Union" was organized as a fresh-fruit shipping association, owned and controlled by the growers themselves. A very large number of growers, including most of the largest, became stockholders, and for some years the Union was the largest shipper of fresh fruit from California, and all its operations appear to have been honestly and effectively conducted. It secured, from the start, many concessions and advantages to the growers, which would otherwise have been delayed for years. After a successful existence for several years, the Union, in 1894, went out of business. The cause of this practical failure of cooperative work was the instability of character of the mass of its stockholders. Personal dissensions arose between some of the largest shippers, causing some withdrawals, but it is probable that the majority of the withdrawals of large shippers grew rather from a speculative fever which passed through the state, causing some who had been successful to engage in large plantings on credit, which soon brought with it the necessity for large advances, which could only be secured by a practical or actual mortgage of the crop to commission men, who, of course, insisted on marketing the fruit. But it was found that the great mass of smaller growers, whose aggregate output is, on the whole, the controlling factor, could not be depended upon at all. Commission houses, seeking the business, flooded the state with incisive "talkers," who found no difficulty whatever in exciting in the minds of the fruit-growers distrust of and even enmity to the agency of their own creation. The plan of concentrating the shipments under one general management, sufficiently powerful to insure the widest distribution possible, was thus defeated by the mental weakness of its members. There was never any ground for serious complaint of the management, and even if certain alleged abuses had existed, growers would have been far better off to have shipped through the Union, and permitted them to continue. But they were infirm of purpose, and sharpers were quick to take advantage of them. There was another reason which brought about the final winding up of a business which was still large and reasonably prosperous. Fresh fruit is a very perishable commodity, upon which freight has to be always guaranteed; the freight between California and the east was not less than $300 per car, and it often happened that, when sold, it did not bring enough to pay charges. These, however, were guaranteed by the Union, and paid, but when it attempted to repay itself by collecting the loss from the individual owners of the fruit, in many cases it practically could not be done. The result was that the large and responsible shippers, who could be reached, were compelled to pay the majority of all such losses of others, and they got tired of it. All these things are useful as illustrating the real character of human nature, with which cooperative enterprises must deal. I have stated, at the beginning of this chapter, that the dangers I was about to discuss were not absolutely fundamental, whereas those which are based on the characteristics of human nature of course really do lie at the foundation of things. But, in the use of that term, I referred to the constitution of the organization, and not to the character of its members. With a proper organization, and sufficient time and patience, we may expect, by education, to overcome the infirmities of human nature. INCOMPETENCE IN MANAGEMENT.-A merchant, thoroughly understanding his business, knows exactly what qualities he desires in his employees, and, being in continual contact with them, knows whether they have them, and whether they do their duty. As there are no personal profits in cooperative work, it is very difficult to insure the same supervision of the salaried staff that is found in a private business. The real owners of the business have none of them an amount at stake which justifies them in taking the time necessary to properly overlook it. It is also nearly always the case that the manager and other paid persons know more about the business than any of their employers. Under these circumstances, which are almost inseparable from distributive cooperation on any large scale, the principal guarantee of good management lies in the value of the personal equation of the directory, which, in a large organization, covering a wide area, is certain to be much higher than that of the average equation of the stockholders. There are, however, many facts and considerations which can be definitely formulated, and which, if thoroughly digested and properly acted upon, ought to insure both competent and honest management. Some of these things might be quite properly discussed under the heading of this chapter, but their importance justifies a separate grouping. In this connection I may say that it is not necessary, nor will it usually be possible, that the manager of a cooperative enterprise should be one of the class known as "successful business men"—that is, men of wealth. Such men invariably have a strong accumulating instinct, and the idea of cooperation does not permit the accumulation of private fortunes by the profits of distribution. There is no money to be made, honestly, in these positions. As a class, also, such men are nearly destitute of sentiment, a fair touch of which is essential to induce men of ability to lead cooperative movements. Fortunately, such men are not necessary. The majority of really good business men do not possess the accumulating instinct. They are often unwilling to submit to the privations upon which, in most cases, the foundations of large fortunes are laid, preferring the comforts of home and the advancement of those dependent upon them, to the accumulation of wealth. The brains and push of all great business organizations is largely composed of such men, who sell their talents and vigor for a fixed compensation, to colder-blooded men, who make a profit on them, and secure the reputation for business ability, which should, in great measure, be shared by their employees. They are also, of course, themselves men of ability. To become very rich, you must be very able; but you may be very able and never become rich. B CHAPTER VI. MANAGEMENT OF COOPERATIVE SOCIETIES. Y the "management" in this chapter I mean the salaried staff, who will ordinarily be appointed by the directors, and not be members of that body. In making these appointments-especially the principal officer-there are four things to be particularly considered : 1. The qualifications necessary. 2. Methods of determining the possession or lack of those qualities. 3. The money value of the service to be rendered. It will be profitable to consider these points in their order. NECESSARY QUALIFICATIONS.-The perfect manager of a cooperative distributing society will possess many qualifications not usually found in one person, and the perfect manager is not likely to be found; but it will be useful to set down the qualities which the perfect manager would have, that in considering the appointment of a mere human being, directors may check off in their minds just which of these qualities the candidate has, and which, if any, he lacks. Integrity. That this is essential needs no argument, nor is there much danger that one not believed to be honest will be appointed manager of any important cooperative enterprise; but the grade of integrity required in the manager of an important cooperative concern is of no ordinary kind; and there is always some danger that it may not be found associated with some other essential qualities, in those available for service in a salaried capacity. There are grades of honesty which can resist ordinary temptations and yet succumb to those which are extraordinary, and the manager of a large cooperative enterprise will be continually exposed to the latter. I do not refer to the mere custody of funds; ordinary pru dence on the part of directors will nearly always be a sufficient guard against embezzlement; and in all events there will be the security of a bond. And this bond, by the way, should always be that of a security company, and not that of an individual. No man's integrity can be absolutely assured, and there is no reason in asking an uninterested third party to pay for his mistaken confidence in the honesty of a friend. Besides, such bonds are often unsafe and uncollectable. The bond of a security company for $1,000 is better than a friendly bond for $10,000. In the first place, the thorough investigation which the company must make, before insuring, is a great safeguard, and, secondly, the absolute certainty of prompt and relentless prosecution to follow the discovery of any wrong-doing is the most powerful restraint on any such inclination. The usual charge for such insurance is one per cent per annum on the amount of the bond. It amounts to a reduction of salary to that extent, and should be paid by the corporation, who will in that way most readily secure a bond of that kind. It will be hard to refuse the tender of what appears to be a sufficient individual bond, and the tendency of the employee will be to save himself the expense of the security bond by inducing some friend to become responsible for him. But there are more serious temptations, arising from the power of the manager to throw business, and against this no bond can provide. If there are purchases to be made, he can, if he will, secure private commissions on these purchases; and if there are sales to be made through brokers, he can obtain a private interest in the brokerages. The Manager Is Sure to be Tempted.-Sooner or later these advantages will be offered him by some unscrupulous person who believes that all men have their price. It is not likely, at first, to be a direct and open offer which can be openly resented and reported, but there will be conversation opening the way to advantages of some kind to be given to the manager, in return for undue favors, which will rapidly crystallize into actual business, if the manager proves susceptible. And it is possible for so large an advantage to come to him, with |