Organizing the Consumer

The function of an efficient marketing service is twofold, to register producers’ quality and consumers’ preference. The measure of its efficiency is the extent to which it does these two things consistently, continuously and in what I will call an encouraging way. From the achievements of the California Fruit Growers, the Land o’ Lakes Creameries, the fluid milk collective bargaining associations of the East and the twenty-five cooperative livestock commission agencies in successful operation at the end of 1926, it is abundantly clear that cooperative marketing, provided that it extends to the central market, is adequate to meet the wants of producers; and it also encourages them to improved production. What of the consumers? Can they with safety entrust the expression of their preferences to competing salesmen? If the main competition today were between numerous distributors in equal active competition, perhaps they might. But it is not. The tendency is for competition to be restricted to a few organizations of giant size, with a quasi-monopoly of the consumer’s person and his stomach. And it encourages no active expression of his wants. Mass production, chain stores, mail order houses and departmental stores treat the consumer as an impersonal unit. The greater part of their advertisement consists in switching the passive millions from the use of A to the use of B. When we say, that consumers insist on this or that, it is metaphor for the fact that they are dragooned into believing that this is better than that. The intelligent minority, as always, sets the pace, but the minority is now in the employ of the distributing house. Those who are pinched by the shoe must be content to groan vicariously.

The great efficiency, as a business organization, of the new types of distributing houses makes competition by consumers through their own organization very difficult. The standard of living, as well as the habits of life, are such on this continent that the small economies with which consumers’ co-operation must begin make small appeal. But it was very different in England a century ago. At that time the mass of the working people were in debt in the very disagreeable form of bondage to the companies which employed them. It is known historically as the Truck System and its evils are vividly portrayed in Disraeli’s great novel, “Sybil, a Story of Two Nations.” From this they escaped by forming their own co-operative stores after the model of the Rochdale Pioneers established in Rochdale, Lancashire, in 1844 on the three-fold rule of sale for cash, at market price, with distribution of surplus (over and above a fixed interest of 5% on capital) to members in proportion to their purchases. This is the famous patronage dividend—the “divvy” as English workers familiarly call it.

Need alone does not evoke a remedy. Idealism also is required. This was furnished by Robert Owen and it found enthusiastic response among a section of the people which was then falling from its former high estate, as an aristocracy of labor, to a position of inferiority and destitution. These were the hand-loom weavers of the north of England and Scotland, whose livelihood was being destroyed by the progress of the factory system. In instance after instance the first committee men of co-operative stores, which today are great and prosperous, were hand-loom weavers earning not more than two dollars a week. Often their little weaving shed was the first shop of the society, and they, served at the counter, literally, for love, in their spare time. By the 1860’s the co-operative movement had multiplied sufficiently to justify the creation of two great wholesale societies, the English Co-operative Wholesale Society (C. W. S.) in 1863 and the Scottish Co-operative Wholesale Society (S. C. W. S.) in 1868. By this federal device (and it is in the field of industrial democracy that 19th century Britain made a distinctive contribution to the federal idea), retailing was integrated not only with wholesaling, but also with industrial production. For in time the wholesale societies became great factory producers, building and equipping their factories out of savings placed with them by their member stores, and selling their output exclusively to those stores. In this way the working people of Britain created without one penny of assistance from the Government what Lord Rosebery, truly called “a State within a State.” The sales of the retail societies—Industrial and Provident Societies, as they are known at law—amounted in 1925 to nine hundred million dollars; the sales of the two wholesale societies to three hundred and seventy-five million dollars; the production of the two wholesales to one hundred and seventy-five million dollars. The workers of Great Britain are strong unionists, but as organized consumers they employ in their shops and factories an army of two hundred thousand other workers; and thus they have learnt to manage workers for themselves. It has been no easy task; for the co-operative employees are militant unionists. There has been some friction and occasionally a strike. But the co-operative societies now lead the way in paying good wages; and while they do not allow themselves to be milked in the name of Democracy, they are sensitive to the standards which as working men they ought to provide for other working men. Structurally, the co-operative store and the municipality are identical, the one composed of wage-earning buyers of competitive goods, the other of tax-paying citizens enjoying services of a monopolistic character. Organized labor entered national politics through municipal politics; and the ability with which British working men and women have discharged their duties as municipal councillors has been due in no small degree to the training acquired in the co-operative store.

