A clever organizer two years ago started organizing a cooperative store in New York.  On the society’s letter heads he had printed a picture of the world and across the world the word “Big.”  He was going to start a whole chain of stores.  In three months the first and only store was put into the hands of an assignee and the man left the city.  An audit of his accounts showed that he had collected $3,600.  One-fourth of this had gone for promotion expenses, $2,350 for rental, fixtures, etc., leaving only $350 for operating expenses.  Where the Finns spent three-tenths of one per cent for promotion he had spent twenty-five per cent.  This had forced the association to start with so small an operating capital that it was soon badly embarrassed for lack of funds and could do nothing but close its doors.

It would be possible to go on with many other illustrations.  Such failures as these are not really a test of genuine cooperation.  Any ordinary business with such management would also have failed.  But it is significant that most of the recent cooperative failures have been among grocery stores.  In this particular business the margin of profit is so small that only the most skillful and economical management can bring success.  A recent survey of all the private grocery stores in one city showed that the average annual profit was only $400 per grocer.

There is no longer any excuse for cooperatives to follow the blind into the pit.  There are many sources of information and advice available to cooperatives that should be fully utilized before any money is spent in a cooperative enterprise that promises only failure.

FALSE COOPERATIVES

The impractical cooperative which fails is bad enough, for it discourages many people from making a second attempt, but the false cooperative is a greater menace to the cooperative movement.  The private promoter with his selfish interests rigs up a scheme to look like cooperation, but the actual purpose is to provide a channel whereby thousands of dollars will flow from the pockets of the working people into those of the promoter.  Inasmuch as New York State has a law which forbids the use of the word cooperation by any concern which is not organized under the Cooperative Law, such promoters have to be uncommonly shrewd.

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The Glynn System.

Early in 1920 a group of three or four private business men in Buffalo established a promoting corporation and then set out to organize a cooperative wholesale which was to be a separate concern from their promoting enterprise but was to be controlled by it.  The promoters sold shares in the Buffalo Wholesale to individuals in fifteen or twenty cities and towns all the way across the central part of the State.  They opened up six or seven stores and handled goods in large quantities through their wholesale plant.