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20th Year Central Co-Operative Wholesale. Superior, Wisconsin

The Central Co-operative Wholesale (or CCW for brief) is a general wholesale enterprise conducted on the Rochdale plan of consumers' co-operation and owned by over a hundred shareholding co-operative societies located chiefly in the northern sections of Minnesota, Wisconsin and Michigan. In addition to its share-owning member societies the CCW serves nearly a hundred non-member co-operatives all of which may become shareholding members in the course of time, through the instrumentality of the patronage dividend, provided they continue to patronize the Wholesale.

The headquarters of the CCW, including its central office, the main warehouses, the bakery and the coffee roasting plant, as well as offices of the Co-operative Publishing Association, its subsidiary, are located at Superior, Wisconsin. A branch warehouse and feed-mill is operated at Virginia, Minnesota.

Membership

At the end of the year 1936 the Central Co-operative Wholesale had 107 co-operative societies as shareholding members. The aggregate total investment of these societies in the shares of the CCW amounted to $198,359.32, the shares being $100 each.

Of the 107 shareholding societies, 10 (including 5 buying clubs) have gone out of existence or ceased operations - some of them several years ago - and 11 other societies had no trading relations with the CCW in 1936. Thus, the number of "active" or patronizing member societies at the end of last year was 86. The total purchases of these 86 societies from the CCW in 1936 amounted to $2,755,708, which was 96.8 % of the total sales of the CCW for that year. In the case of three-fourths of these societies, the purchases of each society from the CCW during the year exceeded the sum of $10,000, while 19 of the societies purchased $50,000-$100,000 worth of merchandise each, and one (the Cloquet Co-operative Society), more than $300,000 worth.

As to the geographical location of the 86 member societies patronizing the CCW, the bulk of them (47 societies) are located in Minnesota. Wisconsin and Michigan are evenly represented, each with 18 affiliated societies. The three other active member societies are located, one in Illinois, one in North Dakota and one in South Dakota.

That the CCW is prevalently an organization of farmers is evident from the fact that 56 of the 86 active member societies are either purely or overwhelmingly farmers' societies, while only 17 of the member societies are either entirely or to the larger part owned and patronized by co-operatively organized consumers in the cities and towns. The other 13 societies are mixed societies, with either the farmers or the city people predominating. The Cloquet Co-operative Society, the largest member society in the CCW, which now has some 2,600 shareholding members, is a typical example of a mixed society in which the city consumers slightly predominate in numbers but in which the farmer element is very strong and really predominates in the influence upon the administration of its affairs. The Rock Co-operative Company in Upper Michigan is another mixed society, in which the farmers predominate both in numbers and in influence. It has been generally estimated that 75-80% of the individual members in the CCW societies are farmers. However, no reliable statistical data to prove this claim are available. It is also impossible to say, without resorting to extensive research work about the matter, whether or not the trend in the CCW group is for the proportion of the city and town members to increase as compared with the farmer members. It appears that the proportion of the farmer members is still slowly increasing, in comparison with the proportion of the members living in cities and towns.

Type of Societies

The 86 member societies which patronized the CCW in 1936 are divided as follows in regard to the type of society:

Co-operative Store Societies

67

Co-operative Oil Associations

8

Co-operative Buying Clubs

4

Farmers' Co-operative Creameries (Producer)

4

Co-operative Boarding and Rooming Houses

2

Workers' Mutual Savings Banks

1

 

-

Total

86

Of the co-operative store societies, 18 are operating productive or service departments in addition to their retail distributive activities. Among these service and productive activities the following might be mentioned here: gasoline filling stations or garages, or both (operated now by several store societies in the CCW group); creameries and milk distributing plants (operated by at least two affiliates); a bakery (Waukegan, Ill.) a cheese factory (Pelkie, Mich.), feed mills, sausage factories, etc.

Control

Contrary to a wide-spread belief among people not familiar with the set-up of our co-operatives, the Central Co-operative Wholesale does not own or operate the local stores. It is the local store societies that own and control the Wholesale. The control is exercised through delegates chosen by the affiliated local co-operatives to represent them at the annual meeting of the Wholesale which is held in Superior in April. The most recent of these meetings was held April 12-13, 1937, with 295 accredited delegates in attendance. These delegates represented 83 member societies of the CCW, with a total aggregate membership of 26,348.

The discussions at the annual meetings of the CCW are at times quite extensive and thorough. Comprehensive reports are presented to the consideration of the delegates by the board of directors, the general manager and the executive heads of its most important departments, such as the Educational Department and the Auditing Department. These reports are carefully prepared and submitted to the delegates in printed form. The most important of them are later published in the CCW's yearbook, together with additional statistical data.

The delegates' votes at the annual meeting of the CCW are based on the number of individual shareholding members in their respective societies, each member society being entitled to one vote for each fifty of its own individual shareholders. To get the privilege to exercise its voting power over and above the one basic vote, the member society must have discharged its obligation to own one share in the CCW to each 50 of its own shareholding members. The 295 delegates attending the 1937 annual meeting were entitled to cast a total of 469 votes.

Administration

The affairs of the CCW are now administered by a board of 15 directors, each of whom is elected for a three-year term at the annual meeting of the Wholesale. For the purposes of this election, the Wholesale's territory is divided into 11 districts, some of which are considered large and important enough to have two representatives, while the bulk of them have only one each. The CCW member societies in each district, usually at their district federation meeting, nominate candidates for the Wholesale board. Generally, these nominees are accepted by the CCW annual meeting, provided the delegates feel that the particular district is entitled to such representation on the Wholesale board.

Of the present fifteen directors of the CCW, nine are farmers, three are co operative store managers, two are workers living in the city and one is editor of a co-operative paper. Every one of these directors has a record of long and faithful service in the movement. Seven of the fifteen directors live in Minnesota, four in the Upper Peninsula of Michigan, three in Wisconsin and one in Illinois.

The full board of directors of the CCW meets usually three or four times a year in addition to the two shorter meetings that are held on the eve of the annual meeting and immediately upon its adjournment, the chief purpose of the latter meeting being to elect officers and committees for the ensuing twelve-month period. The two important committees elected by the board from its own number are an executive committee of nine and a management committee of seven.

