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Co-ops and the Consumer CrisisDEXTER MASTERS
"Mr. Cowden," a member of Mr. Ickes' staff is reported as having said, "we've got to get some sort of yardstick of costs to help us figure out how this industry operates and ought to operate. You cooperators have got your own refinery and we'd like to use the cost breakdown on that for our yardstick." As the story is told, Mr. Cowden said the cooperators would be delighted to furnish such information but asked why their relatively small refinery should get the emphasis. And, as the story goes, Mr. Ickes's representative said: "Well, the fact of the matter is that all the rest of the boys are in this business for profit, and we just can't trust their figures." I don't know whether this actually happened or not. It is based on what reporters call "usually reliable authority," and cooperators quote it as a very satisfying tribute to themselves. But at the same time a part of this story disturbs the cooperative movement; should a committee of 200 people concerned with the high policy of the oil business in relation to defense have only one cooperator on it? There are only three possible answers: one is that the cooperative oil business didn't deserve more representation than that, and another is that Mr. Ickes was guilty of an oversight, and the third is that the cooperators were victims of discrimination. The first answer is not the right answer. Since 1938, when the cooperative society of which Mr. Cowden is president, built the country's first cooperatively-owned oil refinery in Phillipsburg, Kan., the cooperative movement has had its hand in every phase of the oil business, from ground to automobile. And it has been doing well enough in the business to become the largest factor in it outside of the so-called "trust" companies. This may be a little bit like saying that, outside of the United States, Brazil is the most highly industrialized country in the Western Hemisphere. But even so, Co-op oil stations in many towns and counties of the Midwest outsell all the competition. What's more, Co-op gas and oil are selling increasingly. Without laboring the point, it is obvious that the cooperatives warranted more than a 1/200th spot on Mr. Ickes' committee. Cooperative sub-committees responsible only for interpreting and enforcing policy among the co-ops, carry no weight on the policy board of 200. It is also highly doubtful that this meager recognition of the cooperative movement in the field in which it has progressed furthest was simply an oversight. The cooperative movement's Washington representative, John Carson, took many steps to rectify the wrong, submitted lengthy reports on the cooperative's oil and gas achievements to Mr. Ickes. When the cooperators speak bitterly of discrimination on this point, it is hard to disagree. And this is by no means the only thing that the co-operators have had occasion to speak bitterly about lately. There is also the construction which the Coal Division puts upon the law, which results in Governmental refusal to accept the Midland Cooperative Wholesale of Minneapolis, one of the biggest of the Movement's wholesale organizations, as a legitimate distributor of coal on a par with the private companies. The Coal Division's reason was that the regular patronage refunds which Midland makes to its member societies, in accordance with ancient and fundamental cooperative practices, constitute rebates in the ugly sense of the word, because it is not a farm cooperative but a wholesaler owned by both farm and urban consumer cooperatives. The cooperators think that this thesis is not only an error but a cover for something ulterior. In a word confiscation. And this isn't all that has been worrying the cooperators, either. There is more legislation pending, both federal and state, which the cooperators see as designed to cut them out or do them in. To appreciate these worries, you must know that the cooperative movement fears what it calls "statism" even more than it fears the private business against which it ranges itself daily. Actually the distinction is not too important, because what the cooperators mean by statism is a government in which the will and the wishes of private business actively dominate all else. The cooperators figure that out on the flat terrain of daily commerce they can more than hold their own against the private traders. But the cooperators don't feel that way when the scene shifts to the cloakrooms of Congress, to the long tables with the dollar-a-year men and the large industrialists arrayed around them. The Co-ops are "Little Business"Some cooperators are fanatic about their movement. Some are naive. But there are few who don't recognize that big business is riding the horse for all it's worth under a defense program which has begun to disturb virtually everyone by the blandness with which it has conferred its benefits upon big business. It has been argued that government has no choice but to turn to big business in the present crisis, because big business alone is able to produce what is needed. And it has also been argued that, precisely as in the last war, big business is working its lobbying power and financial influence overtime to get all it can out of the situation. In terms of the effects on the cooperative movement, it doesn't matter an awful