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America's Outstanding Retail Cooperative

John I. Kolehmainen

History and Growth

A group of sixty-two Finnish immigrant wage earners organized on May 5, 1911, a cooperative dairy in Waukegan, Illinois. The impulse for its organization came from a "milk strike" of a number of Finnish housewives against a boost in the price of milk. The share capital subscribed for the dairy amounted to only $630. Sales for the first year were nearly $7,000; the year's operations ended, however, with a net loss of $74. Since that time the cooperative has enjoyed a rapid and continuous growth. The following table shows the growth in membership, sales, net savings, and share capital:

Year

Membership

Sales

Net Savings

Share Capital

1911

62

$6,810.00

$74.00*

$630.00

1912

101

12,420.11

784.68

1,008.00

1913

136

14,350.00

1,119.00

1,698.00

1914

170

16,980.00

620.00

2,810.00

1915

184

20,737.75

1,000.35

3,090.00

1916

232

37,110.00

22.56*

4,510.00

1917

260

95,241.00

104.08*

5,820.00

1918

306

106,336.00

5,658.91*

6,430.00

1919

340

128,302.74

2,890.87

7,200.00

1920

421

183,078.80

8,243.80

7,040.00

1921

540

157,559.56

5,594.22

9,050.00

1922

632

195,212.23

8,605.95

19,010.00

1923

720

284,153.09

11,381.78

24,390.00

1924

784

353,442.11

15,235.73

32,780.00

1925

873

497,204.63

21,658.36

37,450.00

1926

1,041

556,290.26

15,757.21

44,030.00

1927

1,200

579,617.62

24,135.77

47,710.00

1928

1,351

679,198.22

24,169.69

54,520.00

1929

1,527

797,567.06

41,983.83

61,000.00

1930

1,814

818,753.55

35,565.50

70,190.00

1931

2,037

766,157.71

26,576.88

75,530.00

1932

2,050

607,016.24

9,544.00

78,350.00

1933

2,096

534,478.32

15,799.58

76,760.00

1934

2,109

546,903.08

597.60

75,040.00

1935

2,062

631,408.32

19,345.28

72,140.00

1936

2,236

709,735.57

33,333.14

76,380.00

1937

2,670

818,613.58

24,845.35

88,500.00

*Indicates net deficit.

The cooperative began, as noted above, as a dairy. In May, 1916, the association expanded into the grocery field and shortly afterward added a meat department. In July of the same year the name of the association was changed from The Cooperative Dairy to The Cooperative Trading Company. In 1921 a group of forty to fifty milk producers joined the cooperative, making it a joint producer-consumer association. The farmers, on the one hand, invested a considerable sum of money in the venture: the cooperative, on the other hand, agreed to pay the farmers rebates on sales to, as well as on purchases from, the organization.1 In 1925 the first branch store was opened on Washington Street, Waukegan; other branches were opened in 1929, 1931, 1935, and 1937. In 1928 the cooperative procured through purchase the Finnish Mercantile Cooperative Association, a non-Rochdale venture begun in 1906. In 1936 a modern service station was opened on Belvidere and Jackson Streets; a year later the cooperative opened its $30,000 warehouse on the same site. The association has recently completed an $18,000 expenditure in re-equipping its dairy plant; now in the process of construction are a new bakery (estimated cost $8,000-$10,000) and a sausage kitchen and smoke house (estimated cost $2,500). The cooperative is, by far, the largest retail organization in the city of Waukegan.

Credit Union

Since May, 1930, a cooperative credit union-by name The Waukegan Cooperative Credit Union-has been operated in conjunction with the Cooperative Trading Company. Its membership, resources, and financial condition are given in the following table:

End of Year

Members

Borrowers

Total Assets

Share Capital

Balance of Loans

1931

90

24

$3,141.79

$3,068.75

$2,735.00

1932

132

50

7,911.77

7,399.75

7,456.00

1933

144

63

9,158.08

8,460.60

8,479.50

1934

175

83

12,127.46

11,040.50

10,890.24

1935

207

93

16,699.80

15,180.71

15,624.19

1936

290

127

33,075.62

30,684.57

23,205.87

1937

425

225

55,909.44

51,843.50

47,666.94

 

During Year

Cash Receipts

Loans Made

No.of Loans

Dividend Rate

1931

$6,491.71

$5,185.00

41

4 %

1932

15,102.93

11,905.00

61

6

1933

12,728.17

8,951.00

60

1934

21,835.06

15,904.00

93

5

1935

28,696.26

21,629.00

109

5

1936

49,484.48

33,640.00

140

5

1937

83,491.55

66,720.60

250

5

The credit union is affiliated with the Illinois Credit Union League and the Credit Union National Association.

The Cooperative Trading Company, on the other hand, is a member of the Central States Cooperative League, Chicago Cooperative Wholesale, Central Cooperative Wholesale of Superior, Wisconsin, and the Cooperative League of the United States.