The work and duties of these administrative committees of the CCW are described in detail in the board of directors' report to the Wholesale's tenth annual meeting, in 1927, as follows:

"The board of directors, which between the annual meetings is responsible to the membership for the administration of the affairs of the Wholesale, is constituted in such a manner that the full board is elected from a large area. This board meets at least once in every three months and exercises general supervision over the affairs of the Wholesale, passing itself on the most important matters and giving instructions to its sub-committees, which act between the meetings of the full board. The full board which in the past has met only a limited number of times during the year to avoid the mounting of administrative expense, considers and passes on such matters as: wage agreements, election of new employees, organizing of new departments, approval of new articles of merchandise or new lines to be handled, relations of the Wholesale with larger organizations, with which it has become affiliated, and with various fraternal organizations, any proposed important changes in the traditional or established methods of the Wholesale, etc. After the full board has considered certain matters, these are either referred to the general manager to be put into execution or are referred to sub-committees to be further considered by these in accordance with the board's instructions or to see to it that the board's decisions are actually carried out.

Sub-committees

"The executive committee which meets at least once a month (with the exception of those months in which the whole board meets) is constituted of those board members who on account of the geographical location of their residence have the possibility to meet relatively often without undue expense or without too much loss of time for themselves. The executive committee handles the largest part of routine administrative matters in accordance with instructions given by the whole board and with the previous decisions of the membership, and in conformity with the by-laws of the organization. Each month it goes over the financial report of the Wholesale and the monthly report of the auditing, educational and other departments, and passes on the same, unless they contain something of special importance which should be referred to the whole board. It adopts rules to regulate the work of the Wholesale's staff, passes on larger purchases of merchandise, temporarily fills positions of minor importance (subject to the final approval of the whole board) and considers and passes on any other matters which are of such nature that they cannot wait till the next meeting of the whole board or which are of minor importance.

"The management committee is composed of board members who reside nearest the headquarters of the Wholesale, who are members of the executive committee and who can be called to a meeting without delay, sometimes on a few hours' notice. The management committee meets as often as (in the judgment of the general manager - Editor's note) there is need to call such a meeting. As a result of the work it has to do, this committee acquires an intimate knowledge of the internal affairs of the Wholesale. It considers and generally passes on such matters as have been referred to it by the whole board or the executive committee. It also considers incidental matters of less consequence (submitted to it by the general manager or the various department heads) and any such routine matters in regard to which the higher organs have taken a definite stand. The scope of this committee covers matters from all the different departments of the Wholesale, such as purchases, pricing, work regulations, arranging of lectures and meetings, raising of money needed for larger purchases, deciding about the trips of the field representatives (traveling salesmen) and countless incidental matters which a collective leadership of this nature is apt to face.

"To the extent that the sub-committees consider important matters which really by their nature belong to the whole board, they do so only in a preparatory sense or manner, these matters being finally decided by the full board.

Accurate Records Kept

"An accurate record is kept of all matters considered by the committees and a copy of the minutes of each meeting is sent to each board member. In this manner the board members are kept posted in detail about the progress of the affairs of the Wholesale and the work of the sub-committees and they can take up any matter whenever they feel there is any reason to do so.

"Thus in the course of years, a fairly efficient regulation of work and duties and a fair division of responsibilities has been developed in the administrative organs of our Wholesale, under which everything has functioned in good harmony. We have succeeded in arranging the administrative organs of such a central institution as ours, operating in a rather large territory, on a really democratic basis, and in spite of the extensiveness of our territory we have succeeded in preserving in these organs sufficient flexibility which is essential and necessary in an institution of the magnitude that ours has now reached.

"It is self-evident that in an institution of this kind a serious attempt should be made to elect to the board of directors persons who possess the widest possible business experience and who have some knowledge of merchandising and administrative problems. The present stage of development of our business requires that the board of directors exercise a real and not only a nominal administrative control."

Democracy of Control

The broad democracy actually prevailing in the control of the affairs of the CCW is reflected not only by the methods of representation and the voting system used at the annual meetings, but also by the fact that the relatively large board of directors and its various sub-committees are actually "on the job", keenly feeling their responsibility to the membership as its trusted representatives whose duty it is to see that the wishes of the membership - as expressed in motions passed or resolutions adopted at the annual meetings - are faithfully carried out and put into practice.

This keen sense of responsibility is reflected from the report cited above. It is further reflected from the large number of meetings the board of directors and its sub-committees have held since the beginning of the CCW. During the first ten full years of operation (1918-1927) the whole board met 54 times, the executive committee 52 times and the management committee not less than 131 (!) times, or a total of 237 meetings of the board and its sub-committees. In 1919 alone the management committee held 31 meetings and during the four-year period following the 1919 annual meeting, 83 times. It appears that the first manager of the CCW leaned on the management committee even more heavily than the second manager (who started his work in the middle of the year 1922), as during the next four-year period (1923-26) the committee met only 31 times.

Even during the second half of the 20-year period the board and its sub-committees have continued to meet quite frequently as witnessed by the fact that a total of 150 meetings were held by them in 1928-36. The present tendency in the CCW seems to be to call the whole board together rather than just the executive committee. For instance, during the two-year period of 1935-36 the whole board met 13 times, as compared with only 4 meetings of the executive committee. This tendency, if it continues, may lead to the simplification of the administrative machinery of the CCW, by the abolition of the executive committee and by dividing its work between the full board and the management committee. The latter committee met 14 times within the two-year period of 1935-36.

The present administrative tendency also is to create new sub-committees, with more specified duties. There is functioning at present, for instance, a special wage committee which thrashes all questions of wage adjustment and makes definite recommendations to the full board on these matters.

