^^g^ A o A o cz u 1 b> 4 o 51 b 3 OI 4 -< /[ -n 9 O -< 7 IPKINS UNIVERSITY STUDIES AND Political Science {ERT B. ADAMS, Editor . jUlstory is past Politics and Politics present History — Freeman SIXTH SERIES VII-VIII THREE PHASES 1 COOPERATION IN THE WEST By AMOS G. WARNER -t#^ \^^ vHt, JOHNSON REPRINT CORPORATION NEW YORK ■*' LONDON 1973 Library of Congress Cataloging in Publication Data: Warner, Amos Griswold, 1861-1900. Three phases of cooperation in the West. Original ed. issued as no. 7-8 of History of cooperation in the United States, which forms the 6th series of Johns Hopkins University studies in historical and political science. 1. Cooperation — Middle West. I. Title. II. Series: Johns Hopkins University. Studies in historical and political science, 6th ser., 7-8. III. Series: History of cooperation in the United States, no. 7-8. HD3443.H55 no. 7-8 [HD3446.A3] 334'.0973s [334'.0977] ISBN 0-384-66803-8 72-131 10 These are two of the twelve numbers that constitute Series VI, "History of Cooperation in the United States," of the Johns Hopkins University Studies in Historical and Political Science. Nos. I-II (bound together) contain the title-page, table of contents and introduction to Series VI, and Nos. XI-XII (bound together) the index. This reprint is from an original copy in the collection of the New York State Library in Albany. The publisher wishes to acknowledge the kind assistance of the Library. Reprinted with the permission of the original publisher First reprinting 1973, all rights reserved Johnson Reprint Corporation, 111 Fifth Avenue, New York, New York 10003 Printed in the United States of America VII-VIII THREE PHASES COOPERATION IN THE WEST. JOHNS HOPKINS UNIVERSITY STUDIES IN Historical and Political Science HERBERT B. ADAMS, Editor History is past Politics and Politics present History — Freeman SIXTH SERIES VII-VIII THREE PHASES OF COOPERATION IN THE WEST By AMOS G. WARNER BALTIMORE Publication Agency of the Johns Hopkins University 1888 Univ«nify of Ca^ifomi*^ 344 k ^3 03 Copyright, 1888, by N. Murray BALTIMORE : From the Press of Gcggenheimer, Weil in Co. TABLE OF CONTEXTS. PAGE. I. COOPERATION AMOXG FARMERS 367-393 In Ohio 371 Cincinnati Grange Supply House 372 Other Grange Stores 377 Cooperative Creameries 378 In Other States 382 Indiana 382 Michigan 383 Missouri 384 Illinois 384 Kansas 384 Nebraska 386 Causes op Failure 387 Residual Benefits 391 11. COOPERATION AMONG WAGE-EARNERS 394-426 Integral Cooperation 398 Distibutive Enterprises 402 Cooperative Association No. 1 402 National Cooperative Guild 405 The Streator Cooperative Supply Store _ . 406 The Laramie Cooperative Association and Others 407 Productive Cooperation 409 Mining Companies 411 Furniture Makers 415 Planing Mills 417 Carpentering 418 Stove Works 418 Pottery and Tile Works 419 Clothing Factories 421 Other Industries 421 Points Omitted — Conclusions 422 III. COOPERATION AMONG MORMONS 427-439 "Zion's Cooperative Mercantile Institution" 427 Other Forms of Mormon Cooperation 434 365 THREE PHASES OF COOPERATION IN THE WEST.^ CHAPTER I. COOPERATION AMONG FARMERS. The tendency of tlie urban to outgrow the rural popula- tion, and the drift towards the cities of the best brain power produced on the farms, have been often noticed and deprecated. But perhaps it has not been so generally pointed out that, in quite recent times, the very nature of the farmer's means of commanding a livelihood has been essen- tially altered, and that his much-talked-of independence is being effectually undermined by the same division of labor and differentiation of interests that has produced at once the strife, and the interdependence of the various classes in the towns. In one aspect, perhaps, we may say that this tend- ency has attracted attention, and has led to the discussion of agrarian questions as related to our own country. But these discussions have to do with the influences — arising also in great measure from the increasing division of labor — that tend to crowd the small farmer out of existence. In this paper it is to the purpose to speak only of the forces that have altered the character of the farmer's industrial duties, and, driving liim from a condition of actual or potential isolation, have compelled him to become a depend- 'NoTE. — The district v/ithin which I have undertaken to study practical codperation inchides the states and territories of Ohio, Micliigan, Indiana, Illinois, IMi&souri, Kansas, Nebraska, Colorado, Utah and Wyoming. The marking out of this district, which for present purposes may be termed the Middle "West, has been a matter of personal convenience and of agreement between myself and 367 368 Three Phases of Cooperation in the West. ent, though essential, part of the modern industrial ma- chine. The boiler is an essential part of the steam engine, but it could not even pump Avater for itself without the other parts; and in much the same way the farming popula- tion, though still at the basis of our industrial organization, must yet rely upon other classes to supply it with some of the things necessary to its continued activity. It is a long time since the farmer and the manufacturer of textile fabrics became mutually dependent, the one for his raw material and the other for the manufactured articles; but only since the war has it become the rule for the great mass of the farmer's products to leave his hands to be wrought by others into the form desired for consumption. When this tendency had gone so far that the hogs of Iowa were shipped to Chi- cago to be butchered, and the hams, lard and bacon shipped back again to be consumed, the farmer was certainly no longer an independent industrial unit. The illustration just used is not a good one, because in such a case the farmer might re-assert his independence if he chose. Certainly no man who is the owner of fat pork- ers need starve because he has not a chance to send them to some great packing house. But in many cases the depend- ence is not only apparent, but real. No very considerable number of farmers have now any practicable method of sup- plying themselves — except through others — with clothing, shelter, fuel, adequate provisions, or the implements essen- tial to the prosecution of their work. As soon as the depend- ence of a class becomes established, there are never lacking those ready to take advantage of it, and a class, in order to maintain its rights amidst the conflicts of the militant co-workers. The histories of the individual cooperative under- takings of this section— with the exception of those in Utah— do not differ greatly from those that will he described by the other writers. Therefore, with the object of avoiding virtual repetition, an attempt has been made by a somewhat different classification, to get special light upon certain phases of the history of cooperation in this country. The paper was finished in March, 1887. W. Cooperation Amonrj Farmers. 369 industries of the time, is driven to organization. Thus it was when the agricultural class found its special interests involved in the general war of interests. It was no longer possible to insist only on preserving the old, because the older state of things was irrecoverably gone; and thus a con- servative body, from whose conservatism much had been hoped, organized for aggressive warfare through the state upon the ''vested rights" of those interested in railroads and other public highways. With the subject of the ''granger legislation "" we have here nothing to do; but the order of the Patrons of Husbandry also endeavored to recon- quer independence for its members, by giving to their con- trol, through the means of cooperation, those industries upon which they were most immediately dependent. The story hardly needs retelling of how sadly they under- estimated the difficulties in their way. The simplicity of prospective cooperation is apt to be very seductive; and the grange leaders, through the press and from the platform, talked and explained till it appeared an easy thing tO' annihilate the despised "middle-man," both in buying and selling, and until it seemed a thing not very difficult for all farmers to " cooperate " — as they termed it — by withhold- ing their produce, and so to "bull" the markets of the world. There were many who looked forward to a kind of grangers' millenium, when the farmers, instead of being fleeced by the other classes and robbed of their earnings, should manage everything and be contented and happy. But when they came down from the platform or out of the sanctum, and began the work of managing even a small cooperative store, the practical difficulties were found to be many. In tlie first place they were handicapped by their lack of familiarity with each other and with the methods necessary to enable them to work together — a deficiency be- queathed to them by some centuries of isolated independ- ence. There was in the second place an almost total lack of the knowledge of business principles — as was indicated from the beginning by their inability to appreciate the real 24 370 Tliree Phases of Cooj^erniion in the West. and indubitable services rendered by middlemen. Perhaps, also, one of the most mischievous characteristics of those who engaged in the early cooperative enterprises was an over-wrought idea of what cooperation could do for them; they expected too much, and quit trying when their expec- tations were not fulfilled. Back of this was also the thought in the mind of each individual that he could, if he chose, get along very well by the old plan of distribution, and if, at any time, it happened to seem to him the more convenient one, he abandoned the cooperative enterprise without regret. But this position of the agricultural class, as the posses- sors of capital and credit, was also the source of a distinct advantage which they enjoyed over those of the day-laborers who have undertaken like enterprises. Any enterprise which they entered upon need not have lacked capital. The fact that most of them did lack that very thing, proves only the latent distrust, and still powerful conservatism in matters pertaining to their own affairs, that controlled the actions even of those who seemed to be the most enthusiastic converts to the idea of cooperation. The various experiences of the different communities were so much alike that the general statement will answer for them all. Yet, as an example of the class, it will be- best to take the experience of the State Grange and of the local granges in some one state, and afterwards the special differences which may characterize the movement in other states can be stated briefly, and unnecessary repetition avoided. Even a statement of the amounts of money in- vested and lost or made in these enterprises would be curi- ous rather than valuable, and not only would the existing materials for such a summary be very difficult of collation, but the materials for the completion of it are no longer in existence. As the state, the experience of which in the direction of grange cooperation will furnish the best point of departure for studying the whole movement, Ohio will be taken. The experiences of the farmers of this state will serve our present purpose none the worse because they at- Business Agency. 371 tempted much and achieved nothing. The pathology of cooperation may be studied witli profit. Ohio. Business Agency. — In Ohio, as in most of the states, a Central Business Agency, or Supply House, was started under the patronage of the State Grange. This was from the first under the management of W. H. Hill, who came to the work recommended by his successful direction of the local Supply House at Lima. The capital was advanced by the State Grange, and the credit of that body was used in the transaction of business, but the whole control of the affair was given to the manager. The main house was located at Cincinnati, and it was intended, besides selling to the vari- ous local grange stores already established, that branch houses should be maintained in different parts of the state to do the retail business. Goods were to be sold at prime cost. If any profit were by accident to accrue, it was to be turned into the treasury of the State Grange. By July, 1878, Hill declared that the enterprise was no longer an experiment, but had proven its right to exist and "was a fixed jiart of the commercial organism of the state. The manager filled a column or more each week of the Na- tional Grange Bulletin with gossip about the agency, and the business, according to his accounts of it, had certainly grown — at least in the sense of having developed along many and divergent lines. Besides acting as purchasing agent for everything that a farmer could want — from thresh- ing machines to molasses — Hill was also a receiver of every- thing a farmer had to sell, from live stock to grass seed. He became a sort of commercial prophet extraordinary and adviser plenipotentiary, and in his weekly contribution to the Bulletin made guesses at the tendencies of the wheat market, and told his readers who were the most reliable firms from whom they could obtain a library or a twenty- five-cent dinner. That a man could do so much gratuitous 372 Three Phases of Cooperation in the West. advertising wisely is not conceivable, and that the average man could do it honestly may be doubted. At the end of each year Hill made a report, and after de- ducting his own salary and that of the clerks, a small balance, usually less than a hundred dollars, but running up to $143.82 in 1878, was turned into the treasury of the State Grange. The business had at this time so extended itself that a branch house was established at Cleveland, under the management of E. F. Ensign. This branch house continued to do business on the same plan as the other until the collapse of both. A grange newspaper war about the state agency became bitter — Hill's enemies charg- ing him with dishonesty, and he replying with assertions that they were jealous of a deserving institution, and wil- fully withholding support that should be accorded it. In- vestigations were made which only furnished fresh material for disputes. Men wrote to ask "^if one man could cooper- ate?" and notwithstanding Hill's books, which were said to show that ho was handling goods on an average commission of from one to three per cent., the grange concluded that the business of the agency had better be closed out. Friends of the grange and of Hill are said to have paid considerable sums out of their own pockets to save either the order or the man from reproach; but these assertions are denied, nor does it matter much from our standpoint whether they are true or false. Whether the exact amount lost was $20,000, as many believed — secrecy having led to exaggeration — or whether it was very little or nothing at all, as others asserted, is only a question of degree. There was apparently nothing in the government of the agency that need have prevented it from losing that or any other amount. CiNciNisrATi Grange Supply House. — But the faith of those at the head of the Ohio State Grange in the value of cooperation was in no wise shaken. Even when the ''agency" was obviously failing they were at work starting an enter- prise which was to operate on strictly cooperative principles. Cincinnati Grange Supply House. 373 The moving spirit *was F. P. Wolcott, then, as now, editor of the American Grange Bulletin. He had been in Europe and studied the great distributive societies of England, and had been so convinced of the expediency and stability of such societies that he had bought stock in some of the Eng- lish concerns, and was now ready to make other investments in like organizations in this country. In September, 1880, there was a meeting of stockholders to take steps toward the organization and incorporation of the Cincinnati Grange Supply House. The committee on constitution and by-laws were instruc- ted to prepare them as nearly in accordance with the Ivoch- dale model as the laws of Ohio permitted. The Supj^ly House, located at Cincinnati, was to be the central or whole- sale house for the grange stores of Ohio, Indiana, Kentucky and West Virginia. The ultimate object was the establish- ment of a system of cooperative stores over all the middle west, which should be tributary to the one at Cincinnati, or to like houses in other large cities. It was at first suggested that of the nine directors of the company three should be chosen from Ohio, and two from each of the other states named above. But as West Virginia farmers did not feel sufficient interest to buy any stock at all, and as little was sold in any state but Ohio, the constitution finally provided that at least five of the directors should come from Ohio. As the law best adapted to its purposes, the company organized under the general act for incorporating mutual insurance societies; but though this law may have been the best on the statute books, it was very ill-adapted, indeed, to the i:)urposes in hand. In the first place it was found im- possible to provide for voting on any other basis than that of the amount of stock held. Wolcott desired that the company begin business with the mutual understanding among the stockholders that each man should have but one vote, no matter how much stock he held. In other words, he appreciated the fundamental importance of this provision, and desired those holding more than a single 374 Three Phases of Cooperation in the West. share to voluntarily resign their legal rights till a better law could be enacted. But the sticklers for the exact conformity of all the methods of the company to the existing law over- ruled his wish to try the experiment of government by comity. Another conflict with the law under which they were to operate occurred when they made the j^rovision that if any stockholder should sever his connnection with the order of Patrons of Husbandry — no stock being issued except to members of the grange — he should be obliged to hand in his stock, and the company was then to pay him, within six months, the par value of the stock resigned. The capital stock of the company was to amount to $50,000, divided into shares of five dollars each, and no person was to be allowed to hold more than one hundred shares. As farmers are producers as well as consumers, it was thought advisable to make provision for the doing of a commission business, indicating that the same tendency to consider all sorts of ''business^' a simple matter, and easy of management, had not been got rid of through the disas- trous experiment with the agency. An invoice was to be taken twice a year, and, not willing to trust simply to the natural force of the English language, the help of the printer's italics was called in — the constitution setting forth that '4n such invoice due allowance 7nust be made for any shrinkage in value that may have occurred since the last invoice in merchandise, or other property of this associa- tion.'' The constitution was printed at the Grange Bulletin office, and it may be suspected that Editor Wolcott is re- sponsible for the italic emphasis, which continues as follows: ' ' They (the directors) shall require all the business of this association, buying and selling, to be done strictly on a cash basis, and under no circumstances permit a departure from this rule." Abandoning the old plan of distributing at cost, the goods handled were to be sold at the regular market price, but no deviation was to be made in any case from the prices Cincinnati Grange Supply House. 