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II-III



COOPERATION



IX THE



MIDDLE STATES.



JOHNS HOPKINS UNIVERSITY STUDIES

IN

HISTORICAL AND POLITICAL SCIENCE

HERBERT B. ADAMS, Editor



History Is past Politics and Politics present History Freeman



SIXTH SERIES
II- III

COOPERATION IN THE MIDDLE STATES

By EDWARD W. BEMIS, PH. D.



BALTIMORE

PUBLICATION AGENCY OF THE JOHNS HOPKINS UNIVERSITY
1888



COPYRIGHT, 1888, BY N. MURRAY



BALTIMORE:
FROM THE PRESS OF GUGGENHEIMER, WEIL & Co.

1888.



TABLE OF CONTENTS.



PAOB
INTRODUCTION 141

I. DISTRIBUTIVE COOPERATION 141

1. Philadelphia Industrial Cooperative Society 143

2. Mechanics' Store Co. of Seneca Falls, N. Y 145

3. Trenton Cooperative Society 145

4. Brunswick Cooperative Store 146

5. Phoenixville Cooperative Society 147

6. Neshannock Cooperative Society 149

7. Kingsland Cooperative Society 149

8. Fruit Growers' Union 149

9. Recent Stores 150

10. Table of Gross Profits 152

II. PRODUCTIVE COOPERATION 156

1. At Troy, N. Y 156

2. At Rochester, N. Y 158

3. Frankford Cooperative Company 160

4. Chester, Pa., Manufacturing Co 160

5. Other Companies 161

6. Solidarity 162

7. Legislation Needed 166

III. PROFIT-SHARING ' 168

1. A. S. Cameron & Co 168

2. Brewster & Co 168

3. Rogers, Peet & Co 171

4. Haines, Jones & Cadbury 174

5. John Mundell & Co 175

6. John Wanamaker 175

7. Nelson Lyon 177

8. Wood, Morrell & Co 179

9. Alfred Dolge 180

IV. COOPERATIVE BUILDING ASSOCIATIONS 183

139



COOPERATION IN THE MIDDLE STATES.



Having had occasion to refer to the early history of co-
operation in these states, in describing the achievements in
New England of the New England Protective Union and of
the Sovereigns of Industry, it is unnecessary for me to con-
sider this early period again at any length. Protective
Union stores selling goods at cost flourished for a short
time in many places, but had almost entirely disappeared
prior to the civil war.

The first important date in the history of distributive
cooperation in the field of our present study is December
16, 1862, when Union Cooperative Association No. 1, of
Philadelphia, was organized. This appears to have been
the first store in America organized on the Rochdale plan.
One of its founders, Mr. Thos. Phillips, late labor candi-
date for mayor in Philadelphia, has furnished an account of
the enterprise. On behalf of the association he obtained
from the Rochdale Pioneers of England their constitution
and other documents, which furnished the model for the
store opened in April, 1864, with twenty- three members.
Dividends on trade and all the familiar principles of English
cooperation were adopted. Sales rapidly increased, until a
business of $7,751.34 was done in the second quarter of
1866. But the great rock upon which cooperative enter-
prises are likely to split was encountered. Expenses were
suffered to increase faster than trade. It often pays in pri-
vate business to incur heavy expenses at the start in adver-
tising. But where there is so little general interest in
cooperation as to render such a course necessary in coopera-
tive undertakings, the enterprise is almost sure to fail. It
is the slow but steady growth, with expenses for rent, wag-

141



142 Cooperation in the Middle States.

ens, teams, fuel, and all other purposes, below ten per cent,
of the trade, that alone leads to enduring success. Mr.
Phillips tells the whole story when he writes :

" Everything at this time looked promising. Sales, membership
and stock were increasing. Public meetings were held and every
effort made to establish the store at the new stand. But the cry
that the store must go to the people, instead of the people must
come to the store, was the loudest, and consequently branches No.
1, 2 and 3 were established. Trade and membership did not in-
crease in proportion to the outlay. Profits ceased. Business fell
off and Branch No. 1 was closed, being located among a class of
people who cared not for cooperation. The summer soldiers and
sunshine cooperators began to withdraw their stock and throw a
wet blanket over the concern."