The Present Board and Officers

The present board of directors of the CCW and its officers, serving till the 1938 annual meeting, are:

William Liimatainen, President, Rabey, Minn.; John Taipale, Vice-President, R. 1, Box 66, Iron River, Wis.; Henry Koski, Secretary, Superior, Wis.; Charles Sillanpaa, Ass't Sec'y, Bruce Crossing, Mich.; Leonard Bakkila, Arthyde, Minn.; Toivo Hannula, 616 Cummings Avenue, Waukegan, Ill.; Matt Heikkinen, R. 2, Menahga, Minn.; Arvid Jarvi, Hancock, Mich.; Eino Jokinen, Embarrass, Minn.; Victor Klemolin, 1106 Avenue F, Cloquet, Minn.; Matt Myllykangas, Iron Belt, Wis.; John Partanen, R. 2, Box 120, Cloquet, Minn.; Maurice Raeburn, Brantwood, Wis.; Eero J. Saarela, Iron, Minn.; Julius Sivula, R. 1, Box 116, Rapid River, Mich.

Additional officers elected by the Board, but not members of it, are: H. V. Nurmi, treasurer, and Arnold J. Ronn, assistant treasurer, both of Superior, Wis.

Cost of Administration and Management

The cost of the administration of the CCW (that is, the expense of holding the meetings of the board of directors and its sub-committees) has run about .l % , of its total annual sales. This year, with expected 3½ million dollar sales, the total administrative cost will be somewhere between $2,500 and $3,000; that is, less than .1 % of the sales. In addition to their traveling and hotel expenses, the directors of the Wholesale receive the magnificent sum of $3.00 a day for attending board and committee meetings. Still, attendance at these meetings has generally run nearly 100 %.

The management cost in the CCW runs about 1 % of the total sales. There are very interesting differences between our co-operative wholesale and private wholesale houses, as regards management and administration. For instance, the general manager of a private wholesale of the same size as the CCW would no doubt receive a much higher salary and would in most cases be under rather superficial control. The supervision exercised by the board of directors over the management of the CCW is real and live.

The relative merits of these two different methods of administration and management are strikingly illustrated by the fact that two and a half years ago the CCW acquired and moved into a palatial building which had belonged to a private wholesale house which about ten years ago was considered a very substantial and well-established business in the city but which under the strain of the severe and prolonged business depression crumbled and went into bankruptcy while the Co-operative Wholesale continued to grow and prosper.

Departments

The four most important divisions of the CCW, as far as its activities are concerned are: a) wholesale or distributive division; b) production division; c) educational division and d) accounting division.

The wholesale or distributive division in turn is divided into several sub-divisions or departments. From the management point of view, there are so far three distinct departments: a) the wholesale department proper (handling groceries, feeds, petroleum products, etc.; b) the clothing department, which was started as a separate department in 1932; c) the branch at Virginia, Minn., established in 1936.

From the view-point of general management there are three main departments: a sales department; a purchasing department and an office department (including credit control, bookkeeping, general billing, etc.)

The shipping and advertising departments as well as the traveling salesmen or commercial fieldmen are considered subdivisions of the sales department.

The production division at present consists of three productive establishments: a) a bakery which was established in 1919 and moved to its present location at the corner of Grand Avenue and Fifth Street in 1926; b) a coffee roasting plant, established in the fall of 1935; c) a feed mill in Virginia, established in 1936.

For bookkeeping and accounting purposes there are eight departments for which separate accounts are kept. These are:

General Merchandise Department
Clothing Department
Gasoline and Oil Department
Bakery Department
Coffee Department
Virginia Branch
Educational Department
Auditing Department.

Of the sales of the CCW for 1936, not less than 72.3 % were general merchandise sales, while the clothing department and the gasoline and oil department sales each amounted to 10 % of the total sales, the latter department having a slight edge on the former. The gasoline and oil department was established in 1934.

The branch warehouse in Virginia was opened about a year ago and is in charge of a branch manager. In connection with this branch warehouse a grinding mill for so-called commercial feeds has been established. The sales of the Virginia Branch increased from $33,193 for the last three or four months of 1936 to $83,593.44 for the first half of 1937.

Conferences of the sales and purchasing department heads with the fieldmen (who correspond to the traveling salesmen of the private wholesale houses) are held regularly every two weeks after these fieldmen have returned from their fortnightly trips. General conferences of all department heads are held occasionally as the need arises.

Special articles elsewhere in this booklet deal with the Educational and Auditing Departments.

Territory Served by the CCW

As is true of private wholesale houses, the CCW likewise cannot advantageously serve local co-operatives beyond a certain area. This is due to distances which impose increasing penalties, in the form of prohibitive freight rates, the farther the delivery point is outside of the Wholesale's normal operating zone.

The Central Co-operative Wholesale's regular service area (1st Zone in the accompanying map) extends from about the Dakota line in the west to almost Sault Ste. Marie in Upper Michigan, but only as far south from Duluth-Superior as a line drawn through Minnesota and Wisconsin so as to pass some distance north of Minneapolis and St. Paul. The Twin Cities are in themselves a major wholesaling center.

Zone 2 (the shaded portion of the map) takes in an intermediate territory in which partial service can be maintained, chiefly through direct drop shipments; that is, goods are ordered shipped direct from factories and other sources of supply, to the stores in the 2nd Zone. Drop shipments, however, require minimum size of orders (as full case lots, etc.). CO-OP coffee, such bakery products as toast and hardtack, and some other items, are also advantageously shipped from Superior.

Zone 3 is wholly beyond the organizational area of the CCW; that is, close educational contact, auditing and advisory service cannot be extended that far. Merchandise may be sold at fully competitive prices by the CCW to practically any point in the outside area, but in carlot quantities only, with the exception of a few special items in which smaller orders may be feasible.

Service Through Other Co-op. Wholesales

Co-operative associations not within the immediate operating area of the CCW and interested in securing a co-operative central source of supply, are advised to inquire first what co-operative wholesales may already be functioning in their district. This holds true not only for more distant points in Zone 3, but also for those in Zone 2. The zones on the map indicate only the approximate range of deliveries possible from Duluth-Superior, not the jurisdictional lines within which the Central Co-operative Wholesale may operate without infringing upon the operating area of other co-operative wholesales.