lot which argument is correct; because the cooperatives stand to get it in the neck either way. Vice-President Wallace has called the cooperatives "the dominant economic idea of the future." And Senator George D. Aiken, an old cooperator himself, has referred to them as "a positive alternative to government controls." This is all dandy, but the fact remains that the time is the present and that government controls are growing. The cooperative movement is beset by all the fears and anxieties which are the fears and anxieties of small business. You might not get this impression from the overall figures of the cooperative movement. Nearly 2,500,000 people throughout the country belong to this movement and, all put together, they buy cooperatively more than $600,000,000 worth of goods a year. These people are organized into something like 10,000 individual cooperative societies which are serviced by 20 large self-owned wholesale societies, which deal in thousands of individual commodities, some of them cooperatively manufactured as well as distributed. The fifth largest automobile insurance company of America is a cooperative company, and in the fields of money-lending, health and burial insurance, cooperative organizations are booming. It all sounds big. But it isn't—at least not yet. For the cooperative movement is spread thin, both geographically and businesswise. It is very strong in some sections of the country—for instance, Minnesota, Wisconsin, Michigan, Indiana, Ohio—and it is very weak in others, particularly in the cities. It is quite strong with certain products, notably oil and gas and groceries. And so far as many others are concerned, it hasn't even got gleam in its eye. To make a long story short, $600,000,000 simply is not a very big figure when you put it up against the figure for the national income which, this year, is close to ninety billion dollars. It is doubtful that even 10 people out of 100 on an average city street would know what you were talking about if you mentioned the cooperative movement to them. So the cooperative movement as business is small business. And it is small business, as everybody knows, which is getting hit under the impact of the defense program. Small business is getting hit so hard, in fact, that defense officials themselves have been talking of "blighted areas" growing out of accumulated small business failures. Small business has been hit so hard that responsible government officials have referred to the situation as one of the country's most critical problems. Can Co-ops Continue to Produce Their Own Goods?The troubles of small business stem from its difficulties in getting and holding onto the men and materials with which to do business. When such difficulties persist there can be only one result: loss of markets, which means economic death. That's the grinning specter facing small business today; and there is, of course, much more to be said on the subject than can this piece. The point to be made here is that on all counts the cooperative movement is doubly affected. Or, rather, triply affected. It is affected first of all simply as a kind of small business. And then the effect is compounded because its chief business is the distribution of civilian goods, which are decidedly the orphans of the economic storm thundering over the land as war molds the American economy to a new shape. And the effect is compounded again by virtue of certain factors peculiar to the cooperative movement. The movement is strongest as a distributor of goods, weakest as a producer. It is, in fact, so weak on the production end that it can't be said to have much more than a toe-hold on its own production of any single commodity. In this respect it's like an army which has thrust spearheads out from its front line; if the spearheads are cut off the whole line is endangered. Shortages of men and materials are presenting just such a threat to the productive spearheads of the cooperative movement. At the same time, the companies who do most of the producing for the cooperatives (on a contract specification basis) are for the most part small businesses which are themselves greatly threatened by defense shortages. And so a whole segment of the cooperative movement is in a fair way to be lost. Which is bad enough, but there's more involved than that. When a cooperator walks into a Co-op store to buy something it may be assumed that he is motivated by some combination of at least three feelings: approval of the cooperative idea, expectation of getting his patronage refund (therefore, paying less for what he buys), and a belief that he is more likely to get fair quality from a store in whose ownership he participates. The ideology, the refund, and the known quality are three of the movement's biggest appeals. Those products which are made and sold under the Co-op brand name provide a kind of cement to hold these appeals together. Their existence proves to the cooperator better than any literature that the cooperative idea is working. And on their own products the cooperatives; theoretically at least, can furnish the greatest savings and the best values to cooperative members. At the present writing about 800 products are sold under the Co-op name. But from now on, for an indefinite period, the number will be decreasing as the production difficulties we have already noted grow. In