In Great Britain, as in America, the chain store and kindred novelties have made great strides in recent years. Old established local family businesses are being rapidly absorbed by London firms. But their custom has been drawn largely from the middle class, or from articles in which the co-operative stores do not specialize. The co-operative store combines local ownership by the consumers themselves with centralized direction. It is therefore not only in line with the modern rationalization of industry, but it avoids also the chief danger of rationalization, the divorce of ownership from local interest. The co-operative stores advertise; but their advertisement is not wasteful, for it takes the form of urging fellow workers to rally, round their own creation. Therefore the worker feels that by dealing with his co-operative society he is helping to realize his democratic ideals. Can political democracy be real unless it is accompanied by economic self-government in some field of working class life? That is the question which Great Britain asks of America today.

I began by saying that an efficient marketing service encourages the consumer. This is admirably illustrated by the fertile way in which the association of consumers has extended its basic principle to allied fields of economic activity. Most people on this continent have heard of the British co-operative store movement, but few realize that it is something more than a democratic chain store system, with appropriate wholesale facilities. In fact it is a great banker and insurance agency. The Bank of the C. W. S., with headquarters at Manchester, Lancashire, acts as the clearing house of the movement, as banker for its member stores, as well as custodian of the savings of individual members of those stores. Its turnover in 1925 was nearly three billion dollars. The co-operative movement also undertakes insurance: social insurance against sickness under the Government scheme of national health insurance, and general insurance, life, fire, accident, etc. To operate general insurance the two wholesale societies combined in 1914 to form a single joint insurance society, the Co-operative Insurance Society, (C. I. S.). Its premium income rose from about two million dollars in 1917 to sixteen million dollars in 1926. One co-operative activity is made to help another. The co-operative store brings business to the cooperative insurance agency, which is housed in the same building or near to it; and members of the middle class, to whom the co-operative store has not hitherto appealed, are now being attracted to the store by the satisfaction received from insurance with the co-operative agency. Before the war the great town of London was a co-operative desert. Since the war the movement has made greater progress there than anywhere else, and the line of progress has been from without inwards; for it is on the outskirts that the wage-earning factory population, the natural recruits to co-operation, bulks most strongly.

But it is not only to men that the co-operative movement makes its appeal. The membership numbers five million persons; and usually not more than one in a family is a member. More than half the working class families of Great Britain are connected through some member of the family with a co-operative store. But whether the wife is the member or not, it is she who normally has the spending of the weekly wage, and on her rests the prosperity of the co-operative movement. The visitor to the United States is impressed by the part which educated women play in the social life of this country„ but he sees less evidence of the participation of working class women in activities outside their home (or automobile). Such is not the case now in Britain. Up to 1900 her role in the co-operative movement was silent; since then through the Women’s Co-operative Guild she has come to the front. She has asserted her rightful place and made a healthy invasion of spheres which were formerly considered to belong to men. In particular the women’s guild has aroused interest in the wage problem as it concerns workers generally and women workers employed by the Co-operative Societies themselves. Both locally in filling gaps in cooperative membership and securing co-operative support for municipal welfare work, and nationally in the formation of a co-operative opinion in politics, women co-operators have led the way. In 19th century England the great trinity of working class associative effort was the Trade Union, the Friendly Society and the Co-operative Store. But the Friendly Society no longer plays its old dynamic role. Today the trinity is the Trade Union, the Labor Party and the Co-operative Store.

He would indeed be a cynic who should desire to see the horrors of the Industrial Revolution re-enacted in order that the prick of necessity might stir the workers of today to self-help through association. And assuredly American employers will not encourage the labor union; at the best they will come to terms with it, if it forces itself on them. But when, as in the American South today, industrial villages are being created by large employers, the possibility presents itself that stores now controlled by. them may be handed over eventually to their employees. The Virginia Quarterly Review of July 1928 describes the migration of cotton mills from new England: “The stores in the Southern mill villages are directly or indirectly controlled by the mill management; therefore, gouging, profiteering and overselling, the evils of the northern slum commerce—are non-existent.” This reverses British experience. In isolated villages, especially mining villages where company stores lasted longest, fraud and oppression were worst. But accepting this picture as true, have we not here a temporary situation from which employers will retire as their community grows? And is not this an opportunity for an experiment in industrial democracy? An efficient company store is better than a little corner store, but it is not so good as one owned and controlled by the workers themselves. A programme of education would be necessary, and a very strong programme too. For paradoxical as it may seem, distress helps popular enthusiasm by causing the distressed to seek thereby economic salvation. Isolated shop-keeping, however, cannot hold its own. Could not the large mill owners lend their support to the framing of a scheme under which a wholesale society, representing the workers in different mill localities, should take over company stores and operate them as an integrated chain? The South, we are told, is solid for Democracy. Perhaps here is an opportunity for a practical manifestation of it.