For example, until recently the Co-operative Trading Company of Waukegan, Illinois (about 30 miles north of Chicago) used to make considerable purchases from the CCW. However, the Central States Co-operative League, which has several member societies in Illinois, Indiana, Ohio and Lower Michigan, has now established a wholesale service in Chicago. When this is developed, it may supply societies also in southern Wisconsin. In the Twin Cities there are located the Midland Co-operative Wholesale (in Minneapolis) and the Farmers' Union Central Exchange (in St. Paul), both of which at present handle principally petroleum products. The Consumers' Co-operative Association of North Kansas City, Missouri, serves a large number of co-operative oil associations, some of which are located in states adjoining the CCW's present trading area, and is developing a general merchandising program of its own.

Lines Handled by the CCW

The following is a fairly well itemized list of the most important lines of merchandise now handled by the CCW:

A complete line of groceries
Coffee (own roasting plant)
Bakery products (own bakery)
General household supplies
Radios and electrical appliances
Work clothing
Limited line of women's and children's clothing
Rubber footwear and rubber goods
Hardware and paints
Roofing and allied building supplies
Feeds and flour (own feed and flour terminal also at Virginia, Minnesota)
Oil, gasoline, greases
Tires, batteries, etc.

New lines are added from time to time, as the Wholesale keeps growing and extending its distributive and productive activities.

About 270 articles of merchandise handled by the CCW are now packed under the CO-OP label, which is a registered trade mark of the CCW. First quality goods are indicated by a red label and second quality by a blue label.

The CCW is a member and patron of the National Co-operatives, Inc., of Chicago, Ill., which is a central buying organization serving a number of co-operative wholesale societies all over the United States. The CCW even took part in organizing the National Co-operatives some three years ago.

Allied Activities

Closely allied with the work of the Educational Department of the CCW are the Northern States Women's Co-operative Guild, the Co-operative Youth League and the Co-operative Publishing Association. The Publishing Association which issues the "Co-operative Builder" and "Tyovaen Osuustoimintalehti" (the Finnish Co-operative Weekly) is incorporated under the co-operative laws of Wisconsin as a separate organization, but is owned and controlled by the Wholesale and its member societies.

District Federations

In addition to their central wholesale, the store societies in the CCW area have grouped themselves into district federations, through which they pool some of their purchases (buying f. i. sugar, apples, etc. in carload lots), set up federated services (such as gasoline bulk stations, trucking lines, lumberyards, sausage factories, etc.) and arrange joint educational activities. Federation meetings, attended by delegates from the affiliates of the CCW in each district are held regularly at least once a year and in some of the best organized districts, even oftener.

Two of the federations, The Range Co-operative Federation and the Arrowhead Co-operative Federation, both in Minnesota, have been incorporated. The first-named now carries on quite extensive business activities, operating a creamery, a sausage factory, two bulk oil stations (at Virginia and Orr), furnishing trucking service to its member societies and, as the latest service just recently added, funeral service to the individual co-operators in the district.

Another type of district federation (formed for definite business purposes only) are the district oil associations of which so far eight have been organized, three in north-eastern Minnesota, three in Wisconsin and two in Upper Michigan. All of these district associations have been incorporated with other co-operative associations (mostly co-operative store societies) as shareholding members. Under their set-up, they do not accept individual consumers as shareholders. One of these oil associations (the Range Co-operative Oil Association of Virginia, Minn.) has recently been consolidated with the Range Co-operative Federation and thus ceased to exist as a separate organization. All but one of the district oil associations are shareholding members in the Wholesale and buy through the CCW the bulk of the petroleum products they handle. In 1936 the purchases of seven of these district organizations from the CCW totaled $290,574.

Managers' Conferences

Besides the inter-departmental conferences in the CCW, mentioned before, a general co-operative managers' conference is held in Superior twice a year (spring and fall). All the managers and branch managers of the co-operative store societies affiliated with the CCW are invited to attend these conferences, at which mostly matters of a technical and business nature are discussed. The main purpose of this kind of conference is to learn the reaction of the local managers in regard to quality of merchandise handled by the Wholesale, and to find out if the service rendered by the Wholesale to the local societies has been satisfactory. Valuable suggestions for the improvement of quality and service are often made at these conferences, at which problems of other nature are also occasionally discussed. The conference usually lasts a whole day.

Policies

As indicated earlier, the CCW does not own or operate the local retail societies supplied by the Wholesale. Instead, these retail societies are locally independent, owned and operated by the consumers of their respective communities, and it is the store societies that jointly own and control the Wholesale. The Central Co-operative Wholesale will not undertake to promote and finance a co-operative in any community. To become a member of the Wholesale, a society buys at least one share of stock in the Wholesale ($100 per share). Non-member co-operative associations may buy from the Central Co-operative Wholesale upon exactly the same terms as member societies. However, trade rebates accumulated to their account are applied to their share account until they own the number of shares required by the Wholesale by-laws. Only bona fide co-operative associations may hold stock in the Wholesale. No local society (whether member or not) is bound by any contract or otherwise to make its purchases through the Wholesale.

Each local cooperative society is incorporated under the cooperative statutes of its own state. The form of organization and methods of operation are standardized in all of them to conform to the universally accepted Rochdale principles of co-operation. These provide: 1) one vote to each member regardless of the number of shares owned, 2) interest on share capital limited to not more than the current legal rate (usually 4 to 6 %, while in frequent cases interest on share capital is omitted altogether), and 3) return of net income (surplus savings) to the patrons in the form of purchase or patronage refunds. Membership in the co-operative stores varies from as low as 50 or less (buying clubs and small stores) to 2,500 (Cloquet, Waukegan). Shares of stock in local store societies are usually set at $5 or $10.

As a general rule, a co-operative store in the Wholesale's area must have at least $1,500 monthly sales for successful operation. A comfortable margin (presuming efficient management in each instance) would be around $3,000 per month. Much depends however on the type of community and the level of co-operative understanding and loyalty of the membership. Where co-operative stores are organized without possibility of joining with a central buying organization, they must be prepared to deal with private wholesales, handle varieties of private and nationally advertised label products, operate often without co-operatively trained and co-operatively minded managers, and without the benefit of timely technical, financial, auditing and even legal advice provided by central organizations. For these reasons, co-operatives starting in outlying communities are well advised to place their initial requirements as to amount of starting capital, number of members and patrons pledged to support the store, etc., higher than in the immediate territory of a co-operative wholesale.