375 marked, in favor of any purchaser whatever. Article XXIII. related to division of profits, and was as follows: "The net profits of this association shall be determined by de- ducting from the apparent profits, as shown by the ledger accounts, the cost of management, which shall include the salaries of officers and all employes, storage, freight, and all other items of expense incurred in the management of the business, interest at the rate of six per cent, per annum on all paid-up stock, and the shrinkage in value as shown by invoice. "The said net profits shall be divided among the Patrons of Hus- bandry who have purchased goods from the association in the pre- ceding half year, in proportion to the amounts purchased as shown by the ledger accounts; but patrons who are not members shall re- ceive only one-half the proportion of those who ai-e members of the association." At the end of the first year the net gains amounted to $1,328, which was all paid out either as interest on paid-up stock, or as dividends to purchasers. There was no pro- vision for a reserve fund, and so no possibility of saving the company from borrowing or assessing the stockholders whenever reverses might come. In fact, during this first year SI, 500 had been borrowed at six jDer cent. In spite of the emphatic italics used in printing the constitution, the exhibit of resources contained the startling item: "Sun- dry book accounts, 84,49G;" and, besides the "borrowed money,^' the "goods on deposit to be paid for when sold," and the "undrawn salaries,'^ there was also seven hundred and seventy-eight dollars of "other indebtedness. '^ More than all this, there was included on the debit side of the loss and gain account the small but significant item of four dollars lost on debts. During the next six months an old bill for expenses of the man that had canvassed the state to sell the stock came in, and other evidences of slip-shod accounts. One of the most discouraging features about the third semi-annual report was the fact that it was presented at a regular meeting of the stockholders at which there was not a quorum present. As it required only twenty for a quorum, and as there' 376 Three Phases of Cod2}eration in tlte West. were some seven hundred stockholders, the complete apathy with which the enterprise was regarded by all but a few may be inferred. According to the statement for January, 1883, though the amount of paid-up stock had increased to nearly thirteen thousand dollars, yet the amount of indebtedness of various kinds had also increased: the value of the merchandise sold had shrunk to $67,098, that of the commission business reached only $38,042, and the net profits were $1,080. Among the resources, the ^'book accounts" had reached the sum of $6,282 — the italics to the contrary notwithstanding. Whenever a man of moderate business capacity begins *'to get involved," the chances are that he will conclude that the one thing needful is for him to extend his business. So, as things began to get tangled in the affairs of the Cincin- nati Grange Supply House, the men in charge decided that matters would be much helped by starting a branch estab- lishment. In 1883 this company, that had to borrow money to carry on its own affairs, sent ofE about two thousand five hundred dollars of its much needed capital to start a branch house at Cleveland, which was credited with having earned during the six months a net profit of forty-three dollars and ninety-four cents. The total net profit of the whole con- cern for the same time was only four hundred and forty-eight dollars, which barely equalled the interest on paid-up stock. During the next half year the volume of business and the net profits increased somewhat, but the amount of '^accounts outstanding" had now reached almost $9,000, though some of them h^d been settled by the acceptance of "^ bills receiv- able" to the amount of $1,100. When I was in Cincinnati in June, 1886, the Grange Supply House, which it had been hoped would be the parent of cooperative enterprises over the whole West, was appa- rently in the last agonies of dissolution. In the hands of Eeceiver Harrison it was thought that everything would be speedily wound up; but these "^'artificial persons," or "legal entities," that we call corporations, sometimes find it hard other Grange Stores. 377 to die. It has been so in this case. A letter bearing the date October 25, 1886, contains the following: " The Grange Supply House is still in course of liquidation. It is hoped that it will pay out with total loss of stock — but if lease of property is made valid, then they will settle by an assessment on the stockholders of at least twenty per cent. I seriously doubt any early efforts at co5peration among farmers. They have had quite enough for the present, and this generation will hardly forget the cooperative failures of the past fifteen years." Other Gkaxge Stores. — During the halcyon days of the grange there was, at least for a short time, a grange store in nearly every county in Ohio, but so far as I have been able to learn not one of them is now in existence; or, even if the store remains, all the cooperative features have long since disappeared. At Hillsboro' a local supply house was started and a man chosen to manage it who had failed in his own business. To insure a suthcient degree of cheapness, the directors passed an iron rule that no goods whatever should be sold at more than ten per cent, profit. The merchants of the place combined and made prices very low on staple articles, and the grange establishment, being unable to make good the loss through higher profits on other articles, was at a serious disadvantage. The stockholders themselves with- drew their j^atronage, yielding to the temptation of tempo- rarily low prices elsewhere, and the cooperative store failed disastrously. At the close the stockholders endeavored to give their stock away to escape assessments, but could not do it. The regular competitive stores in the various places were inclined to measure the danger to themselves by the aims and anticipations of the advocates of cooperation. As the latter declared their intention of annihilating middlemen, it is not strange that these were inclined to combine for the the annihilation of cooperative enterprises. Thus at Lima established merchants of the place made an arrangement among themselves by which one agreed to sell one staple article below cost, another another, and in this way thev 378 Three Phases of Cooperaiion in the West. drew patronage from tlie grange liouse and caused its col- lapse. At Zanesville and at other places public spirited individuals paid out of their own pockets the losses incurred by these ill-starred cooperative affairs. At Dayton one of the grange stores held out longer than those in other parts of the state, but finally succumbed. Where there was no public spirit to break the severity of the downfall of these institutions, the results were even more disastrous. I was assured that there were even yet as many as a hundred law- suits which had their origin in cooperative enterprises, "^dragging their slow length^' through the courts of High- land county. As an example of the manner in which many of these stores retained the adjectives *' cooperative '^ in their title through the principle evaporated at an early day, we may say a word of the attempt at Geneva. Here it was found that if a good stock was not kept for patrons to select from they would trade elsewhere. The increase of stock necessi- tated an increase in capital and in clerk hire, and it was found that with these additional expenses goods from this store were not so very much cheaper than those purchased elsewhere. So the management passed into the hands of an ordinary joint stock company of limited membership. CooPEEATiVE Creameeies. — The only noteworthy ex- ample of productive cooperation among farmers in Ohio is to be found in the creameries located in the principle grazing counties of the state. These are enterprises that have grown up without the help of lecturers, or newspaper editorials, or any of the noisy enginery of a state organization. They were started because it was believed they would be immedi- ately profitable to those engaged; they were continued on a cooperative basis because that method of operation was in fact found to be profitable, and the element of cooperation is at present being pretty rapidly eliminated from their management because the resulting increment of profits, owing to the efforts of competitors and the general state of Cooperative Creameries. 379 the market, is so small that many farmers short-sightedly refuse to ''bother'" with them longer. One gentleman, who is quite well acquainted with the circumstances, esti- mates that this form of cooperation must be the basis of twenty to forty per cent, of the farming in the counties of Geauga, Ashtabula, Portage and Summit. But, after as careful an investigation of the matter as the circumstances permit, I feel sure that this is an over estimate. As best showing the history and extent of this form of industry, and as indicating the vibration between the coopera- tive and the ordinary method of managing the factories, a sketch will be given of their history in Geauga county. All the materials for this statement were obtained through the kindness of J. 0. Converse, editor of the Geauga Rejmbli- can, and of William Howard, the county auditor. In 1862 a Mr. Stanhope erected a cheese factory in Bain- bridge, of sufficient capacity to manufacture into cheese the milk of one thousand cows. The proprietor engaged to fur- nish all the incidentals, manufacture the cheese, and care for the same until sold, at a certain rate per hundred pounds. The patrons arranged for the delivery of the milk at the factory, and appointed each year a man to attend to the selling and to distribute the net proceeds of the sales in proportion to the amount of milk furnished. This method was pursued with entire success for some twelve years, and in some localities is still emjDloyed. It is said to bring to the dairymen greater returns for the milk produced than any other plan. Before 1873 fifteen of these factories had been established in Geauga county at an aggregate expense of about 820,000, and with few exceptions these were man- aged according to the plan described above. In 1874 the price of cheese had become so low that, as. the owners of the factories refused to reduce the price per hundred, the dairymen in some localities formed joint-stock companies for the manufacture of cheese at prime cost, the members of the company being numerous enough to fur- nish all the milk for which the factory had capacity. After 380 Three Phases of Co'Operation in the West. reckoning the interest on the first cost of tlie buildings re- quired, tlie running expenses and the cost of repairing, it was found tiuit cheese could be manufactured for ninety cents per hundred. To prevent any further action in this direction, the owners of the factories immediately engaged to bear all the incidental expenses, to do the Avork of manu- facturing, and to care for the cheese until sold for one cent per pound. This to a large extent satisfied the dairymen until an attempt was made by the owners of factories to control the dairy interest by buying the milk delivered at the factory. This method has not given general satisfaction, because of a combination on the part of owners of factories to control prices. As a rule, dairymen are better satisfied to have the milk of their dairies made into cheese at a rea- sonable rate per hundred and sold at the market price. Mr. Howard reckons the profit on capital invested in cheese factories at fifty per cent., and says it would bo yet larger, but that factory property depreciates in value very rajDidly. Of course it is not possible that a regular jorofit so large as this could be surely earned, although it is a business where the money investment is small as compared with the value of the annual product. The factories that were erected on the joint-stock plan have usually been rented to reliable parties for a term of years. The lessee engages to manufacture the milk deliv- ered at the factory each day at a certain rate, usually seventy-five cents per hundred-weight of cheese. This method, the most decidedly cooj^erative in princij^le of any, has been found very satisfactory in many localities. The manufacturer gets fair pay for his work, and the dairy- men get all for the milk that the market value of the pro- duct warrants. The annual prodiTct of cheese in most of the counties in Ohio, and notaljly in Geauga county, has been steadily decreasing since 1874. In that year the amount of the product was 5,227,703 pounds. In 1884 it was only 3,446,- "941 pounds, showing a net decrease of 1,780,701 pounds. Cooperative Creameries. t381 This diminution is attributed for the most j^art to the ex- tensive adulteration of dairy products, which reduces the value of those that are genuine by partly satisfying the de- mand with an inferior article. In Lake county the one cheese factory operates on the plan of paying the manufacturer by the hundred, and then dividing the proceeds among the dairymen. In Ashtabula county the dairy interest is quite large, and the cooperative principle obtains, to a very considerable extent, the method adopted being that of Lake county. In Cuyahoga county, a correspondent much interested in such matters, writes that cooperative creameries are in that county nearly a thing of the past. There is one cooperative cheese factory near Chagrin Falls, which is thought to give its patrons slightly better results than other establishments in the county where the milk is sold on delivery. The same correspond- ent, in speaking with regret of the decay of the cooperative element in the management of these concerns, lays special stress upon its educational value, though this form of coop- eration may possibly be considered a very mild one. In the days when most of the creameries and cheese factories were cooperative, the weekly county paper found it profitable to take markets by telegraph on the day of going to press, Avhile now the farmers are indifferent to the condition of the market, as they sell their milk on prices established about once a month. Taken all in all, we find that this form of cooperation among dairymen farmers in northern Ohio is the most un- ostentatious and tlie most successful part of the movement for rural cooperation in that state. In fact, it is the only example of success, and the only branch of business in which the farmers have tried to apply the principle, that the result has not been disastrous. Though even in this branch of industry the cooperative element is now in abey- ance, yet it is demonstrated that this form of organization may be an etficient weapon in the hands of the farmers whenever the owners of factories become oppressive in their 382 Three Phases of Cooperation in the West. exactions. The reasons for the success achieved are not far to seek. The capital necessary is not large in proportion to the value of the annual product, the details of the business of manufacturing are simple and can be safely intrusted to a salaried superintendent, or one who receives so much per pound for the article manufactured, the product is a staple for the selling of which no advertising is necessary, and from beginning to end no secrecy is required. Other States. I]srDiA]S'A. — In Indiana much the same line of action was taken as in Ohio. During the time of the grange's greatest prosperity a state grange agency was established, which for a while did a large and apparently profitable business. In 1876 the transactions of this concern amounted to nearly one thousand dollars jier day. But the agency was badly managed, a large stock of unsalable articles accumiilated in the hands of the agent, irresponsible parties were trusted, and there was great shrinkage in values. As a result of these perfectly adequate causes, the agency became bankrupt, and the State Grange of Indiana lost about six thousand dollars through the failure. Of the many local cooperative stores that began business in Indiana some still survive, of which the most successful and the most noted is the Hunt- ington Cooperative Association. The enterprise was begun seven years ago, and has from first to last operated upon the Kochdale plan, as far as the laws of Indiana permit. The association began business with a capital of only five hundred dollars, which has since increased to $20,000. The annual transactions of the con- cern average about 865,000. In 1883 it handled over 8100,000 of goods and paid a quarterly rebate on purchase- checks of fourteen per cent, to stockholders, and seven per cent, to non-sharing patrons. Somewhat higher rebates have at times been paid. "Within the last two years the association has sold almost as many goods as in 1883, but Lansing Cooperative Association. 