CONSUM ER C O O P E R A T IV E S

I N T H E U N I T E D S T A T E S

Recent Developments

•v

V

B u l l e t i n N o . 1158

U N IT E D S T A T E S D E P A R T M E N T OF L A B O R

J a m e s P. M i t c h e l l , S e c r e t a r y

.

% y $ ? # * ; i -

f ■■ * 1 ,

- V- = .

B U R E A U OF L A B O R S T A T I S T I C S 

E w a n C l a g u e , C o m m i s s i o n e r

■*SvDigitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
CONSUMER COOPERATIVES

IN THE UNITED STATES

Recent Developments

Bulletin No. 1158

UNITED STATES DEPARTMENT OF LABOR

Jam es P. Mitchell, Secretary

BUREAU OF LABOR STATISTICS

Ewan Clague, Commissioner

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
L e t t e r o f T r a n s m i t t a l

U n i t e d S t a t e s D e p a r t m e n t o f L a b o r ,

B u r e a u o f L a b o r S t a t i s t i c s , 

W a s h i n g t o n , D . C . D e c e m b e r 2 0 , 1 9 $ 3 *

T h e S e c r e t a r y o f L a b o r :

I h a v e t h e h o n o r t o t r a n s m i t h e r e w i t h a r e p o r t o n C o n s u m e r 

C o o p e r a t i v e s i n t h e U n i t e d S t a t e s * A p o r t i o n o f t h i s r e p o r t , d e a l ­

i n g w i t h c o o p e r a t i v e s e n g a g i n g i n w h o l e s a l e a n d r e t a i l t r a d e w a s 

p r i n t e d i n t h e M o n t h l y L a b o r R e v i e w f a r A u g u s t 1 9 5 3 *

T h i s r e p o r t w a s p r e p a r e d b y J e a n A * F l e x n e r , o f t h e B u r e a u ’ s 

O f f i c e o f L a b o r E c o n o m i c s , u n d e r t h e d i r e c t i o n o f F a i t h M* W i l l i a m s .

T h e B u r e a u w i s h e s t o a c k n o w l e d g e t h e a s s i s t a n c e o f o t h e r 

F e d e r a l a g e n c i e s i n f u r n i s h i n g i n f o r m a t i o n o n a s p e c t s o f c o n s u m e r s ' 

c o o p e r a t i o n t h a t f a l l w i t h i n t h e i r f i e l d s o f i n t e r e s t , s p e c i f i c a l l y 

t h e F a r m e r C o o p e r a t i v e S e r v i c e , U . S * D e p a r t m e n t o f A g r i c u l t u r e , t h e 

S o c i a l S e c u r i t y A d m i n i s t r a t i o n a n d B u r e a u o f . F e d e r a l C r e d i t U n i o n s , i n 

t h e D e p a r t m e n t o f H e a l t h , E d u c a t i o n a n d W e l f a r e , a n d t h e F e d e r a l 

H o u s i n g a n d H o m e F i n a n c e A g e n c y *

E w a n C l a g u e , C o m m i s s i o n e r .

H o n * J a m e s P « M i t c h e l l ,

S e c r e t a r y o f L a b o r .

i l l

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
C O N T E N T S

* « 8 «

I n t r o d u c t i o n ...................................................................... ......... 1

C o o p e r a t i v e s i n D i s t r i b u t i v e F i e l d ...................... 3

C r e d i t U n i o n s ................................................................................ 1 0

E l e c t r i c i t y a n d T e l e p h o n e C o o p e r a t i v e s ................................................ 1 2

H o u s i n g C o o p e r a t i v e s ...... ....................................................................1$

M e d i c a l C a r e C o o p e r a t i v e s .......................................................... 1 8

Tables

1 . S u p p l i e s d i s t r i b u t e d b y m a j o r r e g i o n a l f a r m c o o p e r a t i v e w h o l e s a l e s ,

1 9 111 a n d 1 9 5 1 .............................................................................................................................................................. 5

2 . O p e r a t i o n s o f f a r m a n d n o n f a r m w h o l e s a l e c o o p e r a t i v e s , 1 9 1 1 - 5 1 .............. 7

3 . S u p p l i e s d i s t r i b u t e d b y f a n n e r s ' a s s o c i a t i o n s , 1 9 5 0 - 5 1 , n o t o r

r e t a i l b u s i n e s s ................................... ............................................................................ .• • • • • • • • • * •

1 . D e t a i l s a l e s : A H s t o r e s a n d c o o p e r a t i v e s t o r e s , U n i t e d S t a t e s , 1 9 1 8 1 0

5 . A n n u a l e l e c t r i f i c a t i o n p r o g r a m s H 8 A , 1 9 1 5 - 1 9 5 3 ............................................ ..................1 5

6 . D u r a l e l e c t r i f i c a t i o n b o r r o w e r s f i n a n c e d b y R E A , f i s c a l y e a r s

e n d i n g J u n e 3 0 , 1 9 3 5 t h r o u g h 1 9 5 3 ......................................................................... ..................... 1 5

7 . R u r a l t e l e p h o n e s y s t e m s b o r r o w i n g f r o m REA, 1 9 5 0 - 5 ? . . . . . . . . . . . . . . . . . 1)6

8 . P r o g r e s s o f c o o p e r a t i v e h o u s i n g p r o j e c t s u n d e r s e c t i o n 2 1 3 o f

N a t i o n a l B o u s i n g A c t , M a y 1 9 5 3 • • • • ........................................................................................ ... 1 8

Appendix A

S u m m a r y o f p r i n c i p l e s a d o p t e d b y A m e r i c a n M e d i c a l A s s o c i a t i o n , f o r

l a y - s p o n s o r e d v o l u n t a r y h e a l t h p l a n s . ( 1 9 l 9 ) « * ...................................................... 2 1

A p p e n d i x B

S u m m a r y o f S t a t e l e g i s l a t i o n , 1 9 5 2 ................................................................................................................. 2 3

Appendix C

R e c e n t d e v e l o p m e n t s i n c o n s u m e r c o o p e r a t i v e s i n o t h e r c o u n t r i e s . . . • • • • • • 2 1

v

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
CONSUMER COOPERATIVES IN THE UNITED STATES

INTRO DUCTIO N

A r e v i e w o f d e v e l o p m e n t s i n c o n s u m e r s 1 c o o p e r a t i v e s i n t h e U n i t e d 

S t a t e s * i n r e c e n t y e a r s * s h o w s t h e c o n s i d e r a b l e v a r i a t i o n w h i c h h a s d e v e l o p e d 

f r o m t h e R o c h d a l e p r i n c i p l e s i n b o t h f o r m a n d f u n c t i o n o f t h e s e o r g a n i s a t i o n s 

T h e p r i n c i p l e s w e r e e v o l v e d i n t h e c o u r s e o f o p e r a t i n g a s m a l l g r o c e r y s t o r e 

f o r a g r o u p o f f a c t o r y w o r k e r s i n R o c h d a l e , E n g l a n d i n t h e m i d d l e o f t h e l a s t 

c e n t u r y . T h e s t o r e t r a d e d i n a f e w , s i m p l e , s t a p l e i t e m s . T o d a y i n t h e 

U n i t e d S t a t e s c o o p e r a t i v e s e n d e a v o r t o s a t i s f y h i g h l y d i v e r s i f i e d c o n s u m e r 

w a n t s i n i n t e n s i v e l y c o m p e t i t i v e f i e l d s o f b u s i n e s s * A s i n o t h e r c o u n t r i e s , 

t h e c o o p e r a t i v e f o r m o f o r g a n i z a t i o n h a s b e e n u t i l i s e d o u t s i d e o f t h e d i s ­

t r i b u t i v e f i e l d , t o s a t i s f y o t h e r n e e d s e * g . , f o r h o u s i n g , c o n s u m e r - c r e d i t 

a n d t h e p r o f e s s i o n a l s e r v i c e s .

T h e d e g r e e o f a d h e r e n c e t o t h e R o c h d a l e p r i n c i p l e s m a y v a r y w i t h :

( a ) t h e p r o v i s i o n s o f S t a t e a n d F e d e r a l l a w s u n d e r w h i c h c o o p e r a t i v e s a r e 

o r g a n i z e d ; ( b ) t h e f u n c t i o n t h e y s e e k t o p e r f o r m a n d t h e p r a c t i c e s o f t h e i r 

c o m p e t i t o r s ; a n d ( c ) t h e n e e d f o r a t t r a c t i n g c a p i t a l . I n e a c h o f t h e f i e l d s 

t o b e c o n s i d e r e d , t h e R o c h d a l e t y p e o f c o o p e r a t i v e i s f o u n d o p e r a t i n g , t o ­

g e t h e r w i t h m o d i f i c a t i o n s o f t h e o r i g i n a l c o o p e r a t i v e f o r m - s o m e o n a p r o f i t 

a n d s o m e a n a n o n p r o f i t b a s i s .

T h e s e p r i n c i p l e s h a v e b e e n s t a t e d t h u s : " A c o n s u m e r c o o p e r a t i v e s o ­

c i e t y s h a l l b e d e m o c r a t i c a l l y c o n t r o l l e d ; t h e r e s h a l l b e o p e n m e m b e r s h i p .

N o p e r s o n s s h a l l b e d e n i e d m e m b e r s h i p i n a c o n s u m e r s ' c o o p e r a t i v e u n l e s s i t 

b e k n o w n t h a t t h e y w i s h t o j o i n f o r t h e p u r p o s e o f d o i n g h a r m t o t h e o r g a n i ­

z a t i o n ; m o n e y i n v e s t e d i n a c o o p e r a t i v e s o c i e t y , i f i t r e c e i v e i n t e r e s t , 

s h a l l r e c e i v e a f i x e d p e r c e n t a g e w h i c h s h a l l n o t b e m o r e t h a n t h e p r e v a i l i n g 

c u r r e n t r a t e ; a n d i f a c o o p e r a t i v e s o c i e t y m a k e s a n e t p r o f i t t h a t p r o f i t 

s h a l l b e r e t u r n e d o n t h e b a s i s o f t h e a m o u n t o f p u r c h a s e s t o t h e c o n s u m e r s 

w h o p a t r o n i z e t h e s o c i e t y * "

U s u a l l y t h e i n i t i a t i v e f o r o r g a n i z i n g a c o n s u m e r s ' c o o p e r a t i v e i s 

t a k e n b y t h e u l t i m a t e c o n s u m e r s t h e m s e l v e s . S p o n s o r s h i p b y a n o n - c o n s u m e r 

g r o u p o f t e n r e s u l t s i n t h e s p o n s o r r e t a i n i n g c o n t r o l . C o o p e r a t i v e s h a v e 

b e e n s p o n s o r e d a n d f i n a n c i a l l y a s s i s t e d b y o t h e r c o o p e r a t i v e o r g a n i z a t i o n s 

a n d b y l a b o r u n i o n s , a n d b y p h i l a n t h r o p i s t s l i k e t h e l a t e E . A . F i l e n e . 

B u s i n e s s m e n h a v e f o u n d u s e s f o r f o r m s o f o r g a n i z a t i o n w h i c h r e s e m b l e t h e 

c o o p e r a t i v e s ; e . g . , i n d e p e n d e n t g r o c e r s m a y f o r m t h e i r o w n c o o p e r a t i v e t o 

p u r c h a s e s u p p l i e s a t w h o l e s a l e ; a n d p r i v a t e b u i l d e r s m a y u n d e r t a k e t o b u i l d 

a n d s e l l a n a p a r t m e n t h o u s e o r g r o u p o f d w e l l i n g s t o a c o o p e r a t i v e f o r m e d b y 

p r o s p e c t i v e t e n a n t s o r o w n e r s . T h e A s s o c i a t e d P r e s s a n d t h e A m e r i c a n R a i l ­

w a y C o m p a r y a r e l i s t e d a s b u s i n e s s m e n ' s c o o p e r a t i v e s i n t h e 1 9 5 > 2 Y e a r B o o k

1 / P r i n c i p l e s a n d M e t h o d s o f C o n s u m e r C o o p e r a t i o n b y E l l i s C o w l i n g . 

N a t i o n a l C o o p e r a t i v e s , I n c . , M a y 1 9 U 7 *

- 1 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
o f t h e C o o p e r a t i v e L e a g u e , U . S . A . A l l m u t u a l i n s u r a n c e c o m p a n i e s h a v e s e v ­

e r a l o f t h e c o o p e r a t i v e c h a r a c t e r i s t i c s — s o m e c o m p a n i e s h a v e g o n e f u r t h e r 

t h a n o t h e r s , i n e n c o u r a g i n g a c t i v e p a r t i c i p a t i o n i n t h e d i s c u s s i o n o f m a n a g e ­

m e n t p o l i c i e s a n d p r o b l e m s b y t h e i r p o l i c y h o l d e r s , a n d i n c h a n n e l l i n g p a r t 

o f t h e i r i n v e s t m e n t s i n t o o t h e r c o o p e r a t i v e e n t e r p r i s e s .

C o o p e r a t i v e s f r e q u e n t l y s e t u p o r i n v e s t i n o t h e r c o o p e r a t i v e s f o r t h e 

p u r p o s e o f o b t a i n i n g a s o u r c e o f s u p p l y , o r a s e r v i c e ( e . g . , a n a u d i t i n g s e r v ­

i c e ) . S u b s i d i a r i e s , o f c o u r s e , d o n o t c o n f o r m t o t h e R o c h d a l e c h a r a c t e r i s ­

t i c s , e x c e p t t h a t e a r n i n g s a r e u s u a l l y d i s t r i b u t e d t o t h e o w n i n g c o o p e r a t i v e s 

i n p r o p o r t i o n t o p a t r o n a g e r a t h e r t h a n i n p r o p o r t i o n t o i n v e s i m e n t . S o m e t i m e s 

t h i s p r i n c i p l e a l s o m u s t b e s c r a p p e d ; e . g . , a r a d i o s t a t i o n c a n n o t p a y p a t r o n ­

a g e d i v i d e n d s s i n c e t h e r e i s n o p a t r o n a g e . N e v e r t h e l e s s , a n u m b e r o f r a d i o 

s t a t i o n s t o d a y c l a i m t o b e c o o p e r a t i v e s , o n t h e b a s i s o f o w n e r s h i p b y o t h e r 

c o o p e r a t i v e s , o r o f p r o g r a m s d e s i g n e d t o f u r t h e r c o o p e r a t i v e p r i n c i p l e s .

T h e r e i s t h u s n o s i n g l e o r s i m p l e d e f i n i t i o n o f a c o n s u m e r s ' c o o p e r a ­

t i v e . S t a t i s t i c a l m e a s u r e m e n t s a r e s u b j e c t t o w i d e v a r i a t i o n s , d e p e n d i n g o n 

h o w t h e a s s o c i a t i o n s a r e c l a s s i f i e d .

I n r e c e n t y e a r s t h e a c t i v i t i e s o f c o n s u m e r s ' c o o p e r a t i v e s i n t h e 

U n i t e d S t a t e s h a v e t e n d e d t o w a r d g r e a t e r d i v e r s i f i c a t i o n . T h e s e a c t i v i t i e s 

i n c l u d e : m e d i c a l c a r e ; h o u s i n g ; e l e c t r i c i t y g e n e r a t i o n a n d d i s t r i b u t i o n ; r u r a l 

t e l e p h o n e s e r v i c e ; i n s u r a n c e ; s m a l l l o a n s ; n u r s e r y s c h o o l c a r e ; r e c r e a t i o n ; 

m e a l s ; l o d g i n g , a n d s u p p l i e s f o r c o l l e g e s t u d e n t s ; f r o z e n f o o d l o c k e r s a n d 

u n d e r t a k e r s ' a n d l a u n d r y s e r v i c e s . T h e g r e a t e s t n u m b e r o f m e m b e r s i s f o u n d 

i n t h e c r e d i t u n i o n s ( $ , 1 9 6 , 3 9 3 i n 1 9 $ 1 ) ; n e x t , i n t h e r u r a l e l e c t r i c c o o p e r a ­

t i v e s ( 3 , $ 0 0 , 0 0 0 ) . P o l i c y h o l d e r s i n t h e m u t u a l i n s u r a n c e c o m p a n i e s w i t h c o o p ­

e r a t i v e a f f i l i a t i o n s , n u m b e r a b o u t i ; , $ 0 0 , 0 0 0 . C o o p e r a t i v e a n d g r o u p h e a l t h 

m e d i c a l c a r e p l a n s , a n d c o o p e r a t i v e s d i s t r i b u t i n g c o n s u m e r g o o d s a r e n e x t i n 

o r d e r , w i t h 6 0 0 , 0 0 0 a n d $ 0 0 , 0 0 0 c l a i m e d m e m b e r s h i p s , r e s p e c t i v e l y . M i c h 

s m a l l e r a r e t h e h o u s i n g , e d u c a t i o n , a n d b u r i a l c o o p e r a t i v e s . S o m e 1 0 m i l l i o n 

f a m i l i e s . a r e b e l i e v e d t o b e l o n g t o o n e o r m o r e c o o p e r a t i v e s i n t h e U n i t e d 

S t a t e s . * / O n l y r o u g h e s t i m a t e s o f m e m b e r s h i p a r e a v a i l a b l e , s i n c e c o o p e r a t i v e s 

i n t h e U n i t e d S t a t e s a r e n o t r e q u i r e d — a s t h e y a r e i n m a n y c o u n t r i e s — t o r e g ­

i s t e r w i t h , o r r e p o r t t o , a c e n t r a l g o v e r n m e n t a l a g e n c y .