The Rochdale principles and philosophy of Consumers' Co-operation are adhered to in the organization and administration of the Wholesale. The Co-operative Movement is generally considered a close ally of the general Labor and Farm Movement, although no ties to any particular farm, labor or political organization are permitted. Impartiality or neutrality is the rule as far as other economic, political or religious organizations are concerned.

EDUCATION IN CO-OPERATION

"Have this understood from the beginning: If you fail in co-operative education, you stand to fail in all else."

The foregoing is quoted from the Central Co-operative Wholesale's standard instructions to those who undertake to organize co-operative stores. After twenty years of experience, the CCW and its member societies recognize no exception to that rule.

Were you invited to join a co-operative association in which you knew the members, directors and employees to be ignorant of or but little acquainted with co-operative principles and the Rochdale methods of conducting their own business, you would most likely hesitate to support such an organization with your membership and patronage. Trouble and ultimate failure attend ignorance in a co-operative as in any other association.

By co-operative education we mean the knowledge necessary for organized consumers to understand what the co-operative movement is and how they may successfully establish and conduct their own enterprises. The CCW has been built on the foundation of such knowledge, and both the central organization and its member societies continue to grow sturdily because of increasing attention to co-operative education.

Thorough-going co-operators see in their movement something more than effective buying and selling to benefit the consumers, important as that is. To the extent that co-operation is applied, it supplants profit exploitation and leads to economic democracy; for that reason, to millions of co-operators throughout the world it is also an instrument of profound social reform. It makes for better individuals and nations, better homes and communities, protected and nourished by security and abundance.

It is because its members have, by and large, conceived of co-operation in this light, and have combined practical efficiency with the appreciation of these ultimate aims of co-operation, that the movement in the CCW area is maintaining important agencies devoted principally to promoting co-operative education.

The Educational Department of the CCW

The Educational Department was one of the earliest divisions of the CCW. Today, two full-time advisers and a fieldman are employed, while the Co-operative Publishing Association grew directly out of this department. The Educational Department provides literature, information and advice on co-operative organization and methods; assists in the organization of new societies, and with the incorporation, preparation of by-laws and legal problems of co-operatives; conducts resident Co-operative Training Schools at Superior, and provides speakers and lecturers for local societies, as well as CCW representatives to attend their membership meetings; arranges annual district conferences of local directors and employees, and aids in the work of the Women's Co-operative Guilds and the Co-operative Youth League in the CCW area. The CCW's contact with the Northern States Co-op. League and the Co-operative League of the U. S. A., district and national educational federations, is maintained largely through the Educational Department.

The NSCL, the CLUSA and the ICA

The Northern States Co-operative League, with offices at 458 Sexton Building, Minneapolis, Minn., is the district educational federation of the consumers' co-operatives in the north central states. The CCW is a charter member of the League, which also conducts schools and institutes, issues books and other literature, and renders in Montana, the Dakotas, Minnesota, Wisconsin and Upper Michigan generally the same educational services as are conducted by the CCW for its member societies through its Educational Department. The NSCL is a district division of the national Co-operative League of the U. S. A. (offices: 167 West 12th Street, New York City) and the national league, in turn, is affiliated with the International Co-operative Alliance, a federation of more than 100,000,000 co-operators in over two score countries.

The Local Educational Committee

In most of the co-operative store societies in the CCW area, the local Educational Committee, usually elected at the membership meeting, is a highly important part of each local organization. In their respective communities, the Educational Committees arrange public entertainments, picnics and lectures, distribute co-operative literature and papers, conduct drives for members and patrons for their store societies, and otherwise promote co-operative education among both members and prospective patrons.

The Women's Co-operative Guild

The Northern States Women's Co-operative Guild, with nearly 60 local Guild units and over 1,500 members in the CCW area, is a membership organization interested chiefly in the co-operative organization and education of women. The active support and participation of the housewives and women generally is of primary importance to consumers' organization while women, in turn, find their interests as consumers and purchasers for the home most directly served by the co-operatives. Outstanding contributions to co-operative education have been made by the Guildswomen, not only among women but in the interest of their respective societies generally. Promotion of junior and youth education are among important concerns of the Guilds. Section conferences and an Annual Convention of the entire organization are held annually. More informal Co-operative Women's Conferences have been held now for several years in connection with the Northern States Co-operative League conventions.

The Co-operative Youth League

Organization and education of the youth is being sponsored directly through the Co-operative Youth League which, like the Women's Guild organization, has its district office at Superior, Wisconsin, and has numerous local Youth League units in the district. During several past years, an important project, sponsored jointly by the CCW, the Youth League and the Women's Guild, has been the Co-operative Youth Course. This four-week summer school, held at Brule, Wisconsin, has usually enrolled 50-55 young men and women, chosen from applicants throughout the district.

Co-operative Clubs

In addition to the foregoing, numerous other organizations in both rural and urban communities are more or less closely associated in promoting co-operation. There are many mixed Co-operative Clubs for both men and women, independent hall associations, educational societies, community forums, and the like, in whose programs co-operation plays an important part. Local units of various farm and labor organizations likewise actively sponsor co-operative activities, and this is also true of some church organizations and their auxiliaries. In the field of public education, the teaching of consumers' co-operation has been introduced at least in a partial way in the grade schools and high schools of Minnesota and Wisconsin.

The Co-operative Publishing Association

The Co-operative Publishing Association, as already stated, was an outgrowth of the CCW's Educational Department, when that department's activities in publishing papers and distribution of literature grew to the point necessitating a special publishing division. Both the weekly CO-OPERATIVE BUILDER and the FINNISH CO-OP. WEEKLY are issued by the Association. They are the official organs of the CCW and the Northern States Co-operative League, and are by far the two most widely distributed papers among the co-operators in the north central states. Besides issuing the two papers, the Association provides other literature, sells books, prints pamphlets, does job work for co-operatives, and maintains a travel information service and ticket agency. A separate story on the CO-OPERATIVE BUILDER appears elsewhere in this booklet.

