specified farmers’ organization; one of these, however, reports that this provision has in practice been allowed to lapse. Another admits only farmers, and still another gives preference to “farmers or others whose income is derived from the farm.” Three organizations bar all persons engaged in a business in competition with that of the society (one of these also admits only persons of the white race), and another specifies that no person engaged in “a profit business” may join its ranks. One society limits its membership to trade-unionists, one to railroad employees, and a third to members of a railroad or other union. Only Italians over 21 years of age are eligible for membership in a fourth organization.

The membership provisions of one farmers’ society are as follows:

Section 1. Any white person or Indian may be admitted to membership if of sound mind, over the age of 16 years, of industrious habits, believe in a Supreme Being, is of good moral characters, and if a farmer, country mechanic, school-teacher, physician, or minister of the gospel, and not engaged in any of the following occupations, to wit: Banking, merchandising, practicing law, or belonging to any trust or combine that is for the purpose of speculating in any kind of agricultural products, or the necessities of life, or anything injuriously affecting agricultural Interests; provided that ownership of bank stock by any actual farmer shall not be construed as making him ineligible to membership.

05045

Sec. 2. Females over 16 years are eligible to membership in the local, county, and State union, with all the rights and privileges of male members, but shall be exempt from all fees and dues.

Another organization excludes members of commercial clubs or of associations of employers, manufacturers, or retailers, as well as “profiteers, business men, and private detectives.” Any person over 16 may become a member of another society—a very successful organization—but in order to become a director in the organization the member must belong to the Socialist Party or be a member of some international trade-union.

Two societies, while not excluding any class from their numbers, admonish prospective members that the society “aims to bring about a fundamental change, a better kind of civilization, and its organization should be approached by members in that spirit.”

One society expressly states that “any person of any creed or nationality is welcome” to its numbers; and in one of the boarding houses, a nonstock association, “full membership rights are acquired by the consumer on staying for one month at the boarding house as a weekly boarder.”

The management of the affairs of the society is vested in a board of directors elected by and from the membership. The number of directors is most commonly 5, 7, or 9, though several societies have as many as 15 directors each. Many societies provide that certain conditions automatically vacate the office of a director, as, for instance, if he is concerned in any contract with the society or participates in the profits therefrom.

Among the organizations studied, by far the most general term of office of the directors was that of one year, though terms of two and three years were also fairly common. The term of office ranged, in the societies studied, from six months to five years. A continuing board is often provided for, one-half or one-third of the directors being chosen at each election.

The officers of the society—usually president, vice president, secretary, and treasurer (the last two often combined)—are elected by the directors from their own number, though occasionally they are elected directly by the membership.

The board of directors supervises the financial affairs, appoints the manager and employees, and fixes their salaries and the amount of bond required, if any. The officers are usually unpaid, except for expenses incurred while on business of the association. A nominal fee for attendance at board meetings is often, though not always, paid.

The actual operation of the store is placed in the hands of the manager, a paid employee.

VOTING

It is one of the cardinal principles of the cooperative movement that voting shall be on a membership and not a financial basis, each member having but one vote, regardless of the size of his investment in the association, and no proxy voting being allowed. The extent to which this principle is put into practice among the societies studied is shown below. In some States voting is regulated by the law, either cooperative or corporation, under which the society operates, the society having no choice in the matter.

28464°—27—

05146 Basis of voting: Number Per cent 1 man, 1 vote 275 87.9 Vote by shares 38 12.1 Total 313 100.0 Voting by proxy: Prohibited 221 61.0 Allowed 141 39.0 Total 362 100.0

The above data also suggest a growing laxity, as compared with the 1920 study, the percentages in that year being 90.7 and 9.3 for the basis of voting and 69.8 and 30.2 as the proxy voting. One society, cooperative in other respects, allows a single member to cast 10 proxies. Since the 1920 report, 45 societies which have furnished data for both studies have reversed their practice in this matter, 22 now allowing proxies where they formerly prohibited them and 23 now requiring the vote to be cast in person. 4

4 Warne cities three societies which were forced to allow proxy voting in order to get a quorum at meetings. (Warne, C. E.: The Cooperative Movement in Illinois. Chicago, University of Chicago Press, 1926, p. 202)

VOLUME OF BUSINESS

Table 28 shows, by States, the sales of the consumers’ societies in 1925. Not all of the reports cover the calendar year, but variation of period is so slight and represented by such a small proportion of the societies that the figures can be taken as presenting an accurate picture of the 1925 business.

Roughly the consumers’ societies covered represent a purchasing power of nearly $50,000,000, more than one-fifth of which is in the stores of Minnesota. This State is far in the lead, only one other (Wisconsin) during as much as one-tenth of the total business.