T h e C o o p e r a t i v e L e a g u e o f t h e U n i t e d S t a t e s ( C H J S A ) h a s o n l y a p a r t i a l 

c o v e r a g e o f c o n s u m e r c o o p e r a t i v e m e m b e r s h i p , u n l i k e i t s c o u n t e r p a r t s i n t h e 

c o u n t r i e s o f w e s t e r n E u r o p e , w h e r e t h e c o o p e r a t i v e s a r e n e a t l y p y r a m i d e d i n t o 

n a t i o n a l f e d e r a t i o n s w h i c h p e r f o r m e d u c a t i o n a l a n d p o l i c y - m a k i n g f u n c t i o n s , 

a s w e l l a s e n g a g i n g i n w h o l e s a l i n g a n d b a n k i n g f o r b e n e f i t o f t h e l o c a l 

s o c i e t i e s . T h e L e a g u e ' s r e g u l a r , c o n t r o l l i n g m e m b e r s a r e r e g i o n a l w h o l e s a l e

2 / 1 9 5 2 Y e a r B o o k , C o o p e r a t i v e L e a g u e o f U . S . A . , p . 2 , a n d C o o p e r a t i v e s 

L o o ? A h e a d , b y J e r r y V o o r h i s , P u b l i c A f f a i r s P a m p h l e t N o . 3 2 , 1 9 $ 2 .

- 2 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
c o o p e r a t i v e s ( o w n e d b y l o c a l o r d i s t r i c t s o c i e t i e s ) a n d o t h e r l a r g e o r g a n i s a ­

t i o n s i n c l u d i n g a m u t u a l i n s u r a n c e c o n q > a n y , t h e C r e d i t U n i o n N a t i o n a l A s s o ­

c i a t i o n , a n d t h e N a t i o n a l R i r a l E l e c t r i c C o o p e r a t i v e A s s o c i a t i o n * C U I S A * S 

i n d i r e c t , i n d i v i d u a l m e m b e r s h i p i s p r e p o n d e r a n t l y ( 8 0 p e r c e n t ) o n f a r m s .

T h e s u c c e s s o f d i s t r i b u t i v e c o o p e r a t i v e s c a n n o t b e j u d g e d f r o m m e m b e r ­

s h i p d a t a o r v o l u m e o f b u s i n e s s , u n l e s s t h e r a t i o o f e a r n i n g s t o v o l u m e o f 

b u s i n e s s i s a l s o t a k e n i n t o a c c o u n t . M e m b e r s h i p m a y r e p r e s e n t i n i t i a l i n t e r ­

e s t r a t h e r t h a n c o n t i n u i n g p a t r o n a g e . S o m e d i s t r i b u t i v e c o o p e r a t i v e s h a v e 

t a k e n s t e p s t o e l i m i n a t e i n a c t i v e m e m b e r s ( e . g . , M i d l a n d C o o p e r a t i v e W h o l e ­

s a l e ) b y a r e v o l v i n g f u n d t o r e t i r e b l o c k s o f s t o c k p e r i o d i c a l l y , r e p l a c i n g 

t h e s t o c k o f e a r l i e r i s s u e w i t h n e w i s s u e s . H o w e v e r , t h i s p r a c t i c e i s n o t 

y e t g e n e r a l . S a l e s v o l u m e a l o n e i s n o t a g o o d i n d i c a t o r b e c a u s e a l a r g e 

v o l u m e h a s s o m e t i m e s b e e n a c c o m p a n i e d b y n e t l o s s r a t h e r t h a n g a i n . A l t h o u g h 

c o o p e r a t i v e s d i s c l a i m a n i n t e r e s t i n p r o f i t s a s s u c h , n e t e a r n i n g s a r e i m ­

p o r t a n t t o t h a n a s a s o u r c e b o t h o f i n v e s t m e n t f u n d s a n d f o r a l l o c a t i o n o f 

p a t r o n a g e d i v i d e n d s . N e t e a r n i n g s p e r s a l e s d o l l a r a r e t a k e n h e r e a s t h e 

c r i t e r i o n o f s u c c e s s , r a t h e r t h a n m e m b e r s h i p o r v o l u m e o f b u s i n e s s .

I t i s d i f f i c u l t t o j u d g e t h e s u c c e s s o f c o o p e r a t i v e s i n s o c i a l w e l ­

f a r e f i e l d s w h e r e e c o n o m i c i n d i c a t o r s ( s u c h a s n e t e a r n i n g s ) a r e m e a n i n g ­

l e s s ; e . g . , i n m e d i c a l c a r e , e d u c a t i o n , a n d r e c r e a t i o n . I n t h e s e f i e l d s , 

m e m b e r s h i p f i g u r e s , n u m b e r s s e r v e d , a n d c o s t s a r e t h e o n l y p o s s i b l e s t a ­

t i s t i c a l m e a s u r e m e n t s o f s u c c e s s . I t s h o u l d b e r e c o g n i s e d , h o w e v e r , t h a t 

s u c h s t a t i s t i c s d o n o t g i v e a n y i n d i c a t i o n o f t h e c o m p a r a t i v e q u a l i t y o f t h e 

p r o f e s s i o n a l s e r v i c e s r e n d e r e d .

COOPERATIVES IN D ISTRIBU TIV E FIE LD

T h e l a r g e s t a n d m o s t s u c c e s s f u l g r o u p o f d i s t r i b u t i v e c o o p e r a t i v e s 

i n t h e U n i t e d S t a t e s i s t h e f a r m e r s ' o r g a n i s a t i o n s . W h i l e t h e y e n g a g e 

c h i e f l y i n m a r k e t i n g f a r m p r o d u c t s f o r t h e i r m e m b e r s , t h e y a l s o s u p p l y t h e i r 

m e m b e r s a n d o t h e r p a t r o n s w i t h v a r i o u s s e r v i c e s a n d w i t h c o m m o d i t i e s n e e d e d 

f o r f a r m a n d h o u s e h o l d u s e . M a n y f a r m o r g a n i s a t i o n s c o m b i n e b o t h p r o d u c e r 

a n d c o n s u m e r f u n c t i o n s ; s o m e a r e o r g a n i s e d o n l y t o e n g a g e i n t h e s u p p l y 

f u n c t i o n . T h e s e c o o p e r a t i v e s a r e l o c a l a s s o c i a t i o n s s e l l i n g c o m m o d i t i e s t o 

t h e i r m e m b e r s a t r e t a i l ; a n d t h e s e c o m m o d i t i e s a r e g e n e r a l l y o b t a i n e d t h r o u g h 

r e g i o n a l o r w h o l e s a l e c o o p e r a t i v e s , o w n e d b y t h e l o c a l s o c i e t i e s . T h e r e a r e 

s o m e l a r g e c e n t r a l i s e d s o c i e t i e s w h i c h s e l l b o t h a t r e t a i l a n d a t w h o l e s a l e ; 

e . g . , t h e O r a n g e L e a g u e F e d e r a t i o n ( O I F ) .

S t a t i s t i c s o n f a r m e r s ' m a r k e t i n g , s e r v i c e , a n d p u r c h a s i n g c o o p e r a ­

t i v e s a r e c o l l e c t e d a n d p u b l i s h e d b y t h e F a r m C r e d i t A d m i n i s t r a t i o n . T h e 

d e f i n i t i o n o f a b o n a f i d e c o o p e r a t i v e u s e d b y F C A i s b a s e d o n t h e r e q u i r e ­

m e n t s o f t h e C a p p e r - V o l s t e a d A c t ( w h i c h e x e m p t e d s u c h o r g a n i z a t i o n s f r o m 

t h e a n t i - t r u s t l a w s ) ; n a m e l y : ( 1 ) F a r m e r s h o l d t h e c o n t r o l l i n g i n t e r e s t i n

3

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
t h e a s s o c i a t i o n ; ( 2 ) n o m e m b e r o f t h e a s s o c i a t i o n i s a l l o w e d m o r e t h a n o n e 

v o t e r e g a r d l e s s o f t h e a m o u n t o f s t o c k o r m e m b e r s h i p c a p i t a l h e o w n s t h e r e i n * 

o r , t h e a s s o c i a t i o n d o e s n o t p a y d i v i d e n d s o n s t o c k o r m e m b e r s h i p c a p i t a l i n 

e x c e s s o f 8 p e r c e n t p e r y e a r ; a n d ( 3 ) t h e a s s o c i a t i o n d o e s n o t d e a l i n p r o d ­

u c t s o f n o n - m e m b e r s t o a n a m o u n t g r e a t e r i n v a l u e t h a n i t h a n d l e s f o r i t s 

m e m b e r s *

T h e n o n f a r m , o r u r b a n , d i s t r i b u t i v e c o o p e r a t i v e s a r e l e s s n u m e r o u s 

t h a n t h e f a r m g r o u p , h a v e n o t r e c e i v e d g o v e r n m e n t a s s i s t a n c e , a n d h a v e h a d 

t o m e e t k e e n c o m p e t i t i o n f r o m o t h e r r e t a i l e r s . R e t a i l i n g o f c o n s u m e r g o o d s 

r e q u i r e s h e a v y a n d v a r i e d i n v e n t o r i e s , a n d r a p i d t u r n o v e r ; f u l l d i s p l a y s 

o f m e r c h a n d i s e ; a n d g o o d s t o r e l o c a t i o n s , w i t h p a r k i n g f a c i l i t i e s . T h e s e 

c a n n o t b e p r o v i d e d w i t h o u t l a r g e c a p i t a l , e x p e r t m a n a g e m e n t a n d h i g h - g r a d e 

s a l e s p e r s o n n e l . O n m a n y i t e m s s o l d , p a r t i c u l a r l y i n f o o d s t u f f s , m a r g i n s 

a r e l o w a n d t h e r e f o r e t h e p o s s i b i l i t y o f p a t r o n a g e r e f u n d s i s n e c e s s a r i l y 

l i m i t e d . T h e e c o n o m i e s t o b e r e a l i z e d b y c o o p e r a t i v e w h o l e s a l e s i n m a n u ­

f a c t u r i n g c o n s u m e r g o o d s a r e o u t w e i g h e d b y t h e r i s k s o f c o m p e t i t i o n w i t h 

e s t a b l i s h e d c o m p a n i e s h a v i n g d i v e r s i f i e d a n d w e l l - a d v e r t i s e d p r o d u c t s . ( I n 

s o m e c a s e s , a r r a n g e m e n t s h a v e b e e n m a d e b y c o o p e r a t i v e s t o h a v e p r o d u c t s 

m a d e t o t h e i r s p e c i f i c a t i o n s b y c o m m e r c i a l p r o d u c e r s , t o b e s o l d u n d e r t h e 

c o o p b r a n d o r l a b e l . ) T h e g r e a t d i f f i c u l t i e s f a c i n g d i s t r i b u t i v e c o o p e r a ­

t i v e s a c c o u n t f o r a h i g h m o r t a l i t y a n d c o m p a r a t i v e l y l o w e a r n i n g s . T h e 

l a r g e t u r n o v e r a m o n g c o n s u m e r c o o p e r a t i v e s o c i e t i e s c o m p l i c a t e s s t a t i s t i c a l 

r e p o r t i n g .

W h o l e s a l e T r a d e . M o s t l o c a l c o o p e r a t i v e s o b t a i n a l a r g e p r o p o r t i o n 

o f t h e i r s u p p l i e s f r o m r e g i o n a l , d i s t r i c t , o r n a t i o n a l c o o p e r a t i v e w h o l e s a l e 

a s s o c i a t i o n s , w h i c h t h e y o w n . M a n u f a c t u r i n g a n d s e r v i c e e n t e r p r i s e s a r e 

s o m e t i m e s o p e r a t e d b y t h e w h o l e s a l e s , s e l d o m b y l o c a l a s s o c i a t i o n s s i n g l y .

C o o p e r a t i v e w h o l e s a l e s s e r v i n g m a i n l y l o c a l f a r m a s s o c i a t i o n s h a v e 

p r o s p e r e d a n d e x p a n d e d t h e i r b u s i n e s s i n t h e d e c a d e 1 9 U 1 - 5 1 , a c c o r d i n g t o 

r e p o r t s r e c e n t l y i s s u e d b y t h e F a r m C r e d i t A d m i n i s t r a t i o n . 3 / I n 1 9 $ 1 , t h e 

2 1 l a r g e s t c o o p e r a t i v e f a r m w h o l e s a l e s h a d s a l e s t o t a l l i n g $ 8 0 2 . 2 m i l l i o n , 

o f w h i c h 6 5 p e r c e n t w e r e i n p r o d u c e r g o o d s ( f e e d , f e r t i l i z e r , s e e d , i n s e c t i ­

c i d e s , f a r m m a c h i n e r y a n d e q u i p m e n t , p a c k a g i n g m a t e r i a l s , a n d s t e e l p r o d u c t s ) ; 

2 7 o e r c e n t o f s a l e s w a s f o r p e t r o l e u m p r o d u c t s a n d a u t o m o b i l e a c c e s s o r i e s ;

3 p e r c e n t f o r l u m b e r , p a i n t , a n d m a i n t e n a n c e m a t e r i a l s ; a n d U p e r c e n t f o r 

m i s c e l l a n e o u s i t e m s . ( S e e t a b l e 1 ) . T h e m i s c e l l a n e o u s g r o u p , w h i c h h a d 

d e c l i n e d f r o m 7 p e r c e n t i n 1 9 U l , i n c l u d e s c o n s u m e r g o o d s — e l e c t r i c a l e q u i p ­

m e n t , g r o c e r i e s , c o a l , a n d o t h e r i t e m s . T h e v o l u m e o f m i s c e l l a n e o u s g o o d s 

s o l d w a s s o m e w h a t l a r g e r i n 1 9 5 1 t h a n i n 1 9 U l , b u t t h e r a t e o f i n c r e a s e w a s 

m u c h l e s s t h a n f o r p r o d u c e r s ' g o o d s . A p p a r e n t l y , e v e n t h e p r o s p e r o u s a n d 

w e l l - e s t a b l i s h e d f a r m c o o p e r a t i v e w h o l e s a l e s f i n d e x p a n s i o n i n t h e c o n s u m e r 

g o o d s f i e l d d i f f i c u l t , o r n o t a t t r a c t i v e , a s c o m p a r e d w i t h p r o d u c e r g o o d s 

a n d p e t r o l e u m p r e d i c t s .