In November, 1866, the store was closed. "It was a
great disappointment," writes Mr. Phillips. " Our hearts
were set on success, but it was our fate to fail."

Yet the record of this first American experiment on the
Eochdale plan is not wholly one of failure. From 1862 to
1866 there was published in Philadelphia the organ of
American trades-unions, FincJier's Trades' Review, which
was very friendly to cooperation, carried far and wide
news of the above store, and thus led to the organization of
many others. Most of these failed, but not all. Out of
the experience of failure has come success, until now, as will
soon be shown, strong societies have arisen to demonstrate
that the growing intelligence and spirit of cooperation of
American workmen can transform the experiments of a
few so-called dreamers into practical means of social re-
form. As described in the previous chapters, the Sovereigns
of Industry established many stores in the Middle States.
Extravagant expenses, mistaken methods, incompetent man-
agers, and, chief causes of all ills, jealousy and ignorance
among cooperators who would not cooperate, led to the
same results as in New England. A detailed description of
all this would be fruitless. I propose rather to confine my-
self to such existing enterprises as have survived all perils
and proved their right to exist.



The Philadelphia Industrial Society. 143

THE PHILADELPHIA INDUSTRIAL COOPERATIVE SOCIETY
(Limited) is the largest and one of the oldest cooperative
societies in the country. Organized in 1874 on the Roch-
dale plan described in the chapters on New England, this
company, with its central store and three branches, did a
business in its twelfth year ending November 13, 1886, of
$171,278.04, divided as follows :

Groceries, $123,636 16

Meat, 19,772 11

Dry Goods, 8,908 33

Boots and Shoes, 13,499 94

Coal, 5,461 50



$171,278 04

No dividends on sales of coal are made. On the rest of
the trade $5,302.10 dividends were paid to members
fixed and $764.14 to non-members. The latter received a
dividend of three per cent, on their purchases. Mem-
bers receive from three to eight per cent, trade dividends as
the business permits, besides six per cent, interest on stock.
Trade is exclusively for cash. Every member must deposit
twenty-five cents on applying for membership and pay for
five shares of one dollar each in four monthly or two quar-
terly installments. No one can own more than two hundred
shares or have more than one vote. All share capital re-
ceives six per cent, interest. Three negative votes of the
Board of Directors, or five other negative votes on appeal to
a general meeting of the society, will exclude a member.
Any member can withdraw all his shares but five on suffi-
cient notice to the directors. Two weeks' notice is required
for the withdrawal of ten shares, and four weeks for the
withdrawal of fifty. Any member may, with the consent
of the directors and subsequent confirmation of the society,
transfer his shares to any other person. On the death of a
member his shares may be transferred to his heirs or resold
to the company, as the heirs may prefer. Should the



144 Cooperation in the Middle States.

directors have more cash on hand than they can profitably
invest, they may reduce the number of shares held by mem-
bers, beginning with those holding the most shares. All
the fixed stock is depreciated six per cent, quarterly. Audit-
ors examine the accounts quarterly. No director can vote
in awarding contracts to any business in which he is inter-
ested, nor, if he becomes bankrupt or insolvent, can he hold
any office in the society.

The capital in the hands of 2,355 members is about
$40,000, half of which is invested in the store buildings and
other property connected therewith, which, it is estimated,
would sell for $9,000 more than the value credited to it.
Only groceries were sold prior to 1880, when the other de-
partments were added. The dry goods store was badly man-
aged. Unsaleable goods were credited at their full value,
until a close inventory in 1885 revealed an alarming defi-
ciency and led to the abandoning of this department, the
management of which the present directors do not feel com-
petent to undertake. Again, careless bookkeeping and in-
efficient auditing during 1884-5 led to considerable diminu-
tion in the profits. But with a better general manager
and a more competent bookkeeper the company seems des-
tined to resume the rapid growth which characterized its
earlier years. Five per cent, of the net profits are placed
to the account of the reserve fund, which now amounts to
$4,500, and the financial standing of the society is excellent.

It was shown in the account of eleven representative and
successful cooperative companies in New England, doing a
business of over half a million dollars a year, that the aver-
age percentage of running expenses to trade was only 7.8.
In Philadelphia the percentage is eleven, which is much too
high, and explains the comparatively low dividends on trade
of four and five per cent, common in recent years. The
larger the store the smaller should be the percentage of ex-
pense to business done. As the store has demonstrated its
ability to live and prosper, criticism may seem idle. It is
perfectly evident, however, that with less expense, which



The Trenton Cooperative Society. 145

onght to be perfectly practicable, greater success would
follow.