The foregoing is by no means a complete account of the place co-operative education holds in the progressive section of the American co-operative movement represented by the Central Co-operative Wholesale and its member societies. However, for all who are interested in co-operative undertakings and responsible for their success, whether as patrons, members, or officers and employees, it may help to bring home again that, "if you fail in co-operative education, you stand to fail in all else!"

AUDITING DEPARTMENT

The Auditing Department of the Central Co-operative Wholesale is in its sixteenth year of activity. It started to function officially on January 1, 1922, although a few audits were performed in the latter part of 1921. This department is probably the first of its kind in the United States. Mr. H. V. Nurmi, who had been performing audits for co-operatives for many years previously, was the first auditor employed in the Department and was in charge of it until May 30, 1931, when he was elected general manager of the Wholesale.

The Department now has nine auditors and a stenographer. In 1936, 173 audits were performed for 103 different organizations, of which 67 were Co-op. store societies, nine oil associations, and the others varied types of societies. The volume of audited societies in 1936 was $12,500,000, and their net earnings $472,000.

The main purpose of the Department has been to render specialized auditing and accounting service for the affiliated societies of the Central Co-operative Wholesale. The audit reports have acquainted the co-operative membership with the financial condition and operations of their respective associations; have criticized in a constructive way the management and operations of the societies; have helped to root out dishonesty and inefficiency; have instilled confidence in the shareholders, as to honest and efficient management of their society.

In early years the bookkeeping of the co-operative stores was often poor. A uniform accounting system, with standardized bookkeeping forms especially devised for co-operative stores, oil associations, creameries, etc., has greatly simplified the accounting work of the co-operatives; and regular examinations have resulted in up-to-date record-keeping.

Education has been an important part of the auditing department program. In addition to teaching bookkeeping at the Co-operative Training School, the auditing department has taught new bookkeepers on the job, has educated managers by suggestions and demands for improvements in management, and has educated boards of directors by helping them to analyze financial statements and by thorough discussion of problems in their board meetings. Almost the entire crew of auditors is self-trained by the department.

One of the most valuable services rendered is that of handling income tax matters and securing exemptions for co-operative organizations. Other legal problems have also been handled at times, and with the enactment of social security laws, numerous bulletins explaining their provisions have been addressed to the co-operatives.

Semi-annual audits have been encouraged, and these have been almost unanimously adopted by the co-operative membership, thus giving them information about the affairs of their associations at regular short intervals.

The experience of the co-operative auditors is varied. Most important of all is their co-operative understanding, which leads them to take a deeper interest in the success of the movement than would be the case with private accountants, and which aids them in dealing intelligently with co-operative problems. The qualifications required of co-operative auditors continue to grow. Accountancy laws regulating the profession are becoming stricter in their licensing requirements; and a growing movement requires constantly more education, training and experience. The members of the auditing department are seeking to improve themselves in order to meet these growing demands.

The Auditing Department has sought to keep its professional standards high. Only detailed audits are performed, and each report is carefully checked over in the office.

The future of the Co-operative Movement lies in the combined success of its educational program and its operating efficiency. One without the other is meaningless. The latter can be achieved only by means of strict accounting control, and the use of accounting reports by management and directors to guide their decisions. The Auditing Department's contribution to the Co-operative Movement will be measured by the extent to which these valuable tools - accounting control and accounting reports - are utilized to secure the highest efficiency of operation in our Co-operatives.

Laurie L. Lehtin, a certified public accountant, registered as such by the Wisconsin State Board of Accountancy, is now in charge of the Department.

THE CO-OPERATIVE BUILDER

"The Co-operative Builder" had its origin in July, 1925. It was first a mimeographed bulletin called "The Pyramid-Builder" and issued about once every two months by the Co-operative Central Exchange (now Central Co-operative Wholesale). Instead of being a paper for the rank and file co-operator, it was really a sales bulletin for the co-op. store manager and employee. The first issue, for example, has a cartoon on the cover which is designed to spur co-op. store managers on to boost the wholesale's sales to the million-dollar mark in 1925 (this was achieved in 1926), and inside the reader finds articles on window-display, stock-turn, etc.

Why was it called "Pyramid Builder"? "The co-operative movement," it was said, "must be built like a pyramid, with a broad base of consumers organized into local societies, which in turn are banded into a central organization for wholesale buying, production, and education. The whole structure is supported and controlled by the base, which must always be broader than the top."

Eskel Ronn, then manager of the Wholesale, also championed the name "Pyramid-Builder," in these words, quoted from one of his regular articles in the paper: "Those old Egyptians were the boys. They didn't need any new-fangled wheelbarrows, derricks, hoists, tractors and engines when they built their pyramids.

"Still they put up structures that have puzzled the scientists and engineers the world over. For thousands of years these pyramids have stood as monuments to the ingenuity and perseverance of man. Despite the wear and tear of ages that have brought down to ruins not only cities but great nations, these pyramids have withstood the ravages of time. They were built to stand. They are on a firm foundation.

"The co-operative movement is like a great pyramid, built one stone upon another...."

And so, against the protest of some, the paper was called "Pyramid-Builder". One year later it became "The Co-operative Pyramid-Builder" and was expanded to become a printed magazine, issued monthly, and not merely for the co-op. functionaries but for the membership as well. Geo. Halonen edited the magazine until August, 1928, when A. J. Hayes became editor.

The present broad policy of the "Builder" was foreshadowed in the first issue of the magazine, for it aspired to be not merely an organ for the Wholesale but for the entire movement. It stated: "The Co-operative Central Exchange is only one link in the great co-operative movement, so we cannot limit ourselves to the affairs of the Exchange only. The Pyramid-Builder will convey the general message of co-operation. Local, national, and international events in the co-operative field will be published and commented upon. ... Co-operative, labor, and art pictures will be published."