3 / O p e r a t i o n s o f M a j o r R e g i o n a l P u r c h a s i n g C o o p e r a t i v e s , F a i m C r e d i t 

A d m T n i s t r a t i o n ( C i r c u l a r C - l l i 8 , D e c e m b e r 1 9 5 ? ) •

h

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
T a b l e 1 . S u p p l i e s D i s t r i b u t e d t r y M a j o r R e g i o n a l F a r m C o o p e r a t i v e

W h o l e s a l e s , i / 1 9 4 1 a n d 1 9 5 1

I t e m s

S a l e s i n 

t h o u s a n d s

P e r c e n t

1 9 4 1 1 9 5 1 1 9 a 1 9 5 1

N u m b e r o f a s s o c i a t i o n s • • • • • 1 7 2 1 — —

A l l c o m m o d i t i e s . . . . . . . . . * 1 6 9 - 8 3 1 1 0 0 . 0 1 0 0 . 0

P r o d u c e r g o o d s .......................................................... 1 1 2 . 3 7 5 5 2 4 . 4 3 2 6 6 . 2 6 5 . 4

F e e d • 7 3 , 7 9 5 3 5 2 , 4 4 3 4 3 . 5 4 3 . 9

F e r t i l i z e r •••••»••• 1 5 * 6 8 4 . 7 1 , 2 2 1 9 . 2 8 . 9

S e e d . . . . . . .......................................... 4 , 8 5 0 3 0 , 0 9 4 2 . 8 3 . 8

F a r m m a c h i n e r y

a n d e q u i p m e n t . . . . . . 2 , 8 6 5 2 7 , 9 8 0 1 . 7 3 . 5

P a c k a g e m a t e r i a l s ................................. 9 , 7 8 2 1 7 , 7 8 1 5 . 8 2 . 2

S t e e l p r o d u c t s .................................................. 2 , 6 8 0 1 4 , 5 1 6 1 . 6 1 . 8

I n s e c t i c i d e s 2 , 7 1 9 1 0 , 3 9 7 1 . 6 1 . 3

P e t r o l e u m p r o d u c t s a n d

a u t o a c c e s s o r i e s . . . . . 4 2 , 0 0 1 2 1 8 , 9 7 3 2 4 . 7 2 7 . 3

l u m b e r * p a i n t , a n d m a i n t e ­

n a n c e m a t e r i a l s . . . . . 2 , 9 7 0 2 4 , 6 9 4 1 . 7 3 . 1

M i s c e l l a n e o u s 1 2 , 4 8 5 3 4 . 1 0 4 7 . 4 4 . 2

E l e c t r i c a l e q u i p m e n t . . . . 1 , 3 4 2 8 , 8 7 9 1 . 5 1 . 1

G r o c e r i e s . . . . . . . . . 2 , 5 0 9 6 , 2 7 7 0 . 8 0 . 8

C o a l ......................................................................................... 9 1 8 1 , 7 1 9 0 . 5 0 . 2

O t h e r ••••••••••• 7 , 7 1 6 1 7 , 2 2 9 4 . 6 2 . 1

^ I n c l u d e s a s s o c i a t i o n s d o i n g a t l e a s t $ 5 m i l l i o n w o r t h o f b u s i n e s s 

p e r y e a r , i n 1 9 5 1 * a n d $ 2 m i l l i o n i n 1 9 U l .

S o u r o e : F a r m C r e d i t A d m i n i s t r a t i o n * U , S . D e p a r t m e n t o f A g r i c u l t u r e , 

C i r c u l a r G - 2 4 8 , t a b l e 4 - *

- 5 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
I n a d d i t i o n t o t h e f a r m c o o p e r a t i v e w h o l e s a l e s , t h r e e r e g i o n a l w h o l e ­

s a l e c o o p e r a t i v e s l j / d i s t r i b u t e m a i n l y c o n s u m e r g o o d s t o c o o p e r a t i v e s w i t h p r e ­

d o m i n a n t l y n o n f a r m m e m b e r s h i p s , a n d a n a t i o n a l m a n u f a c t u r i n g a n d d i s t r i b u t i n g 

c o o p e r a t i v e ^ / s e r v e s b o t h f a r m a n d c o n s u m e r n e e d s * T h e s e f o u r a s s o c i a t i o n s 

m a d e s a l e s v a l u e d a t $ 8 . 2 m i l l i o n , i n 1 9 5 1 , e a r n i n g a n e t o f $ 2 8 3 , 0 0 0 o r 3 . U 

p e r c e n t o f s a l e s * T h i s r e t u r n c o m p a r e s w i t h 5 * 5 p e r c e n t f o r t h e 2 1 m a j o r f a i n 

w h o l e s a l e s * A c o m p a r i s o n o f t h e o p e r a t i o n s o f f a r m w i t h n o n f a x m w h o l e s a l e 

c o o p e r a t i v e s i s s h o w n f o r t h e y e a r s 1 9 l | l t o 1 9 5 1 i n t a b l e 2 *

O v e r t h e 1 1 - y e a r p e r i o d , t h e f a r m w h o l e s a l e c o o p e r a t i v e s h a d c o m b i n e d 

n e t e a r n i n g s i n e v e r y y e a r w h i c h r a n g e d f r o m $ 3 * 1 0 t o $ 6 * 7 2 p e r $ 1 0 0 o f s a l e s 

i n 1 9 l * 9 a n d 1 9 U U , r e s p e c t i v e l y * T h e e x p e r i e n c e o f t h e f o u r n o n f a r m w h o l e s a l e s 

c o n t r a s t e d s h a r p l y w i t h t h a t o f t h e f a r m w h o l e s a l e s : o n e n o n f a r m c o o p e r a t i v e 

s u f f e r e d l o s s e s i n 5 o f t h e 1 1 y e a r s , 2 i n 1* y e a r s , a n d 1 i n 2 y e a r s *

T h e n o n f a r m w h o l e s a l e s o n t h e w h o l e p r o s p e r e d d u r i n g t h e w a r y e a r s — 

v o l u m e o f s a l e s i n c r e a s e d r a p i d l y , e v e n w h e n a d j u s t e d f o r c h a n g e s i n t h e r e ­

t a i l p r i c e l e v e l , p a t r o n a g e d i v i d e n d s w e r e p a i d , a n d s o m e r e s e r v e s w e r e b u i l t 

u p . H o w e v e r , t h e s e s u c c e s s e s f o r m e d o n l y a m o d e s t b a s i s f o r t h e m a j o r e x p a n ­

s i o n c a r r i e d o u t b y e a c h o f t h e s e o r g a n i z a t i o n s i n 1 9 U 5 a n d 1 9 1 * 6 .

T h e b u s i n e s s v o l u m e o f t h e f o u r o r g a n i z a t i o n s d o u b l e d b e t w e e n 1 9 1 * 5 a n d 

191*6 a n d f o r t h e 3 y e a r s , 1 9 1 * 6 - 1 * 8 , a v e r a g e d 7 5 p e r c e n t a b o v e 1 9 1 * 5 } w h e n s a l e s 

a r e d e f l a t e d f o r p r i c e c h a n g e s , t h e r i s e w a s 3 3 p e r c e n t * E a c h o f t h e n o n f a x m 

o r g a n i z a t i o n s e x p a n d e d b o t h i t s c o m m e r c i a l a n d n o n c o m m e r c i a l a c t i v i t i e s , t a k ­

i n g o n n e w l i n e s o r d e p a r t m e n t s , a s s u m i n g e d u c a t i o n a l a n d p u b l i s h i n g f u n c t i o n 

o r u n d e r t a k i n g t o p a y t h e c o s t s p r e v i o u s l y b o r n e b y o t h e r o r g a n i z a t i o n s * D e f ­

i c i t s b e g a n t o p i l e u p , r e a c h i n g a c u m u l a t i v e t o t a l o f m o r e t h a n $ 7 0 0 , 0 0 0 i n 

1 9 1 * 9 * ( I n n o n e o f t h e " g o o d " w a r y e a r s h a d c o m b i n e d n e t e a r n i n g s r e a c h e d 

e v e n $ 1 0 0 , 0 0 0 . )

T h e s i t u a t i o n f o r c e d d r a s t i c c u r t a i l m e n t o f o p e r a t i o n s , r e o r g a n i z a ­

t i o n s , a n d l i q u i d a t i o n o f u n e c o n o m i c a c t i v i t i e s * R e t r e n c h m e n t w a s c o m p l e t e d 

b y 1 9 5 0 ; t h r e e o r g a n i z a t i o n s s h o w e d p r o f i t a b l e o p e r a t i o n s i n t h a t y e a r , t h e 

f o u r t h i n 1 9 5 1 * B a l a n c e s h e e t s f o r 1 9 5 1 a n d f o r 1 9 5 2 c o n t i n u e d t o s h o w e n ­

c o u r a g i n g g a i n s . H o w e v e r , t h e a c c u m u l a t e d d e f i c i t s h a v e n o t y e t i n a l l c a s e s 

b e e n e l i m i n a t e d *

I t i s t o o e a r l y ( m i d - 1 9 5 3 ) t o a s s u m e p e r m a n e n c e i n t h e a p p a r e n t r e ­

c o v e r y f r o m t h e d e c l i n e w h i c h f o l l o w e d p o s t w a r o v e r - e x p a n s i o n o f t h e m a j o r 

n o n f a r m c o o p e r a t i v e w h o l e s a l e s * T h e p o s t w a r c y c l e r e v e a l e d a n u n s o l v e d

U / A s s o c i a t e d C o o p e r a t i v e s , C a l i f o r n i a } C e n t r a l S t a t e s C o o p e r a t i v e s , 

I l l i n o i s } E a s t e r n C o o p e r a t i v e s , I n c * , H e w J e r s e y *

5 / N a t i o n a l C o o p e r a t i v e s , C h i c a g o * I t s d e p a r t m e n t s i n 1 9 5 1 w e r e g r o ­

c e r i e s a n d o t h e r c o m m o d i t i e s , a n d m i l k i n g m a c h i n e s } t h e c e r e a l p r o d u c t s 

d i v i s i o n w a s l i q u i d a t e d i n 1 9 5 0 *

-6-

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 2. Operations of farm and nonfarm wholesale cooperatives, 19U1-51

1 9 5 1 1 9 5 0 191*9 19U 8 191*7 191*6 191*5 1910* 191*3 191*2 191*1

M a jo r r e g i o n a l fa rm s u p p ly c o o p e r a t i v e s :

Number o f a s s o c i a t i o n s ^ / .................................. 21 2 1 2 0 1 8 1 8 1 6 1 8 1 8 1 8 17 17

S a l e s , i n th o u s a n d s • • .................................. $ 8 0 2 ,2 0 3 $ 6 9 3 , 6 0 8 $ 6 3 6 ,2 0 0 $61*7,1*1*2 $ 5 U * , 7 2 7 $ 1 * 2 3 ,9 6 3 $ 3 6 0 , 7 5 5 $ 3 1 * 8 ,7 5 9 $ 2 7 6 ,3 7 9 $ 2 2 0 ,9 0 2 # 1 6 9 ,8 3 1

N et e a r n i n g s ................................................... $ U * ,0 S 7 $ 3 0 , 8 2 2 $ 1 9 , 8 1 9 $ 3 8 , 3 2 0 $ 2 9 , 0 3 ? $ 2 1 , 0 9 5 $ 1 7 , 8 1 1 $ 2 3 ,1 * 3 3 $ 1 7 ,7 1 * 2 $ 1 3 ,5 2 7 $ 9 ,5 1 * 8

N onfarm w h o l e s a l e s :

Number o f a s s o c i a t i o n s ^ / .................................. 1* 1* 1* It 1* 1* It It It 3 3

S a l e s , i n th o u s a n d s ............................................. $ 8 ,2 0 9 $ 1 5 , 6 8 0 $ 1 7 , 0 1 5 $ 2 1 , 2 6 7 $ 1 9 , 5 7 5 $21*, 8 1 5 $ 1 2 ,1 * 6 6 $ 1 1 , 6 3 5 $ 8 ,0 1 * 7 $ 3 , 2 5 0 # 2 ,5 3 0

N e t e a r n i n g s o r l o s s ( - ) , i n th o u s a n d s . $ 2 8 3 $ 5 2 - $ 2 3 l* -$ 1 *8 6 $121* - $ 1 9 $91* $ 7 2 $ 1 7 $ 7 0 $ 5 0

N e t e a r n i n g s o r l o s s ( - ) p e r $ 1 0 0 o f s a l e s

Farm a s s o c i a t i o n s ........................................................ $5-1*9 $1*.1*1* $ 3 . 1 0 $ 5 . 9 2 $ 5 . 3 3 $ 1 * .9 7 $U .91t $ 6 . 7 2 $ 6 .1 * 2 $ 6 . 1 2 # 5 * 6 2

N onfarm a s s o c i a t i o n s ........................................ . $ 3 .3 7 $ 0 . 3 3 - $ 1 . 3 8 - $ 2 . 2 9 $ 0 . 6 3 - $ 0 . 0 8 $ 0 . 7 5 $ 0 . 6 2 $ 0 . 2 1 $ 2 . 1 5 # 1 .9 8

In d e x n u m b ers ( 1 9 ii5 = 1 0 0 )

U n a d ju s te d s a l e s v o lu m e :

F a rm a s s o c i a t i o n s ........................................................ 2 2 2 .l t 1 9 2 . 3 1 7 6 . 3 1 7 9 . 2 1 5 0 . 1 1 1 7 . 5 1 0 0 . 0 9 6 . 7 7 6 . 6 6 1 . 2 U 7 . 1

N on farm a s s o c i a t i o n s • • • • ........................... 6 5 . 9 1 2 5 . 8 1 3 6 . 5 1 7 0 . 6 1 5 7 . 0 1 9 9 . 1 1 0 0 . 0 9 3 . 3 6 1 *.6 2 6 . 1 2 0 . 3

S a l e s i n c o n s t a n t (1 9 U 5 ) p r i c e s :

F a rm a s s o c i a t i o n s ^ / ...................................................

1

1 5 3 .1 * 1 1 *3*5 1 3 3 . 6 1 2 5 . 3 1 1 2 . 9 1 0 l * .9 1 0 0 . 0 9 5 . 7 7 9 . 8 6 9 . 5 6 2 . 8

N on farm a s s o c i a t i o n s - ' . ........................................ 1 *0 .3 8 5 . 6 91*. 1 1 1 2 . 9 1 1 2 . 8 1 7 3 . 6 1 0 0 . 0 9 5 . t 6 5 . 2 2 9 . 3 2 6 . 8

1/ Fro m 1 9 U l t o 1 9 L £ , a s s o c i a t i o n s h a v in g an. a n n u a l fa r m s u p p ly b u s i n e s s o f a t l e a s t $ 2 m i l l i o n e a c h w ere i n c l u d e d ; i n 1 9 h 7 , 

t h e minimum v o lu m e o f b u s i n e s s was r a i s e d t o $ 5 m i l l i o n .

2 / A l l known c o o p e r a t i v e w h o le s a le s o u t s i d e t h e fa rm f i e l d s r e i n c l u d e d . I n 1 9 U 3 , N a t i o n a l C o o p e r a t i v e s w e re f i r s t i n c l u d e d . 

P r i o r t o t h a t t i m e i t o p e r a t e d a s a b r o k e r a g e a g e n c y .

3/ A d ju s t e d b y m ean s o f a s p e c i a l l y co m p u ted w h o le s a le p r i c e i n d e x w e ig h te d i n a c c o r d a n c e w ith t h e t y p e s o f g o o d s s o l d b y t h e 

c o o p e r a t i v e w h o l e s a l e s i n 1 9 U 5 .

h / A d ju s t e d b y m ean s o f C P I fo o d co m p o n e n t, s i n c e f o o d i s m a jo r it e m o f b u s i n e s s .

S o u r c e s : O p e r a t io n s o f M a jo r R e g io n a l P u r c h a s in g C o o p e r a t iv e s 1 9 1 * 1 -5 1 , F arm C r e d i t A d m i n i s t r a t i o n ( C i r c u l a r C -lU fl, D ecem ber 

1 9 5 2 ) , an d B u r e a u o f L a b o r S t a t i s t i c s f i l e s .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
d i l e m m a : o n t h e o n e h a n d , l a r g e s a l e s v o l u m e i s n e c e s s a r y t o s u c c e s s f u l o p e r a ­

t i o n b o t h b y w h o l e s a l e s a n d m e m b e r r e t a i l s , t p w v o l u m e m a y r a i s e c o s t s b y i n ­

c r e a s i n g t h e b u r d e n o f o v e r h e a d a n d b y p r e v e n t i n g t h e s a v i n g s a s s o c i a t e d w i t h 

b u y i n g i n l a r g e l o t s . O n t h e o t h e r h a n d , m o r e c r e d i t i s r e q u i r e d t o c a r r y o n 

a l a r g e v o l u m e o f t r a d e . U r b a n c o o p e r a t i v e s , u n l i k e f a r m c o o p e r a t i v e s , d o 

n o t h a v e a c c e s s t o t h e C o o p e r a t i v e B a n k s s e t u p b y t h e g o v e r n m e n t a n d s u p e r ­

v i s e d b y t h e F a r m C r e d i t A d m i n i s t r a t i o n . C l o s e t o o n e - t h i r d o f t h e l o a n s 

m a d e b y t h e b a n k s t o c o o p e r a t i v e s w e r e t o f i n a n c e f a r m s u p p l y b u s i n e s s . I n 

t h e y e a r e n d i n g J u n e 3 0 , 1 9 5 3 , a l m o s t $ 8 0 m i l l i o n w a s l o a n e d f o r t h i s p u r ­

p o s e . L o a n s o u t s t a n d i n g o n J u n e 3 0 , 1 9 5 3 w e r e o v e r $ 1 0 2 . 7 m i l l i o n . B e t w e e n 

1 9 3 3 , w h e n t h e b a n k s f o r c o o p e r a t i v e s w e r e e s t a b l i s h e d , a n d J u n e 1 9 5 2 , a 

g r a n d t o t a l o f $ 6 0 0 m i l l i o n w a s l o a n e d t o f a r m e r s ’ c o o p e r a t i v e s f o r t h e i r 

s u p p l y b u s i n e s s .