THE MECHANICS' STORE COMPANY OF SENECA FALLS,
N. Y., which began business November 1, 1872, on the
Rochdale plan, has sold over $200,000 worth of goods, and
after paying from six to eight per cent, on the paid-in capi-
tal of $265.44, has paid dividends of $5,137.50 to members
and non-members, according to their trade, and accumu-
lated a surplus of over $2,000. The profits would have
been greater were it not for trusting, which has caused a
loss of three-fourths of one per cent, on the amount of sales.
Goods are sold at five per cent, below market prices, but
nevertheless $467.94 profits were divided in 1886 on a trade
of $13,054.77.

The secretary, Samuel Waller, writes :

" We find from our experience of fourteen years that the greatest
obstacles to the success of cooperation are the ignorance and preju-
dices of those who are to be benefited by these cooperative business
enterprises. They are so extremely suspicious and selfish that it
takes but little effort and labor of the middlemen and their friends,
enemies to cooperation, to become disloyal to the principle and the
association of which they may be members."

THE TRENTON COOPERATIVE SOCIETY.

This very prosperous society, which began business on
the Rochdale plan with a capital of $700 April 30, 1885,
did a business in 1886 of $49,958.20, on an average capital
of between $3,000 and $4,000, in $5 shares. These shares
may be paid for in weekly payments of fifty cents each.
Very little trusting is done. The total expenses last year
were 9.1 per cent, of the trade, or allowing for the rent
that the company would have been obliged to pay if it
had not owned the store, 10.2 per cent. This moderate
percentage of expenses, combined with prevailing high retail
prices in the city, permitted of a dividend during 188&
of $5,950.42, or one quarterly dividend of twelve per cent.,
two of fourteen per cent., and one of fifteen per cent., to

10



146 Cooperation in the Middle States.

members on every dollar's worth of goods purchased by
them, and half the percentage to non-members, besides
paying six per cent, interest on capital, appropriating
$352.95 to a reserve fund, $163.70 to an educational fund,
and $250 to a land fund for the payment of a building
recently purchased for $10,000, for the store and for other
purposes. From the profits of each quarter there is thus
set aside a sum equal to ten per cent, per annum on the
unpaid balance on the real estate owned by the society.
This land fund will pay for the property in a few years,
and make the society one of the strong financial insti-
tutions of the state.

A better showing could not well be asked for. No
wonder the membership grew from 193 at the close of 1885
to 420 at the close of 1886, and the paid-up capital from
$2,430.94 to $5,787.12. One of the shareholders informed
the writer that already the dividends on his trade, with the
six per cent, interest on stock, had increased his $5 share
to $60, which was left in the business. The possibilities of
accumulating capital in this way are almost unknown to
the masses. Yet the only difference between this store and
scores that have failed lies in the intelligent comprehension
of the members of the real conditions of success.

THE BRUNSWICK COOPERATIVE STORE.

This society, organized on the Kochdale plan August 15,
1881, and doing a business in 1886 of $25,937.57 on a cap-
ital of $3,248.67, owned by 115 persons in $5 shares, is
evidently tinder too great expense to permit high dividends,
since the expenses for wages, rent and incidentals are thir-
teen per cent, of the trade. The several quarterly divi-
dends on trade in 1886 averaged four per cent, on the
trade of members, and two per cent, on that of non-
members. Interest of one and a-half per cent, quarterly
is paid on capital, five per cent, of the remaining profits
are held as a contingent or sinking fund until a sum equal



The Phcenixville Cooperative Society. 147

to thirty per cent, of the capital stock is accumulated. Of
the remaining profits, two and a-half per cent, are placed
to the credit of an educational fund, as in the Trenton
Society just described, to be disposed of by the board of
trustees, subject to the approval of the members at any
regular or special meeting. As in all the societies thus far
described, non-members receive half as large a per cent,
dividends on their purchases as members. As in some
English stores, a dividend is also paid on the wages of
employes of about the same amount as on the trade of
members. This idea, which seems quite in accord with
the spirit of cooperation, prevails in very few American
societies.