383 has been compelled to handle them on such close margins that the rebates have been comparatively small. In the state of Indiana the grangers made some attempts to organize cooperative companies for the manufacture of farm implements, but these, without exception, resulted disastrously. Michigan. — Three successful or semi-successful stores are left over from the wreck of high hopes and ambitious undertakings in Michigan. The most prosperous of these is the Cooperative Association of the Patrons of Husbandry of Allegan county, that ''deals in everything except intoxi- cating drinks. '' Shares are ten dollars each. The first share owned gives the holder a right to one vote, and he has but one additional vote for each fifty shares that he may pay for thereafter. The number of shares is not limited, but no one at present holds more than fifty. Capital paid in is $25,650, the number of shareholders, five hundred and twenty-five. Goods are sold at cost and four per cent, is added to the bill. Five per cent, interest is paid on stock. The manager is responsible for all credit given. Annual sales for the last two years have been $101,000. The Battle Creek Cooperative Association of the Patrons of Husbandry and Sovereigns of Industry is also prosperous. The capital is $6,000, held by one hundred and seventy-five stockholders. Shares are ten dollars each, no one person to hold more than forty shares, and no shareholder to have more than one vote. Goods are sold to all customers at current rates, and profits divided among stockholders. The Lansing Cooperative Association of the Order of the Patrons of Husbandry was very successful until the last year or so, when its store has been rather overstocked, and goods have so depreciated as to reduce profits. "W. J. Beal, pro- fessor of botany and forestry in the Agricultural College of Michigan, has been a prominent member of this association and it is through his kindness that I have obtained most of the facts regarding grange cooperation in this state. The 384 Three Phases of Cooperation in the West. association began some twelve years ago, with a capital of three hundred dollars; it has now a paid-up capital of 818,000. Shares are ten dollars each — no one allowed to hold more than fifty — and votes are in proportion to stock held. The sales have averaged one hundred and seventy dollars per day. Present prospects are very encouraging. Illinois. — In this state there were at one time coopera- tive stores in fully half the counties. As a rule each one was prosperous for a time, but failed, as a correspondent writes, ^'from lack of mercantile ability on the part of farmers elected as boards of directors and managing sales- men." For some ten years there has been established at Chicago an unambitious but useful business agency of the State Grange. The agent — at present Mr. Joseph Chambers — is elected by the State Grange, and receives a salary for the work done. No capital is invested in the business. Any local grange, or any granger known to the agency, may order any sort of merchandise through Mr. Chambers, who merely sends the orders on to wholesale houses that fill them at the regular rates, the grange receiving a small commis- sion, and becoming responsible on the one hand to the pur- chaser for a good quality of goods and proper rates, and on the other hand to the wholesale dealer for prompt payment in cases where cash does not accompany the order. Farm products may also be consigned to tho agency, and sold at customary commissions. The amount of goods handled in this way is very considerable, but the business, as conducted, does not take all the time of even one man. There are some complaints regarding the management of the agency, but what foundation they may have it is not easy to deter- mine. Missouri. — In Missouri there seem to have been no features worthy of special notice regarding rural cooperation. Kansas. — Here we find examples of unusual and appar- ently permanent success. The Johnston County Coopera- Patrons' Cooperative BanJc. 385 tive Association, which is doing a successful business at Olathe, is the oldest and most successful of these. Its pres- ent manager is H. C. Livermore. The prime mover in the enterprise, and the president of the association for nearly ten years, was the Hon. W. H. Toothaker, the Master of the Kansas State Grange, and a man of national reputation in grange work.' The Eochdale plan was adopted in its purity, and the association began business in July, 1876. The following table gives a summary of the business done during the first ten years, or until July, 1886 : YEABS. 1 2 3 4 5 6 7 8 9 10 Totals. Capital. $848 99 3,816 60 5,971 20 7,540 90 10,343 67 17,673 78 33,685 00 36,879 87 38,576 33 40,916 83 Annual Sales, Annual Profits.. §41,598 86 69,177 32 92,808 85 158,421 54 189,175 84 243,100 88 266,070 15 269,099 52 252,995 78 210,588 79 11,793,037 53 $1,500 29' 2,149 69 4,846 84 10,775 54 11,402 60- 14,887 85. 18,006 21 15,305 12 13,683 21 104,038 41 $196,595 7& Besides the profits a reserve fund has also been set aside for building purposes, with which a three-story iron and brick building, 130 x 128 feet, has been erected, the third floor being used for the grange meetings and as an audience hall. The building is supplied with steam heaters, an ele- vator, etc., and was erected at a cost of 875,000. " Pros- pects are very bright." The Patrons' Cooperative Bank, of the same place, was undertaken with the same men for leaders as the store. It was organized June 7th, 1883. The capital is $75,000, in ^Most of the facts obtained concerning cooperation in Kansas were gathered and systematized for me by Mr. Toothaker, to whose helpful courtesy I am much indebted. 25 386 Three Phases of Cooperation in the West. $100 shares, no man to hold more than ten, and each share- holder to have but one vote. " It was established," says Mr. Toothaker, " principally as a means of protecting the people from losses as depositors," many disastrous failures of banks having occurred. The present stockholders number about two hundred — farmers with visible property worth from ten to one hundred thousand dollars, and as all their personal property is, by the law of the state, to serve as security, there seems small chance for loss on the part of depositors. " The bank has paid the stockholders a semi- annual dividend of ten per cent."' The yearly deposits amount to $1,000,000 and the exchange to over 8500,000. ''There are some twenty or thirty smaller cooperative stores in the state, which need not be described in detail." There are noticeably successful stores at Constant, Cowley county; McLooth, Jefferson county; also at Cadmus, Oak- wood, Mound City and Sj^ring Hill. Nebraska. — In 1872 Nebraska was comparatively new and comparatively far from the places where any desira- ble farm machinery was then manufactured. Many local granges clubbed their orders for different kinds of imple- ments, and though in many cases the result was satisfac- tory, yet in others mere cheapness was secured at the ex- pense of quality. The very cheap machinery was very poor. A style of harvesting machine known as the header, was then much used over all the newer West, and continued popular for several years, till supplanted, together with its old-fashioned competitors, by the modern self-binder. The point of interest for our present purposes is, that few heavy or complicated castings were necesssary in the con- struction of these machines, and there were few parts, ex- cept the sickle-knives, that required great skill for their manufacture, while these could be easily purchased in quan- ^I am not sure whether Mr. Toothaker really meant a twenty per cent, annual dividend or not. Causes of Failure. 387 tity. The standard headers were selling at this time for from $325 to 8300. In February of 1872 the State Grange •appointed an agent to see what could be done towards the manufacturing of headers in Nebraska. After some delay, arrangements were completed with parties in Fremont, which warranted the erection of the necessary foundries and shops, and headers were furnished the State Grange at a net cost of 8150. They were sold to farmers at that price, cash on delivery, and no loss resulted. As a con- sequence the price of all sorts of harvest machinery was reduced over the whole state, railroads gave better rates on machinery of eastern manufacture, and everything seemed to indicate that the grange had made a wise move. But a parallel attempt was made at Plattsmouth in the manufac- ture of corn cultivators, and in this case about twice as many were manufactured as could be sold, and there re- sulted a net loss of some 85,000 to the grange. This, through mismanagement, was connected with the Fremont enterprise, and a fine lot of law-suits was the result, in the progress of which some of the grange officials and agents suffered severe and unmerited personal loss. These disas- ters, together with a severe attack of politics, killed the grange in Nebraska, nor had it, until recently, shown any indication of resurrection. Causes of Failure. The causes of the approximate failure of cooperation among farmers in the district under consideration have necessarily been outlined, or at least suggested, in the fore- going historical sketch. They may be summarized under the following heads : 1. Some of the cooperative enterprises have deservedly failed, because, even with proper management, they could not pay. In other words, there are conditions under which the cooperative is demonstrably inferior to the distinctively competitive organization for the attainment of given ob. 388 Three Phases of Cooperation in the West. jects. One simple example may be given of an industry that has so changed that cooperation, once possible and ad- visable, is now inadvisable, though still possible. When threshing machines first came into use they were small af- fairs, usually run by one or two horses in a tread-mill horse- power. Small as they were, each machine could do much more than thresh the crop of an average farmer, and so it was usual for several farmers to combine, buy a machine, thresh their own crops, do, perhaps, some work for their neighbors, and divide the profits. As the machines were improved and enlarged, it became more and more difficult for an ordinary farmer to operate one to advantage. The value of special skill and aptitude for the business of "run- ning a thresher^' increased as the business became more technical, for each mistake delayed or wasted the labor of an increasing number of men and teams. Nor did farmers find it profitable to buy machines and hire expe- rienced men to run them, for the chances of wasting time and effort were so numerous that experience proved that only one having personal interest in the result could be relied upon to do the best possible work. With the advent of the present steam thresher, having a thirty-six inch cylinder and a daily capacity that would formerly have been considered fabulous, the change is complete, and threshing is almost universally done by men who charge a given rate per bushel, which rate is fixed by the law of supply and demand. Farmers are still at liberty to combine, buy ma- chinery and do their own threshing, but they would infalli- bly lose money by doing so. Where farms are small much the same development has taken place regarding harvesting machinery; those who have not enough grain to keep a ma- chine busy during the season usually find it more profitable to hire their grain cut by the acre than to own part of a machine. Eeferring to the failures we have described, we may then properly ask the question whether or not a given enterprise failed because, as an industrial undertaking, it was inherently Caicses of Failure, 389 unwise. As to the attempts to manufacture farm machinery I think this may be said : farmers, as such, cannot produce or cause to be produced, machinery as reliable and cheap as that sent out from the works managed by expert machinists, whose success depends entirely upon their ''keej^ing up with the times" in a business where the times are very hard to keep up with, and on their winning a reputation for reliable products. It may be well enough for farmers to start such enterprises as a ready means of bringing manu- facturers to just terms; indeed, it seems that, viewed in this light, the disastrous enterprises begun in Nebraska were worth far more to the farmers of the state than they cost. 2. One of the most useless causes of the failure of cooper- ative companies, and a potent one, has been the lack of proper legislation, making impossible the incorporation of true cooperative companies. The example of the Cincinnati Grange Supply House is an instance in point. The mere matter of voting is not the only one which needs a change in the laws to secure the best results, and in some of the states it is allowable to give each member an equal voice in the management of affairs. But nothing definite Avas done in any of the states to make adequate legislative provision for cooperative companies, though, with the English and the eastern models, and a little common sense, it ought not to have been hard to draft such a law; and an organization strong enough to pass what is called the "granger legislation" regarding corporations already estab- lished, might surely have had it enacted. In 1884 a bill passed the Ohio legislature providing for cooperative associ- ations, but it consists merely of the title and a considerable mass of legal verbiage. There is in it absolutely nothing of value for the purpose in hand, except the provision that such associations shall have the right to divide profits among patrons m proportion to purchases, and this right was granted, or could be derived from previous acts under which, the so-called cooperative associations had been operating. 390 Three Phases of Cooperation in the West. 3. A third cause of failure may be stated as the inadapta- tion of rural life and character to the cooperative method of managing business. We may include under this head indi- vidual isolation, lack of business experience, and the fact that farmers are in a position to take, if they choose, the most agreeable and pleasant way, even though it be not in the end the most profitable. Mr. Chambers, of the Illinois Grange Business Agency, says that farmers are too rich to succeed in cooperation. Even where there may be a certain amount of profit in such enterprises, there is no pressing necessity to urge or compel them to take advantage of it. They are in a position to gratify their whims as to where and what to buy, and do so even at some cost to their own final interests. As the first cause of failure given in this sum- mary is one seldom advanced by cooperators or ex-coopera- tors, so, on the other hand, the one at present under con- sideration is oftenest given in reply to inquiries as to the causes of failure. The inability of those concerned to break away from the habits acquired in the transaction of ordinary business, and their willingness to be led astray by specious advertisements and the seductions of the temporarily low prices of ^'cut-throat competitors,^' have been very fruitful causes of disaster. It will be said, perhaps, that short- sightedness is the cause of nearly all human failures of whatever class, but still it is especially fatal in cooperative enterprises. Those who engage in such undertakings are often called u^oon to forego immediate in order to secure prospective gains ; to pay always a fair price in order that they may avoid the necessity of ever paying more than is fair, and to pay cash at each transaction in order that they need never be compelled to pay a share of some less respon- sible person's unsettled accounts. A short-sighted, imjoa- tient person will not persevere in the doing of these things, and a cooperative company made up of any considerable number of such persons will be sure to fail. Yet, while short-sightedness and the isolated lives of farmers are causes of failure in cooperative undertakings. Residual Benefits. 391 these very features of rural life should serve as additional incentives to repeated and earnest efforts to achieve success. If the individuals of a given class are isolated, so much the more do they need something that will bring them together and teach them to understand each other, so that at need they may be able to work together for a common end; if they are deficient in their knowledge of affairs outside their own peculiar branch of industry then it will be to their advantage to acquire such knowledge, even if they have to pay pretty liberally for the experience through which alone it is to be obtained. 4. Of an exactly opposite nature to the foregoing is the influence of the general indebtedness of the farming class. This has been a potent cause of the failure of many rural enterprises, 5. Wo may place next in the enumeration of the causes of failure the peculiarly intense hostility of the regular trades- men. This hostility was more general and vindictive than would have been felt towards the same number of ordinary enterprises, because the cooperators themselves hastened to declare a war of extermination upon ''middle-men," and so the latter necessarily entered upon the struggle as upon a struggle for existence. 6. Lastly, there were a great many local causes of failure. Special quarrels and jealousies already existing or soon developed, or other adventitious difficulties brought ship- wreck to many of the enterprises. Residual Benefits. It may be thouglit that we are very near the end of tlie discussion of cooperation among farmers when we have reached the point where it is proper to begin the enumera- tion of the benefits resulting from the attempts. Though it is indeed true that this branch of the subject need not detain us long, yet it is true, not so much because the benefits were few or small, as because they were of a sort 392 Three Phases of Cooperation in the West. not susceptible of definite statement and enumeration. An approximate estimate of them might include the following items : 1. The educational benefits resulting to the individual cooperators may first be noticed. The most important of these is not the slight acquaintance gained by some with business forms and methods, but rather the intimate knowl- edge that individuals gained of their own incapacities and those of their fellows. Practice in working with his fellows is the most useful training a citizen can have, and this the attempts at cooperation afforded. The earlier grangers were told, and believed, that it would be a simple matter for them to manage all the industrial machinery by which they were in any wise affected. They made numerous experiments to test the feasibility of the thing, and have been more modest and more sensible ever since. They will hereafter understand better the power and the real value of the industrial organization of the present, and they will better understand themselves. Though they may attempt less, they will achieve more. 2. We have already noticed in certain cases the good effects resulting from attempted cooperation through the medium of lower rates forced upon the regular dealers. Co- operative enterprises served as an efficient meansof pricking the bubble of high prices produced by monopoly, or really superfluous middle-men. The strictly competitive system might be expected to perform all such services for itself, but in practice it is found that some force extraneous to that system is of use in accomplishing such results. 3. The habit of going to first sources for supplies has resulted in a permanent pruning of the powers of local deal- ers. Through the old ^'business agencies," relations were established with wholesale houses which continue, even where the agencies have ceased to exist. ''Shopping by mail" was greatly helped towards its present importance by the grange movement, and is still carried on in many cases through the means of the order. Residual Benefits. 