In July, 1931, the magazine form was given up and the publication became a 4-column, tabloid-size newspaper. A. J. Hayes remained editor. The change provided more space for wielding the co-operative editorial pen and also a larger canvas for displaying pictures of the growing co-operative establishments. At the same time the name of the paper was changed again, "Pyramid" being dropped and the name emerging as "The Co-operative Builder".

Announcing this change, the Builder defined its mission as follows: "to spread co-operative knowledge, to furnish facts and current information that bear upon the development of the co-operative and labor movements, and to serve as a medium thru which our affiliated associations and membership at large, and non-member co-operatives also, may exchange opinions and news of local as well as general interest."

The following January, the Midland Co-operative Wholesale, Minneapolis, merged its own paper, the "Co-op. Oil News," with the Builder. This arrangement lasted until August, 1933, and was terminated mainly because of the conclusion on the part of the Midland that the Builder, with its large amount of material pertaining to co-operative stores, did not fully serve the needs of the co-operative oil associations.

In July, 1935, Oscar Cooley became editor, Hayes being transferred to the Wholesale's educational department.

With the forward surge of co-operative interest thruout the country during the following two years, the Builder grew until a dream long conjured with, that of making it a weekly, came true in March, 1937. At the same time the width of the page was increased to five columns.

The Builder is the only English-language weekly newspaper in the United States published by the Consumers' Co-operative Movement. It covers the news of co-operatives, not only of the Central Co-operative Wholesale territory, but of the entire United States. It publishes articles and news on Co-operation abroad as well. Further, its scope is not confined to the co-operatives but takes in other developments of social importance, as in the field of labor, public ownership, and political action. Its special departments and features provide enlightenment for women, for youth, for children; on health, on farm problems. It entertains and inspires with wholesome short stories, plays, poetry. It is replete with pictures illustrating the events of the day. It analyzes current movies for the cinema-goer, sifts radio programs for the discriminating listener. Its editorial page, meanwhile, interprets the Rochdale principles and shows how they apply in the daily operation of economic enterprises. It also analyzes the current world scene from the viewpoint of the conscious consumer. In the words of Dr. J. P. Warbasse, president of the Co-operative League of the U. S. A.: "The Builder is an informative, high-class journal that carries news of the entire economic field aside from being a good mouthpiece of the consumer movement."

HIGHLIGHTS OF CCW HISTORY

July, 1917
Organization meeting held in Superior, Wisconsin, July 30-31. Nineteen local co-operative stores, from Minnesota, Wisconsin, Michigan and Illinois, represented. Delegates decide to incorporate a joint-buying organization under the statutes of Wisconsin. The adopted name, CO-OPERATIVE CENTRAL EXCHANGE.

September, 1917
The CCE-starts operations, with John Nummivuori, formerly manager of the Farmers' Co-operative Trading Company, Hancock, Michigan, as its first manager. Articles of Incorporation filed September 3. They feature an authorized capitalization of $75,000; shares $100 each, and a board of nine directors. Authorized capital later increased to $250,000 and the number of directors increased to eleven in 1927 and further to fifteen in 1932.

December, 1917
Of the 19 associations represented at the organization meeting, 15 have pledged to take shares in the CCE, but only $480 of share capital has actually been paid in by the end of the year. Sales of CCE for the four-month period (Sept.-Dec.) amount to $25,573.62.

February, 1918
At the first annual meeting of the CCE, 18 delegates represent 12 co-operative store societies having a total individual membership of 2,966. Annual meeting approves plans for establishing a bakery.

July, 1918
A one-week course in bookkeeping is conducted at Superior, with H. V. Nurmi, of Virginia, Minn., as instructor. Fifteen students participate.

September, 1918
A three-story brick building is purchased for the CCE at the corner of Winter and Ogden in Superior, at a price of $22,000. - Keenly interested in the development of a national consumers' co-operative movement, the CCE board sends three delegates to the first congress of the Co-operative League of America, held at Springfield, Ill. Ever since the CCE (now CCW) has been represented at every biennial congress of The Co-operative League.

December, 1918
At the end of the first full year of operation, the CCE has 21 fully-paid affiliated co-operatives, including 6 buying clubs. Paid-in share capital now totals $4,020. Sales for the year amount to $132,423, bringing a net income of $2,063. The CCE now has two full-time employees.

September, 1919
A four-week Co-operative Training School, with 40 students, is held at Superior. Co-operative subjects and bookkeeping are taught.

October, 1919
Work in the bakery started, on the first floor of the CCE building.

December, 1919
At the end of the year, total paid-in capital is $6,940, and shareholding member societies number 32. Sales for 1919 total $313,664, a record increase of 137% over 1918; 83% of the sales are to member societies.

February, 1920
At the third annual meeting 18 of the 34 affiliated co-operatives are represented. The meeting authorizes the engaging of a fulltime educational director.

March, 1920
V. S. Alanne is engaged and commences his duties as educational director.

July, 1920
Commodity prices tumble from the abnormal war-period levels, heralding the coming of a severe depression and attendant difficulties also for the CCE and its member societies. However, only three of these societies went under in the next two or three difficult years and these did so largely because they did not turn in time to the CCE for help.

December, 1920
The CCE now has 17 full-time employees, nine of whom are in the bakery. The number of member associations has increased to 44 and 50 other co-operatives are trading more or less regularly with the CCE. Sales for the year pass the $400,000 mark, and a purchase and sales department is created.

March, 1921
At the fourth annual meeting a proposal is made that the CCE acquire its own paper, instead of being dependent upon the local Finnish Socialist publishing company for space in their farm paper. The proposal is approved in principle, but "for reasons of finance" its practical realization is postponed. - The first co-operative managers' conference is held on the eve of the annual meeting; these conferences later developed into large two-day meetings, attended by both managers and directors of local societies.

September, 1921
The CCE enters into an agreement with auditor H. V. Nurmi to provide auditing service for the CCE and its member societies. This agreement was the beginning of the Auditing Department of the CCE.

December, 1921
The severe depression has made the year rather critical for the young CCE. Sales drop to $312,347 but no operating loss is shown. The number of affiliated societies increase by 8 during the year as more of the local co-operatives begin to realize the sustaining force of federation.