short, the cement that binds the cooperative appeals will be cracking. To get the picture in its sharpest colors, visualize a Coop store which offers no Co-op brands. What brands, then, does it offer? Only the brands that this store down the street and that store across the street are offering. If you are a cooperator will you continue to buy at the Co-op store as faithfully as ever? Probably you will if you are a very loyal cooperator; but maybe you won't if you are anything less than that. Now it is true that, even if the Co-op brand name were to be cut off entirely, the appeals which the cooperative movement makes to people would not be lost. They would only be weakened. After all, you can argue, the cooperatives got their start and their early growth as distributing agencies pure and simple; first on the retail level, then on the wholesale. Production is the next step. But that's just the point. Unless the cooperatives can take that next step, as they have been enterprisingly trying to do in recent years, they run the very great risk of slipping back. Neither the cooperatives nor anything else can live statically. And especially not the cooperatives, the current scene being what it is. Why Co-ops GrowForget all about the production crisis—and you still have a very harassed cooperative movement. For instance the draft and defense jobs are taking away many promising young cooperators. The draft and defense jobs are also making forays on private business, but there's a world of difference in the likeness. The cooperative movement hasn't any promising young cooperators to spare; it's too young to have built up a backlog and it grew so fast during the depression that it was suffering shortages of personnel even before the war came along. What's more, a cooperative society can't make a cooperative worker out of just anybody. For one thing, not everybody wants to become one at the modest rates the cooperatives pay. And for another, the society has to train a man not only for a job but for a job in a movement which was never a part of the average American dream of fame and fortune that the average young man dreamed. Add all of these things together and what do you get? You get a social-business movement, not yet understood or accepted by most Americans, which is being barred from undertaking its natural development and variously harried in the fulfillment of its present functions, these being a very secondary concern in the official national eye as it is now cocked. I have not gone into detail on these points. It is plain that this is not the stuff of which glorious futures are made. So what happens? Is the cooperative movement headed for the glooms? Well, a number of circumstances have been cited in support of that thesis. Let me cite a number of arguments on the other side. The simplest argument for the cooperatives is the simplest argument for anything: an analogy. In England, where the impact of war has been greater than here, no cooperative society has gone out of business in the whole course of the war. In 1940, to be more precise, the English cooperative movement added 62,000 families to the 8,500,000 it already had. So much for analogy. More to the point is what makes a cooperative grow, in England or anywhere. The first thing that makes a cooperative grow has nothing to do with cooperatives directly. It has to do with the state of the nation. In the depressed Thirties the cooperatives grew greatly. And during the Thirties there was a deep and persistent decline in family incomes. Prices fell, too, but incomes fell to a point where millions of families had no margin of economic safety at all, and many incomes fell even further than that. The public relations program of the cooperative movement during the Thirties was both amateurish and inadequate. And yet the individual societies expanded and the sales of the wholesale societies marched a steady curve upwards. For while most Americans had only a foggy notion of what the cooperative movement was, those who held any ideas about it at all were sure to hold one in particular: namely, that somehow the cooperatives managed to give back some part of the money they took in trade. A good many of the individual societies actually didn't; they hadn't reached a financial footing where they could put into practice what they were committed to in theory. But a new member didn't find that out until he was in touch with the cooperative, and by then the more important fact was that the cooperative was in touch with him. In short, largely through the exercise of one of its appeals, the cooperative movement gathered momentum right through ten years of depression. A fact of first importance to an understanding of the cooperative picture now is that the savings appeal is on its way to being stronger than ever—by far. For the past year prices of the things that the ordinary citizen buys have been moving relentlessly up. They have gone up so far that President Roosevelt himself in August announced that the country was "on the brink of inflation." They have gone up so fast, in the last six months particularly, that no government official has had the courage or the temerity to predict any solution of the problem. Furthermore, price increases in the stores are as yet only a pale reflection of the price increases that have taken place at wholesale. Already the cost of