State Amount of business Per cent of total Alabama $72,000 0.1 Alaska 223,037 .4 Arkansas 121,090 .2 California 699,004 1.4 Colorado 75,502 .2 Connecticut 473,401 1.0 Idaho 207,934 .4 Illinois 2,883,864 5.8 Indiana 305,549 .6 Iowa 1,245,849 2.5 Kansas 2,021,266 4.1 Kentucky 116,345 .2 Maine 507.324 1.0 Massachusetts 3,710,376 7.5 Michigan 3,485,681 7.0 Minnesota 11,239,067 22.6 Missouri 148,175 .3 Montana 85,155 .2 Nebraska 3,488,736 7.0 New Hampshire 136,556 .3 New Jersey $1,063,221 2.1 New York 1,650,626 3.3 North Carolina 60,900 .1 North Dakota 1,169,252 2.4 Ohio 1,941,472 3.9 Oklahoma 820,737 1.7 Oregon 66,942 .1 Pennsylvania 698.620 1.4 Rhode Island 146,000 .3 South Dakota 759,193 1.5 Tennessee 26,331 .1 Texas 134,112 .3 Virginia 95,419 .2 Washington 2,547,950 5.1 West Virginia 449,081 .9 Wisconsin 6,653,421 13.4 Wyoming 181,000 .4 Total 49,710,788 100.0

Table 28.—AMOUNT OF SALES OF CONSUMERS’ SOCIETIES IN 1925, BY STATES

SIX-YEAR TREND OF COOPERATIVE BUSINESS

The societies covered in the present study were requested to report as to their sales for each year from 1920 to 1925. Table 29 shows the information received on this point. Fewer reports were secured for 05247the earlier years than for 1924 and 1925, due in part to the fact that some of the societies reporting have been started in the years since 1920 and partly to the fact that not all of the societies have records for the earlier years.

Approximately three-fifths of the 1925 sales were those of the general stores.

1920 1921 1922 Type of society Number of societies Amount of business Number of societies Amount of business Number of societies Amount of business Retail store societies handling— General merchandise 204 $24,097,722 170 $16,116,338 195 $16,963,009 Groceries 30 2,363,523 28 4,777,747 32 2,640,210 Groceries and meats 26 2,495,261 22 1,885,936 23 1,969,453 Students’ supplies 7 1,079,981 6 1,588,171 8 1,679,024 Other commodities 5 326,621 4 319,523 4 252,993 Total 272 30,363,108 230 21,687,715 262 23,904,689 Wholesale societies 3 3,333,132 3 1,824,734 3 1,641,822 Gasoline filling stations 1 55,407 Bakeries 6 571,434 6 507,001 7 589,996 Laundries 1 16,042 1 13,990 1 13,208 Boarding houses 3 145,051 5 135,937 5 129,040 Restaurants 3 112,707 4 192,034 4 302,546 Water supply societies 1 589 1 616 1 690 Miscellaneous 3 309,710 3 994,682 3 1,800,559 Grand total 292 34,851,773 253 25,356,709 287 27,437,867

Table 29.—AMOUNT OF BUSINESS DONE BY CONSUMERS’ SOCIETIES EACH YEAR, 1920 TO 1925

1923 1924 1925 Type of society Number of societies Amount of business Number of societies Amount of business Number of societies Amount of business Retail societies handling— General merchandise 213 $18,900,862 283 $24,846,996 322 $29,610,246 Groceries 37 2,378,467 44 2,844,009 49 3,487,979 Groceries and meats 25 2,441,901 29 3,271,620 26 4,346,690 Students’ supplies 11 2,175,842 11 2,841,017 11 2,899,626 Other commodities 4 324,275 7 369,165 8 401,069 Total 290 26,221,348 374 34,172,807 425 40,745,610 Wholesale societies 3 1,974,999 3 2,296,915 3 2,489,521 Gasoline filling stations 1 87,454 4 190,734 9 742,473 Bakeries 8 685,172 8 732,150 9 1,189,737 Laundries 1 15,877 1 21,063 2 37,786 Boarding houses 5 152,660 6 137,236 10 150,853 Restaurants 4 448,660 5 578,777 5 679,110 Water supply societies 2 1,246 2 1,480 2 1,559 Miscellaneous 4 3,257,376 5 3,470,439 5 3,704,139 Grand total 318 32,844,792 408 41,331,601 471 49,710,788

The following tabulations shows, by States, the course of business since 1920 for the 204 societies which furnished reports for all six years. As would be expected, 1920 was a year of very high sales for cooperative societies, as it was also the year of highest prices. That year was followed by a decided drop in 1921 and a still further decline in 1922. Business improved in the following year and still more in 1924, and in 1925 had even exceeded the 1920 mark by 5.1 per cent. In 18 individual States the sales for 1925 surpassed those of 1920.

The sales have been affected by a number of factors—the rise and fall of prices during the six-year period, the fluctuations in employment 05348in the trades of the members with the consequent effect upon their purchasing power, strikes (especially in cases where the members were largely of one trade, such a miners, railroad men, etc.), and general economic conditions.