March, 1922
Representatives of thirteen co-operatives (including the CCE and the Franklin Co-op. Creamery Association of Minneapolis) attend a meeting in the CCE building at Superior, and unanimously vote to organize the Northern States Co-operative League. The meeting was called by the CCE's Educational Department. - The local Finnish Socialist paper (Tyomies) used by the CCE to carry its official releases, first in their farm paper and later in a weekly co-operative section, had renounced its Socialist affiliations and started to support the Communist Party. However, the CCE annual meeting even this year failed to sever relations with the paper although such a proposal was made and, as a consequence, this close association with the communist element was destined to cast for several years a regrettable shadow upon the activities and public reputation of CCE, which was not cleared up unitil the laudable course of action taken after 1929.

June, 1922
John Nummivuori resigns to become manager of the Central States Co-op. Wholesale Society, East St. Louis, Ill., and Eskel Ronn, then bookkeeper, is elected manager of the CCE in his place.

October, 1923
The second annual convention of the Northern States Co-op. League is held in Superior. - The 5th Co-operative Training School is held with 34 students in attendance.

December, 1923
Sales for the year increase 49% over 1922 and pass the half million mark.

The Year 1924
Sales for the year total $613,214, and number of affiliated societies has increased to 60.

April, 1925
George Halonen elected Educational Director of the CCE upon the resignation of V. S. Alanne in January, to accept a similar position with the Franklin Co-operative Creamery Association in Minneapolis.

December, 1925
The year has shown steady growth, with 5 new member societies added and with $200,000 increase in volume.

The Year 1926
CCE sales pass the $1,000,000 mark for the first time. New quarters purchased for the bakery, at Grand and Fifth in Superior. - First issue of the monthly magazine "Co-operative Pyramid Builder" published in July.

The Year 1927
The tenth full year of operation ends rather auspiciously for the CCE. Its sales continue to grow; member societies now total 76; paid-in share capital is nearly $50,000, and net income for the year amounts to $18,335.

The Year 1928
When the year ends, CCE's net worth passes the $100,000 mark; sales for the year are over 1½ million. - Membership list is increased by eight to 84, and paid-in share capital to $65,733. - Educational activities are extended and A. J. Hayes added to the Educational Department.

The Year 1929
Membership continues to increase and another quarter million is added to the sales. - The October stock market crash is a harbinger of another serious depression. - The Communist Party fails to gain control of CCE by attempted pressure upon the directors and responsible executives, and launches a violent attack to either capture or destroy the central organization and its supporting societies. The issue is fought out in the next 3-4 years. The attack fails and the struggle serves the happy end of unifying the co-operators throughout the district and to establish beyond question the co-operative integrity of the CCE and its affiliated societies. - The CCE starts publication of its own Finnish Co-op. Weekly, first as a temporary publication, and then, from the first of the following year, as its regular Finnish organ. Henry Koski is engaged as editor.

The Year 1930
The three-day annual meeting, attended by 249 official delegates from 72 member societies, not only administers a complete defeat to the remaining small communist faction, but also ousts from the board three directors who had joined with the communists in machinations against the CCE. - The Northern States Women's Guild, a federation of local Women's Co-operative Guilds, largely in the CCW territory, is organized with headquarters in Superior. Within a year there are guilds in 46 localities with a total membership of 900. (About a year later the Co-operative Youth League is organized).

The Year 1931
The annual meeting votes to change the name to CENTRAL CO-OPERATIVE WHOLESALE (CCW for short). - Eskel Ronn, manager of the CCW for the last nine years, suddenly dies at Rochester, Minn., on May 14. - At a meeting of the board of directors held in the same month, H. V. Nurmi, chief auditor of the CCW, is elected its manager. - The first annual "Co-op Rally" is held under the auspices of the CCW at the Co-op Park, Brule, Wis., in September. - The first national co-operative Month is observed by the CCW and co-operatives throughout the district in October.

The Year 1932
The Clothing Department, a new division, completes its first full year with sales of $97,542. - The low point in depression years' volume is reached with a total sales of the CCW at $1,309,697, from which sales have expanded rapidly thereafter each year.

The Year 1933
Articles of incorporation of the CCW amended by the annual meeting to provide for a board of 15 directors, instead of 11 as up to that time, to maintain adequate representation of the growing membership in the administration. - Some 150 separate items of merchandise are distributed under the CO-OP label. - Number of employees increased to 55 this year.

The Year 1934
Authorized by the 1933 annual meeting of the CCW, the Co-operative Publishing Association is incorporated and starts operations January 1, and the Wholesale turns its two papers, book sales and job printing over to it. The CCW and affiliated co-operatives constitute shareholders of the Publishing Association. - The National Co-operatives, Inc., of which, CCW is a charter member is organized; headquarters now in Chicago. - At the end of the year the member societies of the CCW number 97, and total sales have reached a new record of $1,787,556, with sales of the comparatively new but fast growing clothing department near a quarter million.

The Year 1935
The CCW purchases the former Eimon building and moves into its new headquarters in January. - Sales this year pass the $2,000,000 mark by a wide margin. - Coffee roasting plant installed and starts operation in November, an immediate success. - Widespread interest in consumers' co-operation general throughout the country, with increasing organizational activities in CCW area; CCW employs a full-time fieldman to assist newly organizing groups, as well to give aid to established societies in expanding their activities.

The Year 1936
The number of member societies is increased by eight to 107, and the CCW in this year served over 160 co-operatives, member and non-member. - Sales jump to $2,845,741, and efficiency of the Wholesale is reflected in an all-time low total expense ratio of 4.98%, - Employees number 71 at the end of the year. - The Virginia, Minn., branch warehouse and feed mill opened in October. - Twelfth Co-operative Training School held, with 35 students. - The Co-operative Builder becomes a weekly (formerly twice a month), and both the Builder and the Finnish Co-op. Weekly subscription lists increase sharply. - Six new stores opened for operation in the area with CCW's assistance.

Published 1937, p. 3-32.

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