The Early Origins of Cooperatives
In early human societies people learned to cooperate and work together to increase their success in hunting, fishing, gathering foods, building shelter, and meeting other individual and group needs. Historians have found evidence of cooperation among peoples in early Greece, Egypt, Rome and Babylon, among Native American and African tribes, and between many other groups.
Early agriculture would have been impossible without mutual aid among farmers. They relied on one another to defend land, harvest crops, build barns and storage buildings, and to share equipment. These examples of informal cooperation – of working together – were the precursors to the cooperative form of business.
The First Cooperatives
The earliest cooperatives appeared in Europe in the late 18th and 19th centuries, during the Industrial Revolution. As people moved from farms into the growing cities, they had to rely on stores to feed their families because they could no longer grow their own food. Working people had very little control over the quality of their food or living conditions. Those with money gained more and more power over those without. Early co-ops were set up as a way to protect the interests of the less powerful members of society – workers, consumers, farmers, and producers.
Groups of these people began experimenting with various methods of providing for their needs themselves. They decided to pool their money and purchase groceries together. When they purchased goods from a wholesale dealer and then divided them equally among themselves, they were surprised at the savings and higher quality of products they were able to obtain.
The Rochdale Equitable Pioneers Society
In 1843, workers in the textile mills of Rochdale, England went on strike. When the strike failed, the millworkers began to look for other ways to improve their lives. Instead of calling for another strike or asking charitable groups for help, some of these people decided to take control of one of the most immediate and pressing areas of their lives. They believed they needed their own food store as an alternative to the company store. Twenty-eight people founded the Rochdale Equitable Pioneers Society.
After saving money for over a year, these pioneers opened their co-op store at 31 Toad Lane on a cold December evening in 1844. Although the founders agreed to sell just butter, sugar, flour, and oatmeal, they also offered tallow candles for sale that night. They were forced to buy candles because the gas company refused to supply gas for the new group’s lights. They bought candles in bulk and sold what they didn’t use to their members.
The Rochdale Pioneers weren’t the first group to try forming a co-op but they were the first to make their co-op succeed and endure. To avoid the mistakes made by earlier co-op societies and to help others, they developed a list of operating principles governing their organization. These formed the basis for what are now know as the cooperative principles. Rochdale is still considered the birthplace of the modern cooperative movement.
The Growth of Cooperatives in the United States
In the United States, cooperatives of one sort or another have roots going back to colonial times. Like their counterparts in England, these early groups experimented with ways to band together and gain economic clout. One of the earliest co-ops was established in 1752 by Benjamin Franklin and is in operation to this day – the Philadelphia Contributorship for the Insurance of Homes from Loss by Fire. It is the oldest continuing co-op in the United States and predates the historical Rochdale group but its place in co-op history is less well known.
From colonial times on, most early American co-ops were formed primarily for the benefit of farmers. Some co-ops helped farmers keep their costs low through joint purchases of supplies, such as feed, equipment, tools, or seed. Some marketing co-ops helped farmers obtain the best prices for their goods by combining their crops and selling in large quantities. Others provided storage or processing services, such as grain elevators or cheese making.
Consumer groups in the United States began taking note of the early British consumer co-ops and the success of American farmers who worked together. They began forming consumer protection associations. in 1845, one group started a store in Boston, founded on the same principles the Rochdale Pioneers had applied a year earlier. These “protective unions’ eventually became divided over political and social issues of the time and were all out of business by the end of the Civil War.
Most early American co-ops failed due to insufficient capital (money invested by the owners), poor management, and a lack of understanding of the cooperative principles by their members. It wasn’t until the early 1900s that co-ops began to have true, long-lasting success in the United States.
Consumer Co-ops Make Waves
In rural and urban areas alike, consumer co-ops were first organized to provide consumers with control and to fight the unfair practices of private and company stores. Over the years, consumer co-ops have experienced “waves” of growth and development, followed by periods of decline.
The first of these waves began in the early 1900s with what was called ”the Rochdale plan.” Under this plan consumers organized into buying groups to purchase from a cooperatively owned wholesaler. The wholesaler would then gradually help these buying clubs convert their operations into retail outlets by supplying management, inventory, and capital. In 1920, there were 2,600 consumer co-ops in the United states – all but 11 were general stores – and 80% were in towns with populations of less than 2,500. Combined sales volume for these stores was about $260 million. Unfortunately, when the wholesalers began having problems due to rapid growth, the whole system crumbled, and most co-ops were closed within the decade.
The Great Depression the the 1930s triggered another great wave of co-op organizing in cities and in rural areas. In California, the “End Poverty in California” (EPIC) campaign established and promoted ”self-help” cooperatives and worked unsuccessfully to elect the reformer Upton Sinclair governor. Several national “consumers’ unions” were formed to promote consumer education and protection. In 1936, Toyohiko Kagawa, a Japanese clergyman with a social gospel, inspired the development of many co-ops in the United States by preaching ”brotherhood economics,” his term for cooperation. “Cooperatives,” he said, “are the foundation of world peace. They are the love principle in action. Whether we like it or not there is no other way but cooperatives.”
These efforts, bolstered by Franklin Roosevelt’s New Deal, supported urban co-ops with technical assistance. Some leading consumer co-ops were launched in this period – in Berkeley, Palo Alto, Eau Claire (Wisconsin), Hanover (New Hampshire), and Hyde Park (a Chicago, Illinois neighborhood), and Greenbelt (Maryland – a Washington, D.C. suburb). All of these stores survived to their 50th anniversaries. but in the 1980s, the co-ops in Berkeley and Greenbelt closed, and those in Eau Claire and Palo Alto greatly scaled back their activities. The co-ops in Hanover and Hyde Park are thriving and growing – both with dynamic membership programs.
In the late 1960s and 1970s the “new wave” of consumer co-ops began. Born out of the ideas and philosophies of the 1960s counterculture, these stores were opened by young and idealistic members. They set up co-ops to fit their belief in equality, not to follow their co-op predecessors. Most of the new co-ops sold only whole, unrefined, and bulk foods. Their operating practices were diverse and experimental. Some stores had limited store hours, others were open seven days a week. Some were run by volunteers, others by fully paid staff. Some had various forms of worker self-management, others had more traditional management structures. Some paid year-end patronage refunds, others gave members a discount at the cash register.
These co-ops were pioneers in what came to be known as the “natural foods” industry. But not all were successful. Some failed because of their experimental structures and operating systems. Most were unable to escape the same problems that had troubled older, earlier co-ops – insufficient capital, inadequate membership support, and inability to improve operations as the natural foods industry developed, a stronger commitment to idealism than to economic success, the lack of adequate support from their wholesalers, and resistance to consolidation. But the ”new wave” co-ops which survived are strong and well-established.
The consumer co-op movement in the United States has had mixed success – especially in contrast to consumer co-ops in Europe and Asia. But each wave of cooperative growth produces renewed enthusiasm for a time-tested idea and innovations that prove successful in the consumer marketplace – at least for a time.
The above text is from the Employee Orientation Handbook on Co-op History by Karen Zimbelman. © Karen Zimbelman, used by permission.
Top photo: Welch’s Grape Juice archive photo
Bottom photo: Founding members of the Rochdale Pioneers.