Amount of business State Societies reporting for all years 1920 1921 1922 1923 1924 1925 Arkansas 1 $25,004 $23,281 $30,762 $24,755 $20,231 $21,422 California 3 193,160 222,284 215,047 226,288 244,391 283,501 Connecticut 3 248,184 225,272 274,677 299,470 303,799 331,561 Idaho 2 185,488 206,885 156,483 188,312 163,256 176,058 Illinois 16 1,532,405 1,445,819 1,349,469 1,698,700 1,873,765 2,100,775 Indiana 2 158,889 151,139 130,452 137,386 134,009 125,546 Iowa 9 268,021 518,988 582,878 595,621 504,765 586,895 Kansas 13 1,551,834 1,165,853 912,050 967,432 952,619 1,056,025 Kentucky 1 198,786 110,862 111,960 105,346 89,786 81,996 Maine 3 488,640 366,824 341,690 340,424 337,534 320,696 Massachusetts 16 1,132,093 992,951 973,504 1,059,606 1,047,385 1,164,996 Michigan 19 3,106,499 2,295,212 2,046,929 2,217,974 2,536,159 2,883,166 Minnesota 29 3,202,760 2,236,638 3,907,272 5,402,627 5,680,431 6,003,785 Missouri 1 10,000 25,000 39,000 39,000 40,000 42,000 Montana 2 79,030 56,744 58,957 68,757 70,318 85,154 Nebraska 12 3,211,739 2,196,777 1,835,853 2,065,359 2,124,569 2,304,801 New Jersey 1 270,419 263,709 206,001 204,610 212,093 234,978 New York 4 504,701 592,462 643,034 723,103 809,713 756,125 North Carolina 1 38,200 39,500 44,100 56,100 57,500 60,900 North Dakota 5 468,351 408,455 374,323 425,232 421,591 501,773 Ohio 5 517,278 595,995 606,821 747,599 688,285 724,525 Oregon 1 40,000 52,023 53,415 59,365 59,991 66,111 Pennsylvania 9 275,059 284,975 269,295 317,155 327,444 338,429 South Dakota 9 651,161 596,110 523,147 561,765 632,510 690,283 Tennessee 1 9,723 10,231 9,621 10,242 9,395 10,388 Texas 1 90,000 140,000 130,000 149,560 139,675 134,112 Virginia 1 59,388 51,096 53,129 66,278 80,442 95,419 Washington 10 1,679,369 1,052,572 1,099,398 1,194,477 1,300,106 1,283,742 West Virginia 4 321,243 349,300 324,830 364,975 333,305 330,415 Wisconsin 20 6,126,311 4,648,583 4,297,982 4,703,219 4,937,104 5,568,838 Total 204 27,003,735 22,235,540 21,592,079 25,021,237 26,192,083 28,544,465

Table 30.—AMOUNT OF BUSINESS OF IDENTICAL CONSUMERS’ SOCIETIES EACH YEAR, 1920 TO 1925, BY STATES

The same information as given in the preceding table is shown for the various types of society, in Table 31:

Amount of business Type of society Societies reporting for all years 1920 1921 1922 1923 1924 1925 Retail store societies dealing in— General merchandise 135 $18,022,334 $14,566,079 $13,370,295 $14,357,262 $14,709,591 $16,090,343 Groceries 23 1,763,258 1,455,136 1,413,145 1,582,427 1,581,495 1,691,073 Groceries and meats 19 2,040,233 1,793,358 1,813,493 2,140,294 2,440,938 2,702,242 Students’ supplies 5 575,982 681,100 755,944 814,370 830,797 819,434 Other commodities 3 288,044 316,188 231,019 300,871 276,374 274,221 Total 185 22,690,071 18,811,881 17,603,806 19,195,224 19,839,195 21,577,313 Wholesale societies 3 3,333,132 1,824,734 1,641,822 1,974,999 2,206,915 2,459,521 Bakeries 5 396,434 394,093 323,983 329,551 340,087 464,993 Laundries 1 16,042 13,990 13,208 15,877 21,063 25,306 Boarding houses 3 145,050 99,380 95,623 117,184 92,490 86,479 Restaurants 3 112,707 96,165 112,298 131,257 225,187 230,296 Water supply societies 1 589 616 500 798 775 729 Miscellaneous 3 309,710 994,681 1,800,559 3,256,346 3,466,370 3,699,828 Grand total 204 27,003,735 22,235,540 21,592,079 25,021,236 26,192,082 28,544,465

Table 31.—AMOUNT OF BUSINESS OF IDENTICAL CONSUMERS’ SOCIETIES EACH YEAR, 1920 TO 1925, BY TYPE OF SOCIETY

05449

Table 32 shows, in terms of average annual amount of business per society and of index numbers thereof, the development of the various types of consumers’ societies which reported for the entire six-year period. In 1920, the general stores were doing the largest annual business of all the retail store societies, while among all types, the wholesale societies held the lead. In 1925, however, the wholesales still ranked highest in average sales, but the general stores had been out distance by grocery and meat societies and those handling students’ supplies. The index numbers show that of all types of consumers’ societies the wholesale societies suffered most from the depression, their business falling in 1922 to less half their 1920 sales. The societies handling students’ supplies were, of the store societies, the only ones unaffected, their sales showing a nearly continuous increase. By 1925 the sales of all societies combined had more than overcome the depression, and five of the groups had sales in 1925 more than 25 per cent in excess of their business.