W h e n c r e d i t d i f f i c u l t i e s o f u r b a n c o o p e r a t i v e w h o l e s a l e s a w o v e r c o m e 

a n d m e a n s a r e f o u n d t o f i n a n c e e x p a n s i o n a t t h e w h o l e s a l e l e v e l , t h e a n t i c i ­

p a t e d d e m a n d s o m e t i m e s f a i l s t o m a t e r i a l i z e a t t h e u r b a n c o o p e r a t i v e r e t a i l 

l e v e l . S u c h f a i l u r e w a s a n i m p o r t a n t f a c t o r i n t h e c a s e o f t w o n o n f a r m c o o p ­

e r a t i v e w h o l e s a l e s . A n a c t i v e c o o p e r a t i v e l y - m i n d e d c o n s u m e r g r o u p d o e s n o t 

a s y e t e x i s t i n s u f f i c i e n t l y l a r g e a n d c o n c e n t r a t e d n u m b e r s t o s u p p o r t l a r g e 

c o o p e r a t i v e r e t a i l s t o r e s . E d u c a t i o n i n c o o p e r a t i v e p r i n c i p l e s i s o f t e n p r o ­

p o s e d a s t h e r e m e d y , b u t t h e e x p e n s e o f s u c h p r o g r a m s ( i n c l u d i n g p u b l i c a t i o n s ) 

w a s i n p a r t r e s p o n s i b l e f o r t h e l a r g e p o s t w a r d e f i c i t s .

I n s p i t e o f t h e m a r k e d p r o s p e r i t y o f t h e l a r g e f a r m c o o p e r a t i v e w h o l e ­

s a l e s a s a g r o u p , i n d i v i d u a l o r g a n i z a t i o n s h a v e e x p e r i e n c e d s o m e o f t h e s a m e 

p r o b l e m s f a c e d b y t h e n o n f a i m o r g a n i z a t i o n s . I n o r d e r t o m e e t t h e s e p r o b l e m s 

t h e m a n a g e m e n t s o f c e r t a i n r e g i o n a l w h o l e s a l e c o o p e r a t i v e s — b o t h f a r m a n d 

u r b a n — a r e u r g i n g i n t e g r a t i o n o f s t o r e s o f l o c a l a s s o c i a t i o n s i n t o l a r g e s y s ­

t e m a t i z e d o p e r a t i o n s w i t h b u l k p u r c h a s i n g a n d u n i f i e d s t o r e p o l i c i e s , a n d 

s e p a r a t i o n o f n o n p r o d u c t i v e , n o n p a y i n g a c t i v i t i e s f r o m c o m m e r c i a l a c t i v i t i e s . 

C o m p e t i t i o n f r o m t h e c h a i n s t o r e s h a s b e e n s u f f i c i e n t l y k e e n t o i n f l u e n c e 

c o o p e r a t i v e s t o a d o p t s o m e o f t h e i r m e t h o d s .

T h e C e n t r a l C o o p e r a t i v e W h o l e s a l e , s e r v i n g l o c a l s o c i e t i e s i n t h e 

L a k e S u p e r i o r D i s t r i c t o f W i s c o n s i n a n d M i c h i g a n , a f t e r e x p e r i m e n t i n g w i t h 

i n t e g r a t i o n i n o n e d i s t r i c t d u r i n g 1 9 5 1 a n d 1 9 5 2 , p r o p o s e d t h a t a l l o f i t s 

m e m b e r s o c i e t i e s s i g n c o n t r a c t s w i t h i t f o r a r e a m e r c h a n d i s i n g s e r v i c e b y 

t h e c e n t r a l o r g a n i z a t i o n . I t a n t i c i p a t e d t h a t t h e n e x t s t e p w o u l d i n v a l v e 

c o r p o r a t e m e r g e r s o f c o o p e r a t i v e s i n e a c h o f t h e a r e a s . T h e l o c a l c o o p e r a t i v e 

w o u l d t e n d t o b e c o m e a b r a n c h s t o r e r a t h e r t h a n a n i n d e p e n d e n t u n i t . A n o t h e r 

s t e p t a k e n i n 1 9 5 3 b y C C W w a s t o s e t u p a l l e d u c a t i o n a l , p r o m o t i o n a l a n d p u b ­

l i s h i n g a c t i v i t i e s a s a s e p a r a t e C o o p e r a t i v e P u b l i s h i n g A s s o c i a t i o n * — " t o s e p ­

a r a t e t h e p r o p a g a n d a f r o m t h e b e a n s " , i n t h e w o r d s o f i t s o r g a n , " C o o p e r a t i v e 

B u i l d e r . "

T h e c o o p e r a t i v e w h o l e s a l e s ’ c e n t r a l i z a t i o n p r o g r a m h a s a r o u s e d o p p o s i ­

t i o n a m o n g t h e o l d e r m e m b e r s w h o h a v e t a k e n g r e a t p r i d e i n t h e i r e d u c a t i o n a l 

a c t i v i t i e s a n d i n i n d e p e n d e n t v o l u n t a r y n e i g h b o r h o o d g r o u p s f o r m i n g a n d

- 8 •

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
financing th e ir own so cie tie s to meet lo c a l needs. However, such groups are

becoming le s s rath er than more common, as immigrant groups experienced in

consumer cooperation in Europe lo se cohesiveness, and as the population becomes more prosperous and m obile. As fam ily incomes r is e , and ownership of

automobiles gives consumers a wider shopping range, thqr appear to p refer

v a rie ty of goods over the p o s s ib ility of receiving sm all patronage dividends.

Even in ru ra l communities, a recent U n iversity of Minnesota study found, "the

opportunity fo r the cooperative so ciety to hold patronage has lesse n ed ."^

The study concluded that a new type of consumer cooperative may emerge "very

d iffe re n t in id e a ls and p rin cip le s from the so -called tra d itio n a l organizatio n ." Another p o s s ib ility Is that cooperatives may concentrate more on

fie ld s other than r e t a il tirade.

lo c a l A ssociations ( R e ta il). The volume of business done by the

wholesales is only a rough in d icatio n of the business done by the r e t a il cooperatives, since i t is not known whether the proportion of the goods sold by

the r e t a il cooperatives, obtained through cooperative w holesales, has been

increasing or decreasing.

Fam associations do the major p art of cooperatives’ r e t a il business.

Although feed, f e r t iliz e r , and farm supplies comprise th re e -fifth s of the

farm cooperatives’ sa le s, they also do a large proportion of cooperative ret a il business in gas, o il, and consumer goods (in clu d in g groceries and ap p liances) . According to s t a t is t ic s of the Farm C redit Adm inistration, r e t a il

sa le s by fam cooperatives in 1950-51 to ta lle d $1.6 b illio n , of which 60 percent was fa m su p p lies, 22 percent was petroleum products (o f which over h a lf

is used on the fa m ), and 18 percent was g roceries, hardware, building mat e r ia ls , and other consumer goods (see tab le 3) . Although the 1950-51 data

are not s t r ic t ly conparable with those fo r e a rlie r years,7/th ere is evidence

that the fa m associations have been ste a d ily expanding tK eir volume of supply-purchasing business.

o/ Consumer Cooperatives in Minnesota, by Professor Helen 0. Canoyer

(In Business News Notes, U n iversity of Minnesota School of Business Administra tio n , November 1952) .

7/ Beginning w ith the crop year 3950- 51, the Fam C redit Adm inistration

revised it s method of compiling and tabulating data. Fo r the f ir s t tim e, data

were published fo r the to ta l number of fa m cooperatives engaged in supplying

th e ir members ( 7, 335) . Form erly, only those associations whose main business

was supply were shown. Also in 1950- 51, supplies sold to members were shown

with a commodity breakdown fo r the f ir s t tim e.

In view of the greater d e ta il now obtained in Farm C red it Adm inistratio n schedules on commodities sold by fa m cooperatives to th e ir patrons, i t

was deemed advisable to summarize these data fo r a ll fa m cooperatives, in

the same font as reported. The present data are not comparable w ith e a rlie r

se rie s fo r fa m cooperatives published by the Fam C red it Adm inistration and

the Bureau of Labor S ta t is t ic s .

The BIS se rie s fo r nonfarm associations has been discontinued because

of the present im p o ssib ility of obtaining both a sa tisfa cto ry benchmark fig ure

fo r the to ta l number of nonfam cooperatives in a given year, and an accurate

measure of year-to-year turnover.

- 9 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 3. Supplies d istrib u ted by farmers* a sso ciatio n s,

19 50- 5 1 , net or r e t a il business

Commodity

Net S a le s j/

Amount Percent

(thousands) of to ta l

A ll commodities •••••••••

Producers* goods • • ..................

Farm machinery and equipment

Feed •

F e r t iliz e r •••••••••

Seed ••••••••••••

A

644,206 10 0

989J2BK"” 60

63,152 4

6 8 3 ,2 6 8 42

153,538 9

89,248 5

Petroleum products 3 6 6 , 0 1 3 22

Other supplies^ /. 2 8 8 ,9 8 9 18

%/ Includes purchases by marketing a sso ciatio n s; duplication of tra n sactio ns between cooperatives elim inated,

2/ Includes building m aterials, in se c tic id e s, containers, automotive supp lie s , hardware, plant equipment, as w e ll as groceries and consumer goods.

Source: Farm C red it Adm inistration M iscellaneous Report 169, March 1953,

tab le A*

Table A* R e ta il sa le s: A ll sto res and cooperative sta re s,

United S ta te s, 1948

Type of operation

A ll types «•«,,, «•«••«•

Grooery stores and other food sto re s, ,

Eating and drinking places ......................

General stores and general merchandise

group , .............................................................

Fu rn itu re , fu rn ish in g s, and appliance

group ................................................................

Automotive g ro u p ...............................

Gasoline service statio n s •••••••

F u e l, fu e l o il, and ic e •••••.••

Lumber, building and hardware group

(including farm machinery) , , , , ,

Feed, farm and garden supplies • . . •

A ll other r e t a i l ....................................... ....

[R e t a il sale s (in thou- CooperasandiiL _____ tiv e sa le s

A ll stores Coopera­ per $1 ,0 0 0

tiv e s of a l l sa le s

Z Z E U z Z ”

30, 965,674 139,863 4.52

10, 683,324 7,862 0.74

17, 134,718 37,001 2.16

6, 914,179 2,024 0 .3 0

20, 104,054 7,724 0 .3 8

6, 483,301 107,941 16.67

2,424,397 6,348 2 .6 2

11, 151,470 44,4M 4 .0 0

3, 146,859 707,264 224.75

21, 512,572 6 ,4 0 0 0 .3 0

Source: U, S , Bureau of the Census; R e ta il Trade, 1948 (B u ll, N o.l-R-0 ) ,

10 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
The to ta l volume of goods sold by cooperatives ( farm and nonfarm) to

patrons a t r e t a il In 19L8 ( the la te st year fo r which comprehensive Census

data are availab le) was s lig h tly over $1 b illio n (tab le h ). 8/ Of each $1 ,0 0 0 

spent In r e t a il sto re s, cooperatives took $8. 17. The proportion fo r various

commodities ranged from 30 cents fo r fu rn itu re , fu rn ish in g s, and appliances,

to $221*. 75 fo r feed , fa m and garden su p p lies. Cooperative sa le s in food

amounted to $U.!>2 per $1,000 of r e t a il food sa le s. Two-thirds of cooperative

r e t a il trade was accounted fo r by feed, farm, and garden su p p lies, and only

18 percent by items that were c le a rly consumer goods.

To a s s is t consumer cooperatives in improving th e ir r e t a il operations,

the Cooperative League holds An annual forum a t which store p o lic ie s and relatio n sh ip s between managers, boards of d ire cto rs, and members are discussed

by p articip an ts representing these groups. The May 1953 conference heard a

presentation of a comparative survey of the business operations of 26 cooperative urban r e t a il supermarkets, which had beeen made by Consumer D is t r ibution Corporation. The survey showed that fo r the 26 reporting stores the

gross margin was 1 5 .6 percent, expense 1 3 .8 percent, and net earnings 1 .8 

percent of sa le s. Fiv e reporting cooperative stores had net earnings exceeding 3 percent of sa le s. Some stores with larg e gross margins had high expense ra tio s . A larg e proportion of sa le s fo r the whole group were in grocery items on which the margin tends to be lower than that on produce and

meats. The operating ra tio s compare rath er unfavorably w ith those compiled

fo r combination grocery stores owned by corporations. 9/ Recommendations of the

survey to increase net earnings were! ( 1 ) increase saTes of meat and produce;

( 2 ) Improve margins on meat; ( 3 ) improve produce margins of the sm aller mark e ts; and ( U) p o ssib ly to pay higher wages, in order to a ttra c t more e f f icie n t personnel.

CREDIT UNIONS

C red it unions are the most numerous of any type of consumer-lender.

Membership is lim ited to groups having a community of in te re s t; e .g ., common

employer, or re lig io u s, fra te rn a l, union, or p rofessional groups. Their

funds are obtained so le ly through purchase of investment shares by members

and accumulation of reserves. Their assets may be used only to make loans to

members or to in vest in government se c u ritie s. Loans are made fo r fam ily

emergencies, fo r home improvement, or fo r durable goods purchases.

8 / Data published by the Farm Credit Adm inistration fo r r e t a il sa le s of

fa m cooperatives make i t appear probable that the Census understated the

to ta l volume of cooperative r e t a il trade in 19U8. However, i t is not known

whether the under-reporting affected mainly fa m or nonfam cooperatives, or

both eq ually.

9/ Comparable ra tio s fo r 769 stores in the f ir s t 10 months of 1952 (w ith

195T fig u res in parentheses) compiled by the Accounting Corporation of America

were: gross margin li+.8 ( 15. 22) , operating expense 9 .6 3 ( 9. 72) , and net profit

5*17 ( 5. 50) . Source: Mail-on-Monday Barometer of Sm all B usiness, Accounting

Corporation of America.

- 11 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
C redit union loans have rise n more sharply since 19U0 than to ta l in ­

stallm ent c re d it, re fle ctin g rapid postwar growth in number of cre d it unions,

membership, and reso u rces.10/ More recen tly, the volume of cre d it union loans

outstanding ( excluding re a l estate loans) increased 28 percent between

December 1951 and December 1952, and U2 percent between December 1951 and

May 1953 according to reports published monthly by the Federal Reserve Board*

C red it union loans in May 1953, constituted 5*2 percent of installm ent cre d it

held by a ll types of fin a n c ia l in stitu tio n s reporting, approximately the same

percentage as in December 1951*“ /

Membership of cre d it unions in the United States reached 5, 196,393 in

1951, with 2*7 m illio n members in cred it unions chartered under various

State laws and 2*5 m illio n members in cre d it unions chartered under the

Federal Credit Union Act* Loans outstanding a t the end of 1951 to ta lle d

$7U7,U76, 131, as reported to the Bureau of Labor S ta tis tic s *

Between 19U9 and 1951 membership in State chartered cre d it unions in ­

creased by 20 percent, and in fe d e ra lly chartered cre d it unions by 36 percent*

The former, with 52 percent of to ta l membership, made 60 percent of a ll loans

outstanding. This predominance a ris e s , in p a rt, because sense States pezmit

cre d it unions to make loans on re a l e state , thus ra isin g the average loan per

member* Federal cred it unions are re stricte d by law to loans covering a maximum 3-year period.

