The Nonpartisan Leader Newspaper, April 5, 1920, Page 8

Farm Credits and Marketing in Europe How the Experience of Foreign Co-Operators May Be Applied In last week’s Leader Professor Roylance told of the condition of Europe in the middle of the nineteenth cen- tury, before the beginning of the modern co-operative movement. In the new industrial age agriculture was _forgotten ' and abandoned. The farmers were separated from the laboring classes and separated from each other. Only a small group of public-spirited men were interested enough to try to save the situation. -BY W. G. ROYLANCE 1T IS not strange that some of the men who had concerned themselves with the revival of agriculture should have given way to profound discourage- ment. Fortunately some of these courageous men were wise enough to find in the very isolation of the villages the ele- ments out of which the new industrial and social fabric could be constructed. They found the village group a compact social unit, and made this fact the basis of the new industrial system they aimed to create. They saw that the basis of successful co-operation is confidence among the co-operators, and that confidence would necessarily be confined within the village limits, as. the acquaintance of the villager did not ex- tend beyond them. An individual vil- lager could not secure financial assist- ance from without, for the very good reason that no one able to extend as- sistance knew anything about him. The rural reformers therefore began with the local communities. They or- ganized them into mutual credit societies, which received the savings of members and made loans out of this capital, sup- . plemented with whatever it was possible to secure outside, on the pooled credit of the entire group. In some instances help was extended by the church or by private philanthropists, and in a few in- stances by local or state governments. But on the whole credit societies depend- ed upon their own associated strength. JOINT RESPONSIBILITY AND JOINT BENEFITS The principle of unlimited liability for all obligations was almost universally adopted, each member being liable to the extent of his entire property, what- ever the size of his loan, and even whether he received any loan or not. This was deemed necessary to protect their own savings and to give each mem- ber of an association that vital interest in all of its business that alone would as- sure its success. As the founders of the movement predicted, the fact of unlimit- ed liability eéstablished a confidence in the association so strong that rarely was any one ever called upon to make good losses due to the failure of another to pay his loan; and on the other hand the association soon found- that it could se- cure outside money solely upon its bare ~ promise to pay, sustained by the pledged unlimited liability of its members and the fact that the joint productive ability of the community was always greater than its joint obligations. The villagers simply capitalized their own average honesty and efficiency. The European rural eo-operative associations are never operated on the profit basis. In other words, they are real co-operative organizations. Many issue no shares, while others issue shares that-have merely a moral value, as indicating in each case the amount sub- scribed for the support of the association. The vot- ing is by individuals, without regard to shares, and incidental profits are distributed according to the business done through the association. That is, if it had been decided to pay 3 per cent on deposits and to charge 4 per cent for loans to members, and it turned out that the cost of the business was only one-half of 1 per cent, the remaining one-half of 1 per cent might be returned pro rata to depositors and borrowers. In like manner where an associa- tion bought or sold products for its members, if a margin of say 10 per cent had been allowed to cover expenses, and it turned out that the cost was: only 5. per cent, the remaining 5 per cent was re- in Our Own Country turned to the_ purchasers in proportion to the re- spective amounts of their purchases. Therefore there were two principles underlying these credit organizations—that of equal service and that of mutual and unlimited responsibility. These two principles can really be reduced to one— that of mutuality. There were mutual responsibil- ity and mutual benefit. For the purposes of the association capital was regarded as essentially a community possession. Each individual pledged his support to the extent of all his property, and therefore the entire property of the co-operative community was pledged. But each man benefited, not in proportion to the amount of his property, but in proportion to the amount of business trans- acted through the association on his behalf. The association kept open the channels of credit and trade for all, affording to each the opportunity to use them to the extent of his ability. The indi- vidual enjoyed separate control of capital insofar l TOO BIG TO BE PUNISHED? I ¢ AW e N W —Drawn expressly for the Leadcr by W. C. Morris, When illegal business gets too big to be handled by ordinary methods there is one thing left to do and that is to devise new methods. It