393 4. A certain amouut of absolute success has been acliieved, and the possibility of achieving success under right laws, and with good management, has been demonstrated. Thus, though the proportion of failures to successes has been greater in this section than in any other, the care- ful study of the facts need not discourage us. "Even our failures are a prophecy.' CHAPTER 11. COOPERATION AMONG WAGE-EARNERS. Cooperation among wage-earners in the middle west is' as yet almost wholly tentative. He who writes of it must, for the most part, be content to describe hopes and to sketch possibilities. In estimating the general possibilities of the success of co- operative enterprises as such, the first factor to be considered is the way in which such enterprises are regarded by the laborers themselves. It is believed, and speaking generally it is true, that the enthusiasm of the laboring men for coop- eration surpasses that of the early grangers; the need of the wage-earners is greater, and their aims are more radical. ''Down with the strike (assistance) fund and up with the cooperative fund/' says the Chicago Knights of Labor, and Avants the order to raise $0,000,000 for the advancement of the "cause." This enthusiasm is so vociferous and so much talked about that here it need not be further insisted on; there is, however, an under-current of opposition, which, though not specially important in itself, needs noticing be- cause it is usually ignored. This opposition is that of cer- tain laborers — or, j)erhaps, some would think it more accu- rate to say of certain labor leaders — to what they call indi- vidual or competitive cooperation; that is to the forma- tion of individual cooperative companies that seek to fit themselves into the ordinary competitive organization of industry. The radical wing of the Socialists is an existing force that should be reckoned with. Their present oppo- sition to attempts at partial cooperation are various, and some of them troublesome. When the Denver Labor En- quirer, the official organ of the '"lied Internationals,'"' de- clares against profit-sharing, it does so on purely theoretical 39i Co'OjMration Among Wage- Earners. 395- grounds. But a most conspicuous example of practical opposition is to be found in the action of the International Working People's Association in Chicago, relative to the proposed cooperative company formed by the packing-house strikers, and designed to operate a large establishment of its own. The opposition to the project was based largely upon the ground that successful cooperators became as conserva- tive and aristocratic as any other capitalists. Morgan, who opposed the plan most decidedly, also sketched very forcibly the difficulties attending a cooperative enterprise that must compete with such a man as Armour, and urged that labor- ers could have no real power till all industry was managed as the postoffice now is. Until that time came, the laborer should get as much as possible for his work, and help for- ward the agitation for the complete triumph of socialism. Whether from such opjDOsition, or from inherent weakness, the packing-house scheme came to nothing. Some of the labor papers also become restive under the perpetual reiteration of the story of the Eochdale Pioneers, and show that in the department of retail trade the profits are already so small in this country that the retailers more resemble hired laborers for the wholesale houses than inv''e- pendent tradesmen, and that with trade so organized there is no place for distributive cooperation.' No one can doubt the need of such a warning who has looked through the great mass of self-complacent theoriz- ing indulged in by writers for the labor press. But aside from the theorists who hinder by oj)posing and the theorists who cripple by trying unwisely to aid the movement for cooperation, the fact remains that the great majority of organized laborers in this section of the country believe in cooperation, and are making very practical and very vigor- ous efforts to help forward ''the cause." One of the largest appropriations made by the General Assembly of the ^Professor J. B. Clark, in his recent work, The Philosophy of Wealth, insists upon this same point, p. 193. 396 Th-ee Phases of Cooperation in the West. Knights of Labor, at its meeting at Eichmond, was for the purpose of furthering practical cooperation, and with the help of the hard sense and great experience which some of the leaders possess, we may hope that definite results of some sort may ere long be reached. In their declaration of principles the Knights of Labor declare that their ultimate object is to introduce a "^coope- rative industrial system," which undoubtedly many of them expect to become universal without great delay. But their leaders are too shrewd, and have learned too much by their experience of the last few years, to expect very start- ling results in the immediate future. "We cannot make men," says Powderly, sadly; *'we must take them as we find them;" and one of the most difficult features of the work of the leaders has been to get the men to come down to practical plans and begin where there is a possibility of beginning. McGaughey, the secretary of the cooperative board, has had a chance to observe all the operations of the successful coop- erative coopers, elsewhere described by Dr. Shaw, and the study of the self -helping efforts of these men has begot in him a rather lively impatience with the frequent calls for assist- ance made by various local assemblies. A published letter of his says that the cooperative board desire to learn of all cooperative efforts, and especially to receive copies of their by-laws and constitutions, but that the board does not want any more applications for aid from cooperative enterprises. "This thing of expecting help in starting a carp-pond, a dairy or a machine shop is a great mistake." Then going on in an exclamatory and despairing mood, he cries : ** Give us a rest ill the name of brotherhood and human charity ! If your plans are feasible the best place to look for help must be near home." Mr. Samuel, another member of the board, trying to meet the demand for definite plans of co- operation fitted to existing circumstances, prepared a pam- phlet of twenty pages on "How to Organize Cooperative Societies." This pamphlet gives the fundamental maxims Cooperation Among Wage-Earners. 397 that have been followed by nearly all successful cooperators, a model for the constitution and by-laws of a cooperative society, and a few pages of reasons why a laboring man should become a cooperator. The price of this little work is only five cents, and though it was published in 188G, it has circulated widely among the Knights, and has already exerted considerable influence in shaping the policy of the various new societies springing up in various parts of the country. Before taking up the individual enterprises, one more characteristic of the attitude of certain laborers should be pointed out. The feeling alluded to is that of dread of the present competitive organization as of something tangible and objective, which is able to seize and injure them. Of course, this feeling is not widespread, but that it should exist at all in this country will bo a matter of surprise to some. It is almost exactly analagous to the fear which an oppressed citizen might have of a tyrannical government. I know of cooperative stores, the managers of which keep everything as secret as possible, and where the deliberations of the stockholders are carried on with many of the precau- tions that conspirators, planning the assassination of a tyrant, might employ. In Michigan there is a small coopera- tive store, the very existence of which is kept secret, and I was confidentially informed of its whereabouts only on con- dition that none of the facts concerning it should be made public. At the close of his pamphlet on "How to Organize Cooperative Societies," Mr. Samuel gives five reasons for being a cooperator, and the last of these affords as good a summary as we need seek of the way in which this subject is regarded by the great majority of workingmen who both think and hope. The essential parts of the passage referred to are these : " Cooperation is the only way that I see by which the workers in this land, or any other, can raise their position to what it ought to be and might be. Hundreds and thousands of persons have 398 Three Phases of Cooperation in the West. 'got on,' as it's called, by getting on the backs of the workers. They have rolled up capital out of profits on their work and their trade. Now, cannot the workers get themselves, as a body; 'on' to a higher standing ground ? Cannot they roll up capital out of their own purchases and their own work to lift themselves up, one and all ? I believe they can. But how? By union among them- selves for this great end — the greatest end, I think, that men have ever knowingly worked for. Now, where does the road to this end begin? Where else but in the store — which can give them capital out of their own income; which gives them business habits; which enables them to combine their power by great commercial institu- tions, such as the cooperative wholesale societies, and active cen- ters for propaganda, conferences, congresses, central and sectional boards, at once creating strength and showing them how to use it to best advantage and for the noblest purposes." Integral Cooperation. Those wlio liave become acquainted with any considerable number of attempts at cooperation must have felt at times that Wolsey's injunction, "I charge thee, fling away ambi- tion,^' is of special applicability to cooperators. " The great fault with too many cooperators," said Powderly in 1885, ''is that they advocate the establishment of coopera- tive institutions on too large a scale." The Knights of Labor announce that they are working towards universal cooperation, but this is said by men who (most of them) realize keenly how distant is the goal that they are striving toward. Yet there are others, within and without the order, that refuse to see the difficulties, and who insist on believing in an imminent millenium. The most radical of those who have practically attempted to realize such ideals believe in ''integral cooperation." The end sought through this form of organization is really a state of pure socialism, with socialized capital and reward proportioned to services. An enterprise of the kind was organized by Henry E. Sharpe in January of 1880, and was called the York Society of Integral Cooperators. I have obtained no detailed account of the society during the period immediately following its origin, but in 1882 there Integral Cooperation. 399 were about sixty members, some of wliom were already located on a farm of one thousand acres near Eglinton, in the southwestern part of Missouri. The object of those interested was declared to be ''to form an absolutely independent community, not communistic, but with the motto : ' Equal opjjortunity, but reward pro- portioned to deed. ' ' ' Capital was borrowed upon which a fixed interest was paid, but the intention was that all capital should ultimately be socialized. The members of the colony entered Local Assembly 2776 of the Knights of Labor, and Sharpe, the originator and propagandist of the enterprise, was made chairman of the cooperative board of the order. In this capacity he travelled about lecturing on cooperation for the edification of the Knights and others. After picturing, in the way that was then becoming, and has since become so common, the existing miseries of the *'wage slave,'^ his first point was to show that under the present organization of industry no betterment was possible. He followed this alleged demonstration by the dogmatic assertion that cooperation, as tried in England, had failed, and that the various schemes of industrial part- nership had failed. He next claimed that neither j^roduc- tive cooperation nor competitive distributive cooperation would make its way unaided. The one solution of the problem was the union of these two, or integral coopera- tion. '' Do not produce to sell, do not buy to consume. Be independent of capital, independent of markets and of the price of labor. Work for yourselves." But though the Knights were anxious to undertake coop- erative enterprises, and though their chairman of tlie coop- erative board was very sure he knew the proper method of going about the work, yet he was not destined to be the Moses that was to lead them out of the Egypt of wage- bondage. For, while, by means of his lectures in the large cities, he was in some measure carrying the war into the enemy's country, the model colony at Eglinton was in revolt behind him. 400 Three Phases of Cooperation in the West. In the final report of the Executive Board to the General Assembly, the following causes were assigned for the failure: (1) City people cannot succeed in agriculture at once; (2) Want of individual incentive to exertion; (3) Want of means to discipline or to expel refractory members; (4) No way of restraining members in case of a panic; (5) The smallness of the scale on which the experiment was tried. The same circumstance also made it impossible to give opportunity for the development of individual capacity. The Executive Board formulated in their report the more obvious of the lessons which the Eglinton experiment seemed to teach : ''(1) Men cannot change at once from the condi- tion of wage-service to the higher level of cooperation. Man for a long time yet must have before his mind the fear of being stricken from the pay-roll. (2) Individual incentives to exertion must be provided. (3) Executive officers must have power to discipline, subject always to appeal. (4) Executive officers must have ample authority to select the men best adapted to the work in hand." This preeminently sensible report was submitted to the General Assembly of the Knights of Labor at its meeting in 1884. The lessons then learned the managers of the order seem not to have forgotten, for this was the last time that they officially countenanced any scheme for immediate integral coopera- tion. Thenceforth they lent the whole force of their influ- ence to more modest but more feasible plans. Yet many individuals in the order have looked in the same direction for the coming of industrial salvation. A friend in Cincinnati has sent me a copy of a book published at St. Louis by the author and designed to circulate chiefly among the Knights of Labor. On the upper cover are stamped the words : " The Key of Industrial Cooperative Government, by Pruning Knife." On the other cover is a picture which represents a hand throwing open the portals of "Equity,^' through which may be seen a very small lamb resting lovingly by the side of a very large and very benig- nant lion. The book is written in doggerel poetry, inter- Integral Cooperation. 401 spersed with that style of composition wliich is said to joos- sess neither rhyme nor reason, and is illustrated from drawings by the author himself. As an all-sufficient ex- ample of his economic, poetic and grammatical attainments, one verse may be given of his description of the ideal indus- trial organization: "In lieu of greedy profits made by us, Industrial bureaus on each other draw For all the products without least of fuss ; With great dispatch, a system without flaw." Even Mr. John Samuel, whose pamphlet was mentioned above, sketches the ultimate aims of cooperators as includ- ing a system that corresponds to Sharpe's integral coope- ration. Section two, of a model constitution for a coope- rative society, drawn up by him, is as follows: "The object of this society is to elevate the intellectual, moral and financial condition of its members, through cooperative effort, and in accordance with the following plans and arrangements :• 1. "The establishment of a store to conduct the business of gen- eral dealers, wholesale and retail, in food, clothing and other com- modities ; and to manufacture the same whenever practicable, or when necessary for the employment of such members as may be suffering from an undue reduction of wages. 2. " The buying and holding of land, and the erection of build- ings thereon for the use of the society. o. "To elevate the domestic condition of its members by buying or building suitable homes for such as may need. 4. "The purchase or rental of lands or landed estates, to be cul- tivated by members who are out of employment, or who may suffer from poor wages. 5. "And to proceed, as soon as practicable, to the establishment of a self-supporting home colony, or to assist other societies in establishing sucli colonies, wherein may be exemplified in a practi- cal way the codperative idea of production, distribution, education and government." 'How to Org. Coop. So., p. 0. 20 402 Three Phases of Cooperation in the West. Distributive Enterprises.^ Of the distributive enterprises managed distinctively by wage- workers, I know of none established earlier than 1881. A vast swarm of them are at present coming into existence, or trying to. Of the whole number I have obtained more or less definite information regarding something over thirty. As many of their brief histories, in so far as they have his- tories, are of small value, I prefer to speak at length of but four of them, and pass by the others with nothing more than possible mention. Some of the most important enter- prises may not be known to me at all. Modest undertak- ings, as before stated, are apt to be the most successful, and these will often be overlooked, even by one svho appre- ciates the need of seeking for them. CooPEKATivE Association No, 1. — The following cir- cular was issued early in January in 1886: ^'Cooperative Fair; Fannie Allyn, L. A. 4457, Cincinnati, Ohio. "Believing that our only salvation lies in cooperation, and that being one of the leading principles of our noble order, we therefore, having full confidence in each other, make a bold attempt in form- ing a cooperative concern. 'Prof. Clark says that "only by a strange perversity of nomen- clature " can this form of cooperation be called distributive. "It is productive in as complete a sense as the spinning of wool or the raising of sheep. * * The process is complex, and, in reality, is only quasi cooperative. It may, perhaps, be termed mixed co- operation, since the essential peculiarity of it is that men who are employes in one industry become proprietors in another." (Ph. of W., pp. 191-2.) In the sense in which Prof. Clark uses distribu- tion, as an economic term, his exception is well taken, but the word leads to less practical ambiguity than the one he would substitute for it, nor does the word he suggests seem more logical than the other. It does not aflfect the nature of an enterprise that those en- gaged in it are engaged in another capacity in other enterprises ; its character would be the same whether those connected with it were, in other branches of industry, all employes, or all capitalists. " Consumptive cooperation " is another remarkable name that has been used lately to describe the work of these "consumers' unions," but the usual term will be employed in this paper. Distributive Enterprises. 