In 1952 Congress passed a law—with the approval of the c re d it union

lead ers—financing the f u ll cost of fed eral supervision of fe d e ra lly chartered cre d it unions by means of a graduated scale of fe e s, increasing w ith

siz e of a sse ts. P reviously fees had been co llected to cover only the cost

of annual examination of books* The C red it Union N ational A ssociation takes

pride in the fa c t that w ithin 20 years of passage of the Federal C red it Union

A ct, these organizations had become fin a n c ia lly s e lf-s u ffic ie n t. In 1952,

Congress also extended the Federal C red it Union Act to the V irgin Isla n d s,

thus perad-tting cre d it unions to be chartered there.

M assachusetts and New York, in 1952, raised the le g a l c e ilin g on

cre d it union loans which some other States had done previo usly. Hie e a rlie r

c e ilin g s had become too re s tric tiv e in view of advances in the general p rice

le v e l. New York also in 1952 required cre d it unions to m aintain surplus accounts proportionate to th e ir lia b ilit ie s . M assachusetts, in 1953, raised

the perm issive lim it on th e ir bank stock investm ents.

10/ Adapted from Business Conditions, Ju ly 1953, Federal Reserve Bank of

Chicago, pp. 12- 13*

11/ For more d e ta il on States see tab les in Operations of C redit Unions

in 1951, in Monthly Labor Review, February 1953, pp* 155- 158. The fig ure

(theregiven) of 12 percent of consumer installm ent loans i s not comparable

w ith the 5*2 percent fig ure (here quoted) because the Fed eral Reserve Board

has changed it s se rie s on installm ent c re d it, to include both d ire ct loans

and paper purchased by fin a n cia l in stitu tio n s (form erly only d ire ct loans

were reported); and to cover new types of fin a n cia l in stitu tio n s* For in fo rmation on subsequent years w rite to Bureau of Federal C red it Unions, U. S .

Department of H ealth, Education and W elfare.

- 12 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Puerto Rico, in 1951, strengthened it s Federation of Credit Unions

and established a Cooperative Bank to provide a source of cre d it fo r cooperativ e s , including cre d it unions.

ELECTRICITY AND TELEPHONE COOPERATIVES

E le c t r ic it y cooperatives are organized c h ie fly in ru ra l communities

by farm ers, fo r the purpose of building e le c tric power or telephone lin e s

and, sometimes, power-generating p la n ts. They are organized under State

la v s , eith e r under a sp e c ific enabling act fo r th is type of cooperative, a

general enabling act fo r th is type of cooperative, an act authorizing incorporation of nonprofit a sso cia tio n s, or in the absence of such sta tu tes, under

the general corporation law . The sp e c ific enabling acts generally give the

cooperative greater freedom to deal w ith the le g a l, engineering, and economic

problems p ecu liar to the public u t ilit y f ie ld .

The Federal R ural E le c trific a tio n Act (1936) authorized s e lf- liq u idating government loans fo r the purpose of extending e le c tric power lin e s ; by

a 19 4 9 amendment, loans were authorized fo r extending telephone lin e s in

ru ra l areas not receivin g cen tral sta tio n se rv ice . Such loans could be made

to persons, corporations, States and T e rrito rie s , m u n icip a litie s, public

power d is t r ic t s , cooperatives, and nonprofit or lim ited dividend associatio n s. In making loans fo r e le c trific a tio n , preference was to be given to

public bodies and nonprofit organizations. The p rin cip a l REA borrowers in

both programs have been cooperatives. They have received assistan ce and

supervision from the R ural E le c trific a tio n Adm inistration in accounting and

aud iting , on management and engineering problems, as w e ll as guidance in

organizational and le g a l m atters.

The N ational R ural E le c tric Cooperative A sso ciatio n , established by

these cooperatives in 1942, reported 9 00-member system* at it s 1951 conventio n .

E le c t r ic it y and telephone cooperatives depart from the ty p ic a l Bach dale

pattern in th at patronage refunds are seldom paid members do not have to

provide c a p ita l. Charges are based on costs of operation, p in s payments on

loans made by REA, provided the Adm inistrator is s a tis fie d that the p ro ject

w ill be se lf-liq u id a tin g . Any surplus is used fo r e a rlie r retirem ent of the

loan, instead of fo r patronage or stock dividends.

The cumulative record of HEA, through the f is c a l year 1953, shows 1 ,3

m illio n m iles of e le c tr ic a l lin e s energized, serving almost k m illio n ru ra l

consumers. Among the 1,079 borrowers were 98U cooperatives. (See tab les 5

and 6 ) . Close to 90 percent of a l l farms in the United States are receiving

cen tral sta tio n e le c tric current, more than h a lf of them from REA-finaneed

systems, according to REA. There has been a d ecline in loans authorized and

m iles of lin e energized, sin ce the peak war year 1950 (Table 5) . This is

attributed by the Adm inistrator of REA to attainment of the prim ary objective!,

- 13 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
namely “providing backbone cen tral statio n f a c i l i t i e s T h e Executive Manager of the N ational Rural Cooperative A sso ciation, however, an ticip ates a

continuing need fo r modernization, reconstruction, and expansion to keep up

with increasing consumption of e le c tr ic it y on farms as farmers add various

types of e le c tr ic a l equipment.

Household uses account fo r 80-90 percent of power consumption on

farms according to surveys made by the Bureau of A g ricu ltu ra l Economics*

D airy farms and poultry farm s, which use heaters and brooders, consume almost

as much as the farm home when equipped with sto ves, hotwater h eaters, laundry,

or other household appliances. An increase in d airy or poultry farming

therefore might g reatly increase the ru ra l demand fo r cu rren t. In general,

farmers tended to purchase household appliances e a rlie r than e le c tric farm

equipment. They also tended to increase th e ir power-consumption from year to

year as e le c tric home appliances and farm equipment were added,

REk borrowers assumed increasing re sp o n sib ility fo r the operation of

th e ir systems in 1952 as d etailed fed eral controls were reduced or elim inated.

Repayment of p rin cip a l and in te re st continued to exceed scheduled payments—

by as much as 27 percent in 1952, However, beginning with 1954-', the borrowers1 

scheduled payments w ill ris e more steep ly. In 1956, they w ill be almost

tw ice as high as in 1952. These increases w ill occur because most borrowers

were allowed a 2-to -5-year development period during which in te re st and princ ip a l payments were deferred, to be spread over succeeding years at a heavier

ra te .

The telephone program of REA, in e ffect only since 194-9 , has made le ss

progress. In 1952, REA personnel was being sh ifted from the ru ra l e le c t r if ication to the telephone program. As of June 30, 1952, there were 190 borrowe rs— 80 were cooperatives and 110 were commercial telephone companies, the

la tte r g enerally serving fewer subscribers than the cooperatives, (See

table 7 ) No inform ation on loan repayment is av ailab le fo r the telephone

program.

In 1953, 42,5 percent of the nation*8 farms had telephones - only

s lig h tly more than in 1920, Many of the magneto phones in sta lle d a fte r World

War I deteriorated and were not replaced . The number of telephone associatio ns serving ru ra l areas has been su b sta n tia lly reduced since the 1930* s by

consolidation, which connected iso la ted service lin e s with companies or

associations operating cen tral switchboards, REA has assisted ru ra l te le ­

phone asso ciatio ns in th e ir management, te ch n ica l, and personnel-training

problems.

- l H -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 5. Annual e le c trific a tio n programs REA,

F is c a l year ending Jane 30 M iles of lin e

energized

Consumers

oonnected

Cumulative through 19U5 . . . . ...................... 424., 072 1, 287,347

194.6......................................................................... 50,765 2 6 1 ,7 1 0

1 9 4 7 ......................................................................... 71,944 294,294

1 9 4 8 ......................................................................... 119,375 420,538

1 9 4 9 ......................................................................... 173,529 534,311

1950 ......................................................................... 178,651 473,607

1 9 5 1 ......................................................................... 1 1 6 ,1 6 2 295,536

1952 ......................................................................... 75,975 222,103

1953 ......................................................................... 60,970 382,534

Cumulative through 1953 .......................... .... 1,271,443 3 , 951,940

Source: REA Monthly S t a t is t ic a l B u lle tin , Table 3 .

Table 6 . Rural e le c trific a tio n borrowers financed by REA,

f is c a l years ending June 3°> 1935 through 1953

Type of borrower Total

number

Cumulative to ta l

loans approved

(in m illio n s)

Total 1.079.............. *2.730

Cooperatives ..... 984 2,594

Public power bodies . . 70 327

Power companies .... 25 9

Source: REA, Monthly S t a t is t ic a l B u lle tin , Table 2 .

- 1 5 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 7. R ural telephone systems borrowing from REA, 1950-52

Item

W 5

and

1951

1952

taam latlve

19U9-1552

Number of borrowers «»»•••#*• 113 77 190

Cooperative •••••••••••• 38 42 80

Other . ......................................................... 75 35 1 1 0

Loans allo cated in year (in m illio n s)* 141.3 i u . o $82.3

C o o p erative................................... $2 2 .0 $2 6 .6 $46.6

Other ...................... • •••••••• $19.3 $14*4 $33.7

Subscribers ad d ed.......................... .... 155,816 1 95,234 251,050

Source: Report of the Adm inistrator of the R ural E le c trific a tio n

A dm inistration, 1950, 1951 and 1 9 5 2 *

HOUSING COOPERATIVES

In 1950 the Bureau of Labor S ta tis tic s surveyed 165 housing cooperativ e s , w ith 2 4 ,2 5 0 members holding 1 0 ,4 0 0 acres of land on which 2 8 ,3 3 0 

dwelling u n its had been b u ilt, or were scheduled to be b u ilt .32/ The study

included a l l known associations which met the follow ing c rite ria t ( l) in itia tiv e taken by the group to be housed; (2 ) nonprofit enterprise or sponsorsh ip ; and (3 ) membership determ ination and control of p o licie s from the sta rt*

Some ad d itio n al inform ation on cooperative p rojects has been received

since 1950. A larg e apartment house, sponsored by the Omaha Education Associa tio n , was completed in Omaha in 1952 with a mortgage insured by FHA under

Section 213 of the National Housing A ct. A nonprofit, non-par-value corporatio n was organized in which 7 0 teachers each owns one share carrying one

vote, and each holds a 99-year lease on h is apartment. F in a l cost to members

ranged from $7,300 to $15, 900, w ith monthly payments from $35 to $90*50. The

cooperative manages the p ro je ct.

Greenbelt Veteran Housing Corporation, G reenbelt, Md*, (a cooperative

included in the Bureau of Labor S ta t is t ic s ' study cited above) completed purchase of housing from the government on December 31, 1952, fa r $7 m illio n .

Fam ilies who a re , or become members, acquire perpetual use of the land and

12/ Cooperative Housing in the United S ta te s, 1949- 50, Bureau of Labor

S ta tis tic s ' B u lle tin No. 1093, U . S , Department of Labor, 1951.

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
d w e l l i n g , o n m o n t h l y p a y m e n t s t o G V H C , I f d i s p o s e d o f t o a n o u t s i d e r , a p ­

p r o v a l o f G V H C m u s t b e o b t a i n e d . G V H C c o l l e c t s m o n t h l y p a y m e n t s , i n c l u d i n g 

t a x e s , m a k e s a l u m p s u m m o r t g a g e p a y m e n t t o t h e g o v e r n m e n t , a n d i s r e s p o n s i ­

b l e f o r m a i n t e n a n c e a n d g e n e r a l s u p e r v i s i o n ( e . g . , o f a n y s t r u c t u r a l c h a n g e s 

p r o p o s e d b y o c c u p a n t s . ) I t a l s o m a n a g e s t w o a p a r t m e n t b u i l d i n g s . S u b s e q u e n t 

t o t h e f i r s t g o v e r n m e n t s a l e , t h e c o o p e r a t i v e a c q u i r e d t i t l e t o 700 a c r e s o f 

l a n d f o r d e v e l o p m e n t , i n l i n e w i t h t h e o r i g i n a l t o w n p l a n . T h i s l a n d m a y b e 

d i s p o s e d o f t o n o n m e m b e r s . I n t h i s c o n n e c t i o n , s e v e r a l c o o p e r a t i v e p r o j e c t s 

h a v e m a d e a p p l i c a t i o n s t o t h e F e d e r a l H o u s i n g A d m i n i s t r a t i o n f o r d e v e l o p m e n t 

o f p a r c e l s o f t h i s l a n d .

F o u r N e w Y o r k C i t y l a b o r u n i o n l o c a l s , t w o a f f i l i a t e d w i t h t h e T e a m ­

s t e r s ( A F L ) a n d t w o w i t h t h e U t i l i t y W o r k e r s ( C I O ) , a r e j o i n t l y p l a n n i n g t o 

c o n s t r u c t a n d o p e r a t e a $21 m i l l i o n n o n p r o f i t h o u s i n g p r o j e c t f o r 2 ,0 0 0 memb e r s * f a m i l i e s . T h e i r a p p l i c a t i o n f o r p a r t i a l t a x e x e m p t i o n w a s p e n d i n g b e ­

f o r e t h e N e w Y o r k C i t y c o u n c i l i n m i d - J u n e 1953.

S e c t i o n 213 w a s a d d e d t o t h e N a t i o n a l H o u s i n g A c t o n A p r i l 20, 1950, 

i n o r d e r t o a s s i s t n o n p r o f i t c o o p e r a t i v e h o u s i n g a s s o c i a t i o n s t o o b t a i n l o w - 

i n t e r e s t , l o n g - t e r m m o r t g a g e f i n a n c i n g . T h e F e d e r a l H o u s i n g A d m i n i s t r a t i o n 

i s a u t h o r i z e d t o i n s u r e m o r t g a g e s o n t w o t y p e s o f h o u s i n g c o o p e r a t i v e s — t h e 

s a l e s t y p e o r c o - v e n t u r e s , a n d t h e m a n a g e m e n t t y p e o r a l l - t h e ^ w a y c o o p e r a ­

t i v e s . A c o ^ v e n t u r e o r s a l e s - t y p e c o o p e r a t i v e i s o n e w h i c h c o n s t r u c t s d w e l l ­

i n g s b u t d i s s o l v e s u p o n c o m p l e t i o n o f t h e p r o j e c t a n d s a l e o f d w e l l i n g s t o 

i n d i v i d u a l o w n e r s . T h e b l a n k e t m o r t g a g e w h i c h F H A h a s i n s u r e d i s r e p l a c e d 

b y i n d i v i d u a l m o r t g a g e s a s e a c h u n i t i s s o l d . A n a l l - t h e - w a y o r m a n a g e m e n t 

c o o p e r a t i v e c o n t i n u e s i n e x i s t e n c e f o r t h e p u r p o s e o f m a n a g i n g t h e p r o p e r t y 

a f t e r c o n s t r u c t i o n i s c o m p l e t e d . C o o p e r a t i v e s t a k i n g a d v a n t a g e o f s e c t i o n 

213 m a y b u i l d o n l y s i n g l e - f a m i l y d w e l l i n g s i f t h e b l a n k e t m o r t g a g e i s t o b e 

c o n v e r t e d , b u t i f t h e m o r t g a g e i s t o c o n t i n u e , t h e n e i t h e r m u l t i p l e o r s i n g l e - 

f a m i l y u n i t s m a y b e f i n a n c e d u n d e r s e c t i o n 213.

A l t h o u g h t h e p r o j e c t s f i n a n c e d b y F H A u n d e r s e c t i o n 213 a r e t e c h n i c a l ^ 

c o o p e r a t i v e s i n f o r m , t h e i n i t i a t i v e f o r t h e p r o j e c t i n m o s t c a s e s h a s c o m e 

n o t f r o m t h e g r o u p t o b e h o u s e d b u t f r o m a n o u t s i d e s p o n s o r , u s u a l l y a p r i v a t e 

b u i l d e r . " S e l f - p r o p e l l e d " c o o p e r a t i v e s h a v e e n c o u n t e r e d m a n y d i f f i c u l t i e s 

b e c a u s e o f t h e i r l a d e o f e x p e r i e n c e w i t h t h e c o m p l e x p r o b l e m s i n v o l v e d i n 

r e a l e s t a t e , c o n s t r u c t i o n , m o r t g a g e f i n a n c i n g , a n d F H A r e q u i r e m e n t s . F u r t h e r ­

m o r e , f e w c o o p e r a t i v e g r o u p s h a v e h a d t h e c a p i t a l n e c e s s a r y t o p u r c h a s e t h e 

l a n d a n d p r o v i d e f o r a l l p r e l i m i n a r y c o s t s i n v o l v e d i n l a r g e p r o j e c t s . I n 

c a s e s i n v o l v i n g s p o n s o r e d p r o j e c t s t h e s e c o s t s a r e a d v a n c e d b y t h e s p o n s o r .