Average amount of business per society Type of society 1920 1921 1922 1923 1924 1925 Retail store societies dealing in— General merchandise $133,500 $107,897 $99,039 $106,359 $108,960 $119,188 Groceries 76,663 63,268 61,441 68,801 68,761 73,325 Groceries and meats 107,381 94,387 95,447 112,647 128,470 142,213 Students’ supplies 115,196 136,220 151,189 162,874 166,159 163,887 Other commodities 96,015 105,396 83,673 100,290 92,125 91,407 Total 122,619 101,686 95,156 103,758 107,239 116,634 Wholesale societies 1,111,014 608,245 547,271 658,333 735,638 819,840 Bakeries 79,287 78,819 64,797 65,910 68,017 92,999 Laundries 16,912 13,990 13,208 15,877 21,013 25,206 Boarding houses 48,350 33,127 31,874 30,061 30,830 28,826 Restaurants 37,569 32,053 37,433 43,752 75,062 76,765 Water supply societies 589 616 690 798 775 729 Miscellaneous 103,237 331,560 600,186 1,085,449 1,155,457 1,233,276 Grand total 132,371 108,998 105,844 122,633 128,393 139,924 Index numbers Retail store societies dealing in— General merchandise 100.0 80.0 74.2 79.7 81.6 89.3 Groceries 100.0 82.5 80.1 89.7 89.7 25.9 Groceries and meats 100.0 87.9 88.9 104.9 119.6 132.4 Students’ supplies 100.0 118.3 131.2 141.4 144.2 142.3 Other commodities 100.0 109.8 87.1 104.5 95.9 95.2 Total 100.0 82.9 77.6 84.6 87.4 95.1 Wholesale societies 100.0 54.7 49.3 59.3 66.2 73.3 Bakeries 100.0 99.4 81.7 83.1 85.8 117.3 Laundries 100.0 87.2 82.3 99.0 131.3 157.7 Boarding houses 100.0 68.5 65.9 80.8 63.8 59.6 Restaurants 100.0 85.3 99.6 116.5 199.8 204.3 Water supply societies 100.0 104.6 117.1 135.5 131.6 123.8 Miscellaneous 100.0 321.2 581.4 1,051.4 1,119.2 1,194.6 Grand total 100.0 82.3 80.0 92.7 97.0 105.7

Table 32.—TREND OF SALES OF IDENTICAL CONSUMERS’ SOCIETIES, 1920 TO 1925 BY TYPE OF SOCIETY

In Table 33 are shown the total 1925 business of store societies reporting on that point, and the average business per society and per member. Average sales per member are based only on societies which reported both membership and sales. For purposes of comparison the average disclosed by the 1920 study are also given.

05550 Business done, 1925 Average amount of business State Amount Percent of total Per society Per member 1920 1925 1920 1925 Alabama $72,000 9.2 $75,121 $72,000 $769 $480 Alaska 233,037 .5 60,000 111,519 393 721 Arkansas 121,090 .3 57,172 40,363 341 513 California 699,604 1.7 236,292 139,921 168 773 Colorado 75,592 .2 93,947 75,592 623 472 Connecticut 400,921 1.1 102,068 76,829 193 146 Idaho 207,934 .5 101,730 69,311 711 739 Illinois 2,620,322 6.4 98,342 100,180 236 286 Indians 295,540 .7 36,435 76,387 499 394 Iowa 1,163,142 2.9 99,360 68,362 495 477 Kansas 2,021,266 5,0 80,122 74,862 441 385 Kentucky 116,345 .3 90,135 58,173 544 252 Maine 597,324 1.2 80,425 84,554 303 421 Massachusetts 3,362,082 8.3 161,618 129,311 262 171 Michigan 3,449,894 8.5 122,213 123,211 484 415 Minnesota 7,004,937 17.2 116,002 64,861 635 447 Missouri 148,173 .4 89,185 37,044 433 324 Montana 85,155 .2 69,243 42,578 530 437 Nebraska 1,932,748 4.7 113,856 84,033 709 763 New Hampshire 136,556 .3 8,900 68,278 321 479 New Jersey 828,243 2.0 58,099 165,649 258 241 New York 831,270 2.0 72,252 118,743 189 306 North Carolina 60,900 .1 86,653 60,900 825 491 North Dakota 1,169,252 2.9 99,853 83,518 851 835 Ohio 1,041,472 4.8 71,275 121,342 352 136 Oklahoma 830,737 2.0 63,419 205,184 426 1,129 Oregon 66,111 .2 33,061 66,111 650 22 Pennsylvania 435,616 1.1 30,921 35,517 207 317 Rhode Island 146,000 .4 65, 652 73,900 237 281 South Dakota 779,193 1.9 72,679 69,018 828 684 Tennessee 26,331 .1 134,500 13,166 330 572 Texas 134,112 .3 77,416 134,112 121 156 Virginia 95,419 .2 67,386 95,419 498 444 Washington 2,442,729 6.0 104,270 128,365 739 663 West Virginia 449,081 1.1 65,734 74,847 412 428 Wisconsin 5,615,361 13,8 164,885 187,179 268 936 Wyoming 181,000 .4 60,800 181,000 477 335 Total 40,745,410 100.0 100,354 95,423 353 334

