to give further credit to the Buffalo headquarters and at the end of the first year of operation one of the office force confided to a friend that there was a ten thousand dollar deficit. When bankruptcy was finally declared in midsummer, the promoters were not to be found. The principal organizer, an ardent friend of labor for many years, had been completely duped by these promoters and was left penniless and alone to face hundreds of investors. Cooperation was put in disrepute for thousands of men and women in dozens of cities and towns throughout the State.

Cooperation cannot be developed downward from a central wholesale organization with a corps of organizers, nor will it grow when built upon mercenary motives. In this case organized labor in the state was partly to blame for not heeding the warning of a few groups of cooperators who were aware of the nature of the concern early in its history. But the ultimate blame lies with the individual men and women who joined the corporation without looking carefully into its organization.

The Cooperative Society of America.

In 1920 The Cooperative Society of America was doing a flourishing business in Chicago and vicinity. One of the leaders of the enterprise went to Europe in 1921 and convinced most of the leading cooperators of those countries that he was the greatest power in the cooperative movement in the United States. By the summer of 1921, the agents of the principal promoter of this scheme, Harrison Parker, were operating in New York City, and scores of salesmen were covering the various boroughs selling stock. Within two weeks all the agencies interested in protecting cooperation were organized to fight this fraud. The matter was placed in the hands of the Attorney General and a special deputy appointed to prosecute. The leading newspapers ran an expose of its operations. At this juncture, the Chicago headquarters suddenly went into the hands of a receiver and the New York office closed its doors.

Late in the year federal action was instituted against Harrison Parker in Chicago. The entire business of the so-called cooperative was disclosed to the courts. It was found that 81,000 people had invested fifteen millions in this gigantic fraud. Here in New York there were many hundreds, if not several thousands, of men and women who lost large sums of money in the ensuing bankruptcy. These people were taken in by the dramatic appeal to their selfish interests. The Chicago organization showed them photographs of the "massive buildings" in Chicago in which it was doing business, spoke glibly of its banking and insurance departments, and then promised them a share in the spoils if they would pay $75 for their certificates which were worth only $25 or $50 at their face value.

That so many people could be duped by these "get-rich-quick" methods is an indication of the amazing lack of cooperative understanding which prevails in the United States. It is a part of the purpose of this Bulletin to correct the misunderstanding which prevails because of the fraudulent use of the word cooperation. In the case of a suspected false cooperative, test it by the Rochdale principles. If it fails to measure up to them take the matter up directly with the State authorities or the Cooperative League of America.

HOW TO START A COOPERATIVE ENTERPRISE IN NEW YORK STATE

In starting a cooperative enterprise two things must be considered: first, the kind of business to go into and, second, the method of organization. Any group desiring to engage in a cooperative venture should first of all, through a committee and by consultation with experts, determine what type of enterprise will serve them most effectively. Where competition is unusually keen and profit margins are low, cooperation is less likely to be of service than where the opposite is the case. Whatever enterprise is started men experienced in that business should be consulted as to the location of the business, the stock and equipment needed, the operating capital necessary, etc.

Preliminary organization should likewise be handled by a committee which might estimate the number of persons who would become members, the service each could contribute to the society, etc. Meetings should be held to educate the group in both cooperation and the special need of the undertaking. For this purpose many educational bulletins may be obtained from the Cooperative League of America and other reliable sources.

Actual organization of the society consists of incorporation, election of officers, the adoption of by-laws, and the immediate adoption of a sound system of bookkeeping. No action undertaken before incorporation has any legal effect on an incorporated body, so early incorporation is desirable. The New York State law requires that all firms using the word "cooperation" incorporate under one of the three state cooperative laws. Outside of farmers' cooperatives practically all cooperative societies are incorporated under the Stock Law known as Article III. Copies of these laws may be obtained from the State Department of Farms and Markets. The Department has prepared simple forms for incorporation under this law. When these are filled out and sworn to and the papers filed with the Secretary of State and the County Clerk, the society may legally begin business. The fee of the Secretary of State is $30. A board of directors is named in the incorporation papers and this board, through a paid manager, will transact the society's business. Model by-laws, upon which the by-laws controlling the organization may be based, may be obtained from the State Department of Farms and Markets or from the Cooperative League of America.

THE PRESENT TREND OF COOPERATION

There have been significant developments in the cooperative enterprise in New York in the last two years. In the first place while a number of small groceries closed their doors, the larger cooperatives have grown larger and more prosperous. At last there appear to have developed cooperatives which have passed that critical stage connected with the life of a newly-organized business. One of these larger cooperatives, which did over $200,000 worth of business in 1921, has turned its surplus into its business ever since it started and is now buying more land to erect a second business block in order to take care of expansion which is forced upon it by the growing trade. Another cooperative has established two prosperous branches and is now doing a business of a quarter of a million dollars a year. A third, following a profitable year in which its business amounted to $205,000, is likewise building a new plant. The balance sheets of each of these associations would be the envy of most business undertakings.

A second development is the appearance of a new type of management. A group of younger men and women with a broad background, an intense interest in cooperation and a capacity of growing up with the business is working now to make these cooperatives even more successful. The cooperative movement is likely to grow in pretty close proportion to the ability of these leaders and the men and women they can attach to themselves. Heretofore the greatest handicap of the cooperative movement in this country has been the lack of trained and able leaders.

A third significant development is the adoption by cooperatives of the best methods of management and accounting. Until this had been done the cooperatives had small chance of succeeding. It is probable that cooperatives which lack some of the incentives of the ordinary commercial business will be compelled constantly to adopt the most efficient and advanced type of machinery. In setting this up as a definite standard they will escape the inertia and conservatism that ordinarily characterize large groups, a condition which at the present time is retarding the British