living has risen about 10 percent over what it was a year ago. When the wholesale increases which have already taken place hit the stores, as they will be doing in the months to come, there is no telling what the figure will be. But a figure 25 percent higher than last year's is a conservative estimate. And meanwhile another thing is happening which puts a premium on another appeal that the cooperatives make. As prices are moving up quality is falling off. Manufacturers anxious to preserve a standard price level are cutting corners, whittling sizes, using cheaper substitute materials and going in for sundry other stunts—all designed to let them give less for the same price. To the confusion that results in the minds of the buying public as these tactics became known (and they are becoming known) the cooperatives can present a palatable antidote: namely, "join a cooperative and know what you're getting—you don't cheat yourself." There is as yet no reason to believe that, as the war economy tightens, the twin factors of rising prices and declining quality will become any less important. And the cooperatives can meet them both head-on. They can't do anything about rising prices on the things they buy to sell. And they can't do any more than anybody else can about shortages. But they can say "a cooperative can't profiteer"; and they can say, "you know what you're getting when you buy cooperatively." Moreover, as the British have found, cooperatives can often handle the details of rationing more satisfactorily than private shops. And in the event of rationing of any commodities in this country the element of consumer participation, which distinguishes the co-ops, might well be one of their greatest appeals to new members. Making a Movement MoveAt this point the future of the cooperatives has to be approached from the standpoint not just of what they can say but of what they will say. By and large, the cooperators have been highly inefficient as salesmen of their own wares, ideological or material. They are, of course, selling something more than a packaged product to be picked up at your nearest dealer's, and that makes their job complicated. it isn't complications which have made the cooperatives' public relations so piteously meager as to cause even some do-or-die cooperators to mutter in their beards. It's rather that the cooperative leadership in the past has given the problem neither interest nor understanding. The approach has been along the lines that anyone who didn't have sense enough to be a cooperator was a kind of idiot's child and not worth bothering with. And how much this insular arrogance has cost the movement in terms of lost opportunities no one can say. But there are those among the cooperative leaders who believe that if it had been continued for only a few more years it might have set the whole movement back irreparably. One of the most important single elements in the cooperative picture today is that the old insularity has been dropped. It has been dropped by official decision, concurred in by all the top leadership of the movement, to take the cooperative story to the people. The decision is recent and the job itself is only just beginning. So it is too early to say how effective it will be. But at least the cooperators are giving themselves a chance. They have scheduled promotion techniques heretofore identified with their rivals, the private traders; and when it comes to promotion techniques, the private traders have got plenty to show the cooperators. Door-to-door selling, copious leaflets and pamphlets, some straight advertising and possibly even a national radio hookup are involved. Presumably the new president of the Cooperative League of the U. S. A., Murray Lincoln, of Ohio, deserves a good share of the credit for this break with the past, because the break comes close on the heels of his election last spring. But the chief credit, in any event, should go to whoever convinced the rock-ribbed elder statesmen of the movement to string along. Too many of the elder statesmen had forgotten that the movement was a movement. The stated objectives of the new drive will be to dramatize the appeals we have already examined; and to sell the idea that cooperation is a thoroughly "American" way to a more rational society—is, in fact, "Democracy in Action." Thus, for the first time, the cooperative movement will be actively pushing all of its three big appeals: the savings, the known quality, and the ideology. It is entirely possible that the ideology, if geared into the average citizen's desire for a more rational society, will have quite as much of a long range appeal as the more materialistic personal advantages of shopping cooperatively. This won't help the movement with its production problems, and it probably will do anything but moderate the hostility felt toward cooperatives by lots of businessmen. But the drive will at least give the movement a sort of weapon with which to fight for its interests. And if it takes hold, view it with respect. For if it does, the 2,500,000 may some day not too far off be 4,000,000 or 5,000,000 or even more. And the business that that many people can account for begins to be something bigger than small business. And a movement with that many people in it begins to be something that the nation cannot remain ignorant of nor the politicians ignore. |