403 " L. A. 4457 has announced that a fair is to be held at K. of L. Hall, southeast corner of Abigail and Main streets, for said pur- pose, commencing March 21st, ending March 28th. " We would like all co5perative concerns to correspond M'ith us, and give statements of articles manufactured and prices therefor. We will be thankful for any information of the above description, as we are anxious to exhibit all K. of L. goods manufactured or made by members of the order. " We have enclosed tickets for various articles to be raffled for at said fair, and we hope the Assembly will use its influence in the disposal of the same. "All articles raffled off will be made public through the Journal and the labor papers of the country. " All remittances to be made by March 15. C. Fannie Allyn, Geo. C. Kuechler, Miss Mary Healy, Fair Committee. ^^ The moving spirit was George C. Kuechler, a young man of twenty-one, a shoe-cutter by trade, and one having plenty of time to attend to the matter, because out of work. It was thought by some that he had been * 'victimized," that is, found it hard to get work because he had made him- self too prominent in forwarding the work of organizing the Knights of Labor. Of tlie eighteen members of the assembly twelve were ladies. Two of the men had been interested in cooperative enterprises before — one under the Sovereigns of Industry, and the other in one of the great societies of Manchester, England. Copies of the circular were sent all over the country, and extended notices of the fair appeared in many of the labor papers in distant places. It was the first enterprise of the kind in America, and much was hoped from it. Nearly all the cooperative concerns of the country sent exhibits, and the friends of the order were liberal in their donations of things to serve as prizes in the raffle. The Dueber Watch Case Company, which had just come to terms with the Knights, and been released from a long and effective boy- cott, was especially generous. In a "business circular,'' 404 Three Pha.^es of Co7iperation in the West. issued after the close of the fair, tlie managers returned thanks for the effective support accorded them, and also did what they could to extend a knowledge of the enterprises represented. Among the most i)rominent of the exhibitors were the following, most of which are still thriving and prosperous enterprises : The Richmond Cooperative Com- mercial and Manufacturing )Soap Company, of Eichmond, Va. ; the Ohio Valley Cooperative Pottery Company, of Til- tonville, Ohio; the Quaker City Cooperative Carjoet Com- pany, of Pliiladelphia, Pa. ; the Canmakers' Mutual Protec- tive Association, of Baltimore, Md.; the Cooperative Morocco Manufacturing Company, of Philadelpliia, Pa.; the Ken- tucky Railroad Cooperative Tobacco Company (now the Knights of Labor Cooperative Association), of Covington, Ky. ; the N"ational K. of L. Cooperative Smoking Tobacco Company, of Ralcigli, X. C; the Cooperative Corn-cob Pipe and Novelty Works, of St. Charles, Mo. ; the Cooperative Hat Company, of South Norwalk, Conn.; and of the coop- erative cooper shops of Minneapolis, the Phoenix, North- western, North Star, Hennepin and Minneapolis sent exhib- its. The barrels sent by these companies were made of select staves and hoops, elaborately painted and varnished, and the Pillsbury Milling Company had filled them gratis with "Pillsbury's Best.'' The result of the fair was to put the cooperative enter- prise on a sound financial basis, and to give cooperators in different parts of the country a better appreciation of each other's work. It shows the feasibility of such exhibitions with our present facilities for inter-conimunication, and affords an earnest of the value that might be derived from them. Their value would, of course, be increased if they Avere managed not by one concern primarily for its own profit, but by a committee of the exhibitors, or by some central organization. A directory of cooperative concerns, which has been advocated in the General Assembly of iinights, would then be not difficult to make. After the fair the Fannie Allyn Cooperative Association Distributive Enterjrrises. 405 changed its name to tlie K. of L. Cooperative Association No. 1, of Cincinnati, and on the first of May business was regularly begun. They were able, from the accumulated dues, initiation fees and proceeds of the fair, to buy a stock of goods worth five hundred and four dollars, and had a reserve fund of over one hundred and fifty dollars. The association rented two rooms at the rear of 555 Main street, and as one of them was used by a K. of L. assembly, the rent which the store had to bear was only three dollars and fifty cents per month. The business hours were from 7 to 10 P. M., and as the managers consented to serve with- out pay for the first quarter, and be in the store during the evening in turn, there were almost no expenses at all. It was a strangely constructed, non-legal association, and how it could live for any length of time, and especially how it could outlive a quarrel among the members, seems strange, yet the K. of L. Cooperative Association No. 1 contrived to do both these things. Kuechler is no longer connected with it, but its affairs seem to prosper. Business increased rapidly, and a dividend of thirteen per cent, on purchases was declared at the end of the first quarter. A lady was employed to attend to business during the day. A letter bearing date the 13th of January, 1887, informs me that the establishment has removed to a three-story building at 62 Thirteenth street. I am not certain whether or not radical changes have been made in the plan of organization, but a quarrel with the District Assembly has at least compelled them to drop the letters ""'K. of L." from their title. Natioxal Cooperative Guild. — This is another rather anomolous enterprise that has sprung up in Cincinnati, under the management of Mr. Kuechler, who was concerned with the fair and with the Association No. 1. It might as well be classed with the productive enterprises, for it is a wholesale house, having for its chief object the finding of a market for goods produced by cooperative companies. The capital is very small, but the association does a sort of commission business for some ten cooperative enterprises. 406 Three Phases of Cooperation in the West. That a wholesale house can profitably handle miscel- laneous merchandise is, of course, improbable. Because a certain brand of cigars, a particular kind of baking powder and a given sort of brooms, or soap, or cooking stoves, have all been produced in establishments having certain coopera- tive features in their management, seems to be no excuse for lumping them together in the store-room of a single whole- sale dealer. One of the most difficult problems for some of the CO perative companies has been found to be the securing of a market. In a business requiring as much shrewd advertising as the sale of manufactured tobacco, this is especially true, but it hardly seems that the proper method has been found in this "distributing association." The producing companies will find it easier to force their way into the ordinary avenues of trade by the regular means than by dealing with such a gratuitous ''middleman" as this company. Kuechler is himself a good salesman for some sorts of trade, and it appears that it is only through his energetic efforts as a sort of travelling man for the various concerns whose goods the Guild is handling that anything at all has been accomplished. The Streator Cooperative Supply Store. — This enterprise has been in operation but little over a year, yet has met with such immediate and pronounced success as to have attracted the attention of the wage-earners in many parts of the "West. Accounts of it have appeared in many of the labor papers, and the company has been flooded with requests for copies of the constitution. The president of the company, and the person to whom it owes its origin, is Mr. John H. Shay, state lecturer of the Knights of Labor for the department of Illinois, and chairman of the State Cooperative Board. The store is the outcome of a series of meetings held in the public park of Streator on the Sabbath day under the auspices of the Knights, and addressed by Shay and others, "on the subjects of organization, educa- tion, cooperation, industrial partnership, and the ballot.'*' Distributive £!nterprises. 407 It originated among wage-workers and the stock is owned by that class, but much of it is held by persons who are not members of the Knights of Labor, nor has any attempt been made to prevent other classes from purchasing stock. Every effort has been made not to antagonize other dealers, and so favorably is the enterprise regarded by those merchants who do not come in competition with the store, that when the by-laws and constitution were published a few extra pages were filled with advertisements, and these more than paid for the cost of printing the whole. The capital stock of the company is five thousand dollars, in shares of ten dollars each. No person is allowed to hold more than five shares, "and it shall be the duty of the board of the directors, as rapidly as may be practicable, to assign the shares in excess of one, which any member may hold, to those who may afterwards apply for membership. ' ' After making provision for payment of interest, twenty per cent, of the remaining net profits is set aside for the reserve fund, and the remainder is divided among share- holders in proportion to purchases. Non-shareholding patrons receive no dividends, as it is thought that with such a rule the competing stores can have less cause for complaint. The business motto of the concern is ''cash, current rates and dividends," but credit is allowed for thirty days, in cases of emergency, to three-fifths the value of a member's paid-up stock. No amendment to the constitution shall ever be entertained to allow a member more than one vote, "except in the election of directors, when the vote shall conform to tlie laws of the state." The Laramie Cooperative Association and Others. — This association, located at Laramie, Wyoming, is also of importance as having been the model for a goodly number of similar enterprises. Judged by the rules that have been found wisest for such undertakings in other places, its con- stitution and by-laws contain several regulations that seem injudicious; but a prosperous career of over five years, the 408 Three Phases of Cooperation in the West. present flourishing condition of the company, and the fact that it is becoming more thoroughly cooperative as it gets older, remind us that we must not jump at conclusions. The company was incorporated December 21st, 1881. The capital was limited to $30,000 by the articles of incorpora- tion in shares of five dollars each; stock is not assessable. There were nine shareholders Avho subscribed for one hun- dred and fifteen shares of stock, twenty shares being the most that was held by any one person, and five shares the least. Xo limit was fixed for the amount of stock which one man could own, but each member is allowed but one vote, and no proxies are allowed. Credit is allowed with a thirty days' limit, and no ''member indebted to the associa- tion two days previous to any meeting shall be entitled to vote.' "Profits shall be divided as follows: (1) After deducting all expenses, interest, at the rate of twelve per cent, shall be paid on share capital, {'i) Members shall receive the full dividend on cash purchases — one-half the dividend to members taking not more than thirty days' credit for their purchases, and one-half the dividend to known non-members on their cash purchases." Just what this section provides I am unable to decide. Practically it has made but little difference, as no dividends have been declared at all, but the surplus above the twelve jier cent, interest has been allowed to accumulate as a reserve fund, which now amounts to more than 810,000. Beginning with December 1st, 1886, the company proposes to declare divi- dends "in order to stoj) the continual increase in the value of shares." The seventh semi-annual statement is as follows : Goods to the amount of $18,073 91 Fixed stock to the amount of 959 90 Real estate to the amount of 11,700 00 Open accounts to the amount of 10,868 13 Notes in our favor to the amount of 2,558 50 Money in safe December 1 to the amount of 166 50 Total assets $44,.326 94 Productive Cooperation. 409 Amount of capital stock taken to date $7,S20 00 The corporation is worth to-day, independ- ently of all debts and capital stock 10,131 09 Total -worth of Association §17,951 09 This instance of success at the far west shows that even in a new country cooperation may be employed to advantage, for where rates of interest and wages are liigh, profits are also high. The influence of the example of the Laramie Cooperative Association can be directly traced in the estab- lishment of some half-dozen enterprises of a similar nature, all at the West. Two of these are in Wyoming, one at Evanston and another at Carbon; one at Eagle Rock, Idalio; another at Denver, Colorado; and two in Kansas, one at Ellis, the other at Leavenworth; still another is talked of at Green Eiver, Wyoming. All of these enterprises Avere begun during 1885 or 1886. Of these the Colorado Cooperative Mercantile Association, of Denver, has been most immedi- ately successful. Productive Cooperation. The laboring classes of this country have been quick to see the limitations of distributive cooperation, and to a hitherto unprecedented extent are turning their energies to the more difficult task of cooperative production. Li over twenty industries attempts are now being made to introduce this form of organization. The list given below will best serve to indicate the industrial and geographical distribution of these enterprises : 1. Cooperative Baking Powder Co , Elkhart. Ind. 2. Cooperative Box Factory, Cincinnati, Ohio. 3. National K. of L. Cooperative Broom Co., Cmcinnnati, Ohio. 4. Carpentering : a. Carpenters' Cooperative Association, Decatur, III. b. Cooperative Sash and Blind Factory, Rushville, Ind. •5. Clothing Factories : «. Our Girls' C'o5perative Clothing Manufacturing Co., 158 N. Market street, Chicago, 111. 410 Three Phases of Cooperation i?i the West. b. Manufacturing Tailoring Co., of Chicago, III. c. Martha Washington Cooperative Overall and Knit Work Association, Indianapolis, Ind. 6. Coopers' Cooperative Association, Detroit, Mich. 7. Expressmen, Detroit, Mich. 8. Foundrymen's Cooperative Manufacturing Co., Chicago, III. 9. Furniture Workers : a. Cooperative Reed Chair Factory, Michigan City, Ind. b. Mechanics' Furniture Association, St. Louis, Mo. c. Central Furniture Co., St. Louis, Mo. d. Furniture Workers' Association, St. Louis, Mo. e. Cooperative Furniture Co., Cincinnati, Ohio. 10. Cooperative Match Factory, Indianapolis, Ind. 11. Mining : a. Cooperative Coal Co., Bloomington 111. b. Cooperative Mining Co., Fairbury, 111. c. Cooperative Coal Co., Peoria, 111. d. Union Mining Co., Cannelburg, Ind. e. Cooperative Mining Co., Fontanet, Ind. /. Cooperative Mining Co., Huntsville, Mo., g. Summit Cooperative Coal and Mining Co., Macon, Mo. 12. Nail ]Mills : a. Steubenville, Ohio. b. Iron and Steel Nail Works, Belleville, 111. c. Wellston, Ohio. 13. Cooperative Packing and Provision Co., Chicago, 111. 14. Cooperative Corn-Cob Pipe Co., St. Charles, Mo. 15. Planing Mills : a. East Side Planing Mill, Kansas City, Mo. b. Mechanics' Planing Mill, St. Louis, Mo. 16. Pottery Works : a. Potters' Cooperative Co., East Liverpool, Ohio. b. Standard Cooperative Pottery Co., East Liverpool, Ohio. c. Ohio Valley Cooperative Pottery Co. , Tiltonville, Ohio. 17. Publishing Companies : a. Publishers of the Knights of Labor, Chicago, III. b. Cooperative Publishing Co., Scandia, Kan. c. Publishers Trades- Union, Atchison Kan. d. Publishers Daily Evening Star, Bay City, Mich. e. Publishers Industrial News, Toledo, Ohio. 18. Boot and Shoe Cooperative Association, Detroit, Mich. Productive Cooperaiion. 411 19. Soap "Works. a. Assemblies Cooperative Soap Co., Toledo, Ohio. b. Knights of Labor Cooperative Soap Co., Chicago, 111. 20. Stove "Works: a. Cooperative Co., Bloomington, 111. b. "Western Stove Works, Peoria, 111. c. "Western Stove Manufacturing Co., St. Louis, Mo. d. Cooperative Stove Co., Cleveland, Ohio. 21. Cooperative Tile Co., Cable, 111. 22. Tobacco Factories: a. Cooperative Cigar Factory, Lafayette, Ind. b. Cooperative Cigar Co., Delaware, Ohio. In the foregoing list I have included a few companies that are already dead, but concerning these certain facts have been obtained tliat seem to be of importance, and all of them will be mentioned. Some may have died since my information concerning them was obtained, but no company has been included in the list except such as appeared to have a recent history worth knowing, and most of them are living and said to be prosperous. The more important among them will be briefly noticed. MixiXG COMPAXIES — (1). In 1883 certain men at work for the Buckeye Mining Company, of Cannelburg, Indiana^ joined L. A. 1436 of the K. of L., and were in consequence discharged. They had credit enough to enable them to borrow $"2,000, with which they leased land near the Buck_ eye works and sunk a shaft. To meet their notes when maturing they appealed for help to the order of the K. of L., and March 3d, 1884, the Executive Board issued a cir- cular stating their case and enthusiastically pleading their cause. Powderly, at that time less experienced and more hopeful than since, wrote as follows : "Can anything be done for our Cannelburg brothers? If no other plan presents itself, levy an assessment or issue an appeal — anything to preserve them. The money is well invested; really it is the first sensible move that has been put into practical operation. These men are locked out, and instead of sitting down and sucking 412 Tliree Pliases of Cooperation in the West. their thumbs in idleness, awaiting assistance from the order, they go to work and Ihink tlie enemj^ by entering into competition with him. Let them have the Assistance fund, the Cooperative fund — only don't let them fail. It will be the biggest card for the order we ever played. Count on my entire and hearty cooperation in anything you may do for them." The 82,000 needed for immediiite use was advanced by L. A. 300, composed of glass-workers, who had been helped by the order to a successful issiie in a strike not long before. The general Executive Board of the K. of L. was incorporated as the Union Mining Company, of Cannelburg, Indiana. Ten thousand dollars was raised by the issuing of two thousand debentures of five dollars each, which Averc taken by individuals or assemblies. It was decided that from the proceeds of the mine were to be paid, (1) current Avages to laborers; (3) incidental expenses, and (3) five per cent, interest to debenture holders. If there should be any profits remaining they were to be divided so that ten per cent, should go to the general cooperative fund, ten per cent, to the sinking fund for the purchase of debentures when they should be offered, three per cent, to the local educational fund, and seventy-seven per cent, to be divided equally between labor and capital, "'in proportion to A^alue of invest- ment." Plans WTre made for laying off the land into small lots and selling these to the men on easy terms for homes. A cooperative store was to be started which should save the laborer from the necessity of trading at the old Buckeye ''pluck me," and everything seemed to promise immediate success. When everything was ready to begin operations it was found that those concerned had been reckoning without their — railroad. A switch had been built from the railroad to the mine, but though the general manager of the road — Mr. Peabody, of the Ohio and Mississippi — made repeated promises to have it connected Avitli the main track, the work still remained undone. Thus, having invested over 112,000 in the affair, the Knights found themselves unable to ship .a ton of coal, because the old Buckeye company had influ- Prodnctivc Cooperation. 