I n c a s e s w h e r e t h e d w e l l i n g s a r e s o l d b y t h e b u i l d e r t o a c o o p e r a t i v e w h i c h 

c o n t i n u e s t o m a n a g e t h e p r o j e c t , t h e e n d r e s u l t i s p r a c t i c a l l y i d e n t i c a l w i t h 

t h e a l l - t h e ^ w a y c o o p e r a t i v e s .

B y t h e e n d o f M a y 1953, t h e F e d e r a l H o u s i n g A d m i n i s t r a t i o n h e d r e c e i v e d 

673 a p p l i c a t i o n s f o r m o r t g a g e i n s u r a n c e o n 82,855 d w e l l i n g u n i t s ; 242 a p ­

p l i c a t i o n s i n v o l v i n g 4-0,600 u n i t s h a d b e e n a p p r o v e d o r w e r e t i n d e r e x a m i n a t i o n .

17 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
( S e e t a b l e 8. ) E i g h t y p e r c e n t o f a l l a p p l i c a t i o n s w e r e f o r t h e m a n a g e m e n t 

t y p e a n d t w o - t h i r d s w e r e f r o m t h e N e w Y o r k a r e a . O n e h u n d r e d a n d f o u r t e e n 

p r o j e c t s , w i t h 20,950 u n i t s a n d w i t h i n s u r e d m o r t g a g e s t o t a l i n g $ 19U .7 m i l ­

l i o n , h a d e i t h e r b e e n c o m p l e t e d o r w e r e u n d e r c o n s t r u c t i o n . A n o t h e r 10 

p r o j e c t s w e r e r e a d y t o s t a r t , f u l l m e m b e r p a r t i c i p a t i o n h a v i n g b e e n a s s u r e d ; 

m e m b e r s w e r e s t i l l b e i n g r e c r u i t e d f o r 1*0 p r o j e c t s w h i c h h a d b e e n s c r e e n e d 

b y F H A . O n e o f t h e p r i n c i p a l r e a s o n s f o r t h e l a c k o f p r o g r e s s i n t h e 308 

a p p l i c a t i o n s w i t h d r a w n o r e x p i r e d ( t a b l e 8 ) w a s t h e d i f f i c u l t y o f o b t a i n i n g 

m o r t g a g e f i n a n c i n g a t t h e m a x im u m ^ - p e r c e n t s t a t u t o r y i n t e r e s t r a t e . I n 1953, 

C o n g r e s s p e r m i t t e d a r i s e i n t h e U - p e r c e n t i n t e r e s t r a t e f o r m o r t g a g e f i n a n c ­

i n g u n d e r s e c t i o n 213. F H A a d m i n i s t r a t i v e r u l e s h a v e r a i s e d t h e r a t e s — n o t 

t o t h e f u l l e x t e n t p e r m i t t e d b y l a v — b u t t o 1* J p e r c e n t o n b l a n k e t m o r t g a g e e 

a n d t o 1*3* p e r c e n t o n r e l e a r n e d i n d i v i d u a l m o r t g a g e s .

T a b l e 8 . P r o g r e s s o f c o o p e r a t i v e h e n s i n g p r o j e c t s u n d e r s e c t i o n 213 

o f N a t i o n a l H o u s i n g A c t , M a y 1953

N u m b e r o f - - - - V a l u e

I t e m P r o j e c t s D w e l l i n g

u n i t s

( i n

m i l l i o n s )

T o t a l a p p l i c a t i o n s r e c e i v e d • • • • • • • 673_____ 82.855 1788.9

A c t i v e c a s e s • • • • • • • • • • • • • • 242 40,601 382.1

M o r t g a g e s i n s u r e d 114 20,950 194.7

C o m m i t m e n t s o u t s t a n d i n g • • • • • • • 10 1,619 1 6 .3

E l i g i b i l i t y s t a t e m e n t s o u t s t a n d i n g • • A 0 5,738 5 2 .6

A p p l i c a t i o n s i n p r o c e s s • • • • • • • 78 12,314 138.5

E l i g i b i l i t y s t a t e m e n t s e x p i r e d • • • • 60 4,673 4 3 .1

C a s e s w i t h d r a w n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 248 20,080 1 9 8 .4

C a s e s r e j e c t e d • • • • • • • • . • • • 123 17,501 165.3

S o u r c e : F e d e r a l H o u s i n g A d m i n i s t r a t i o n .

-1 8 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
M E D I C A L C A R E C O O P E R A T I V E S

I n t h e f i e l d o f m e d i c a l c a r e , t h e c o o p e r a t i v e f o r m o f o r g a n i z a t i o n i s 

b a r e l y d i s t i n g u i s h a b l e f r o m o t h e r t y p e s o f c o n s u m e r - s p o n s o r e d , o r c o n s u m e r - 

c o n t r o l l e d g r o u p h e a l t h p l a n s . T h e v o l u n t a r y f e d e r a t i o n i n t h i s f i e l d , t h e 

C o o p e r a t i v e H e a l t h F e d e r a t i o n o f A m e r i c a ( C H F A ) , i n c l u d e s p l a n s b a s e d o n t h e 

f o l l o w i n g f i v e p r i n c i p l e s t p r e p a y m e n t , c o m p r e h e n s i v e c a r e , g r o u p p r a c t i c e , 

o w n e r s h i p a n d m a n a g e m e n t o f f a c i l i t i e s b y a v o l u n t a r y m e m b e r - a s s o c i a t i o n , a n d 

d e m o c r a t i c c o n t r o l o f t h e e c o n o m i c a n d b u s i n e s s a s p e c t s , ( i n a l l p l a n s , t h e 

m e d i c a l s e r v i c e s m u s t b e u n d e r t h e d i r e c t i o n o f a p h y s i c i a n . ) A l t h o u g h t h i s 

l a s t c r i t e r i o n i s s i m i l a r t o o n e o f t h e c a r d i n a l R o c h d a l e p r i n c i p l e s , s o m e 

p l a n s b e l o n g i n g t o C H F A a r e g o v e r n e d b y b o a r d s o f d i r e c t o r s r e p r e s e n t i n g , 

b u t h o t e l e c t e d b y , l a r g e g r o u p s o f u s e r s . S o m e a r e j o i n t l y m a n a g e d b y e m ­

p l o y e r s a n d u n i o n s , a s r e q u i r e d b y t h e T a f t - H a r t l e y A c t i f t h e e m p l o y e r c o n ­

t r i b u t e s t o t h e p l a n u n d e r a c o l l e c t i v e - b a r g a i n i n g a g r e e m e n t . S t i l l o t h e r 

p l a n s , s p o n s o r e d b y l a b o r u n i o n s f o r t h e b e n e f i t o f u n i o n m e m b e r s a n d t h e i r 

f a m i l i e s , a r e s u b j e c t t o t h e s a m e g e n e r a l m e m b e r s h i p c o n t r o l a s o t h e r u n i o n 

a c t i v i t i e s .

I n D e c e m b e r 1952, o n l y 16 p l a n s w e r e a f f i l i a t e d w i t h C H F A , b u t t h e y 

s e r v e d 802,000 p e r s o n s . T h e r e w e r e t h i r t y - t h r e e p l a n s w h i c h w e r e r e g a r d e d 

a s R o c h d a l e c o o p e r a t i v e s j i . e . , s u b j e c t t o c o n t r o l b y t h e p l a n m e m b e r s h i p o n 

t h e b a s i s o f o n e v o t e p e r m e m b e r . T h e s e p l a n s h a d a c o m b i n e d m e m b e r s h i p o f

200,000 i n 1951, a n i n c r e a s e o f 14 p e r c e n t s i n c e 1949j 11 o f t h e s e p l a n s h o w ­

e v e r , d e c l i n e d s l i g h t l y i n m e m b e r s h i p . F o u r c o o p e r a t i v e h e a l t h p l a n s b e g a n 

o p e r a t i n g a n d f i v e c e a s e d o p e r a t i n g a s c o o p e r a t i v e s d u r i n g 1951.

T h e C o o p e r a t i v e H e a l t h F e d e r a t i o n o f A m e r i c a a s s i s t s c o o p e r a t i v e a n d 

o t h e r g r o u p s i n s e t t i n g u p c o n s u m e r - s p o n s o r e d m e d i c a l c a r e p l a n s , l o b b i e s f o r 

f a v o r a b l e l e g i s l a t i o n , c o l l e c t s f u n d s t o a s s i s t g r o u p s i n v o l v e d i n l i t i g a t i o n , 

a n d r e n d e r s t e c h n i c a l a d v i s o r y s e r v i c e o n o p e r a t i n g p r o b l e m s . I t p r o v i d e s

2- o r 3- d a y f o r u m s a t w h i c h o r g a n i z a t i o n , s e r v i c e s , f a c i l i t i e s , f i n a n c i n g , a n d 

t h e i n t e r r e l a t i o n s h i p s o f g r o u p h e a l t h p l a n s a r e p e r i o d i c a l l y d i s c u s s e d . D u r ­

i n g 1952 t h e C o o p e r a t i v e H e a l t h F e d e r a t i o n e n l i s t e d t h e s e r v i c e s o f a n u m b e r 

o f s p e c i a l i s t s t o s e r v e a s m e d i c a l , l e g a l , a n d a c c o u n t i n g c o n s u l t a n t s t o 

g r o u p s w i s h i n g t o e s t a b l i s h h e a l t h p l a n s . I n 1953, t h e t h i r d a n n u a l G r o u p 

H e a l t h I n s t i t u t e a t S t . L o u i s , M o . b r o u g h t t o g e t h e r 100 a c t i v e r e p r e s e n t a t i v e * 

o f 29 g r o u p m e d i c a l p l a n s i n t h e U . S . a n d C a n a d a . T h e c o n f e r e n c e a g e n d a i n ­

c l u d e d s t u d y o f t h e L a b o r H e a l t h I n s t i t u t e o f t h a t c i t y , w h i c h s e r v e s 14,000 

m e m b e r s o f A F L T e a m s t e r s * L o c a l #688 a n d t h e i r d e p e n d e n t s , w i t h p h y s i c i a n s 

s e r v i n g o n a p a r t - t i m e b a s i s . R e p o r t s t o t h e c o n f e r e n c e i n d i c a t e d t h a t d u r ­

i n g t h e l a s t f e w y e a r s u n i o n - s p o n s o r e d a n d e m p l o y e r - f i n a n c e d p l a n s h a v e i n ­

c r e a s e d i n n u m b e r a n d s c o p e , w h i l e o t h e r c o n s u m e r - s p o n s o r e d p l a n s h a v e e x p e ­

r i e n c e d d i f f i c u l t y i n f i n a n c i n g e x p a n s i o n b e c a u s e o f t h e h i g h c o s t o f n e w 

p l a n t a n d e q u i p m e n t .

T h e 20 p r i n c i p l e s ( a p p e n d i x A ) d r a f t e d b y a j o i n t c o m m i t t e e o f l a y m e n 

a n d p h y s i c i a n s i n 1949, a s a b a s i s f o r c o o p e r a t i o n b e t w e e n t h e m e d i c a l p r o ­

f e s s i o n a n d n o n - p r o f i t g r o u p h e a l t h p l a n s , a p p e a r t o b e s l o w l y g a i n i n g l o c a l

- 19 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
a c c e p t a n c e . R e l a t i o n s h i p s b e t w e e n t h e o r g a n i z e d m e d i c a l p r o f e s s i o n a n d t h e 

c o n s u m e r - s p o n s o r e d m e d i c a l c a r e p l a n s s h o w e d s o m e i m p r o v e m e n t i n 1952 a n d 

1953, a i d e d b y c o u r t d e c i s i o n s . L o c a l m e d i c a l s o c i e t i e s o p e n e d t h e i r m e m b e r ­

s h i p r o l l s t o g r o u p - h e a l t h p h y s i c i a n s i n C a l i f o r n i a , W a s h i n g t o n , O k l a h o m a a n d 

T e x a s — i n t h e f i r s t t w o S t a t e s f o l l o w i n g c o u r t d e c i s i o n s .

A c o n s u m e r - s p o n s o r e d h e a l t h p l a n i n S a n D i e g o , C a l i f . , o b t a i n e d a f a ­

v o r a b l e c o u r t d e c i s i o n i n M a r c h 1952; a m o n t h l a t e r a s u i t i n v o l v i n g t h e 

B e c k h a m C o u n t y M e d i c a l S o c i e t y a n d t h e C o m m u n i t y - H o s p i t a l - C l i n i c i n E l k C i t y , 

G k l a . , w a s s e t t l e d o u t o f c o u r t . H o w e v e r , a M i n n e s o t a s u i t b y T w o H a r b o r s ' 

H o s p i t a l a n d C l i n i c a g a i n s t t h e l o c a l M e d i c a l S o c i e t y i s s t i l l p e n d i n g . I n 

A p r i l 1952, t h e U n i t e d S t a t e s S u p r e m e C o u r t a f f i r m e d a d i s t r i c t c o u r t ' s d i s ­

m i s s a l o f t h e G o v e r n m e n t ' s s u i t a g a i n s t t h e O r e g o n S t a t e M e d i c a l S o c i e t y 

w h i c h h a d a l l e g e d v i o l a t i o n o f t h e S h e r m a n A n t i - T r u s t A c t ( U . S . v . O r e g o n 

S t a t e M e d i c a l S o c i e t y , 343, U . S . 326) . T h e S u p r e m e C o u r t h e l d t h a t — s e v e n 

y e a r s p r i o r t o t h e c o m m e n c e m e n t o f t h e s u i t — t h e c o n d u c t o f t h e O r e g o n d o c ­

t o r s , h a d u n d e r g o n e a s i g n i f i c a n t c h a n g e w h e n i n 1941 t h e s o c i e t y o r g a n i z e d 

i t s o w n p r e p a i d m e d i c a l c a r e p l a n . D u r i n g t h e i n t e r v e n i n g p e r i o d s i n c e 1941, 

f u r t h e r m o r e , n u m e r o u s d o c t o r s h a d a c c e p t e d p a y m e n t s f o r s e r v i c e s r e n d e r e d t o 

t h e p l a n s t h a t h a d f o r m e r l y b e e n b o y c o t t e d b y t h e i r s o c i e t y .

A n a l m o s t u n i v e r s a l o b s t a c l e t o g r o u p h e a l t h p l a n s h a s b e e n t h e c o m m o n 

l a w p r i n c i p l e , p r o h i b i t i n g t h e p r a c t i c e o f m e d i c i n e b y a c o r p o r a t i o n . T h e 

p r i n c i p l e , , w h i c h i s i n t e n d e d t o p r e v e n t i n j u r y t o t h e p u b l i c b y c o m m e r c i a l e x ­

p l o i t a t i o n a n d d e b a s e m e n t o f p r o f e s s i o n a l s t a n d a r d s , h a s b e e n s p e c i f i c a l l y 

i n c o r p o r a t e d i n s o m e S t a t e m e d i c a l p r a c t i c e l a w s . T h i s d o c t r i n e h a s b e e n s e t 

a s i d e , u n d e r s a f e g u a r d i n g c o n d i t i o n s , i n s o m e S t a t e s b y s t a t u t e , i n o t h e r s b y 

c o u r t d e c i s i o n s w h e r e i t w a s s h o w n t h a t t h e g r o u p p r a c t i c e o f m e d i c i n e w a s 

n o t o p e r a t e d f o r p r i v a t e p r o f i t a n d c o m p l i e d w i t h p r o f e s s i o n a l s t a n d a r d s ; ( A n 

o u t s t a n d i n g c a s e i s t h a t o f t h e D i s t r i c t o f C o l u m b i a G r o u p H e a l t h A s s o c i a t i o n )

A c t s s p e c i f i c a l l y a u t h o r i z i n g n o n p r o f i t g r o u p h e a l t h p l a n s , c o n t r o l l e d 

b y l a y m e n , h a v e b e e n p a s s e d i n 13 S t a t e s . 13/ b u t n o n e w a c t s h a v e b e e n p a s s e d 

s i n c e 1951. T w e n t y - n i n e S t a t e s h a v e l a w s a u t h o r i z i n g t h e o p e r a t i o n o f p r e p a y ­

m e n t m e d i c a l c a r e p l a n s , c o n t r o l l e d b y p h y s i c i a n s ( s o - c a l l e d B l u e S h i e l d 

p l a n s ) . 14/ T h r e e S t a t e s ( I l l i n o i s , M a s s a c h u s e t t s , a n d W i s c o n s i n ) h a v e l a w s 

w h i c h p e r m i t b o t h t y p e s o f p l a n s . N i n e S t a t e s h a v e n o e n a b l i n g a c t s . 15/

13/ C o n n e c t i c u t , I l l i n o i s , M a r y l a n d , M a s s a c h u s e t t s , M i s s i s s i p p i , N e w M e x i c o ^ 

N e w Y o r k , O k l a h o m a , O r e g o n , S o u t h D a k o t a , T e x a s , W a s h i n g t o n , a n d W i s c o n s i n .