Table 33.—VOLUME OF BUSINESS OF STORE SOCIETIES IN 1925 AND AVERAGE BUSINESS PER SOCIETY AND PER MEMBER, 1920 AND 1925, BY STATES.

As is seen from the table, for all the store societies combined, a decrease took place both in average yearly sales per member and in average absolute sales per society in 1925 as compared with 1920. Oklahoma shows the largest average sales per society, $205, 184, but Wisconsin and Wyoming societies follow, with average sales of $187, 179 and $181, 000, respectively, and 10 other States also show average sales of more than $100,000. A much greater range is shown in the average sales per member, varying from only $22 in Oregon to $1, 129 in Oklahoma. Five of the States with societies whose average sales exceeded $100,000 had sales per member averaging more than $500. Massachusetts, however, with sales averaging $129,311 per society, sold only $171 worth of goods to each member, and Texas with sales per society averaging $134,112 sold only $156 worth to each member. The average per member is, of course, influenced by the lines of goods carried by the store. Thus, average sales per member would naturally be smaller in a society doing only a grocery business than in one which supplied its members with dry goods, shoes, coal, and, perhaps farm machinery as well.

Loyalty of the member to the store, while desirable, can not be compelled. Cooperative effort to be effective must be voluntary. Efforts can, however, be made to stimulate a member's interest and hold his patronage, and in some cases lack of support is penalized 05651by withholding the dividend of any member who fails to purchased a certain amount of goods from the store during the year. One society provides, in this connection, as follows:

Section 4. When a member does not trade in his own cooperative store and no good reason prevents him from doing so, but supports instead a competing private store with his purchases, the board of director shall send him a reminder. Should the member, in spite of the reminder, still refuse to make his purchases in his own store, the board of directors shall have the right to suspend his membership privileges, and if this does not remedy matters, the board may expel him from membership in accordance with the provisions of the foregoing section of this article.

Table 34 shows the “real sales” of the retail store societies and of the wholesale societies during the six years, 1920 to 1925, figured on the basis of retail and wholesale prices, respectively.

Index numbers of— Year Sales of retail store societies Retail prices “Real sales” of retail store societies Sales of wholesale societies Wholesale prices “Real sale” of wholesale societies 1920 100.0 100.0 100.0 100.0 100.0 100.0 1921 82.9 75.4 109.9 54.7 64.9 84.3 1922 77.6 69.6 111.1 49.3 65.8 74.9 1923 81.6 71.9 117.7 59.3 67.9 87.3 1924 87.4 71.7 121.9 66.2 66.2 66.2 100.0 1925 95.1 77.4 122.9 73.8 70.3 105.1

Table 34.—INDEX NUMBERS OF WHOLESALE AND RETAIL PRICES AND OF “REAL SALES” OF COOPERATIVE WHOLESALE AND RETAIL SOCIETIES, BASED THEREON, BY YEARS

The relation of the sales of wholesale and retail societies to wholesale and retail prices (in terms of “real sales”) and to employment is shown graphically in the chart on page 52.

AVERAGE SALES IN 1925

The 472 consumer's societies reporting are classified in Table 35 according to amount of business done in 1925.

About half of the retail store societies fall in the two groups from $25,000 to $50,000 and $50,000 to $75,000. Nearly equal groups of general stores do an annual business of $25,000 but less than $50,000 and of $50,000 and less than $75,000. Nearly one-third of the stores dealing in groceries and meats have sales of from $25,000 to $50,000; but another 25 per cent of these stores also fall in the group doing business of between $100,000 and $200,000 a year. The grocery stores are somewhat smaller, 45 per cent of these having sales of less than $50,000. More than one-fifth of all the stores combined, however, have an annual business of more than $100,000. The students’ societies are the largest of the retail store group, all of them having sales of $50,000 or over and over 80 per cent sales of $100,000 or over.

About one-fourth of the consumers’ societies as a whole may be termed “large” societies, i. e., those with annual sales of $100,000 or over, while one-eight are small societies doing a yearly business of less than $25,000. Of the second group, the laundries, boarding house societies, and water supply societies are small, all having a yearly total of less than $50,000 per year. All of the wholesales and three-fourths of the bakeries fall in the “large group.”