THE PHCENIXVILLE COOPERATIVE SOCIETY.

This society, at Phoenixville, Chester county, Pennsyl-
vania, was organized on the Rochdale plan January 12,
1885. The first year the sales amounted to $17,880, and
in 1886 to $31,864.90. Quarterly dividends were paid on
the members' trade of six per cent., and half as much to
non-members. A dividend of five per cent, was also paid
on the salaries of employes. About six per cent, of the
sales of groceries, boots and shoes, was to members. Coal
was sold at a reduction of a dollar a ton below previous
market rates. Whatever else the store has accomplished,
it has certainly forced all the merchants of Phcenixville to
reduce greatly their prices.

The stock of the association in one dollar shares, of
which every member must have at least five, grew from
January, 1886, to January, 1887, from $2,173.24 to
$4,928.36, and the number of members from 125 to 180.
No member can own more than 500 shares. On being
admitted to membership in the association a fee of fifty
cents is paid and five shares of stock subscribed for, which
may be paid by installments of ten cents a share a month,
the first installment being not less than one dollar. These



148 Cooperation in the Middle States*

first five shares are not withdrawable, but may be trans-
ferred. Stock in excess of five shares may be withdrawn
on notice, which varies in time from one to twelve weeks,
according to the amount to be withdrawn.

Dividends on trade, as well as the six per cent, interest
on stock are often left in the society to increase the capital.
The stock of members is thus in several cases increased
from twenty to three hundred per cent, and upward a year,
according to the amount of their trade. No trusting is
done. The expenses were only 8.4 per cent, of the trade in
1886 a good exhibit, which alone enabled the store to with-
stand the fierce competition and tempting offers of credit of
the rival stores.

Mr. M. G-. Lippert, of the Board of Directors, thus writes :

" I may add that we are doing now, after a two years' struggle
against competition of the storekeepers and indifference on the
part of our own members, a fair business, although not by far as
well as we ought to, if our people knew their own interest. And it
is a curious fact that the workingman more than any other class of
people stands aloof with suspicion and distrust, although the enter-
prise was founded by workingmen and for their interest. I think,
however, the pernicious credit system in vogue at the other stores
is a great disadvantage to us. On the whole we are satisfied with
what we are doing ; at the same time we find it necessary to stir up
our members continually, as they are apt to become indifferent. It
is no doubt true that the workingmen of America do not take to
cooperation as kindly as those of England or the Continent. What
the cause of this apparent indifference, if not distrust, may be, I am
at a loss to know. Perhaps it is because it has never been tried
here on a large scale or with marked success. The few associations,
like our own, or the Philadelphia Cooperative Association, are like
oases in the desert."

A partial answer to our friend's queries may be found in
the fact that American workmen have hitherto largely de-
spised the small economies of trade, have been migratory in
habits, too independent in character to desire union with
any one, and ignorant of the advantages of the cash system
and the results of English cooperation. Education, organi-
zation, and experienced managers for such enterprises, with



The Fruit Growers' Union. 149

the legal prohibition of pluck-me, or company stores, and
the tendency toward weekly payments of wages, are fast
paving the way for practical cooperation on an extensive
scale in America.

The NESHANNOCK COOPERATIVE SOCIETY, of Neshan-
nock, Mercer county, Penn., which commenced business
on the Rochdale plan in May, 1873, has now a paid-in capi-
tal of over $6,800 in five-dollar shares, owned by ninety-
three persons. No one can hold more than one hundred
shares. The interest on capital is only four per cent. The
yearly trade is about $23,000, on which $2,116.64 profits
were divided in 1886, giving nine and a-half per cent, divi-
dends on thB trade of members, and half as much on the
trade of non-members. There is no trusting save to mem-
bers, and to, them only when they place sufficient shares of
their stock in the hands of the secretary as collateral to
cover such indebtedness. Business is not growing much,
because the works at this place are nearly exhausted, but
the cooperative store claims to secure the largest share of
the business of the district.