14/ A l a b a m a , A r i z o n a , C a l i f o r n i a , C o l o r a d o , F l o r i d a , I d a h o , I l l i n o i s , I o w a , 

K a n s a s , K e n t u c k y , L o u i s i a n a , M a i n e , M a s s a c h u s e t t s , M i c h i g a n , M i n n e s o t a , 

M o n t a n a , N e w H a m p s h i r e , N ew J e r s e y , N o r t h C a r o l i n a , N o r t h D a k o t a , O h i o , 

P e n n s y l v a n i a , R h o d e I s l a n d , S o u t h C a r o l i n a , T e n n e s s e e , V e r m o n t , V i r g i n i a ,

W e s t V i r g i n i a , a n d W i s c o n s i n .

15/ A r k a n s a s , D e l a w a r e , G e o r g i a , I n d i a n a , M i s s o u r i , N e b r a s k a , N e v a d a , U t a h , 

a n d W y o m i n g .

- 20 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
L a w o f t h e B l u e S h i e l d t y p e , i t h a s b e e n a l l e g e d , c o n s t i t u t e a s e r i ­

o u s o b s t a c l e t o t h e f o r m a t i o n o f c o n s u m e r - c o n t r o l l e d p l a n s , b e c a u s e t h e y 

e i t h e r c o n f e r a n e x c l u s i v e p r i v i l e g e u p o n t h e d o c t o r - c o n t r o l l e d c o r p o r a t i o n , 

o r r e q u i r e t h a t t h e p l a n b e o p e n t o a l l , o r a l a r g e p e r c e n t a g e o f , q u a l i f i e d 

p h y s i c i a n s , t h u s i n e f f e c t b a r r i n g a n o r g a n i z e d g r o u p - p r a c t i c e c l i n i c >16/ 

C o n s u m e r - c o n t r o l l e d p l a n s t h a t p r o v i d e s e r v i c e b e n e f i t s t h r o u g h t h e i r o w n f a ­

c i l i t i e s , h o w e v e r , a r e o p e r a t i n g i n 4- S t a t e s w h e r e t h e o n l y e n a b l i n g s t a t u t e 

i s t h e B l u e S h i e l d t y p e , i n 10 S t a t e s h a v i n g s p e c i f i c e n a b l i n g a c t s , a n d i n 3 

S t a t e s h a v i n g n o l a w o n t h i s s u b j e c t .

t a l o n s i n i t i a t e d a n u m b e r o f d e v e l o p m e n t s i n t h e h e a l t h f i e l d i n 1952 

a n d 1953* T h e I n t e r n a t i o n a l . A s s o c i a t i o n o f M a c h i n i s t s ( 1F L ) s t a r t e d a n a t i o n ­

w i d e p r s g r a m , h e a d e d b y a p h y s i c i a n , t o a i d m e m b e r l o c a l s i n d e v e l o p i n g i n ­

s u r a n c e o r g r o u p h e a l t h c e n t e r s , T h e S a n F r a n c i s c o T r a d e s a n d L a b o r C o u n c i l 

U i L ) i s p l a n n i n g i t s o w n h e a l t h c e n t e r . T h e U n i o n E y e C a r e C e n t e r , C h i c a g o ,

111. , w h i c h p r o v i d e s s e r v i c e s f o r 70 A F L a n d C I O l o c a l u n i o n s , c o m p l e t e d i t s 

f i r s t y e a r i n M a r c h 1953; m e m b e r s o f t h e s e u n i o n s , w i t h t h e i r d e p e n d e n t s , n u m ­

b e r 90, 000. T h e S i d n e y H i l l m a n H e a l t h C e n t e r i n N e w Y o r k C i t y , f i n a n c e d 

j o i n t l y b y t h e A m a l g a m a t e d C l o t h i n g W o r k e r s o f A m e r i c a ( C I O ) a n d t h e N e w Y o r k 

C l o t h i n g M a n u f a c t u r e r s * E x c h a n g e , i n 1953 d e c i d e d t o e q u i p t w o a d d i t i o n a l 

f l o o r s , a t a c o s t o f $ 250, 000. T h e U n i t e d M i n e W o r k e r s W e l f a r e F u n d ( i n d . ) i s 

p l a n i r t w g t o b u i l d 10 h o s p i t a l s i n m i n i n g a r e a s w h i c h l a c k a d e q u a t e m e d i c a l 

f a c i l i t i e s . S o m e g r o u p p r a c t i c e c l i n i c s h a v e b e e n o r g a n i z e d b y t h e u n i o n t o 

s e r v e m i n e r s a n d t h e i r f a m i l i e s .

T h e H e a l t h I n s u r a n c e F l a n o f G r e a t e r N e w Y o r k ( a c o m m u n i t y - w i d e p l a n , 

n o t a c o o p e r a t i v e ) s e r v e s 380,000 p e r s o n s i n c l u d i n g t h e m e m b e r s h i p s o f m a n y 

l o c a l u n i o n s a n d g r o u p s o f c i t y e m p l o y e e s f o r w h o m t h e c i t y p a y s h a l f o f t h e 

p r e m i u m s . I t a d d e d t h r e e m o r e h o u s i n g d e v e l o p m e n t s t o i t s m e m b e r s h i p i n 

1952, m a k i n g a t o t a l o f e i g h t i n w h i c h 75 p e r c e n t o f t h e t e n a n t s h a v e m a d e 

a p p l i c a t i o n f o r c o v e r a g e . . A b o u t 6,000 p o l i c e m e n a n d t h e i r d e p e n d e n t s h a v e 

a l s o b e e n e n r o l l e d r e c e n t l y .

16/ S e e L a w A f f e c t i n g G r o u p H e a l t h P l a n s b y H o r a c e R . H a n s e n i n I o w a 

L a w R e v i e w , 1950, v o l . 35 ( p . 209) ; a n d C o o p e r a t i o n i n M e d i c i n e , M i n n e s o t a 

L a w R e v i e w , 1? 51, v o l . 35 ( p . 373) .

- 21 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
A P P E N D I X A . SU M M A R Y O F P R I N C I P L E S A D O P T E D B Y A M E R IC A N M E D IC A L

A S S O C I A T I O N , F O R L A Y ^ S P O N S O B E D V O L U N T A R Y H E A L T H P L A N S ( 1949) . ? /

I . T h e p l a n s h a l l h e n o n p r o f i t , p a y i n g n o d i v i d e n d s t o b e n e f i c i a r i e s o r o t h e r s . 

S u r p l u s s h a l l b e u s e d f o r s e r v i c e s , f a c i l i t i e s , d o c t o r - c o m p e n s a t i o n , o r 

r e s e r v e s #

2 # I t i s u n e t h i c a l f o r a p h y s i c i a n t o s e r v e a n o r g a n i z a t i o n o r g r o u p w h i c h 

w i l l d e r i v e a d i r e c t p r o f i t f r o m h i s f e e s o r c o m p e n s a t i o n .

3 # T h e p l a n s h a l l b e a d e q u a t e l y f i n a n c e d a n d o r g a n i z e d w i t h o u t c a p i t a l s t o c k .

A # T h e p l a n s h a l l b e o p e r a t e d u n d e r a n a u t o n o m o u s a d m i n i s t r a t i o n , o r t r u s t , 

w i t h s e g r e g a t e d f u n d s , d e v o t e d e x c l u s i v e l y t o p r o v i s i o n o f h e a l t h s e r v i c e s .

5# P r o m o t i o n , s a l e s a n d a d m i n i s t r a t i v e e x p e n s e s s h a l l b e m i n i m a l .

6 # Q u a l i t y o f m e d i c a l s e r v i c e s h a l l b e a t h i g h e s t p o s s i b l e l e v e l a n d s h a l l 

m e e t S t a t e s t a n d a r d s .

7 # T h e p l a n s h a l l p r o v i d e a l l s e r v i c e s p r o m i s e d t o b e n e f i c i a r i e s i n a g r e e ­

m e n t .

8 . E a c h b e n e f i c i a r y s h a l l r e c e i v e a c l e a r s t a t e m e n t o f t e r m s o f a g r e e m e n t r e 

s e r v i c e s , b e n e f i t s a n d l i m i t a t i o n s .

9 . A m o u n t o f d u e s s h a l l b e c l e a r l y s t a t e d a n d s h a l l b e a d e q u a t e f o r p r o p e r 

f i n a n c i n g o f t h e r i s k s i n v o l v e d .

10. N o p r o m o t i o n a l m a t e r i a l s h a l l p u b l i c i z e s k i l l o r a t t a i n m e n t s o f p a r t i c i ­

p a t i n g p h y s i c i a n s .

I I . C o m p e n s a t i o n o f p h y s i c i a n s m a y t a k e a n y f o r m n o t c o n t r a r y t o AMA e t h i c s 

r e c o n t r a c t p r a c t i c e .

12. A n y d u l y l i c e n s e d a n d q u a l i f i e d p h y s i c i a n i n t h e c o m m u n i t y w h o w i s h e s t o 

p a r t i c i p a t e i n t h e p l a n , w h o a g r e e s t o i t s t e r m s a n d m e e t s i t s s t a n d a r d s , 

s h a l l b e a d m i t t e d t o t h e p l a n .

13. P r o s p e c t i v e b e n e f i c i a r i e s s h a l l b e t o l d t h e n a m e s o f p a r t i c i p a t i n g p h y s i ­

c i a n s , a n d s h a l l h a v e f r e e d o m o f c h o i c e , w i t h i n r e a s o n a b l e g e o g r a p h i c a n d 

p r o f e s s i o n a l l i m i t a t i o n s .

14. G o v e r n i n g b o d y s h a l l n o t i n t e r f e r e w i t h t h e m e d i c a l s t a f f i n t h e p r a c t i c e 

o f m e d i c i n e . C o n f i d e n t i a l d o c t o r - p a t i e n t r e l a t i o n s h i p s h a l l b e p r e s e r v e d .

V J o u r n a l o f t h e A m e r i c a n M e d i c a l A s s o c i a t i o n , J u n e 26, 39l j9 , p p . 686- 687.

22 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
15* M e d i c a l s t a f f s h a l l p a r t i c i p a t e i n d e l i b e r a t i o n s o f t h e g o v e r n i n g b o d y 

a n d i t i s r e c o m m e n d e d t h a t r e p r e s e n t a t i v e s o f t h e m e d i c a l p r o f e s s i o n 

s h o u l d b e m e m b e r s o f t h a t b o d y ,

16# A l l s e r v i c e o u t s i d e t h e c o n t r a c t s h a l l b e p a y a b l e b y b e n e f i c i a r y t o p h y s i ­

c i a n o n wa f e e - f a r - e e r v i c e b a s i s

17* H o s p i t a l s c o n n e c t e d v i t h p l a n s h a l l b e o p e r a t e d i n a c c o r d a n c e w i t h s o u n d 

p u b l i c p o l i c y *

I S * T h e r e s h a l l b e n o d i s c r i m i n a t i o n i n r a t e s , b e n e f i t s , t e r m s , a n d c o n d i ­

t i o n s f o r a l l p e r s o n s i n t h e s a m e c l a s s *

19* R e s e r v e f u n d s s h a l l b e p r u d e n t l y i n v e s t e d *

20* P l a n s d e s i r i n g a p p r o v a l s h a l l a g r e e t o r e g u l a t i o n a n d p e r i o d i c r e v i e w b y 

a n a p p r o p r i a t e a c c r e d i t i n g b o d y o f AM A i n c o n s u l t a t i o n w i t h t h e p l a n ' s 

s p o n s o r s *

23

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
A P P E N D I X B . SU M M A R Y C F - S T A T E L E G I S I A T I O N , 1952

Of t h e 12 l e g i s l a t u r e s i n r e g u l a r s e s s i o n i n 1952, 6 e n a c t e d n o l a v s 

o n c o o p e r a t i v e s ( A r i z o n a , K e n t u c k y , L o u i s i a n a , M i s s i s s i p p i , R h o d e I s l a n d ,

S o u t h C a r o l i n a ) . T h e o t h e r 6 S t a t e s p a s s e d l a v s o f m i n o r i m p o r t a n c e t o 

c o o p e r a t i v e s :

C o l o r a d o a m e n d e d i t s i n c o m e t a x l a v t o e x e m p t c r e d i t u n i o n s f r o m t a x 

o n n e t i n c o m e , p r o v i d e d 85 p e r c e n t o r m o r e o f g r o s s i n c o m e i s d e r i v e d f r o m t h e 

b u s i n e s s o f m a l r i n g l o a n s t o m e m b e r s o r f r o m i n v e s t m e n t i n U . S . b o n d s . O t h e r 

c o o p e r a t i v e s ( f o r m e r l y a l s o e x e m p t ) a r e n o w r e q u i r e d t o r e p o r t a n d t o i n c l u d e 

i n t h e i r g r o s s i n c o m e a l l d i s t r i b u t i o n s a n d a l l o c a t i o n s . I n d i v i d u a l s a r e 

p e r m i t t e d t o e x c l u d e f r o m t h e i r g r o s s i n c o m e c o o p e r a t i v e r e f u n d s o r r e b a t e s 

i f e x p e n d e d f o r p e r s o n a l , l i v i n g , o r f a m i l y e x p e n s e s . C o o p e r a t i v e s a t e a l l o w e d 

t o d e d u c t a m o u n t s a l l o c a t e d , c r e d i t e d o r p a i d t o m e m b e r s a s p a t r o n a g e d i v i ­

d e n d s , r e b a t e s o r r e f u n d s - d u r i n g t a x a b l e y e a r o r w i t h i n t h r e e m o n t h s o f i t s 

e n d ; R E A - f i n a n c e d c o o p e r a t i v e s m a y d e d u c t s u c h a m o u n t s c r e d i t e d o r p a i d o r 

a l l o c a t e d t o c u s t o m e r s a n d m e m b e r s , ( c h . 4 7 , L a v s o f 1952) , £ / I n e f f e c t , 

C o l o r a d o h a s a d o p t e d t h e p a t t e r n o f F e d e r a l t a x a t i o n o f c o o p e r a t i v e s .

M a s s a c h u s e t t s a d o p t e d m i n o r a m e n d m e n t s c o n c e r n i n g c r e d i t u n i o n o p e r a ­

t i o n s a n d c o o p e r a t i v e b a n k s ( r e s p e c t i v e l y , o h . 8 8 , 95, 162, 163, 91; 149 a n d 

257, l a v s o f 1952) .

M e w Y o r k m a d e s l i g h t c h a n g e s i n t h e l a v s r e g u l a t i n g c r e d i t u n i o n s ( c h . 

268 a n d 307, L a v s o f 1952) .

w t f t t r f g a n r e q u i r e d a l l c o r p o r a t i o n s ( p r o f i t , n o n p r o f i t , o r c o o p e r a t i v e ) 

t o p a y a n o r g a n i z a t i o n f e e a n d a n a n n u a l f e e f o r t h e p r i v i l e g e o f d o i n g b u s i ­

n e s s i n t h e S t a t e ( P . A . 180 a n d 183) . C o o p e r a t i v e s w o u l d b e p e r m i t t e d t o 

o p e r a t e a s n o n p r o f i t o r g a n i z a t i o n s , p r o v i d e d t h e y e n g a g e d i n b u y i n g a n d s e l l ­

i n g p r o d u c t s f o r m e m b e r s w i t h o u t d i r e c t p e c u n i a r y g a i n ( P , A . 23) . I t h a s 

b e e n p o i n t e d o u t t h a t t h i s m i g h t r u l e o u t p a t r o n a g e r e f u n d s , s o t h a t o n l y 

c o s t - p l u s b u y i n g c l u b s w o u l d b e a b l e t o q u a l i f y .