41? ence enough to make a common carrier viulate its trust. Even were the switch connected witli the main track, it was certain that the road would discriminate against the coope- rators. To enforce their rights in tlie courts was a proceed- ing far too costly to he undertaken hy those who had strained every nerve to make the necessary imjirovements at the mine. Nothing remained but to sell out for what could be got. The details of closing up the affairs of the company I do not know. 2. At Fairbury, Illinois, there was a strike of miners in the spring of 1S8G. They sunk a shaft and began taking out coal for themselves, and secured most of the local trade. The railroad company refused to lay a side track to the mine. The men were afraid to go to the expense of laying a track themselves, lest after it was finished the comjianv should refuse to haul the coal, or rather should refuse to furnish cars for hauling it. " The courts have decided that while a railroad may be compelled to haul freight, it cannot be compelled to furnish cars." Such failures as the abovc^ are obviously gratuitous. It is cases like these that cause the labor papers to insist that justice is becoming a luxury which the poor cannot afford. 3. The Cooperative Mining Company of Fatanet, Indiana, went to pieces, after a general and acrimonious quarrel among its members. Liabilities §10,000; assets not men- tioned. 4. At Huntsville, Missouri, the largest mine in the place- was deserted for five months in consequence of a strike. At- last an arrangement was made by which the miners took entire control of the mine, using the company's machinery^ and paying to the company a royalty of one cent per bushel. All over this belongs to the miners, and is used to meet running expenses, the net profit being tlien divided among the men. 5. At Peoria, Illinois, the Cooperative Coal Company is. said to have a capital of 8'30,000 and to be prospering. 414 Tiwee Phases of Cooperation in the West. G. Two of the mining companies seem to be conspicuously successful. One of these is located at Bloomington, Illinois. It was incorporated July 18, 1885. with a nominal capital of $30,000. Like most of the other attempts of the kind, it originated in dissatisfaction with the wages and treatment received from an established company. After the enterprise was begun the men interested still kept on at their work, and the old company kept intensifying their earnestness by getting larger mine cars and docking them more and more for the slack contained in the coal. When the first load of coal was drawn from the new shaft that the cooperative company had sunk^ there was great rejoicing, and this first load was repeatedly auctioned off, bringing in all five hun- dred and five dollars. The shares of the company are one hundred dollars each, and it is simply a common joint-stock concern; but the thirty shares are held by twenty-two persons, all of whom work in and about the mine, with the exception of one or two merchants, who bought stock to obtain the good-will of the miners. 7. The Summit Cooperative Coal and Mining Company, operating mines near Bevier, Macon county. Mo., was incor- porated in July, 1885. The immediate cause was a strike against the employment of negro labor by the old company. The capital stock is 85,000 in ten-dollar shares, which are held by one hundred and fifty persons, and is nearly all paid in. The company holds the lease of two mines, giving claim to four hundred and fifty acres of coal, one hundred and thirty acres of land and thirty-six tenement houses. The royalty for the first year is remitted. AVork is plentiful and wages high in winter, but at this time the profits are also greatest, even considering the high wages. There is work for two hundred and fifty men in winter and for only one hundred and forty in summer. The members of the company therefore expect to provide constant work for themselves, and also to make a certain amount of profit from that done by the ''transients" between October and April. Productive Cooperation. 415 The men, whether shareholders or not, are to submit to a five per cent, reduction from their nominal wages, which id to be added to the profits of the company. No profits are to be divided until the company shall have a surj^lus of net profits to the amount of $12,000. The division of j)rofits is left to the board of directors, and non-shareholding laborers are to receive '*an equitable dividend in proportion to the amount of wages earned." Xo person can own more than ten shares. The value of the annual product is about $85,000. The company farmed some of their land during the last year, and expect to make some brick, put up a store, and build additional tenement-houses as soon as pos- sible. Eelations with the railroads are thus far very satis- factory, and coal dealers in a place as distant as Atchison, Kansas, find it profitable to advertise in the labor papers that they keep the ''Bevier coope^'ative coal."' FuRXiTUEE Makers.' — 1. In 1878 a comi^auy of strikers organized the St. Louis Furniture Workers' Association, and began what has proved a prosperous career. The amount of capital at the present time I have not learned, and have no means of judging except from the statement that the shares are twenty-five dollars each, and that there are two hundred and eighty shareholders. Of the share- holders ninety-six are laborers, and since February 1st, 1886, they have given up ten per cent, of their wages to form a fund for buying in the outside shares. No person can hold more than twenty shares. Wages are regulated by commit- tees appointed for the purpose. Part of the men are paid by the week at from twelve to fifteen dollars per week, and the piece-workers receive what are considered fair wages. Profits remained undivided till 1884, when a dividend was declared and paid in stock. The stock is now all taken. ^For the facts regarding this and some other St. Louis enterprises, I am indebted to an article which appeared in UtiQAge of Steel, about a year ago. 416 Tltree Phases of Coupcration in the WesL 2. The Central Furniture Company, also of St. Louis, began operations in 1881. The capital stock is $30,000, which is all paid up. The shares are one hundred dollars each, and the number which can be held by one person is not limited; the stock is held by some fifty persons, about four-fifths of Avhom are at work for the company. In 1882, at the end of the first year's business, a possible six per cent, dividend was carried to the reserve fund; in 1883 a dividend of forty-five per cent, was declared, but only thirty-five per cent, was made payable, and this in stock; in 1884 a twenty per cent, dividend was declared, five per cent, of which was paid in cash, and the rest in stock; in 1885 the dividend was passed. 3. A third enterprise of this kind, also of St. Louis, is the Mechanics' Furniture Association, which began business in March, 1885. The capital stock is $25,000, half paid in. The shares are fifty dollars each, and those that have been taken are held by one hundred and fifty persons, sixty-five or seventy of whom are workers. Nine directors have gen- eral control of the wages; three trustees look after the finan- cial part of the concern, but the president has power to make purchases and sales. Ten i)er cent, of the wages will be held back, and stock dividends declared till the shares arc all taken. 4. The Cooperative Furniture Company, of Cincinnati, Ohio, was incorporated July 13th, 1886, and began work on the 25th of the following October. The immediate cause of the formation of the company was the failure of the **' eight-hour strike.^' The capital stock is $50,000, divided into shares of $100 each ; the members of the company must each hold the same number of shares. At the last of Jan- uary, 1887, $34,500 of stock was taken, which was held by sixty-nine persons. The last six purchasers of stock have paid tAventy-five dollars premium ont heir shares, which, if I understand my informant correctly, means a premium of five dollars per share. There arc fifty-one men employed. Productive Cooperation, 417 all of whom own stock. Profits are to be divided equally among shareholders. Their opinion is that what is called distinctively "profit-sharing 'Ms ''a good scheme for the manufacturer," an idea which is rather common with the more radical of the thinkers among laborers. 5. The Cooperative Eeed Chair Factory, of Michigan City, Ind., was organized August 14th, 1886. The old factory decided to use convict labor, and so the men began on their own account. The nominal cajoital is 850,000, in five-dollar shares ; the value of the annual product will be about $25,000. There are at present five hundred share- holders. The company employs forty-two men, of whom all but eight are shareholders, and these eight are all minors. Profits are divided in proportion to the amount of stock held. Henry Bird, the secretary of the company, has had some twenty years' experience in labor organizations, and looks forward to "universal cooperation" as possibly to be attained in three or four generations. Ignorance and jealousy he finds the greatest drawbacks. Planing Mills. — 1. The Mechanics' Planing Mill Company, St. Louis, Mo., began business in 1874 with a nominal capital of 850,000, but with a supply of available cash amounting only to $10,000. The concern is only slightly cooperative in practice, and not at all so organi- cally. The transferable shares are of the value of $500, and were issued to outside parties or workers, for cash or scrip — the latter representing unpaid wages. There were at first twenty-five or thirty stockholders, about three-fourths of whom were laborers. The officers make purchases and sales, but a board of directors fixes the amount of wages. For a long time the company was very much embarrassed by lack of adequate capital. A book-keeper of the early time says that on pay-day he was compelled to settle first with non- shareholders, and then pay the members of the company only just as much as he thought they had to have to pre- vent starvation. The shareholders, who were also workers, 27 418 Three Phases of Cooperation in the West. were mainly Germans ; they grumbled at this sort of treat- ment, but submitted. The company was at one time refused ten feet of belting because the cash did not accompany the order. In the second year a fire caused a loss of 88,000 ; they managed to get lumber on credit, and the stockholders put up the building. After this they began to conquer success, and in 188-4 the stock was all taken. They now have an undivided surplus of $35,000, and the shares are worth double their face value. Dividends have usually been ten per cent. The wages paid for piece work are usually a trifle higher than are paid elsewhere in the city. 2. The East Side Planing Mill, of Kansas City, Missouri, though spoken of as cooperative, is really a profit-sharing enterprise, and one where the latter principle has only re- cently been introduced. Cakpentering. — 1. The Carpenters' Cooperative Asso- ciation, of Decatur, 111., was incorporated October 17th, 1885. Stock is $5,000, in ten-dollar shares, held, or at least subscribed for, by eighteen persons. Profits are divided on basis of stock owned, but the association aims to pay a little better wages than competing firms. Twenty-three thousand dollars' worth of work was done during the first quarter, and from repeated notices in the labor press, it may be inferred that the association is still prosperous. 2. Of the nature of the Cooperative Sash and Blind Fac- tory, at Eushville, Ind., I have not been able to learn defi- nitely. Stove Works. — 1. The Cleveland Cooperative Stove Company is a large institution, and one long established. It was incorporated in 1867, and was for some time thor- oughly cooperative, profits being divided with the laborers. A long and gallant fight was made, but under this manage- ment it was found that not enough capital could be secured. The works were practically closed for two years, and when work was resumed the company was an ordinary joint stock Productive Cooperation. 419 -concern, except that a good deal of the stock was hekl by employes. The capital is 8250,000, in shares of one hundred dollars each. Of the three hundred and fifty men employed, about ninety are shareholders. The value of the annual product is about 8400,000. Profits are now divided on the basis only of stock held. A branch house is established at St. Louis. The experience of this company is of use as giving an obvious and concrete example of the rule that capital must be allowed a sufficient return, or it will not be used to provide for the laborer the means of laboring. 2. The Cooperative Stove Company, of Bloomington, Illinois, was incorporated in June, 1886. A strike preceded its formation, caused partly by low wages and partly by the persistence of the old company in the method of putting on a large force, doing a year's work in six or seven months, and then discharging the men for the remainder of the year. The capital stock is 812,000 in 810 shares, this being the smallest share which the laws of Illinois allow. There are forty shareholders, and no one is allowed to hold more than one hundred shares. A circular appeal was issued to the assemblies of the Knights of Labor, and various local and district assemblies together subscribed for 84,000 of stock. Profits are divided according to amount of stock held, but as long as all the stock is not taken any of the men at work for the company can join it. 3. Of the two other companies, I know little more than that they are reported to exist. Pottery axd Tile Works. — 1. The Standard Coopera- tive Pottery Company, of East Liverpool, Ohio, was incor- porated August 18, 1886. A favorable opportunity offered at that time for purchasing the works that the company now owns, and the men organized to take advantage of this opportunity, the object being, as stated by one of the men, to secure to the workers the profits, if there were any, of the business, and at any rate to provide steady work for the stockholders. The capital stock is 820,000 in forty shares, 4*20 Three Phases of Cooperation in the West. which are held by thirty-four persons. No person can hold more than two shares, and each stockholder has but one vote. Fifty-four men are employed, of whom twenty-six are shareholders. The value of the annual product, in case the works are run the full fifty-two weeks, is $70,000. The company manufacture iron-stone china and decorated ware, and are doing a good business at present. They do not expect to realize any profits before the end of 1887, as it is found expensive to get the product into new markets. 2. The Ohio Valley Cooperative Pottery Co., ''manu- facturers of Rockingham and yellow-ware, terra cotta hang- ing baskets, flower-pots, etc.," was organized on November 18, 1885. The paid-up capital is S4,000, held by twenty- six individuals. The number of men employed is sixteen to eighteen, of whom perhaps a majority do not own stock or share in profits. 3. The Cooperative Tile Company, of Cable, Illinois, was organized in March, 1886, after the feasibility of such an undertaking had been discussed at length in the local as- sembly of the Knights of Labor. The capital stock is $4,000, in shares of fifteen dollars each, and is held by twenty-three persons. The value of the annual product is estimated at $15,000. Eighteen laborers are employed, of whom all but four own stock, and these can receive stock in exchange for labor if they choose. Profits are divided on the basis of capital invested. No member is allowed to hold more than twelve shares, or if he does so they secure him no additional votes. Most questions are settled by the wishes of the majority of members, but when issue is made a member holding twelve shares can demand twelve votes. The secretary writes that most of the opposition to the enterprise has come from laborers not connected with it, who are jealous and suspicious of the undertaking. Lack of sufficient capital has also hindered the development of the business, but orders are said to be plentiful and pros- pects bright. Productive Cooperation. 421 Clothing Factories. — 1. Our Girls' Cooperative Cloth- ing Manufacturing Company has received especial encour- agement from the labor papers and the various asssemblies. The girls comprising the company were locked out for taking part in the labor parade of September 6, though they had supposed that their employer had consented to their doing so. "Being afterwards blacklisted, it became a ques- tion of cooperation or starve," The ten-dollar shares have heen liberally subscribed for by the Knights, and the com- pany seems likely to get started. It is the intention to fit up a room with twenty or thirty machines and take work from the large manufacturers of ready-made clothing, thus doing away with the sub-contractors. 2. By far the most tastefully printed copy of by-laws and constitution as yet received from any cooperative enterprise, bears upon the cover the initials, M. W. C. A. Being interpreted, these letters signify Martha Washington Coop- erative Association, which organized for the manufacture of overalls, shirts and knit goods. The nominal capital is $10,000, in five-dollar shares. None but members are to be employed ; ordinary wages are paid. Ten per cent, of profits are to go to a reserve fund, and the rest to be shared in monthly dividends among the workers, in proportion to the amount of work done. ''Stockholders not sewing'' are to receive six per cent, on the investment after the first year. All the officers are women. Other Industries.