05752

—“Real sales” of retail societies

—“Real sales” of wholesale societies

—Employment

05853 Societies having sales in 1925 of— Type of society Less than $5,000 $5,000 and under $25,000 $25,000 and under $50,000 $50,000 and under $75,000 $75,000 and under $100,000 $100,000 and under $200,000 $200,000 and under $300,000 $300,000 and under $500,000 $500,000 and over Total Number Retail stores dealing in—General merchandise 6 20 84 81 51 44 12 10 2 322 Groceries 2 4 16 12 7 5 2 1 49 Groceries and meats 1 11 6 5 9 2 2 1 37 Students’ supplies 1 1 4 2 1 2 11 Other commodities 2 1 3 1 1 8 Total 10 36 114 103 64 62 19 14 5 427 Wholesale societies 1 2 3 Gasoline filling stations 3 1 3 2 9 Bakeries 1 1 1 2 1 3 9 Laundries 1 1 2 Boarding houses 2 6 2 1 10 Restaurants 3 1 1 5 Water supply societies 2 2 Miscellaneous 2 1 1 1 5 Grand total 16 14 127 105 68 68 21 16 11 472 Per cent Retail stores dealing in— General merchandise 1.9 9.3 26.1 25.8 15.8 13.7 3.7 3.1 9.6 100.0 Groceries 4.1 8.2 32.7 24.5 14.3 10.2 4.1 2.0 100.0 Groceries and meats 2.7 29.7 16.2 13.5 24.3 5.4 5.4 2.7 100.0 Students’ supplies 9.1 9.1 36.4 18.2 9.1 18.2 100.0 Other commodities 25.0 12.5 37.5 12.5 12.5 100.0 Total 2.3 8.4 36.7 24.1 15.0 14.5 4.4 3.3 1.2 100.0 Wholesale societies 33.3 66.7 100.0 Gasoline filling stations 33.3 11.1 33.3 22.2 100.0 Bakeries 11.1 11.1 11.1 22.2 11.1 33.3 100.0 Laundries 50.0 50.0 100.0 Boarding houses 20.0 60.0 20.0 100.0 Restaurants 60.0 20.0 20.0 100.0 Water supply societies 100.0 100.0 Miscellaneous 40.0 20.0 20.0 20.0 100.0 Grand total 3.4 9.3 26.1 22.2 11.4 14.4 4.4 3.4 2.3 100.0

TABLE 35.—NUMBER AND PER CENT OF CONSUMERS’ SOCIETIES HAVING EACH CLASSIFIED AMOUNT OF BUSINESS IN 1925.

1 Not including one society operating at cost which keeps no accounts and one society in which the business averages about $40 per month per member.

The average sales per member in 1925 of the various types of consumers’ societies are shown below. In calculating these averages only those societies which reported as to both membership and sales were included.

Average sales per member Retail store societies dealing in— General merchandise $528 Groceries 305 Groceries and meats 198 Students’ supplies 87 Other commodities 372 Total 334 Gasoline filling stations 195 Bakeries 246 Laundries 144 Restaurants 248 Water-supply societies 21 Miscellaneous 572 Grand total 352

NET TRADING PROFIT OR LOSS

Although a few societies still operate on the cost-plus plan (i.e. they set their selling prices only high enough to cover the cost of the goods plus estimated expense of operation), this practice seems to be on the decrease, and all but 15 of the societies reporting sell at current prices. Sale at current prices not only avoids arousing the antagonism of private competitors because of the “price cutting” involved in the cost-plus plan, but it obviates the necessity of guessing what the overhead expense will be.

The difference or margin, then, between the cost of goods, plus the overhead expense, and the selling price constitutes the ordinary dealer's profit or the cooperative societies’ “saving” (it is not profit in the ordinary sense in the case of the cooperative society, but represents what the member lends the society above the cost of his goods).

Unfortunately, only incomplete returns are available as to the net trading profit or loss and as to dividends paid by consumers’ societies on the 1925 business. Only 441 societies replied definitely to the question of whether a profit was made on the 1925 business. Of these 317 had a profit, 87 were able only to make ends meet, 15 operate on the cost-plus plan and so showed no profit, and 22 lost money. The profit for the 71.9 per cent of the societies which had a profit aggregated more than a million and a half dollars, as shown in Table 36.

Net trading profit Net trading loss Type of society Number of societies reporting Amount Average per society Number of societies reporting Amount Retail stores dealing in — General merchandise 219 $918,630 $4,195 12 1 $19,265 Groceries 30 73,128 2,438 3 2 3,740 Groceries and meats 25 141,949 5,678 1 200 Students’ supplies 8 170,732 21,342 Other commodities 5 10,075 2,015 Total 287 1,314,514 4,580 16 3 23,205 Wholesale societies 2 45,503 22,752 Gasoline filling stations 9 98,892 10,988 Bakeries 7 18,823 2,689 Laundries 1 1,079 1,079 Boarding houses 6 3,026 504 1 572 Restaurants 2 23,976 11,988 Water supply societies 1 527 527 Miscellaneous 2 102,359 51,180 1 2,822 Grand total 317 1,608,609 5,075 18 2

Table 36.—AMOUNT OF NET TRADING PROFIT OR LOSS ON 1925 BUSINESS, BY TYPE OF SOCIETY

1 Not including 3 societies which reported a loss but did not state amount. 2 Not including 1 societies which reported a loss but did not state amount. 3 Not including 4 societies which reported a loss but did not state amount.