THE KINGSLAND COOPERATIVE ASSOCIATION, of Kings-
land, N. J., organized in 1884, on the Rochdale plan, has
sales of about $20,000 a year, and keeps its expenses down
to about eight per cent, of that, by which means, and by care-
ful management in other ways, the dividend in 1886 on
the trade of members amounted to ten per cent. Interest
of seven per cent, on capital was paid. This showing is
very good for a small town only nine miles from New York,
on the Delaware, Lackawana & Western R. R., and thus
open to the competition of the large city stores.

THE FRUIT GROWERS' UNION" AND COOPERATIVE SO-
CIETY, of Hammonton, N. J., organized in 1867, and
reorganized in 1884, had a membership, February, 1887, of
533, and net assets of $8,096.60. All kinds of merchan-



150 Cooperation in the Middle Mates.

dise, including agricultural implements, fertilizers, hay,
coal, etc., are sold. The trade in 1886 was $45,940.45, on.
which a dividend of five per cent, was paid to members and
two and a-half per cent, to non-members. Goods are sold
very low, and this dividend is only made possible by the
low ratio, only 4.8 per cent., of expenses to trade. Six
per cent, interest is paid on stock, and five per cent, of the
net earnings are set aside for a contingent fund until this,
shall reach thirty per cent, of the capital employed.

The society was organized for the purpose of handling
fruit to advantage, which is still the business most impor-
tant to members; 3,286,302 pounds were thus shipped in

1886. The society receives two per cent, commission on.
the gross sales of all fruit of the members, and the rail-
road, in consideration of services rendered, pays a per-
centage on fruit shipped to eastern markets. This account
is kept separate from the store business, division is made
on the net earnings of this department, and paid to ship-
pers pro rata in stock. The shipping department owns the
plant and charges the store rent, in order to keep the ac-
counts separate, as there are some customers at the store who
are not shippers, and vice versa.

At Karitan, N. J., a store was opened in January, 1886,
which is controlled by the employes of the Karitan Woollen
Mills. The sales, confined to these employes, amounted in
the first six months to $35,795.25, on which a six and a-half
per cent, trade dividend was given according to the Roch-
dale plan.

Several interesting experiments in distributive cooper-
ation have been started too recently for one to judge of their
probable success. One of the most promising is the Buffalo.
Pioneer Cooperative Society, which had a capital March 1,

1887, of $2,063.66 in twenty-five dollar shares in the hands
of three hundred stockholders. The store, when visited,
had just been opened in a good brick block, and reported
a trade of nearly four hundred dollars a week at the start.
The method of dividing purchases is curious. Twenty per



Trenton Cooperative Business Association. 151

cent, of the net profits are paid as interest on capital, thirty
per cent, as dividends on the trade of all, whether members
or not. Fifteen per cent, goes to a reserve fund, twenty-
five per cent, to a building fund, and the remaining ten per
cent, to an educational fund. The twenty-five dollar shares
may be paid for at the rate of twenty-five cents a week.
No one can own more than one share. Believing that
ignorance is the great foe of cooperation, the directors
propose to have a library and reading room in connection
with the store, and already for a year have been issuing a
monthly paper called The Pioneer Codperator, which must
exert a good influence in favor of the store and of other
cooperative enterprises, which it is hoped will in time be
started in Buffalo.

The Trenton Cooperative Business Association, of Tren-
ton, N. J., which began to sell groceries in June, 1886, is
now doing a business of about $6,000 a month with a cap-
ital of $8,000 in twenty-five dollar shares, owned by two
hundred and fifty stockholders, but will have to reduce its
expenses and trust less if it would long continue. The
expenses prior to January, 1887, were 16.8 per cent, of the
sales, and the bills and accounts receivable for seven
months' business were reported as $2,299.25. The man-
ager, however, was confident when visited that there would
be a ten per cent, dividend in June, 1887, on the trade of
members, and five per cent, on the trade of non-members,
besides interest at the rate of 7.3 per cent, on capital.

The statistics of cooperative stores conducted on the
Rochdale plan furnish material for determining in some
measure the much discussed question as to the costs of
retail trade in those departments like groceries and meat
where competition is keenest. Since many of these stores
keep accurate accounts and claim to sell at prevailing mar-
ket prices, though very likely a little below, it is easy to
determine the average increase in price to the consumer
over that charged by the wholesaler. The following table
has been prepared with this end in view, stores being



152



Cooperation in the Middle States.



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