— 1. The Boot and Shoe Cooperative Association, of Detroit, was organized in September, 1885. It has had to fight hard for each mouth of existence from that time to this. Of the 850,000 of nominal capital, only $1,800 has been paid in. It is thoroughly cooperative. 2. There seems to be nothing substantial under all the talk of those who have the Chicago Cooperative Packing and Provision Company in the process of alleged creation. A very conspicuous advertisement in the luiights of Labor of 423 Three Phases of Cooperation in the West. December IS, 18SG, announced that 830,000 of the capital stock of S500,000 was already subscribed. The same adver- tisement announced that "the business will be capably and economically managed without risks, and depending on regular profits through a continuous chain of interstate union markets. The establishment will employ union labor only, and run on the eight-hour plan.^' An editorial in the same paper told of an offer to the company, made by the citizens of Iowa City, to pay a cash bonus of 120,000, besides various local facilities for beginning business, worth *'at least ^^ $30,000 more, if the company would locate their works at that place. 3. Of the other companies enumerated above, it will hardly be worth while to speak. Of some of them I know almost nothing, except that they are said to exist, and that they claim to be cooperative. The publishing companies have been especially uncommunicative, none of them find- ing it possible to answer letters of inquiry concerning their organization and methods of operation. Some of them, there is good reason to believe, are merely companies of two or three printers who had money enough between them to start a paper, and called the company cooperative because anything so called is now popular with laborers. Of some of the enterprises there are at hand statements as complete as many of those already given, but it seems useless to ex- tend further the accounts of half-formed and wholly inex- perienced companies. Points Ommitted — Conclusions. In the foregoing survey no mention is made of commu- nistic societies, except as they may have originated in what is known as "labor agitation. '^ Neither has any attempt been made to obtain the facts relative to the numerous and prosperous "building associations.^' Drs. Straw and Bemis have described with sufficient fullness their methods and influence. Pointfi Omiited. 423 As for collecting and tabulating the concrete results achieved in the middle West by these associations, it can only be said, that while such a summary would have some value, yet it is not possible for a single individual to com- pile it for so large an area. Laws requiring annual reports to some state official, and the work of the state bureaus of labor statistics, might render the facts accessible. Insurance companies, claiming to operate on a ''cooperative" or ''mutual" plan, are to be found all over the country, and differ scarcely at all in aims or management from those that have seen fit to choose other words "to conjure with" in the writing out of their advertisements. Profit-sharing is a form of cooperation much commended by many writers on these topics. I have learned of ten or fifteen establish- ments in the middle West where practical attempts in this direction have been made, but they are so entirely tentative that any detailed statement would be of little use. Mr. N. 0. Nelson, of the Nelson Manufacturing Company of St. Louis, has recently published a pamphlet on the subject, in which he tells of the experience of himself and others in this direction, and gives his conclusions as to the efficacy of this method of solving some of the industrial problems of the time. The causes that now retard the development of the coop- erative element in our industrial organization may be given under six heads, and these can in turn be grouped by pairs in three classes. The first two are external and adventitious, the second two are inherent in the character of the individual cooperators, and the third two are inherent in the nature of cooperative enterprises. 1. A serious drawback is the want of proper legislation, which has been previously mentioned while discussing coop- eration among farmers. A bill is now before the Illinois Legislature to make possible the incorporation of cooperative companies, but its provisions are so general as to be nearly worthless. Experience has proved that careful, definite. 424 Three Phases of Cooperation in the West. circumstantial legislation is to successful cooperation not an impediment but a help, not a restraint but a guide. 2. A general organization to embrace all cooperative enterprises is much needed. The Knights of Labor have attempted much in this direction and accomplished little as yet. What is called the American Cooperative Union was organized toward the end of 1886 in Ohio. William Gossage, of Mount Vernon, Ohio, is the ''governor general,'' and the central office is located at Janes ville, in the same state. It seems to have had a purely local origin, but aims ''to combine in one grand union all beneficiary, trades unions, educational, religious, supply, distributive, productive, building and banking companies, societies, or associations of whatever name or nature, in order to bring about com- plete cooperation through the interwoven interests of all." The aims are certainly comprehensive and the effort com- mendable, but a reading of the constitution, wherein poetry is quoted, and grammar is used as bad as that just given^ leads one to doubt if the union can be successful. It seems altogether likely that some of the attempts in this direction now being inade in the East will result in the formation of a society or societies that can extend west, as fast as there are established cooperative companies to be benefited thereby. The cooperative fair at Cincinnati proves the desire for inter-communication and the possibility of it. Elaborate attempts like that of the "American Union" and the Cincinnati "Distributive Association" Ccin only serve as evidences of the American tendency to lay the cap-stone before the foundation. 3. The checks upon the extension of cooperation that result from bad morals are very obvious, and have been often enough insisted on. It is because good morals are so essential to successful cooperation that cooperation, where possible, is such an efficient aid in the development of better morality. Po'mts Omitted. 425 4. Lack of intelligence is another obstacle which can be hardly overcome, except by removing it. The intellectual faculty which is most important to a coOpcrator, is the power to estimate correctly his own capacity and that of his coadjutors, in order that he may choose leaders wisely, and submit to them willingly. The weakest point in the think- ing of laborers and in the arguments of labor leaders, is that they cannot manage to appreciate the economic value of brains. The greatest desideratum in the economic dis- cussions of the present time is a unit of brain power. 5. This brings us to the inherent defect of the cooperative / form of industrial organization, which is, that under this form the highest prices cannot be offered, either to capital or to managerial ability. As regards capital, this fact is not of great moment, as lenders do not insist on very high interest, if only its payment be certain. It is only while enterprises are new that capital demands high rates, as insurance against loss. 6. That cooperative companies have, as yet, found no way to pay the highest rates for brain power, is a more serious matter. Francis A. Walker has carefully differentiated profits from insurance against loss, and from interest on Ccij)ital, and thinks that they are determined by a law anala- gous to that of rent. He says that there is a no-profits class of entrepreneurs; that is, of managers who get for the work of superintendence no more than other laborers do for per- forming other work. Now, if a manager, who produces for the same market as does one of this no-profits class, can so organize the industrial forces that he controls as to produce more cheaply, it is evident that the difference in the cost of production at the two establishments will measure the amount of profits accruing to the better manager. This likening profits to rent leads us again to consider the capacity for affecting economic production resident in the brain of man — or perhaps we should rather say, in the non- physical part of man. As a fertile field produces for its owner a surplus over and above the amount of labor 436 Three Phases of Cooperation in the West. expended, so a "fertile brain" will produce for the lucky entrepreneur that owns it a surplus of profit to which no other man can have a claim. It may be further noticed that in the cultivation of brain power there has been found no fixed law of diminishing returns. While the supply of land is limited, and its fertility capable of exhaustion, the supply of brain power is apparently limitless, and its improvability unmeasured. Walker speaks always as though it were the ability of a single manager that had an influence on profits, but that basis is surely too narrow. Instead of ''a no-profits class of entrepreneurs,'^ it would be more in accordance with facts to speak of ''a no-profits class of establishments." Doubtless the ability of the chief manager is the most important factor in determining whether or not there shall be any profits at all, but it is not the only one. So long as there is in any person connected with a given establishment — whether he be the superintendent or not — the capacity to earn by dili- gence, or economy, or intelligence, more than his wages, that person has within himself the power to influence the amount of profits to be made. The success of any manager must depend very largely on the class of men he is able to secure. The combined abilities of the manager and the men will determine the place in the industrial scale of a given establishment, and so the amount of profits it can make. Production will be cheapest where the energies of all concerned are stimulated to the utmost possible limit of continuous achievement. The inherent weakness of coope- rative enterprises, as usually conducted, is that profits are so divided that they fail to secure the best managers, or the best energies of the managers secured; their inherent strength is fn the fact that they can secure the most faithful and intelligent laborers, and can offer them inducements to labor with a maximum of fidelity and intelligence. The relative importance of these two factors in the cost of produc- tion in a given industry is a guide to the probability of successful cooperation therein. CHAPTER III. COOPERATION AMOXG MORMONS. A recent pamphlet of about a hundred pages bears the following title : "Social Problems of To-day, or the Mormon Question in its Economic Aspects; a Study of Cooperation and Arbitration in Mormon dom, from the Standpoint of a Wage-worker.'' The author, who uses the nom de lAume of " A Gentile," is Dyer D. Lum, now of Chicago, and promi- nent in labor agitation there. He was for a time a United States official in Utah, and wrote a previous pamphlet on ''Utah and its People.'' His last work has been extensively reviewed by the labor press, and has met with much favor at the hands of the more radical. By Lum, as by many writers of his class, cooperation is used in the broad sense of associ- ation. The great work of compelling a desert not only to blossom as the rose, but to produce over fifty bushels of wheat to the acre, he includes in the results of what he calls- cooperation. One sort of cooperation this certainly is, and its claim to consideration in such a stud}"- as this will be examined later on. But, apart from such a form of indus- trial achievement, the Mormons have built up a mammoth mercantile enterprise which is called cooperative, and by its name challenges the investigation of its claim to be so called. "Zion's Cooperative Mercantile Institution."^ The great commercial enterprise, which is usually referred to as the Z. C. M. I., was undertaken in 1868. The prices for ordinary commodities, such as merchants usually handle, Oly sources for this part of the monograph are mainly these: (1) Lum's pamphlet, already mentioned; (2) A file of the Z. C. M. I. Advocate and Commercial Register for 188G; (3) A lengthy state- ment sent me by H. W. Naisbitt, editor of the Advocate; (4) A copy 437 438 Three Phases of Cooperaiion in the West. were as exorbitant in Utah as in most western communities, and one object — and tlie main one which was urged by Briffham Youno: for the establishment of the "institution" — was to give consumers cheaper rates. Speculation was iictive. * 'Wheat that was bought in one place for seventy- five cents per bushel, was sold in isolated mining camps for twenty-five dollars per hundred-weight.'" ''In 1864 mer- chants had risen to opulence. Commerce was gradually but surely throwing all money to a few hands." " Early in 1868 the merchants were startled by the announce- ment ' that it was advisable that the people of Utah Territory sliould become their own merchants,' and that an organization should be created for them expressly for importing and distributing mer- chandise on a compreliensive pUm. Although in the prosecution of this work tlie church was threatened witli a formidable schism, Brigham Young never faltered; it was an economic rather tlian a religious heresy he had to confront. In Mormon society the two elements of organization — the social and the religious — have ever been combined, and it was to prevent their threatened divorce that this step became necessary. " In October, 1868, President Young called a meeting of the mer- chants, and it was then and there determined to adopt a general cooperative plan throughout the territory. The late Mr. Jennings, one of the largest merchants, and perhaps one of the wealthiest men in Utah, rented his store to a co5perative association for five years. The people possessed the genius of cooperation and Brigham Young possessed the will, while around him there was a small circle of men who, for commercial energy and honor, instincts for great enterprises, and financial capacity generally, would be es. teemed as preeminent in any commercial emporium in the world. of the "Agreement, Order, Certificate of Incorporation and By- Laws of the Z. C. M. I.;" (5) Answers at length to questions asked of Hon. John T. Caine, Territorial delegate from Utah; and (6) Correspondence with various "gentile" observers of the operations of the great "Institution." With only such sources as these, it is evidently not possible for one so far away to make an exhaustive study of such an enterprise; but if all statements of fact are care- fully credited to the proper authorities, the incompleteness of a preliminary study need not mislead. 'So. Prob. of To-day, p. 10. Zion's Cooperative Mercantile Institution. 429 The policy' which had been wisely and considerately pursued in purchasing the stocks of existing firms, or receiving them as invest- ments at just rates, shielded from embarrassment those who other- wise would have inevitably suffered from the inauguration and prestige of the new organization. Simultaneously with the framing of the parent institution, local organizations were formed in most of the settlements of the territory, each drawing its supplies mainly from the one central depot. The people, with great unan- imity, became shareholders in their respective local 'coops,' and also in the parent institution, ' Zion's Cooperative Mercantile Insti- tution.' Thus, almost in a day, was effected a great reconstruction of the commercial relations and methods of an entire community, which fitted the purposes of the times and preserved the temporal unity of the Mormon people, as wxll as creating for them a mighty financial bulwark."' Besides the object of reducing prices and uniting interests, there was also the influence in the minds of the originators of the plan of the idea of developing home industries. **It is evident that with but one importing house in the hands of the country's friends, struggling industries could be aided by partial, if not absolute, non-importation; but mul- tiplying importers, particularly self-interested ones, would nullify our theory — the fostering of local industries.^"' In rej^ly to my questions as to the number of shareholders at various times, and the maximum, minimum and average amount of stock held by each, Mr. Caine replies thus guardedly : "It may be said the number of stockholders was never so num- erous as desirable, but that in commencing this system many con- ditions had to be taken into account. There Avere already many merchants in Salt Lake City and Utah Territory, who w"ere freely consulted, and with great unanimity they became investors, many of them selling out their entire stock to the new co5perative organ- ization. These sales not only gave goods, but buildings also, which could not otherwise have been obtained, so that organization and a beginning in trade were almost simultaneous. Payment for the goods in excess of investment by the retiring merchants was made ^So. Prob. of To-day, pp. 10, 11, and Naisbitt writes to the same purpose. ^John T. Caine. 430 Tliree Phases of Cooperaiiun in the Wesf. with that celerity which was contingent upon the establishment of credit in the regular, though then distant marts of our country. The first stockholders were of every grade, from the holders of a single share of $100 or less, to holders of larger amounts, $75,000, $50,000, $25,000 and $10,000, by merchants and prominent men, who, at the solicitation of the late president, Brigham Young, fur- nished these several amounts. He himself was a large stockholder. Originally the stockholders were all members of the Mormon church, and the majority are now so; but some few shares of stock are occasionally placed in the open market The intention of this organization was that it should be the supreme importing house of the people for the territory, and that auxiliaries of local organization, for distribution, should be formed in every colony or settlement. This barred many, in those days of limited means, from identifying themselves with the parent institution, as their little surplus was needed in the local organization f so that while the stockholders in the Z. C. M. I. might never have exceeded a thousand, large numbers were everywhere committed to that policy which meant self-defense, low prices, and, to the Mormon, the education in business directions of great numbers who, as directors, buyers and salesmen, have attended to this cooperative business, and thus preserved, in great measure, the Territory from being overrun with speculators and adventurers." The scope of the business done may be judged from the following extract from the full page advertisement of the institution : " Among our leading departments are groceries, hardware, metals, stoves, tinware, crockery, glassware, dry goods, notions, clothing, carpets, boots, shoes, shoe-findings, stationery and drugs, continually replenished with the most choice goods from the markets of the world. '^' As to the financial success of the institution there can be no possible question. Its stock, to the amount of $1,000,000, has been maintained at par. Its annual sales now reach a figure somewhere between four and five millions, its pay roll averages 820,000 per month, and the freight bill is nearly 6300,000 per annum. Since beginning business in March, 1869, it has paid dividends to the amount of 81,270,415.86.'' "^Z. C. 31. I. Advocate, November 15, 1886. -John T. Caine. Zion's Cooperative Mercantile Institution. 