Table 37 shows, for the societies reporting, the per cent of net profit (calculated on sales) for each type of consumers’ society. It is seen that profits were highest among societies operating gasoline filling stations; these averaged 12.9 per cent net profit on their 1925 sales. Among the store societies, those selling students’ supplies averaged highest—7 per cent.

06055 Rate (per cent) of profit Type of society Low High Common Average Retail store societies dealing in— General merchandise 0.1 12.6 4-5 4.0 Groceries .8 15.3 2-3 3.7 Groceries and meats .7 9.2 1 1-3 4.3 Student's supplies 2.8 10.0 6-7 7.0 Other commodities .7 9.7 2 2-4 3.0 Total .1 15.3 3-4 4.0 Wholesale societies 1.1 2.4 1.9 Gasoline filling stations 1.4 15.4 12.9 Bakeries .1 6.6 2 2-4 2.3 Laundries 3 Boarding houses .1 11.1 1 3.6 Restaurants 2.0 5.1 4.2 Miscellaneous 2.9 13.1 2.9 Grand Total .1 15.4 2-3 3.0

Table 37.—LOW, HIGH, AND AVERAGE RATE OF NET PROFIT OF CONSUMERS’ SOCIETIES ON 1925 BUSINESS

1 Equal numbers of societies had profit of between 1 and 2 and 2 and 3 per cent. 2 Equal numbers of societies had profits of between 2 and 3 and 4 per cent. 3 One society only.

Table 38 shows for each of 316 consumers’ societies the per cent of net gain for 1925 on the basis of the sales.

Table 38.—PER CENT OF NET GAIN MADE ON 1925 BUSINESS BY 316 CONSUMERS’ SOCIETIES

Number and type of society

Per cent of net profit

General stores:

No. 1 1.4

No. 2 7.3

No. 3 5.1

No. 4 5.4

No. 5 5.4

No. 6 4.5

No. 7 3.6

No. 8 1.5

No. 9 10.0

No. 10 2.0

No. 11 5.5

No. 12 3.7

No. 13 1.4

No. 14 5.4

No. 15 2.2

No. 16 3.5

No. 17 10.3

No. 18 4.2

No. 19 .2

No. 20 2.9

No. 21 3.1

No. 22 7.8

No. 23 5.9

No. 24 3.7

No. 25 6.0

No. 26 3.1

No. 27 4.8

No. 28 2.4

No. 29 3.7

No. 30 2.1

No. 31 1.0

No. 32 1.6

No. 33 .4

No. 34 1.8

No. 35 8.3

No. 36 3.4

No. 37 3.5

No. 38 4.3

No. 39 4.4

No. 40 1.8

No. 41 3.8

No. 42 7.5

No. 43 .7

No. 44 4.2

No. 45 4.0

No. 46 .4

No. 47 1.1

No. 48 3.6

No. 49 3.4

No. 50 4.5

No. 51 2.9

No. 52 6.0

No. 53 2.9

No. 54 3.6

No. 55 9.6

No. 56 4.2

No. 57 1.2

No. 58 5.7

No. 59 4.7

No. 60 7.4

No. 61 1.3

No. 62 8.2

No. 63 2.7

No. 64 5.3

No. 65 1.6

No. 66 5.3

No. 67 1.3

No. 68 2.8

No. 69 10.1

No. 70 4.5

No. 71 12.7

No. 72 8.6

No. 73 5.7

No. 74 1.1

No. 75 1.1

No. 76 2.7

No. 77 2.8

No. 78 7.0

No. 79 5.1

No. 80 3.2

No. 81 1.2

No. 82 1.9

No. 83 1.9

No. 84 5.4

No. 85 3.5

No. 86 5.3

No. 87 3.8

No. 88 3.5

No. 89 2.1

No. 90 2.6

No. 91 3.2

No. 92 4.4

No. 93 4.2

No. 94 7.7

No. 95 3.8

No. 96 4.1

No. 97 1.9

No. 98 5.3

No. 99 3.1

No. 100 1.6

No. 101 2.1

No. 102 5.0

No. 103 4.5

No. 104 .3

No. 105 3.4

No. 106 5.2

No. 107 2.0

No. 108 9.4

No. 109 2.4

No. 110 4.3

No. 111 4.0

No. 112 .9

No. 113 9.4

No. 114 2.0

No. 115 .5

No. 116 3.2

No. 117 8.4

No. 118 5.3

No. 119 1.8

No. 120 7.2

06156

No. 121 3.3

No. 122 3.0

No. 123 3.7

No. 124 2.3

No. 125 6.1

No. 126 .1

No. 127 9.6

No. 128 6.2

No. 129 5.2

No. 130 1.5

No. 131 1.2

No. 132 2.6

No. 133 1.6

No 134 .4

No. 135 3.4

No. 136 2.1

No. 137 3.1

No. 138 1.6

No. 139 4.6

No. 140 10.1

No. 141 1.8

No. 142 4.4

No. 143 3.0

No. 144 1.2

No. 145 4.9

No. 146 2.9

No. 147 4.4

No. 148 3.0

No. 149 2.3

No. 150 2.8

No. 151 1.2

No. 152 4.8

No. 153 8

No. 154 4.0

No. 155 3.4

No. 156 1.1

No. 157 6.0

No. 158 7.3

No. 159 2.4

No. 160 9.1

No. 161 12.6

No 162 6.5

No. 163 .5

No. 164 4.9

No. 165 4.3

No. 166 11.9

No. 167 5.7

No. 168 4.6

No. 169 8.2

No. 170 3.8

No. 171 4.7

No. 172 3.6

No. 173 2.4

No. 174 6.1

No. 175 3.3

No. 176 5.1

No. 177 4.6

No. 178 2.8

No. 179 6.7

No. 180 2.0

No. 181 3.9

No. 182 4.0

No. 183 11.0

No. 184 4.9

No. 185 4.6

No. 186 2.0

No. 187 4.8

No. 188 5.6

No. 189 1.9

No. 190 2.4

No. 191 6.9

No. 192 3.0

No. 193 3.1

No. 194 4.6

No. 195 2.1

No. 196 3.8

No. 197 1.9

No. 198 1.9

No. 199 7.2

No. 200 2.0

No. 201 4.3

No. 202 4.5

No. 203 4.9

No. 204 4.1

No. 205 6.4

No. 206 2.4

No. 207 9.4

No. 208 2.1

No. 209 1.0

No. 210 2.0

No. 211 5.3

No. 212 4.7

No. 213 4.7

No. 214 4.2

No. 215 5.0

No. 216 2.7

No. 217 1.4

No. 218 .4

No. 219 5.9

Average 4.0

Grocery stores:

No. 1 3.7

No. 2 9.0

No. 3 2.5

No. 4 10.0

No. 5 2.8

No. 6 3.4

No. 7 4.3

No. 8 2.3

No. 9 4.2

No. 10 15.3

No. 11 5.9

No. 12 1.2

No. 13 2.3

No. 14 6.5

No. 15 9.5

No. 16 2.9

No. 17 1.5

No. 18 13.0

No. 19 6.1

No. 20 .9

No. 21 3.5

No. 22 .9

No. 23 1.9

No. 24 6.5

No. 25 .8

No. 26 1.1

No. 27 2.3

No. 28 4.4

No. 29 6.3

No. 30 3.7

Average 3.7

Grocery and meat stores:

No. 1 2.7

No. 2 2.0

No. 3 6.8

No. 4 4.4

No. 5 1.0

No. 6 3.7

No. 7 6.1

No. 8 9.2

No. 9 5.2

No. 10 1.8

No. 11 8.6

No. 12 1.1

No. 13 .7

No. 14 2.5

No. 15 1.4

No. 16 5.5

No. 17 3.1

No. 18 2.6

No. 19 2.4

No. 20 6.8

No. 21 .8

No.22 7.6

No. 23 1.8

No. 24 3.6

No. 25 3.7

Average 4.3

Students’ stores:

No. 1 6.9

No. 2 6.3

No. 3 10.0

No. 4 6.1

No. 5 8.9

No. 6 2.8

No. 7 4.2

No. 8 6.8

Average 7.0

Other Commodities stores:

No. 1 2.7

No. 2 9.7

No. 3 3.9

No. 4 3.7

No. 5 .7

Average 3.0

Average, all stores. 4.0

Wholesale societies:

No. 1 2.4

No. 2 1.1

Average 1.9

Gasoline stations:

No. 1 11.5

No. 2 4.5

No. 3 15.4

No. 4 7.7

No. 5 1.4

No. 6 21.9

No. 7 9.0

No. 8 10.2

No. 9 10.5

Average 12.0

Bakeries:

No. 1 .1

No. 2 2.8

No. 3 3.2

No. 4 6.6

No. 5 2.2

No. 6 3.4

No. 7 1.7

Average 2.3

Laundries: No.1 4.3

Boarding houses:

No. 1 .8

No. 2 .2

No. 3 .1

No. 4 11.1

No. 5 .8

No. 6 3.4

Average 3.6

Restaurants:

No. 1 2.0

No. 2 5.1

Average 4.2

Other societies:

No. 1 13.1

No. 2 2.9

Average 2.9