Current Operations

From 1911 to 1916 the Cooperative Trading Company was engaged in only one line of activity, namely, the processing and distribution of milk and allied products. Since 1916 the association has carefully but continuously expanded into many other fields. At the present time it is operating the following:

 

1937 Sales

Dairy Department

$235,968.52

Bakery Department

22,940.25

Bakery Store

25,239.69

Main Store Grocery Department

81,595.27

Main Store Meat Department

85,474.06

Branch Store No. 1

81,993.60

Branch Store No. No. 2

73,555.87

Branch Store No. No. 3

45,255.59

Branch Store No. No. 4

65,551.94

Branch Store No. No. 5

61,156.33

Branch Store No. No. 6

9,163.06

Service Station

30,719.40

In 1938 two new departments have been added to date: (1) The feed and farm supplies, in operation four months; and (2) The educational department, in operation since the first of the year. The sausage kitchen and smoke house, now being built, will be undoubtedly operated as a separate department. It might also be noted that each of the branch stores has two sub-departments: a grocery and a meat market.

The net value of the cooperative's plant and equipment, as of December 31, 1937, was $207,751. Its total assets exceed $308,000; its total net worth is $205,279 and its share capital is $88,500.

Relations to Organized Labor

The Cooperative Trading Company, begun by wage earners and drawing upon the wage earning class for a greater part of its membership, has naturally maintained a very close relationship with Organized Labor. The action of the cooperative during the Steel Strike of 1919 illustrates its attitude toward Labor. A large number of the cooperative's members and customers had walked out in the strike. The semi-annual meeting of the membership in October, 1919, was called upon to consider what should be the cooperative's attitude toward the strike. The directors' resolution, which in effect gave the union unconditional use of the cooperative, was unanimously approved by the members. Moreover, the board was empowered to "act in any way to help the strikers... no sacrifice would be too great to help win the steel workers' strike".

The cooperative has, in addition, always urged the unionization of its employees. The association's milk drivers and dairy workers have been in the local of the International Teamsters' Union since its organization and have taken, an active part in inducing other dairy employees to become unionized. The cooperative's meat cutters are also affiliated with an A. F. of L. local; it might be added that when a premature attempt was made several years ago to organize the city's meat cutters, the cooperative was the first organization to sign the agreement. The rest of the cooperative's employees - clerks, drivers, office workers, etc. - are organized in a temporary union of Cooperative Employees. When its members find a place for them in the national movement their temporary union will be dissolved.

Perhaps the best evidence of the cooperative's sympathetic attitude toward Labor is reflected in the fact that of its present board of nine directors, more than half are members of A. F. of L. locals.

Benefits to Producers

In 1921, as above stated, the Cooperative Trading Company invited those farmers who had been supplying it with milk to join the urban organization rather than forming, as the dairymen had thought of doing, a separate marketing cooperative.2 The benefits to the farmers from participation in the association have been, without a doubt, greater than those they might have derived from a simple marketing cooperative. For, in addition to having a year-in-year-out market for their milk, receiving for it the highest prevailing prices, the farmers have received interest on their share capital, patronage rebates on their purchases, and patronage dividends on their sales. For the year 1936, as an example, the farmermembers received over $2,000 as a reward for their membership in and their support of the association: (1) $221 in the form of interest on capital stock held by them; (2) $630 in patronage rebates for their purchases from the cooperative; and (3) over $1,200 - or $30 per capita - in patronage dividends for their sales to the cooperative. All this, of course, in addition to getting the prevailing prices for their milk.

Benefits to Consumers

The urban consumers have also reaped immense benefits from the cooperative. In the first place, over $400,000 has been returned to them in the form of patronage rebates in the twenty-seven years of the cooperative's existence; the rebates for 1937, for example, exceeded $23,000. The distribution of this vast sum has implemented in no small way the purchasing power of the rank and file wage earners. The consumers, in addition, have had access to quality merchandise; the cooperative, owned and operated by them, has had no incentive toward fleecing its members with inferior and cheap goods. In other fields, too, the cooperative has benefited its members: it has given them wide experience in the democratic ownership and operation of a large business; it has performed, through its diverse clubs and auxiliaries, important educational, recreational, and social functions whose net effect has been to facilitate the process of adjustment of Finnish and other immigrants to American life.3

The contributions of the Cooperative Trading Company to producers, consumers, members and non-members have been, thus, many and significant. The cooperative is a living testimonial of what can be achieved when wage earners together build and operate their own enterprises to serve their own needs.

1 Article XII, Section 3, of the By-Laws reads: "After necessary legal reserves and deductions have been made from the net income, the remainder shall be distributed, in a manner described by the annual shareholders' meeting, as patronage dividends to the patrons, equally to members and non-members, on the basis of their patronage, but the rate of such patronage dividends paid on products marketed shall be only one-third (1/3) as large as the rate of dividends paid on customers' purchases."

2 See author's "Same Co-op Serves Both Producer and Consumer", News for Farmer Cooperatives (Farm Credit Administration, Washington, D. C.), February, 1938.

3 A detailed study, The Cooperative Trading Company, The Case History of a Successful Producer-Consumer Cooperative, by the writer will be published this fall.

Published in the American Federationist, Vol. 45, 1938, p. 1060-1063.

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