has been proved, conclusively enough, during the past few months that existing methods are unable to handle the profiteering problem. A few petty suits against price-raising grocers and milk dealers will not accomplish anything; fundamental reforms are what is needed. Pro- fessor Roylance shows in his article how European farmers met some- what similar difficulties by co-operation. action combined are being used by the farmers and workers today. only as he used it himself. In addition he received whatever rate of interest on his savings, over and - above what -he had use for, the gg-operative asso- ciation agreed upon. The community fixed the val- ue of capital, and exercised all the power incident to the possession of capital. Individual initiative, ‘enterprise, invention, skill, labor are left free, and are rewarded according to what they accomplish. There is a premium placed upon exceptional ability to the extent that incidental profits are distributed proportionately to the use made by each of the facilities supplied through co-operation. In other words; the benefits of individually used capital are assured to the individual while the pow- er that goes with combined capital is taken by the community and used for the benefit of all individ- uals, separately and associatively. The community uses the accumulations of all individuals to finance the industry of each and all. It at the same time PAGE EIGHT b Co-operation and political protects individual industry and secures to the whole people safety from want that would result from a decline of individual efficiency. By adhering closely to these principles the Euro- pean co-operative associations have been almost universally successful. Nor has their success been limited to separate village communities in which the movement began. By means of their asso- ciated responsibility they have obtained access to the great reservoirs of credit in the financial cen- ters, and, what is still more important, they have confederated the local associations and founded regional banks and central buying and selling agencies. They have in many instances become financially stronger than any private organizations operating in the same territory, and in some cases their securities have sold higher than the bonds of the governments themselves. They have built up and extended mutual confidence, until it has become nation-wide. They have done more. In some in- stances, as in that of the Danish Co- Operative Wholesale society, they have successfully established trade with other countries, in the face of the most stren- uous opposition from great monopolistic joint-stock concerns, operating for prof- it. They have proved that the principles of co-operation are of nation-wide, and may be of world-wide application. APPLYING EUROPEAN EXPERIENCE TO AMERICAN CONDITIONS In applying the experiences of other countries to our own problems, the first thing to be recognized is that there is nothing in the underlying principles of co-operation that makes it necessary to confine operations to local communities. There is no fundamental reason why we should begin at the bottom instead of at the top. There is no fundamental prin- ciple according to which we need be bound by territorial considerations at all. All that is necessary is community of in- terests and the ability of the individuals concerned to recognize its existence. Common interests may exist between next-door neighbors, or between persons separated from each other by thousands of miles; between persons who never see each other, and between persons who have other interests entirely in conflict. Complete communijty of interest is not necessary to successful co-operation. “Catholics and Protestants may and often do associate together for the estab- lishment of common credit, for the mar- keting of farm products, for the building of roads or the maintenance of schools, and still remain as separate in religious belief and observance as they were be- fore. Two neighbors may be members of a co-operative creamery association, and be ready to fly at each other’s throats in a quarrel over a division fence. A fruit grower may associate with other fruit growers scattered all over the country for the co-operative marketing of fruits, while his nearest neighbor, who happens to be a wheat grower, may be in like manner associated with other wheat growers, none of whom are members of his community. Mutual confidence is the basis of co-operation and mutual confidence grows out of a community of interests. Conversely, mutual confidence is nec- essary to the successful working out of common in- terests. Once mutual confidence is established with regard to certain common interests it is much easier to reconcile conflicts in other interests and thus to increase the scope of co-operative action. In other words, common interests and confidence are reciprocal. They co-exist and develop side by side. Recognizing that common interest and mutual confidence are the basis of co-operation, it will be .seen that we may have, under different conditions, a choice between several methods of co-operation. In all co-operation there must be mutual liability, o (Continued on page 14) A R SRR sy =10 = o - P I A% - i~ -