43i The following is the official statement for the fiscal half year ending July 31, 1886 :' RESOURCES. Mdse. on hand $ 995,917 51 Notes receivable 180,682 74 Accounts receivable 261,322 38 Cash on hand 26,639 10 Real estate in Salt Lake City, Ogden, Logan, Soda Sp'gs and Provo 240,846 66 ilachinery at shoe and clothing factories and tannery. 33,400 00 17 horses, 2 Mules, 16 wagons, 10 sets of harness, 10 tons of oats, and 4 tons of hay 2,311 00 Provo Manuf. Stock 291,40 ?1, 744,410 79 LIABILITIES. Bills payable $ 446,710 02 Accounts payable 18,301 34 LTnpaid dividends 4, 275 99 Temporary deposits by customers 3,415 65 Outstanding orders drawn on us for mdse. at retail. . . 1,046 57 Capital stock 999,877 71 Reserves 134,015 30 Undivided profits 86,007 61 §1,744,410 79 The places where the Z. C. M. I. owns real estate mark each the location of a large and prosperous branch house, and the statement also indicates the j)roductive undertak- ings that have been started directly by the parent institu- tion. The ^fZwcrt^e, after giving this statement, adds: '-'From the undivided profits mentioned above a dividend will be paid of 5 per cent,, as usual ; the balance goes to the re- serve fund. "At the annual election, held at the Social Hall on the 5th inst., the old ofiicers and directors were re-elected.''* One who is an enemy of the Mormons, and denies that ^Z. C. M. I. Advocate, October 15, 1886. There is a mistake of $40 in adding the liabilities column of this statement. 433 Three Phases of Cooperatmi in the West. the Z. C, M. I. is in tiny sense cooperative, would point to this hist sentence as an evidence of the fact that the great institution is hut one of the means hy which the Mormon hierarchy holds in subjection the Mormon people. "The profits of it are the prophet's," says Benjamin F. Taylor, and there are many who hold that its amazing success is no more an example of what free industrial cooperation can do than was the building of the pyramids. Gentile corre- spondents 'write that in the upbuilding of this institution the Mormon people have been merely "dumb, driven cattle." "The Z. C. M. I. was originally organized to keep out the trading gentile, and bind all the people to- gether in trading interests by giving them an interest in their church stores. The Mormon theory of cooperation looks well on paper, but in practice it is exactly the reverse of what it pretends to be."' Even "on paper," it can be shown that the institution is an ordinary joint-stock corporation, and that its offices have been filled by the same men that filled the offices of the Mormon Church. Brigham Young was its first presi- dent, and John Taylor was his successor in the position. It is said by many that at first a large number of the people held stock, but that the smaller holders have been "crowded out." When, in 1870, the company was incorporated the stockholders numbered but twenty-one, and of the $199,000 of stock then taken four men held 1177,200 worth. These four men, and the number of their respective shares, were as follows : William Jennings, 790 shares; Brigham Young, 772 shares; William H. Hooper, 110 shares; and David Day, 100. Next to these came Brigham Young, Jr., with fifty-three shares. Later on the Mormon Church itself bought largely of the stock — was said to own a third ; but in anticipation of the confiscation of church property this has lately been transferred to individuals. The Mormon urges the claim of the institution to the 'J. Brainerd Thrall, of Salt Lake City. Zion's Cooperative Mercantile Institution. 433 title cooperative^ on the grounds that the great corporation has been operated, not in the interests of the stockholders, but of the people. Ten per cent, per annum has been paid to stockholders on capital invested, but that is really not high interest for a western territory ; and it is urged that prices have been gauged, not by what could be got for the goods on hand, but by the cost price plus the lowest possible charge for> handling. It is claimed again and again that it has never taken advantage of opportunities to charge a monopoly price when there happened to be an inadequate supply of some commodity of which the institution had a large stock on hand. The Advocate, the monthly organ of the Z. C. M. I., exhorts the "local coops'^ to charge only as much as is really necessary — not in the name of commer- cial expediency, but in the name of brotherly fairness and loyalty to the church. It is, indeed, from time to time cov- ertly pointed out that expediency and duty indicate the same course, but still the highest note in all the pleading is that of obligation to their neighbors, to the Mormon Church and to the Mormon people. "Many of the local coopera- tive stores have limited their dividends, retaining a part of the profits made each six months to extend by cooi^eration industrial and manufacturing facilities, so that furniture, lumber, shoe factories, tanneries, butcher shops, dairies, grist mills and other industries have been inaugurated and built up slowly, but effectually, from the nucleus of the original store. Some of the local stores have retained a half of the surplus exhibited on their inventories from time to time, for the purpose just mentioned, and while there is some danger of an abnormal expansion under enthusiastic directories, the instances of failure are rare indeed."' It is easy to see how a Mormon looks at such "expansion'^ as resulting in a great benefit to the community, while a hostile critic can see in it nothing but a strengthening and multiplying of the chains that bind the Mormon people. ^Caine's statement. 28 434 Three Phases of CoojjeraHo^i in the West. One thing is very obvious, and is insisted on by friends and foes. This is the fact that the Mormon mercantile system is really, though not nominally, dependent upon the larger religious system that makes of the Mormons a peculiar peo- ple. ''The management of the institution/' says Caine, ''is essentially democratic as to its semi-annual meetings of stockholders, where all persons give expression to their ideas.'' Yet he adds : "But the moral, financial, and — it may be said — ecclesiastical character of the directors and leading officers has given such faith in their integrity and experience that but few questions as to management are asked." It will be noticed that, viewed from a commercial standpoint alone, the results of the operations of the Z. C. M. I. have been much the same as those reached by the wholesale coojoerative stores of England. The order of development of the local and central establishments is exactly opposite in the two cases. Other Forms of Mormon Cooperation. As to the economic bearings of this confidence in leaders in other industries, the statement made by Mr. Caine well expresses the Mormon views of the question, and his words "may as well be quoted as paraphrased:" " it is beyond question that Utah would have remained a desert, or at least have now been made up of a few straggling ranches, but for the advent of the indomitable 'Mormon' pioneers. They came here by compulsion; that is, they had to get away somewhere from plunder and extermination. Civilization had shut its doors against them, and compelled them to desert lands bought from the govern- ment, and homes erected by patient toil, in the intervals of peace, for which they have never received any recompense. Two years' travel brought them here decimated but not destroyed. The land, Indians, crickets and drought were here before them. The few streams, far apart from each other, rushed down canyons untrav- ersed, roadless and bridgeless. These had to be explored, cut through, blasted, graded and cleared ; for here in almost inacces- sible fastnesses was timber for building and fuel ; and water, after intense labor and a struggle now unappreciated, was brought on to the thirsty soil, and thus the scorched deserts were forced to other Forms of Mormon Cooperation. 435 yield a scanty crop — if crop it could be called. If farms had to be fenced, it could only be done by united efforts — co5peration. If ditches and canals had to be made, no facilities were there but the pick and shovel in the hands of toil ; if roads had to be made, each man, and boy, and team worked as though they alone had to reap the benefit. Everything was new ; everyone was without experience; but nerved by the needs of personal salva- tion, by love of wife and children, by dread of famine and death, by the spirit of freedom and faith in God, one foothold after another was made. Everywhere was encountered the same labor, the same difficulties and the same necessities ; but emboldened and encouraged by success, these sturdy 'Mormons' persevered until for nearly eight hundred miles north and south, and in numberless quiet valleys east and west, the streams have been diverted, canyons explored and cleared out, until nearly 300,000 of an enterprising and not easily discomfited population fill Utah with sounds of industry and peace. Thousands of miles of canal, and tens of thousands of ditches speak of prodigious labor, and testify to the subtle power of cooperative work. Thus cooperation has given us farms, orchards, homes and population ; it has given the people renown for patience, endurance and success ; it has testified to moral courage, to industrial unity, to religious influence and faith, and pointed an example whose power is felt throughout the inter-mountain region, on the sunny slopes of the Pacific, on the great plains of Colorado, and in all the region roundabout. "Our first lumber mills, grist mills and factories, as well as our settlements, were founded on the principles of cooperation that has its base in a religious faith ; and now our stores, tanneries, woolen mills, dairies, and cheese factories, our churches, schools, and tem- ples, as well as our ditches and farms, bear witness to the potency of cooperation. " In regard to irrigating companies,^ I may say that the institu- tion of monopolies, the selling water rights, and, under the protec- tion of law, the exaction of money for this privilege, are not likely to be multiplied in districts colonized by a 'Mormon' population, who will make their own facilities, creating by labor the water- ^ I asked Mr. Caine for the points in favor of voluntary coopera- tion on the part of land-owners in securing water for irrigation, as opposed to the plan of allowing a large company to do the work, and then charging the farmers for the Avater. The latter plan is much used in Colorado, many of the companies are English, and as nothing can be produced without the water, the demands of the company are apt to be exacting and oppressive. 430 Three Phases of Cooperation in the Vt'est, courses needed, and combining them with the land in such a way that he who is without money is equally eligible to a share of the mountain streams, if his own right arm is only willing to join with that of his neighbors in performing the necessary work." On this same point Naisbitt says : " In the colonization of Utah and adjoining territories, where irrigation is essential to successful agriculture, ditches and canals were usually the creation of united effort or cooperation. * * * The original settlers did work on the ditches in proportion to the amount of land they desired to cultivate. Residents coming in afterwards would be called upon to take up shares which would be valued at the labor-cost of the work done per acre. * * * if land was obtained in the district, and settlers increased beyond the water supply of the ditches or canals already made, enlargement has been common, and many of the old cooperators, in order to secure protection in their vested rights, have, under local laws be- come incorporated ; but the instances are rare in Utah where the ditches have been made by companies or individuals who had no interest in the land, but were simply sellers of water privileges. * * * In many cases the ditches have cost as high as fifty or sixty dollars per acre ; and one dollar per acre for labor is not an uncommon levy for repairs." The ''gentile'' authorities tell of these settlements as being the means by which the Mormons have obtained con- trol of all the valuable land in Utah and large tracts in Nevada, Wyoming, Arizona, New Mexico and Colorado. They say that whenever a new and fertile canyon is dis- covered, or a watercourse capable of being used in irrigation, the supreme authority — the church — sends out a ^Mormon bishop with a band of slavish followers, who, under his direction, homestead and pre-empt such land as will com- mand the water supply for the whole tract; and under his direction hold and improve it. That the Mormons, by their system of colonization, have thus obtained command over vast tracts, not only in Utah, but in the commonwealths named, is indisputably true. The only question is as to the " slavishness'' of the workers. Much work on the earlier railroads was done in the same way. "The territory being largely agricultural, and pos- other Forms of Mormon Cooperation. 437 sessing surplus labor, was in good condition for the work. Much of it was done after seeding, and before harvest; much, also, after harvest and toward winter. * * * * rpj^^ call was made on the settlements in something like an equi- table proportion for a contingent of men and teams."' That all these forms of cooperation are made possible only by the Mormon religion is admitted and affirmed by all. Caine thus concludes his statement of the case : " The essential elements of cooperation as it exists in Utah can- not be found elsewhere. Nevertheless, in the chapters of our his- tory there are lessons for the sociologist, the political economist, the statesman, the philosopher, and the religionist, separately or combined. The unique experiment of Mormon co5peration, its successes and failures, its present and future, could be best studied on the spot. It is only regrettable that ignorance and prejudice are so combined, that almost none believe that any good can come out of this despised Nazareth of our magnificent country. Our people are not anxious to place themselves under the tyranny of monopo- lists, particularly if this has to be done at the expense of self-help — the boast of freemen — or of that united help, which supersedes the motto of 'live and let live,' by the more Godlike one, 'live and help live,' which is as much the key to Mormon history in the past as it will be to the triumphant vindication of its principles in the future." Whatever else may be considered doubtful in the state- ments or arguments advanced by Mr. Caine, I suppose that no one can intelligently deny the truth of what he says regarding the importance of this great social experiment to students of social science. For present purposes it is only necessary to notice that from the lower classes — that is from the usually successless classes of this country and of Europe — has been drawn a people that has achieved great economic sitccess under enormous, difficulties. Bronterre O'Brien said of them, that they had ' ' created a soul under the ribs of death;'' and their labors have attracted the interested attention of men like Eobert Owen and George Jacob Holyoake. Their enemies say that they have gathered iH. W. Naisbitt 438 Three Phases of Cooperation in the West. together "the off-scourings of society," but even were this true, it would be of the greatest importance if we could learn how '-'the off-scourings of society'^ might thus be utilized in the up-building of such industrial successes. To say that it has been done by reducing the people to virtual servitude does not seem plausible, because with Federal artillery bearing on Salt Lake City, and Federal officers all over the territory willing not only to protect, but reward apostates, it is evident that nothing like physical or political servitude can exist, A large majority of Mormons own their homesteads, and ownership of land not only has been, but is the badge and guarantee of economic freedom. It is interesting to note that tyranny and freedom may produce results that in their outward manifestations are very much alike. A far-seeing tyrant may wield his power entirely in the interests of those he governs, and a free people may resign and re-resign their power entirely into the hands of the man or men best able to use it wisely. Disinclination and refusal to do this very thing has been the greatest stumbling block in the way of successful coopera- tion. Numberless enterprises have failed, either because the leaders could not be trusted fully, or because the men would not trust them as fully as they might. Brentano says that cooperative enterprises can accomplish most for working- men whose intellectual standard is ordinary, but whose moral standard is above the average. The Mormons claim that they have been successful because a religious element has come in that has made the leaders trustworthy and the followers trustful. 1 know that to hint at a superior moral standard among the Mormons is to cause most peojole to fly off at a tangent. That is not to be helped. But if by the morality of a people we understand the willingness to fulfill all their social duties, as they understand them, it can hardly be denied that the Mormon religion has begot in its converts a morality higher than the average. That this same religion has also resulted in a spiritual servitude that more than counterbalances other good results, there are other Forms of Mormon Cooperation. 439 grounds to believe. It is pertinent to our purposes merely to note that here we have a chance to study the industrial and economic bearings of a religious faith. Its practical lesson for the common man is that religion and morality have economic value. It behooves us^ who look for no "'latter day^' inspiration and are little inclined to submit to the guidance of a prophet, to learn this prac- tical lesson from the experience of others, from the teachings of Christianity and of common sense, and not to wait until it has been taught us "by the discipline of our virtues in the severe school of adversity." 521 DATE DUE APR 1 1981 h}Mf F{ 8 12 J981 GAYLORD PRINTED IN U S * 3 1970 00427 2271 ^ PERM'.nnvyirf