N e w J e r s e y , b y p r o c l a m a t i o n o f t h e s e c r e t a r y o f s t a t e , d i s s o l v e d 60 

c o o p e r a t i v e a s s o c i a t i o n s w h i c h h a d f a i l e d t o f i l e a u d i t o r s ' r e p o r t s f o r t h r e e 

c o n s e c u t i v e y e a r s a s r e q u i r e d b y l a v .

V i r g i n i a a u t h o r i z e d i t s C o r p o r a t i o n C o m m i s s i o n t o w i t h h o l d a c e r t i f i ­

c a t e f r o m a c r e d i t u n i o n w h e n i t h a s r e a s o n t o b e l i e v e t h a t i t h a s b e e n f o r m e d 

f o r o t h e r t h a n l e g i t i m a t e c r e d i t u n i o n b u s i n e s s , o r t h a t t h e m o r a l f i t n e s s , 

f i n a n c i a l r e s p o n s i b i l i t y , a n d b u s i n e s s q u a l i f i c a t i o n s o f i t s o f f i c e r s d o n o t 

c o m m a n d c o n f i d e n c e ( c h . 22) .

S t o c k i n a g r i c u l t u r a l c o o p e r a t i v e s m a y b e r e g i s t e r e d i n t h e n a m e o f 

t w o o r m o r e p e r s o n s , p a y a b l e t o a n y o n e o f t h e m a s a s u r v i v o r ( c h . 166) .

2/ B o t h f a i m a n d n o n f a n a c o o p e r a t i v e s a t e p e r m i t t e d t o d e d u c t f r o m H x e i r 

g r o s s t a x a b l e i n c o m e , a m o u n t s p a i d o r a l l o c a t e d t o p a t r o n s a s d i v i d e n d s o r 

p a t r o n a g e a n d a m o u n t s p a i d a s i n t e r e s t ^ o r d i v i d e n d s o n c a p i t a l s t o c k .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
APPENDIX C. RECENT DEVELOPMENTS IN CONSUMER COOPERATIVES

IN OTHER COUNTRIES

For reasons of space, tills review Is United to Canada and certain 

countries of Western Europe. It is not meant to imply that there have been 

less interesting developments elsewhere. In Asia and Africa, producer and 

agricultural credit societies, with governmental encouragement and assistance, 

have become Important in the economy of a number of countries; consumer cooperatives are less well developed in these areas.

Canada.3/ Distributive cooperatives, in Canada, as in the United States are 

organised chiefly by farmers. The 1952 report indicates little progress to 

date in organizing consumer cooperatives in the urban centers of Canada. However, separate data are not available for nonfam consumer cooperatives.

During 1951-52 (year ending July 31) 3,838 cooperatives engaged in marketing agricultural products, purchasing supplies, or providing services for 

their members. A total of 2,19b societies with 1,163,803 members engaged in 

marketing or purchasing, or in a combination of tne two; 83 fishermen's cooperatives had lU,6m members and did #20 million worth of business; 339 

"Service* cooperatives had 195,027 members and did #8.1 million worth of 

business. Since some persons belong to several cooperatives, the grand total 

of 1,373* U71 members includes duplication. The number of societies and members reported was somewhat lower than in the preceding year.

While the marketing of members' produce is the leading cooperative 

activity, Canadian farm cooperatives are increasing their purchasing of supplies for farm and household use. Merchandise sales constituted 20.3 percent 

of total cooperative business in 1952 compared to 5 percent twenty years ago. 

This type of business increased by #38 million (18 percent) between 1951 and 

1952, the biggest annual increase since 1932. The total volume of .pupplypu re ha sing reached #21*8,050,700. Much of this business is combined with marketing* However, separate cooperative retail stores sold an estimated #111; 

million worth of goods in 1952. The proportion of total retail trade accounted Tor cooperativesstores is somewhat higher than in the United States but is 

not above 2 percent.

Cooperative wholesales, owned by 1,710 local cooperative associations, 

operate in every Canadian province accept Newfoundland. Eleven wholesales 

sold about #70 million worth of business in supplies to member associations, 

in 1952. These wholesales also carried on a somewhat larger volume of marketing business (#95.5 million). A total of 339 "service" cooperatives with 

195,027 members, assets of #32 million, and revenue of #$«U million in 1952 

provided hospital and medical care, housing, transportation, electricity, 

and operated undertaking establishments, restaurants, student boarding houses, 

and recreation facilities.

3/ This account is based on Cooperation in Canada 1952, Twenty-first 

Annual Summary, Department of Agriculture, Ottawa, July 1953*

■ 25 •

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
In addition to the associations included in the statistics shown, Bare 

than 4 0 0 provincial farmers* mutual fire insurance companies carried risk insurance of $2.5 billion* A Cooperative Fire and Casualty Company was incorporated under a special federal act of June 30, 1951 and began to write fire 

and automobile insurance July 1, 1952*

The following table shows the commodity groups supplied to Canadian 

members and patrons in 1952:

Commodity groups

W *-—^ jiupdot or • 

8S0oe£atl0h0*y

„ Value ct sales

Dollars

(thousands)

Percent

Total................. . . • 1.683___ 248.050 100.0

907 96,142 38.7

Food products * ........ • • • • • • • • 790 56,456 25*5

Petroleum products and auto accessories• • 639 25,966 10.5

Coal, wood, building materials.......... 15,822 6*4

Clothing and home furnishings .......... 474 7,871 3*2

Machinery and equipment • • • • • • • • • 358 16,532 6.7

Miscellaneous . . • • • • • • • • • • • * 964 27,261 11.0

1/ Associations handling more than one commodity group are counted more 

than once* Some associations also market produce of members.

Great Britain. Consumer cooperatives have grown steadily since 1938 in membership, volume of business, and proportion of total retail trade handled, 

according to reports by the government* e Registrar of Friendly Societies 

(including cooperatives) and estimates made by the Cooperative Union (the 

national federation of cooperative societies).

In 1952 membership had reached almost 11 million - an increase of 2 

peroent over 1951, and 31 percent over 1938, while population had increased 

only 6 percent. (See table p>21» Between one-fourth and one-4ialf of British 

families are now believed to hold membership in cooperatives engaging in retail trade. Volume of business increased between two-and three-fold; however 

when adjusted for the rise in the price level, the increase was only about 

15 percent. The percentage of national consumers* expenditures for goods and 

services of types handled by cooperatives, rose from 8.9 percent in 1938 to 

9*3 percent in 1951. According to the 1950 retail trade census, cooperatives 

constituted 5 percent of all retail establishments and handled 12 percent of 

all retail trade (compared with 0.2 peroent of the establishments and 0.8 pea* 

cent of sales in the IT* S.). The cooperative share of retail sales in certain 

lines is as follows: dairy products, 35 percent; specialized grocery stores, 

29 percent; other food, 16 peroent; coal, 15 percent; men*s and women*s wear, 

14 peroent; furniture, 9 peroent; and drugs, 6 peroent.

26

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Great Britain Cooperative Trading Societies, 193S, 1951, and 1952

1938 1951 1952 _

Wholesale societies ............ . . . 2 2 2

Member societies • 1,800 1,500 1,500

Sales (million S )]J. 153.5 435.8 482.2

Retail societies-number . . . . . . . . 1,168 1,109 1,107

Members (thousands) • • • • • • • • 8,357.8 10,744.6 10,931.5

Sales (million & ) . . ......... 262.4 649.8 704.2

tttvidends ox sales

Million h ..................... 23.6 38.2 35.6

Percent of sales • • . • • • • • 9.0 5.9 5.1

1/ h i equalled $4,89 in 1938, In 1951 and 1952 the official rate of 

exchange was fixed at $2,80, This rate does not necessarily provide an accurate measure of differences in purchasing power of a unit of currency in 

idH'ttfo eotmfcrtsa

Source* Reports of Registrar of Friendly Societies, London,

27

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
As part of a national survey of personal incomes and savings made by 

the Oxford University Institute of Statistics in the spring of 1952, information was obtained on investment in cooperative societies, by income and 

occupation of head of income unit^/ The sample studies showed membership in 

a cooperative society for 23 percent of the income unitsj 26 percent of the 

skilled manual workers, 21 percent of the unskilled, 1? percent of the clerical and sales workers, 20 percent of the managers, and 15 percent of the 

self-employed. One-third of the units with incomes in the &400-599 bracket^/ 

belonged to cooperatives. Most cooperative members had small investments; 

nearly half reported owning a single L 1 ($2.80) share; more than two-thirds 

reported owning shares worth less than L 10 ($28).

Reduction in the rate of patronage refunds since prewar is being 

studied by a special Committee of the Cooperative Union. Dividends on sales 

have been and still are at a much higher rate than is usual in the United 

States; the overall rate was 9 percent of sales in 1938, and in 1952, 5.1 

percent. The decline has been partly explained by the government's regulation 

of retailers* gross margins as part of its price control program (only recently 

discontinued); another factor is the practice of paying refunds on total 

amount of purchases including heavy excise taxes on tobacco and other goods.

The highlight of the 84-th annual congress held by the Cooperative 

Union in 1953 was the unanimous adoption of a report on social ownership and 

consumer problems, stressing cooperative ownership as an alternative to 

nationalization. Advantages urged for the cooperative form were its greater 

opportunities for the exercise of democratic control by the membership. 

The report indicated some apprehension lest a conflict develop between advocates of further nationalization and the cooperatives, particularly in areas 

rhere cooperatives have extended their control vertically over a related 

jroup of industries. The report criticized "the facade of consumer representation without really effective consumer influence" in the nationalized 

industries, and noted that centralization had removed "something which existed in municipal enterprises namely.the direct responsibility of the municipal government to local risers of gas, electric current and water, and the 

ready channels available for communication of consumer grievances.

U/ National Survey of Personal Incomes and Savings, by H. F. Iydall in 

Bulletin of the Oxford University Institute of Statistics, June and July 

1953* vol. 15, nos. 6 and 7, pp. 208-209.

W At the official exchange rate of $2.80 « fi 1, this bracket amounts to 

$1,1?0-$1,680 a year.

- 28 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Scandinavia. Although consumer cooperatives in Denmark, Norway, and Sweden 

continued to increase their volume of sales in 1950-51, the increase was not 

substantial when adjusted for upward changes in the price level. In Norway 

and Sweden, cooperatives’ wholesale trade increased more than their retail 

trade.

In 1950 Swedish cooperatives accounted for 15 to 20 percent of all 

retail trade and for an even higher proportion of sales of foodstuffs. Cooperative membership included 993,000 families, or between one-third and onehalf of the population. Wage earners constituted 51.4- percent of the membership of consumer societies in 1951. The Swedish cooperative movement is the 

largest single employer of labor (next to the government) with 51,000 employees. In the cooperatives* establishments, works committees and special committees have been concentrating on the improvement of productivity and working efficiency#

In order to assist local societies in improving their store layouts 

and techniques and in building more self-service stores as well as warehouses, the Swedish Cooperative Union and Wholesale Society floated a loan 

in 1952 of which 68 million kroner had been subscribed by April— more than 

doubling its outstanding bond issues. (One krone - 19*3 cents U. S# at the 

official rate of exchange).

As in Great Britain, the Swedish cooperatives have helped to head off 

or slow down nationalization. In Sweden, they have specifically opposed 

nationalization of the oil industry.

Sweden adopted a special law to provide for the incorporation of cooperatives, effective January 1, 1953, replacing a 1911 Act which applied to 

both cooperatives and profitmaKing enterprises.

The centenary of consumers* cooperation in Norway was reached in 1951. 

In 1950, one-fifth of all Norwegian families were enrolled in cooperatives - 

more than twice as many as before World War II. In 1951, approximately 13 

percent of national retail trade in foods, textiles, shoes, and household 

goods (amounting to 705 million kroner) was carried on by cooperatives. There 

were 282,166 members enrolled in 1,097 consumers* societies in 1952, which 

did a business worth 801,847,000 kroner in 1952. (1 krone ■ 19.3 cents UJS. 

at the official rate of exchange). On sales to members a patronage refund 

of 1.3 percent was paid. Almost as large ail amount was ploughed back into 

the societies' reserves and other funds. The Norwegian cooperative law was 

amended in 1952 to permit societies to operate in more than one county or 

municipality and to permit societies operating more than one store to sell to 

nonmembers. During World War II, the old prohibitions had been suspended.

The Oslo society, in early 1953, operated about 75 stores.

Bow to safeguard consumer interests was the subject of an official 

committee report to the Norwegian Government in 1953* It recommended a 

Consumer Federation, with a secretariat to deal with prices, production, distribution, supplies, rationing, quality control, standards, research and information. „

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Denmark, like Norway prior to 1951, still has legislation prohibiting 

common ownership of two or more shops in a municipality, and operating both 

a retail store and a producing enterprise. Revision of this obsolete legislation was demanded by the KFB (Urban Cooperative Union) in January 1953 but 

was opposed by the conservative press, which feared that a change might lead 

to the "American" system of retailing, and eliminate many of Denmark1 s 25,OCX) 

small shopkeepers.

The 1,900 Danish consumer cooperatives had 460,000 members in 1951 

who, with their families, lnoluded from one-fourth to one-third of the total 

population. The annual volume of business in 1951 totaled 950 million Kronen 

(One Krone s 14*46 U. S. cents) or about 10 percent of the nation's retail 

trade.

France. ^ French consumer cooperatives were handicapped by World War II initiation even more than those of other countries. Holdings of members were 

limited by lav to 500 francs per person until a recent modification raised 

the wwHmmn to 3,000 francs ($8.50 at the official rate of exchange). Not 

all members have increased their holdings to the new limit. Both the national wholesale society and the member locals are reported to be short of funds 

for investment in needed facilities. A government-established Central Fund 

far Cooperative Credit, for providing long-term credit, has also been handicapped by receiving only small appropriations. The cooperatives have their 

own Central Bank of Cooperatives for short-term borrowing. Finally, the 

French taxation system favored the small shopkeeper and tended to penalize 

large-scale operations, including those of cooperatives.

Cooperative trade accounts for 3 to 8 percent of total trade in commodities which cooperatives handle. The following figures show the extent 

of consumers* cooperation in France at the end of 1951.

1951

Number of local societies • .......... 947

Membership......... 2,552,000

Number of stares ........ . . . . . . . 7,586

Sales— million francs ••••••..• 87,723

million dollars ••••*••• 250.6

Wholesale society........... •••• 1

Direct sales— million francs • • • • 9,000

million dollars • • • • 25.7

Commission sales— -million francs . . . . 45,000

million dollars . . . 128.6

West Germany.^/ In 1946 the Central Association of German Cooperatives was 

re-established; German cooperatives had been liquidated in two actions by the 

Nazis in 1935 and in 1941* The Association represents consumer interests at

6/ This account is based on a memorandum on Consumer Cooperation in 

France, by Thoraten Odhe, 1953*

7/ This account is based on D.G.B. News Letter of June 1953* published by 

Executive Cased.ttee of German Federation of Trade Unions.

- 30 -

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
the federal and local level, on legislative and administrative matters; engages in cooperative education, training, research and publicity; and audits 

books of member cooperatives. During 1952 cooperatives sought repeal of a 

long-standing, but unenforced statutory provision which prohibited sales to 

nonmembers. In September 1952 the question of restitution of cooperative 

property confiscated by the Nazis was finally settled in principle, although 

each case must still be adjudicated.

In 1951 it was estimated that 11 percent of the population belonged 

to families having membership in a cooperative, compared to 30 percent of 

the population in 1930. Cooperative members have been increasing rapidly in 

recent years; the rise from 1951 to 1952 was 15 percent. At this time total 

membership was 1,835,774-. A total of 7,389 stores was operated in 1952; 

sales totaled 1,34-0 million Deutsche mark. (One DM - 23*81 U* S. at the official rate of exchange).

The wholesale purchasing company of Germany, Consumers Cooperatives 

(GIG), which also engages*in production and importing, continued to make 

progress during 1952.

In re-establishing the central Association, particular effort was 

made to avoid duplication of functions, and to achieve simplification of 

structure and greater efficiency in management. Towards this end, the boards 

of the association and the wholesale (which share a headquarters building) 

hold joint meetings weekly to discuss organization, finance, administration, 

and broad policies in respect to production and trade. 2/

8/ Out of the Ashes, in The Cooperative Official, June 295>3, Manchester 

England.

☆ U. S. GOVERNMENT PRINTING OFFICE: 1954 O— 289150

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis