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TESTING Fmm / Tremors in the chemical industry 





/.\v a 



. of 

Readers are invited to submit 
items for publication, 
indicating whether 
the sender can be identified. 
Items must be fully documented 
and not require any comment. 

MISSING CHILDREN “ The FBI automatically keeps data on your car if it is 
missing, but information about your missing child is not 
similarly collected or kept unless there is evidence of kidnapping or violence. So 
I introduced a proposed Missing Children Act in the House which would do two 
things: Put missing children on the national computer and enter information 
about the more than 1,000 bodies of children and adults each year which now are 
never identified. The cost of using the existing National Crime Information 
Center computer for this added purpose would be almost nothing and the 
benefits of the new service would be great. Congressman Paul Simon (D., 111.) 

PROFITABLE TAX RETURNS Almost 34 million 1981 tax returns received by 
the IRS were prepared by someone other than 
the taxpayer. Based on the average $32 tax preparation charge by H&R Block 
offices (which prepared over ten million returns in 1981), Americans probably 
shelled out more than a billion dollars to get help with IRS forms. 

PEACE IS PRIVATE The Reagan administration told proponents of a federal- 
ly financed peace academy that peace research and non- 
violent conflict resolution should be left to the private sector. Reagan wrote 
Sen. Spark Matsunaga, D-Hawaii: “I regret to say that we are unable to support 
the establishment of a national academy of the type proposed. I find it difficult 
to justify the expenditure of some $66 million. ...” Matsunaga, who headed a 
special federal commission set up to examine a peace academy, argued that the 
cost of the academy would be “one-tenth the cost of building one B-l bomber.” 

St Louis Post-Dispatch 

DEFUNDING THE LEFT The current crusade of the right-wing focuses on “de- 
funding the left”-blacklisting certain groups from 
federal funding. The April Conservative Digest targets 175 such groups, includ- 
ing the Corporation for Public Broadcasting, the American Bar Association and 
the League of Women Voters. Interchange 

LOVE IT OR LEAVE IT The Citizens Committee for the Right to Keep and 
Bear Arms in San Francisco have started a cam- 
paign called “I Hate San Francisco.” The campaign follows a ban on hand guns 
passed recently by the Bay City supervisors. Group Research Report 

LESS PAPERWORK? One of Missouri Sen. John Danforth’s legislative tri- 
umphs is the “Paperwork Reduction Act of 1980” 
which the senator promised constituents would “set controls on the 
phenomenal number of federal forms that flood out of Washington.” It doesn’t 
seem to work quite that way. The IRS recently sent a peculiar notice (number 
610, 11-81) to a taxpayer. The message was brief; the tone firm. “The Paperwork 
Reduction Act of 1980 says we must tell you why we are collecting this informa- 
tion, how we will use it, and whether you have to give it to us. We ask for the in- 
formation to carry out the Internal Revenue laws of the United States. We need 
it to ensure that taxpayers are complying with these laws and to allow us to 
figure and collect the right amount of tax. You are required to give us this infor- 
mation.” It took one more form to tell us about the paper reduction. 

HAMMING IT UP The prestigious Simon and Schuster publishing house has an- 
nounced the October 1982 release of Cheeks, described as a 
photo directory to “the greatest tushes and cutest behinds of the world’s sexiest 
men, at last revealed in luscious full color.” The book was compiled by the 
editors of Play girl magazine. 

MISSISSIPPI MUCK A New Orleans college student has begun bottling Missis- 
sippi River water for sale in the French Quarter gift shops. 
The vials carry a guarantee that their contents can “remove paint, kill weeds, 
and cultivate tumors.” The New Orleans municipal water supply contains a 
wide assortment of harmful elements, including arsenic, cyanide, and mercury 
salts. Mother Earth News, H76 

Page Two 

FOCUS /Midwest 



FOCUS (ISSN: 0015-508X) Volume 15, Number 
93. Second class postage paid at St. Louis, Mo. 
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(Editorial Advisors are not responsible for 
the editorial policy of FOCUS/Midwest.) Irving 
Achtenberg, Douglas B. Anderson, Irl B. Baris, 
Eugene L. Baum, Lucille H. Bluford, H.T. 
Blumenthal, Leo Bohanon, Eugene Buder, 
David L. Colton, Leon M. Despres, Pierre de 
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Polikoff, James D. H. Reefer, Don Rose, 
Anthony Scariano, Sherwin A. Swartz, John M. 
Swomley, Jr., Tyler Thompson. 


EDITORIALS / Danforth: Reaganomics on ‘right 
track’; Missouri utilities exploit unfair initiative petition 
laws; Chicago 

so racist even Reagan looks good 4 


Blacks win in Kansas City, St. Louis 6 

Official Missouri primary results 6 

Issues dominate Woods, Danforth senatorial race 7 


Will Byrne sit out Stevenson, Thompson race? 8 

Tradition revived: Byrne-Thompson deal 8 



TESTING FRAUD: Federal indictments send tremors 
through chemical industry / Judith and Mark Miller 10 


George Palmer 13 

COMING INTO FOCUS / Congressman Paul Simon 13 


•A revolution in the making / Robert Mayer, Roland Klose 16 
•Food coops reflect regional needs / John N oiler 19 

•Independence coop: Top sales in Missouri/ 

Pat Heady, Ken Reveill 20 

•East Wind builds a new community / Allen Butcher 22 

•Capitalist, socialist, or something else? / C. Brice Ratchf or d 24 
•Coops organize to provide energy / David Haenke 26 

•Resources / Literature on cooperatives; Organizing 
a cooperative; Cooperative organizations; The Law and 
Cooperatives 27 


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Page Three 

Volume 15, Number 93 


Danforth : Reaganomics 
on ‘ right track 9 

President Ronald Reagan is making 
rich Americans richer and poor Ameri- 
cans poorer. 

That’s the conclusion of a study re- 
leased September 13 by the Urban Insti- 
tute. The nonpartisan organization 
claims that about 46 million families with 
incomes of less than $15,000 a year will 
see almost no change in buying power. 
The poorest of the poor — those served in 
part by government support— will have 
income levels cut by four percent, accord- 
ing to the study. For the midwest, the 
news is even gloomier: a shift in invest- 
ment will continue to the sunbelt. The ad- 
ministration’s tax cuts and budget priori- 
ties are widening that gap. 

The Urban Institute’s study confirms 
dismal projections and realities that are 
already well known to readers of FOCUS/ 

Item: The Tax Foundation reports in a 
study released in August that the aver- 
age American family is worse off than it 
was ten years ago. In 1980, before Rea- 
gonomics, the median after-tax family in- 
come was $8712 in 1972 dollars. The 
group estimates that for 1984 the after- 
tax income will be $8617. 

Item: Defense spending continues to in- 
crease under Reagan: from 24 percent of 
the budget in fiscal year 1981 ($160 bil- 
lion), to 31 percent of the budget in fiscal 
year 1984 ($250 billion). 

Item: Unemployment reached 10.8 mil- 
lion in July and has continued at that 
high level. That number fails to include 
an additional 1.7 million Americans who 
have simply given up looking for work 
and are not included in government re- 
ports. Compounding the labor problem is 
the large number of Americans involun- 
tarily working part-time instead of full- 
time jobs, a figure exceeding six million, 
according to AFL-CIO claims. 

The Reagan plan for economic recovery 
has restrained inflation by creating mas- 
sive unemployment. The Reagan adminis- 
tration has offered platitude and diver- 
sion in the face of business failures and 
monopolistic mergers. 

Clearly, any Reaganomics-supporting 
incumbent will have to do some explain- 
ing to his constituents if he expects re- 
election in November. Missouri’s Senator 
John Danforth will be no exception, no 
matter how valiently he attempts to 

fudge his record on nuclear proliferation, 
business regulation, and labor issues. 

And Danforth’ s stand is unequivocal. 
No Missouri congressman scored higher 
in 1981 in voting for Reagan-backed 
issues. No Missouri congressman scored 
lower in opposing Reagan-backed mea- 
sures (FOCUS /Midwest number 92). 
Even when Danforth voted with the ma- 
jority of the U.S. Senate to override 
Reagan’s veto of a fiscal year 1982 sup- 
plemental appropriations bill, he issued a 
statement that explained, “My vote to 
override the President’s veto should not 
be viewed as a lack of support for the 
thrust of his economic program. I contin- 
ue to believe that he is on the right 

The Missouri senator’s reelection bid 
gives Missourians a perfect opportunity 
to send the White House a clear message 
in November. 

High court strikes a blow 
against utilities, for democracy 

Union Electric and Southwestern Bell’s 
cheap and crafty effort to deny Missouri- 
ans a chance to vote on a voluntary con- 
sumer lobbying group— the much her- 
alded citizens utility board-unintention- 
ally helped clean up the state’s initiative 
petition process. 

In early July, backers of the consumers’ 
utility plan submitted 102,437 signatures 
to Secretary of State James C. Kirkpat- 
rick, a number considerably higher than 
those needed to put a statewide issue on 
the ballot. Union Electric and South- 
western Bell, in collusion with the Interna- 
tional Brotherhood of Electrical Workers 
Local 1455 (representing utility workers), 
attempted to persuade individual peti- 
tioners to withdraw their names from the 
consumer-backed initiative. Masquerad- 
ing as “Citizens for Fair Consumer 
Rights,” utility employees convinced 
over 1600 petitioners that the proposed 
referendum threatened union jobs and 
provided Missourians an added, unneces- 
sary bureaucracy. 

That organization, no matter how spu- 
rious its motives and actions, took legal 
advantage of discriminatory Missouri 
statutes which permit a petitioner to 
withdraw his or her name from a petition 
after it has been filed with the Secretary 
of State. The law, however, did not per- 
mit petition-backers to add additional 
names. The withdrawal law put any peti- 

Page Four 

FOCUS 'Midwest 


tion effort at a profound disadvantage be- 
cause backers of a measure must antici- 
pate the extent to which opponents— such 
as consumer-financed utility monopolies 
—will attempt to raid the ranks of peti- 

Fortunately, the merits of that argu- 
ment swayed Missouri’s Supreme Court 
and the court has since reversed a ruling 
upholding Kirkpatrick’s precipitous deci- 
sion to remove the issue from the ballot. 
In addition, the court ordered the utility 
board proposal back on the ballot and 
struck down, in a 4-3 decision, the name- 
withdrawal issue. 

While Missouri’s attention should have 
been focused on the merits and demerits 
of the proposed consumer plan, the at- 
tempt by St. Louis utilities to subvert the 
democratic process gives voters a very 
convincing and emotionally charged rea- 
son to support a measure giving consum- 
ers representation where they have had 
i none. In a democracy, fortunately, the 
people, not special interests, will some- 
times prevail. 

Chicago is so racist even 
Reagan can look good 

According to the 1980 Census, Chicago 
remains the most segregated large city, 
and Illinois is still the most segregated 
state in the nation. According to recent 
events, Chicago’s racial politics are be- 
coming more blatant than ever, even pro- 
viding the Reagan administration with 
one opportunity after another to show 
that it has not given up enforcing civil 
rights laws. 

I The humiliation, degradation and dis- 
missal of black administrators and board 
members from the police, the Board of 
Education, the Chicago Transit Authori- 
ty, and the Chicago Housing Authority 
elicited vigorous protests and boycotts 
by black and liberal groups in Chicago, 
and rhetoric from Washington, including 
the empty threat to cut off federal funds 
if the executive director and entire board 
of the racist and wasteful CHA were not 
removed. (The white executive, a political 
crony, was promoted to CHA chairman, 
with a handsome salary boost.) 

Mayor Byrne’s racially gerrymandered 
ward map, forced on a reluctant and em- 
barrassed, but obedient, City Council last 
November, has given the Reagan admin- 
istration a chance to prove to the nation 
that it is Gung Ho on civil rights. In mid- 

Volumel5, Number 93 

Bn this issue 

This issue focusses on the cooperative 
movement, from the perspective of Missouri. 
Robert Mayer, a Kansas City-based consul- 
tant to cooperatives, contributed his energies 
in assembling factual articles written by 
authoritative activists in the cooperative 
movement. Essentially, the special 15-page 
section is a primer on coops. An extensive list 
of resources is provided for readers who wish 
to explore the movement in more depth. 

And while citizens in the Illinois/Missouri 
region won’t have the opportunity, FOCUS 
discusses the nuclear freeze resolution which 
one quarter of the nation will consider in No- 

September, the Justice Department de- 
clared its intention to intervene (for the 
good guys) in two citizen suits in federal 
court contending the Bryne ward map 
violates the Voting Rights Act of 1965. 

The mayor’s supporters, as well as op- 
ponents, were taken aback by the map 
prepared in secret (with the help of ex- 
felon Tom Keane) and rammed through 
the City Council last November, after 
Mayor Byrne increased from 10 to 17 the 
number of aldermen required by state law 
to offer alternative maps. 

This additional humiliation of black of- 
ficials, which the Chicago Urban League 
estimates would mean two to four fewer 
black aldermen than a color-blind ward 
map would produce, seems gratuitous 
when one considers the blind obedience 
and loyalty of Byrne’s black officials. 

These officials, in and out of the Council, 
are the Mayor’s staunchest supporters. 

Thus, on the ward map vote last Novem- 
ber, only six of the 15 votes favoring an 
alternative map were black votes. The ten 
other black aldermen voted for the Byrne 
map (their wards were safe). It is appar- 
ent that even these loyal blacks, as well as 
the independent blacks hounded and 
smeared by City Hall leaks to the press, 
are being discredited. 

Byrne’s insults and slaps at black of- 
ficials and voters appear designed more 
to ingratiate Byrne with white racists 
than to ward off the threat of a successful 
black mayoral candidate. 

In the meantime, the Reagan adminis- 
tration’s unprecedented invocation of the 
Voting Rights Act against a major city 
can reinforce the President’s defense that 
it is “plain baloney” to label his enforce- 
ment of civil rights laws as tepid at best. 

And Mayor Byrne’s stout defense of her 
racist map may win even enough white 
racists from Richard H. Daley— the likely 
opponent— to insure her election in 1983. 

Page Five 

Blacks win in 
Kansas City, St. Louis 

Solid support from black voters 
and a respectable showing in pre- 
dominantly white areas— that combi- 
nation spelled victory for black con- 
gressional candidates William Clay 
and Alan Wheat in Missouri’s Aug. 3 
primary election. 

Incumbent Democrat Clay soundly 
defeated an aggressive primary chal- 
lenger in the St. Louis area 1st Dis- 
trict. In the open 5th District, which 
includes Kansas City and its suburbs, 

state Rep. Wheat’s 30 percent of the 
vote was enough to earn first place in 
a crowded Democratic primary field. 

Clay’s impressive margin over 
state Rep. Alan Mueller was a sur- 
prise to those who thought redistrict- 
ing might cause problems for the in- 
cumbent. The remap brought Clay 
more than 200,000 new constituents 
and made whites the majority among 
registered votes in the 1st. 

Many of the newly added people 
live in white, working-class Catholic 
areas of St. Louis County. Mueller 
tried to woo them by emphasizing his 
support for labor and his opposition 
to abortion and busing. 

Clay worked hard to mobilize vot- 
ers in the predominantly black St. 
Louis city portions of the district 
where turnout is traditionally low. 
And he made a strong pitch to or- 
ganized labor, which has supported 
him in the past. 

Clay won St. Louis 6 to 1, taking 
some black city wards by margins ex- 
ceeding 25 to 1. In the county, Clay 
won majorities in white liberal areas, 
in some blue-collar communities and 

in middle-class black enclaves. 
Mueller fared well in areas staunchly 
opposed to abortion and busing. His 
overall county advantage was 3 to 2. 

The GOP primary in the 1st nomi- 
nated William E. White, who lost to 
Clay in 1978 and 1980. 

Though the population of the 5th 
District is only one-quarter black, 
Wheat won the Democratic nomina- 
tion by uniting Freedom Inc., a black 
political organization that mobilizes 
the inner-city voice, with a considera- 
ble number of moderate-to-liberal 
southwest Kansas City whites. 

Finishing a close second was Inde- 
pendence City Councilman John 
Carnes, a more conservative candi- 
date. He was the dominant vote-get- 
ter in suburbs outside Kansas City 
and in blue-collar north and northeast 
Kansas City. 

The GOP primary winner, state 
Rep. John A. Sharp, split the Kansas 
City vote with James H. Lyddon. But 
Sharp’s better showing in the sub- 
urbs gave him an edge. 

In the Democratic U.S. Senate pri- 
continued on page 7 

Official Missouri primary results 










Burleigh Arnold (D) 

Jefferson City 



District 5: Kansas City and eastern suburbs 

* Harriet Woods (D) 

University City 



•Alan Wheat (D) 

Kansas City 



Thomas E. Zych (D) 

St. Louis 



John Carnes (D) 




Tom Ryan (D) 

St. Louis 



Jack L. Campbell (D) 

Kansas City 



Larry D. Hurt (D) 

Poplar Bluff 



Andrew McCance (D) 

Kansas City 



Herb Fillmore (D) 




Jim Kenworthy (D) 

Kansas City 



Judith L. Soignet (D) 

Webster Groves 



William C. Paxton (D) 




Lee C Sutton (D) 




John Masterman (D) 

Kansas City 



Sidney L Phillips (D) 




John Price (D) 

Kansas City 



Theodis Brown (D) 

St. Louis 



Mike Ethington (R) 




Betty Jane Jackson (D) 




James H. Lyddon (R) 

Kansas City 



• John C Dan forth (R) 




Joanne M. Collins (R) 

Kansas City 



Mel Hancock (R) 




•John A Sharp (R) 

Kansas Citv 



Vernon Riehl (R) 




Emmett Roach (R> 

Kansas City 



Gregory Hansman (R) 

University City 



Barry Seward (R) 





Stella Sonars (R) 

Kansas City 



District 1 : North St. Louis, northeast St. Louis County 

District 6: Northwest— St. Joseph 

• William Clay ( D ) 

Al Mueller (D) 

Thomas R. Colyer (D) 

Elsa Debra Hill (D) 

Jay Miller (D) 

Felix J Panlasigui Sr (D) 

St. Louis 

St Louis 

St. Louis 

St. Louis 

St. Louis 

University City 













David C. Christian (D) 

•Jim Russell (D) 

J. Herbert Francisco (D) 

Rex S "Barry'" Taylor (D) 

• E Thomas Coleman (R) 

Robert L Buck (R) 

Kansas City 


Kansas City 

Kansas City 









5 4 



Ronald C Townsend (D) 
•William E White (R) 


St. Louis 





District 7: Southwest— Springfield, Joplin 

Norbert D "Cousin" Collins (R) 

St Louis 



•David A Geisler (D) 




Jonathan M. Harris (R) 

St Louis 



Bill Dailey (D) 




Hugh V Murray (R) 

St Louis 



James W. Roberts (D) 




•Gene Taylor (R) 



District 2: Western St. Louis County, St. Charles 

• Robert A young (D) 

Maryland Heights 



District 8: Southeast— Cape Girardeau 

Edward Phelan Roche (D) 

Maryland Heights 


13 6 

•Jerry Ford (D) 

Cape Girardeau 



'Harold L Dielmann (R) 

Creve Coeur 


Frank X Hastings (D) 




John L Woodward (D) 




District 3: South St. Louis, Southeast St. Louis County, Jefferson County 

* Bill Emerson (R) 

Cape Girardeau 


• Richard A Gephardt (D) 

St. Louis 


• Richard Foristel (R) 

St Louis 



District 9: Northeast— Columbia 

Doris M. Bass Landfather (R) 

St Louis 



• Harold L Volkmer(D) 



Roy C Amelung Jr (R) 

St. Louis 



‘Larry E. Mead (R) 




Nandor "Fred" Hettig (R) 




District 4: West — Kansas City suburbs, Jefferson City 

• Ike Skelton (D) 




• t Wendell Bailey (R> 



\Moved from the 8th District 

Dale L Parvin (R) 



14 5 

Incumbent congressmen Italics 

Page Six 

FOCUS /Midwest 

Blacks win 

continued from page 6 
mary, state Sen. Harriet Woods’ 
grass-roots network and personable 
campaign style gave her a comforta- 
ble win over Democratic National 
Committeeman Burleigh Arnold. 
Woods enjoyed a wide lead in the St. 
Louis area and carried Jackson Coun- 
ty (Kansas City) and most of the rural 
counties. Incumbent GOP Sen. John 
C. Danforth breezed to renomination. 

Issues dominate 
Woods, Danforth 
senatorial race 

By Fred Beaumont 

State Senator Harriett Woods may 
have trounced her competitors in the 
Democratic race for U.S. Senator, but 
the race against incumbent Sen. John 
Danforth is an uphill fight. 

Both Woods and Danforth are vet- 
eran Missouri leaders: Woods is cred- 
ited for keeping the liberal wing of 
Missouri’s Democratic party alive 
and kicking and Danforth is recog- 
nized as the man that put new vigor 
in Missouri’s GOP and new Republi- 
can faces into state government. 

Of course, Danforth has not had an 
easy time of it. As a Republican mod- 
erate, he has had to fend off right- 
wing party critics who have chal- 
lenged his commitment to the pro-life 
lobby and related conservative issues. 
Last year, some party dissidents 
charged Danforth wasn’t muscling 
enough Republicans into patronage 
jobs. On the other hand, liberal detrac- 
tors claim Danforth is just a million- 
aire frontman for business, intent on 
dismantling government regulations 
and restraints. Indeed, Danforth has 
led the charge in cutting the Federal 
Trade Commission’s regulatory pow- 
ers and those efforts have been re- 
warded with a public whipping by 
consumer-activist Ralph Nader. 

But Danforth has managed to sur- 
prise some consumer watchdogs with 
his leadership on some ballyhooed 
issues: his opposition to delaying the 
automobile air-bag installation dead- 
line and his support for the Consumer 
Product Safety Commission. Dan- 
forth cuts into other traditionally lib- 
eral constituencies with his opposi- 
tion to a peacetime draft and opposi- 
tion to the right- to- work movement. 

Like many other politicians, Dan- 
forth has embraced the concept of a 

nuclear freeze— although he opposes 
the Kennedy-Hatfield resolution. 
Woods will have a hard time convinc- 
ing voters that a vote for Danforth 
will be a vote for Reaganism. Indeed, 
Republican State Chairman John 
Powell was at pains to convince GOP 
regulars last year that Danforth was 
voting with the Reagan administra- 
tion on every issue. 

If— besides Reaganomics— anything 
stands in the way of a Danforth vic- 
tory in November, it will be a public 
perception that he is not in touch 
with his constituency. An heir to the 

Ralston Purina fortune, the Senator 
is among the wealthiest legislators in 
Washington. Danforth has strong fi- 
nancial backing from corporate politi- 
cal action committees and the state’s 
business community. Between Janu- 
ary 1 and June 30, Danforth raised 
$690,873 and spent 59.6 percent hum- 
bling three challengers. Woods, on 
the other hand, spent 54.4 percent of 
her $182,925 attempting to stay in 
front of 10 other Democrats. Dan- 
forth’s three-to-one financial advan- 
tage over his Democratic challenger 
may prove the key to his reelection. 

c^n almost watch 
Chicago Bears Football 
r suite. 

Volume 15, Number 93 

Page Seven 

Will Byrne sit 
out Stevenson, 
Thompson race? 

The political fortunes of Republi- 
can Gov. Janies R. Thompson may 
have rebounded as he apparently 
widens the margin between himself 
and Democratic challenger Adlai E. 
Stevenson III. 

The latest polls show Thompson 
with a lead over Stevenson, a former 
U.S. Senator and scion of an illustri- 
ous Illinois political family. Indeed, a 
mid-September poll by Stevenson s 
campaign confirmed Thompson s 

The political winds blowing across 
the nation have made the economy 
the number one issue in many races, 
and the Illinois gubernatorial race is 
no exception. Stevenson has focused 
on Illinois’ faltering economy and has 
proposed ambitious policies to stimu- 
late productivity. While the Demo- 
crat is proposing a major thrust into 
economic planning by the state gov- 
ernment, Thompson is taking the 
heat for cutbacks resulting from de- 
clining state revenues. Austere bud- 
gets have soured Chicagoans in partic- 
ular on the Thompson administration. 

But Chicago, which proves critical 
in any statewide race, has not rushed 
to embrace the Stevenson candidacy. 
A major Stevenson turnout in Chi- 
cago is necessary for a Democratic 
victory. But the Chicago Democratic 
party, led by Mayor Jane Byrne, has 
never enjoyed close relations with the 
ex-Senator. When Stevenson was tal- 
lying up pledges of support from 
Democratic powerbrokers last fall, 
Byrne loyalists noticeably bided their 
time before jumping on the band- 

Other factors will also influence the 
vote. The ERA will play a role, 
though it is not clear whether it will 
be a pivotal issue. Both Thompson 


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Page Eight 

and Stevenson supported the pro- 
posed amendment, though ERA sup- 
porters charge the governor did little 
during the waning days of the legis- 
lative fight to pass it. Women voters 
are lining up behind both candidates 
equally. If the “ERA backlash’’ has 
any victims, it might very well be in 
the lieutenant governor race in which 
House Speak George Ryan (R, Kan- 
kakee) is pitted against Mary Stern, 
Democratic Lake County clerk. Ryan 
played a controversial role in the 
ERA floor fight earlier this year. 

Stevenson has conducted his cam- 
paign, charge critical supporters, as 
though he wants the office of gover- 
nor presented to him. He is running 
as a statesman of sorts, relying on an 

almost 100 percent statewide name 
recognition to do the image-building 
work usually delegated to campaign 
pollsters and consultants. 

For his part, Thompson claims he 
should be retained in office because 
he’s provided the leadership neces- 
sary to keep Illinois from suffering 
during the recession— a Thompson 
slogan is typical: “Tough times de- 
mand a tough leader.” If Thompson 
can shake the monkey on Republican 
backs— Reaganomics— and convince 
Illinois voters of his claim that Ste- 
venson is a gun-hating, ERA-loving, 
introspective, do-nothing former U.S. 
senator, Thompson will be calling 
Springfield home for another four 

Adlai E. Stevenson III 

James R. Thompson 

Tradition revived: Byrne-Thompson deal 

Democratic Chicago mayors and 
Republican Illinois governors have 
relied on a collaborate relationship 
that until 1981 provided a measure of 
compromise and trade-off in a state 
divided politically and economically. 

In the September 1982 Illinois Is- 
sues, Milton Rakove, professor of 
political science at Northwestern, 
notes that this arrangement has 
worked well during the administra- 
tions of Mayor Richard J. Daley and 
Republican Governors William G. 
Stratton and Richard B. Ogilvie. 

For example, Daley supported 
Stratton’s sales tax measure in ex- 
change for a percentage of the tax for 
Chicago. Stratton helped Daley take 
control over Chicago’s budget. Ogil- 
vie received Daley’s support for a 
state income tax, but Daley made 
sure to pin all the “credit” for pass- 
ing the tax on the governor. Daley 
slated weak Democratic gubernatori- 
al candidates; Stratton and Ogilvie 
did nothing to support Republican 
opponents to the Daley machine. 

Democratic Mayor Jane Byrne and 
Republican Gov. James Thompson 
attempted to continue this tradition 
of collaboration, striking a deal to I 

tory, and Chicago, Democratic prop- 
erty, were both to receive federal 
monies for roads and transit needs 
Reagan budget-cutting destroyed the 

deal, and for the first time in recent 
memory, a Chicago mayor and the 
governor split publicly and dramatic 
ally. Rakove reports that the ruckus 
is now muted with Byrne and Thomn 
son s recent deal to postpone theh 
mutual financial problems until theh 
reelection campaigns are over. Hence 
Byme isn't doing much for Thomm 
son challenger Adlai Stevenson III 
a ? f d ™°mP s °n is keeping his hands 
off Chicago s developing mayoral bat- 

Rakove notes that the renewed col- 
laborative relationship between gov- 
ernor and mayor may be meaningless 
to Illinois voters. If Thompson and 
the Republicans are saddled with fail- 
ing Reaganomics, even downstate Il- 
linois isn’t “safe” territory for the 
GOP. And as for Chicago, the Daley 
machine can t control the pivotal 
Cook County suburbs and, even more 
importantly, cannot be relied on to 
deliver Democratic votes. 

FOCUS /Midwest 

Moderate outside 
earnings for 
area senators 

By Ross Evans and 
Colleen McGuiness 

Missouri and Illinois senators 
failed to take advantage in 1981 of a 
law they helped pass which elimi- 
nated the cap on outside earnings 
from honoraria. One-quarter of the 
U.S. Senate did break the $25,000 
ceiling which was lifted September 
24, 1981. 

Congressional Quarterly reports 
that the tendency to take more hono- 
raria income was especially pro- 
nounced among senators who voted 
in favor of raising the earnings ceil- 
ing. However, Missouri Senators 
John Danforth and Thomas Eagleton 
and Illinois Senator Charles Percy all 
supported, but did not take advan- 
tage of the measure. Illinois junior 
Senator Alan Dixon had opposed 
raising the cap on outside earning in- 

The average total of honoraria fees 
reported by the 98 senators who were 
in office during 1981 and filgd com- 
plete disclosure forms was $17,626. 
Among Missouri and Illinois sena- 
tors, the average total of honoraria 
fees was $12,862.50. The average 
earnings after charitable donations 
were subtracted from the fees the 
earnings that would have been sub- 
ject to the old limit — was $15,835. 

The median for such earnings was 
$16,150— that is, half the 98 senators 
earned more and half earned less. 

Highest earners 

Jake Garn, R-Utah, had the highest 
honoraria earnings. He reported fees 
of $48,000 and donated none of it. 

Ranking second in the amount of 
honoraria kept was Majority Leader 
Howard H. Baker Jr., (R., Tenn.), who 
reported earnings of $41,000 after do- 
nations (54,000 before). He was fol- 
lowed by Charles McC. Mathias Jr., 
(R., Md.), with earnings of $37,850 
after donations ($38,950 before). 

Republicans tended to earn more 
from honoraria than Democrats did. 

The median earnings figure (after 
donations) for Republicans was 
$22,290; the median for Democrats 
was $10,365. Among the 25 senators 


Please forward your address label 
with your correction to: F/M, 8606 
Olive Blvd., St. Louis, Mo. 63132 

who reported earnings of more than 
$25,000, 20 were Republicans. 

In all, 89 of the 98 senators reported 
honoraria fees, and 19 reported 
specific contributions to charity. Sev- 
enty of the 98 senators reported hono- 
raria but no donations. 

Congress lifted limit 

The $25,000 limit had been con- 
tained in the 1976 Federal Election 
Campaign act. But it was lifted for 
senators in 1981. 

The limit had applied to the total of 
all honoraria that amounted to at 
least $100 from any single source — 
minus charitable donations, expense 
reimbursements and agents’ fees. 

A separate provision of the law was 
unaffected by the change. This provi- 
sion limits the amount of each hono- 
rarium— with the same deductions— 
to $2,000. 

Earnings, vote linked 

The 1981 change in the law affect- 
ing senators survived a close roll-call 
vote Sept. 24, when an amendment 
by William Proxmire (D., Wis.) to re- 
tain the old limit was defeated 43-45. 

The financial reports for 1981 show 
a strong correlation between 
senators earnings and their vote on 
Proxmire’s amendment. Among the 
98 covered by the CQ study, senators 
who voted to lift the $25,000 ceiling 
tended to earn more in honoraria (af- 
ter charitable donations) than those 
who voted to retain the cap: 

• The median earnings figure for 
senators voting to lift the cap was 
$24,750; the median for those wishing 
to keep it was $10,000. 

• Of the 45 senators voting to elim- 
inate the ceiling, 21 — almost half— 
reported earnings above $25,000; 
three had zero earnings. 

• Of the 41 current senators (not 
including Thurmond) who voted 
against changing the law, seven re- 
ported zero earnings. Only three re- 
ported earnings above $25,000. 

• Fifteen of the 98 senators re- 
ported zero earnings, and three of 
them voted to lift the limit. 

Proxmire, the sponsor of the unsuc- 
cessful effort to retain the old limit, 
ranked above average in earnings but 
still below what the ceiling would 
have been. He reported $19,813 in 
honoraria fees, none of it donated. 

Senators’ honoraria 

Following is a list of honoraria re- 
ported by Missouri and Illinois sena- 
tors for speeches, appearances or arti- 
cles during 1981. The list also includes 
reimbursements of $250 or more for 
travel and expenses in connection 
with such activities. 

Honoraria passed on to charitable 
organizations are marked “donated.” 

John C. Danforth. R-Mo.: $13,500: American 
Council of Life Insurance ($2,000): Insurance 
Company of North America ($1,000): Tax Foun- 
dation ($500); Ernest Wittenberg Associates 
Inc.. Senate Leadership Seminar ($2,000): Pro- 
ductivity Inc. ($2,000): Edison Electric Institute 
($1,500 and round-trip travel Washington, D.C ./ 
Kansas City); Chemical Manufacturers Associa- 
tion ($1,000): Bendix Corp. ($500): Grocery 
Manufacturers of America ($1,000): United 
States League of Savings Association ($2,000). 

Alan J. Dixon, D.-Ill.: $17,000; Hotel and Res- 
taurant Employees and Bartenders Internation- 
al Union ($1,000): Swift & Co. ($1,000): Futures 
Industry Associatoin ($2,000, round-trip travel 
Washington, D.C./West Palm Beach, Fla., food 
and lodging for self and spouse): Washington 
Discussion Group ($1,000); Marex International 
($1,000); The Capitol Forum ($1,000); National 
Association of Manufacturers ($500); Bank Ad- 
ministration Institute ($1,000): Container Cor- 
poration of America ($1,000 and round-trip 
travel Washington. D.C./Chicago); Pfizer Inc. 
($1,000): Northrop Corp. ($1,000): American 
Jewish Congress ($2,000, round-trip travel 
Washington D.C./Chicago and lodging): Allied 
Chemical Corp. ($1,000): Southern Illinois 
Builders Association ($500 and round-trip travel 
Washington. D.C./St. Louis); Outdoor Advertis- 
ing Association of America ($1,000); Association 
of Bank Holding Companies ($1,000, round-trip 
travel Washington. D.C./New Orleans and lodg- 
ing): Illinois Education Associaton (travel 
Washington. D.C./Chicago. food and lodging): 
State of Israel Bonds (lodging): Illinois Federa- 
tion of Teachers (round-trip travel St. Louis/Chi- 

cago): Illinois Manufacturers Association 
(round-trip travel Washington, D.C./St. Louis 
and lodging): First National Bank of Belleville 
(round-trip travel Washington. D.C./St Louis 
and lodging); Illinois State United Steelworkers 
of America (round-trip travel Washington. D C. 
St. Louis and lodging); Electronic Funds Illinois 
Inc. (round-trip travel Washington, D.C./Chi- 
cago and lodging): Chris HiU (round-trip travel 
Washington. D.C./Champaign. 111., and lodging): 
Association for Modern Banking in Illinois 
(round-trip travel Washington. D.C./Chicago): 
Jewish United Fund of Metropolitan Chicago 
(round-trip travel Washington. D.C./Chicago 
and lodging); Thomas Jefferson Educational 
Foundation (round-trip travel Washington. 
D.C./Peoria, 111.): Country Companies Agency 
Managers Association (round-trip travel Wash- 
ington. D.C./Chicago). 

Thomas F. Eagleton, D-Mo.: $9050.00: Na- 
tional School Boards Association ($1,000): Il- 
linois Public Health Associates ($2,000. round- 
trip travel Washington. D.C./Springfield. 111., 
and lodging): The Brookings Institution ($200): 
New York University ($1,000): The Washington 
Campus ($750): Albert and Mary Lasker Foun- 
dation Inc. ($1,500. round-trip travel Washing- 
ton D C /New York City and lodging); Cemrel 
Inc ($500); Mortgage Bankers Association 
($2,000 and round-trip travel Washington. 
D C /New Orleans): National Council of Local 
Administrators of Vocational. Technical and 
Practical Arts Education ($100). 

Charles H. Percy, R-I1L: $11,900.00: Republic 
National Bank of New York ($2,000); Lincoln 
Club ($1,000 and round-trip travel Washington. 
D C /Los Angeles for self and spouse): Alumi- 
num Association ($2,000. round-trip travel 
Washington. D.C./White Sulphur Springs. 
W Va food and lodging): IMPACT ($100): Gov- 
ernment Research Corp. ($1,000); Illinois Bank- 
ers Association ($2,000 and round-trip travel 
Washington. D.C./Chicago): Estech General 
Chemicals Corp. ($1,500): Food Marketing Insti- 
tute ($2,000): Foreign Policy magazine ($300): 
The Canadian Pugwash Group (round-trip travel 
Washington. D.C./Calgary. Alberta, and lodging 
for self and spouse). 

Volume 15, Number 93 

Page Nine 



Federal indictments send 
tremors through chemical industry 

Judith Miller and Mark Miller 

Industrial Bio-Test (IBT) was the 
largest testing lab m the ^^ry. I 

conducted about one-third of the tox 

icity and cancer testing ofctemicak 
in America-as many as 22,500 sal 
ty tests over the last decade. 

was respected and employed by both 

government and industry. k 

spect has since crumbied in the wak 
of startling and unsetthng 

tl0 On June 22, 1981, the formerpresi- 

dent of IBT, and three ex jborch 
nates were indicted chemi- 

fudging health tests ° n „ that 

cals The government alleges 
tests were fraudulently conducted on 
TCC, an antibacteria agent used^n 
deodorant soaps, naprosy . 
tis medication, and sencor and nema 

cur, both pesticides. shadow 

The indictment casts as 
over hundreds of similar tests ; con- 
ducted during IBT s nearySOyears 
of existence. Corporate dients who 
manufacture drugs, dyes, Pasties, 
pesticides, food additives and 
cosmetics, have been advised to have 
IBT- tested chemicals retested. 

Named in the indictment were Dr. 
Joseph Calandra, former IBT presi- 
dent and founder, Dr. Moreno Kep- 
einger, a former Toxicology manager, 
Dr. Paul Wright, former Toxicology 
head, and James Plank, a former Tox- 

Page Ten 

icology manager. Each was charged 
with four counts of giving false 
documents to the government, three 
counts of mail fraud, and one count of 
wire fraud. (Dr. Wright is now work- 
ing for Monsanto.) 

IBT had concluded that the four 
chemicals were safe and didn’t cause 
cancer or birth defects; but when 
FDA inspectors went inside 1B1 in 
1976, they found so much grossly 
flawed work that everything IBT 
ever tested became suspect. Word of 
the scandal spread like a cloud over 
the entire industry. Clients rushed to 
take their business elsewhere. IBT 
was sold, and some facilities were 

Monsanto connection 

Details of a test IBT performed on 
one Monsanto product, TCC, illus- 
trate the extent of the alleged IBT 
fraud. St. Louis-based Monsanto 
manufactures TCC as an anti- 
bacterial agent in the major brands of 
deodorant soaps. According to FDA 
microbiologist Dr. Mary Bruch, “Vir- 
tually all antimicrobial soaps on the 
market today contain TCC.’’ 

According to FDA documents on 
IBT’s test of TCC, “During the in- 
spection, numerous irregularities 
were uncovered in this study. Pre- 
liminary indications at this time are 

that IBT made false staf 
their original reports to the Pn .‘ S il > 
A memo from the FDA'fo 4 ’’ 
Bntten amplifies this »n R °nald 
Review of the raw re™ J Ieeati °n- 
TCC did not verify’ thatch 

, was accurately recorded m stud V 
lar concern was the failure , Part >cu- 
assurance that the an“m„f° provid « 

were kept segregated T 8 ° n tea t 

treatment group „ e a ® *» their 
False information regard their st “dy 
ner ,n winch the study ft ^ ma "‘ 
and performed, false mo l l mct *»red 
and ^ Se Moratory datl ** * ty data - 

mitted to the governm ’ Were sub- 
false submission? ^ enta •• . The 
have the effect of making 0 me to 
and the drug (TCC) look K stud y 
they are. . . . I recornm k J 5etter than 
vestigation of possrtlkff d that an in ’ 
sidered.’’ P SSlble fraud be con- 
What did IRT Ho 

I regulators cry “fraud’V? 0 t0 make 
most or all records on « F ° r starters * 

study a rat died, it was replaced by 
!f“‘ h , er t ^™ 8 rat «hich was then as 
fi gn 'i d the tdentification number that 
the dead rat had had. IBT wrote an 
continued on page 11 

FOCUS /Midwest 

Kennedy: “safety study . . . completely unjustified . . . 


continued, from page 10 
interim report after one year and a 
final report at the two-year termina- 
tion date; but, the first-year report 
said there had been no deaths during 
the first six months of the study, 
whereas the second-year report said 
thirty-three rats died during the first 
six months. 

Senator Edward Kennedy (D., 
Mass.), chairman of the Subcommit- 
tee on Health and Scientific Research 
quizzed the FDA’s Dr. Richard Crout 
about the safety of TCC-containing 
soaps in March 1977 hearings: "You 
have got a safety study that is com- 
pletely unjustified or unwarranted, 
deficient, is that correct?" 

"That is correct,” replied Crout. 

Kennedy pressed further: "You 
have got probably millions of 
Americans using that particular pro- 
duct?" Crout replied, "All those who 
wash, as far as we know." 

Monsanto did not agree that the 
IBT study was deficient. In March 
1977, Monsanto argued that the 
study “was conducted in accordance 

with protocols and practices consis- 
tent with those used in most 
laboratories at that time.” The fact 
that IBT mixed up animals did not 
disturb Monsanto; for, the company 
claimed, “Identification of individual 
animals is not considered necessary 
to observe and document gross and 
microscopic effects.” Monsanto 
therefore concluded that “We do not 
believe that the study conducted by 
Industrial Bio-Test needs to be 

What if an animal develops a 
tumor? To determine whether the tu- 
mor is cancerous or benign, it must be 
examined under a microscope. If the 
specimen looks like cancer, it be- 
comes important to be able to iden- 
tify which animal the specimen came 
from in order to know whether the 
animal belonged to the group getting 
the drug being tested, or whether it 
came from the “control" group, i.e. 
animals not getting the drug. Mon- 
santo’s claim that individual iden- 
tification of test animals was not nec- 
essary contradicts accepted testing 


A common method of keeping track 
of test animals is ear-tagging— each 
animal has a metal tag bearing its 
number clipped on its ear. IBT, for 
unexplained reasons, had stopped 
ear-tagging to identify test animals in 
its TCC test. According to an FDA 
examiner who interrogated Dr. Calan- 
dra, "He was not aware that animal 
ear-tagging had been discontinued.” 
Tagging wasn’t resumed until the 
TCC test was history. 

Nonexistent tagging still doesn’t 
explain nonexistent records. Accord- 
ing to IBT, there was supposed to be 
a one-to-one correlation between the 
number of tests animals and the 
number of files on those animals. On 
the TCC test, however, some animals’ 
files were missing. The FDA examin- 
er noted that Calandra confessed 
that, "there is no excuse for missing 
records. He said he has always been 
concerned about competence of em- 
ployees. He said he once fired a tech- 
nician for penciling in animal body 
weight data without actually doing 
the weighings.” 

On March 25, 1977, Dr. Calandra 
resigned as IBT president. 

Meanwhile in March 1977, Monsan- 
to sent Senator Kennedy a letter. It 
read, “Monsanto Company applauds 
the efforts of the Health Subcommit- 
tee ... to investigate potential abuses 
in nonclinical [i.e., animal] laboratory 
test procedures by laboratories [e.g., 
IBT]. If abuses are found we hope the 
Subcommittee will recommend reme- 
dial action. This would clearly serve 
the national interest and such action 
is consistent with Monsanto’s own in- 

^ Although the firm publicly expressed 
an interest in cooperating with inves- 
tigators, it had previously fought ef- 
forts by FDA inspectors to gain ac- 
cess to the TCC records. 

Monsanto and IBT did eventually 
release test data to the government, 
making the need for retesting un- 
avoidable. Monsanto, which had a 
huge financial stake in the chemical, 
did the safety test on its product 
itself. Meanwhile, TCC-containing 
products remained on the market, 
even though the chemical’s effects 
were unknown. 

Monsanto scientists have now re- 
done the animals tests themselves. 
The FDA accepted the results and ap- 
proved use of the products. 

Ironically, in 1974, an FDA panel 
had written that they are concerned 
“that consumer use of the ingredient 
continued on page 12 
Page Eleven 

IBT a pioneer in toxicology testing 

IBT was started in 1952 by 
Dr. Joseph Calandra, a North- 
western University Medical 
School pathologist. 

It was a subsidiary of the 
Nalco Chemical Company, 
headquartered in Northbrook, 
Illinois with additional test cen- 
ters in Decatur, Illinois and 
Wedges Creek, Wisconsin. IBT 
pioneered in a field which came 
into vogue with the advent of 
federal law requiring that chem- 
icals be proven safe on subhu- 
man animals before they are 
used on humans. 

The field, toxicology, in- 
volves the testing of chemicals 
on animals, usually rats or 
mice, to see whether cancer, 
genetic damage, or ill effects 
are induced. Animals are dosed 
over most of their lifespan, 2 to 
3 years in the rat’s case, be- 
cause some cancers do not be- 
come fullblown until old age, 
even though the chemical expo- 
sure which caused it took place 
only as a pup. A chemical found 
to induce cancer is called a car- 

Government and corporate 
clients farmed out tests to IBT. 

IBT displayed a knack for cor- 
nering contracts, according to a 
rival enterprise, by allegedly al- 
ways underbidding the compe- 
tition by 25 percent. 

Government agencies for 
whom IBT performed tests are 
the Army, Department of De- 
fense, Environmental Protec- 
tion Agency, Food and Drug 
Administration, National Can- 
cer Institute, Occupational 
Safety and Health Administra- 
tion, and Department of Agri- 
culture. Corporations paid IBT 
to test a chemical for them, or 
else put a chemical IBT tested 
for another client in one of their 
products. A partial list of such 
corporations includes Monsan- 
to, Procter and Gamble, Ar- 
mour, Syntex, Sandoz, Morton- 
Norwich, Lederle, Newport, 
Velsicol, International Chemi- 
cal and Nuclear, Abbott, Ciba- 
Geigy, Upjohn, Dow, 3M, Uni- 
royal, Chevron, Gulf, Phillips, 
Shell, Diamond Shamrock, 
Chemagro, and American Cy- 
anamid. At least 100 different 
pesticide manufacturing firms 
did business with IBT. 

Volume 15, Number 93 

Americans not only ones in danger 

continued from page 11 
(TCC) may occur before adequate re- 
search is conducted.” 

Shredding documents 

Dr. Alvin Frisque, who became IBT 
president when Calandra left, agreed 
to review all IBT studies. In an FDA 
document, Frisque is quoted as say- 
ing that “90 percent of these studies 
probably have moderately serious to 
serious problems.” Next came a re- 
port, ultimately confirmed, that the 
boys at IBT were shredding docu- 

If Frisque was right, Americans 
aren’t the only ones possibly in dan- 
ger. The World Health Organization 
relied heavily on IBT test results in 
setting human-exposure standards 
for potentially dangerous chemicals. 
An example of global shockwaves set 
off by IBT is the pesticide Phosvel, 
which IBT tested and found safe. 
IBT’s results allowed its manufac- 
turer, Velsicol Chemical of Chicago, 
to market it for use on tomatoes and 
lettuce in a variety of foreign nations, 
including Australia, Canada, Colum- 
bia, Dominican Republic, France, 
Guatemala, India, Israel, Kenya, Ma- 
laysia, Pakistan, Philippines, Taiwan, 
and South Africa. 

The U.S. is not listed because EPA 
began to question the quality of the 
IBT test two months after EPA gave 
Phosvel the go-ahead. Domestic sales 
were put in Umbo while foreign sales 

proceeded. . . trt 1 

EPA detectives paid a visit to id 1 • 
IBT had tested Phosvel on chickens 
to see if the substance damaged nerve 
tissue. Such damage can be deter- 
mined from examining the test bird’s 
nerve tissue. . 

The report IBT submitted to regu- 
latory agencies concluded that micro- 
scopic examination of nerve tissue 
from Phosvel-fed chickens “did not 
reveal any evidence of demyelination 
[i.e. destruction of the sheath which 
wraps around nerves].” According to 
the EPA examiner, however, on one 
shde “The [microscopic] sections of 
the nerves were highly questionable 
and unreadable. They could not be 
evaluated because of the thickness 

and fading of stains It is doubtful 

whether they were readable even in 
1969 [when IBT ran the test].” Re- 
garding another chicken, he said, 
“These shdes were also highly ques- 
tionable and again could not be 
evaluated. In ... my opinion these 
sUdes have been impossible to evalu- 
ate from the time they were prepared. 
In summary ... the experimental evi- 

Page Twelve 

dence was inconclusive and should be 

But microscopic vision is not 
needed to sense symptoms indicative 
of a nerve toxin. IBT records re- 
ported one chick that had “no control 
of legs,” another walked “very un- 
steady,” a third “cannot remain 

Of course it is hard to predict 
what’s going to happen to man on the 
basis of a chicken test. 

But, in fact, it happened to several 
men. On June 9, 1975, Velsicol got 
this letter from a physician at the 
plant where Phosvel was made: 
“There have been a series of unusual 
central nervous system illnesses oc- 
curring amongst the employees of 
[the Phosvel plant]. Apparently, most 
of the illnesses occurred among those 
who were in contact with [Phosvel. 
One worker . . .] began to develop . . . 
bizarre central nervous system symp- 
toms which was followed by his being 
hospitalized . . . with the diagnosis of 
encephalomyelitis [inflammation of 
the brain and spinal cord] for eight 

months The patient was severely 

ill, almost died, and was then left 
with a number of residual nervous 

system deficits There have been 

at least two individuals employed in 
this shop who had a diagnosis of 
multiple sclerosis, another with a 
history of seizures and hallucina- 
tions, and fairly recently, still another 

with a diagnosis of encephalitis (brain 
inflammation). ... I advise that the 
company seriously consider halting 
the manufacture of [Phosvel] until 
these matters are clarified.” 

The EPA banned Phosvel Novem- 
ber 22, 1976; but, according to a report 
from another Senate subcommittee, 
“while Phosvel was never registered 
by EPA ... in the United States, the 
agency ... did permit the import of 
. . . Phosvel-treated commodities into 
the United States from other coun- 
tries . . . , which raised the possibility 
that the U.S. may still [in December 
1976] be importing Phosvel-contami- 
nated foodstuffs from other coun- 

The FDA and EPA asked the Jus- 
tice Department to seek criminal in- 
dictments against IBT. The case was 
assigned to the U.S. Attorney in 

By the time the indictments were 
handed down, IBT was no longer in 
business; nevertheless, the actions of 
four former IBT bigwigs will not be 
swept under the rug. Their guilt or in- 
nocence will be determined in federal 

Irrespective of what the court con- 
cludes, what may never be deter- 
mined are the hidden dangers to 
health that have resulted from the 
four IBT-tested chemicals and other, 
yet unknown and fraudulently tested 

Farewell to 
the Florida pai 

Mo one knows how many 
Florida panthers are still 
alive. Perhaps fewer than 
*00- the se mountain 
'firW lions ^' e ' an °ther creature 
*•'’ v ' r will be gone from the earth 
forever the victim, first, 
of predator elimination pro- 
grams. and more recently, 
of ever-shrinking habitat. 
But we don't have to bid fare- 
well to the Florida panther 
The National Wildlife Federation 
has awarded a grant to researchers 
to study the panther and its future 
and to draw up a plan for saving it. That's 
:j just one small example of how the National Wildlife 

; Fedeiation is working to save endangered species 
from extinction. You can be a part of the effort. ( 

Join the National Wildlife Federation. Department fl 
108. M 12 16th Street. NW. Washington. DC 20036. 


One of four will vote 

itowgmte ©rieel tor nuclear freeze 

By George Palmer 

At a press conference in 1955, Pres- 
ident Dwight D. Eisenhower was 
questioned about the need to accumu- 
late ever greater stocks of nuclear 
weapons. “There comes a time,” he 
responded, “when a lead is not signif- 
icant in the defensive arrangements 
of a country. If you get enough of a 
particular type of weapon, I doubt 
that it is particularly important to 
have a lot more of it.” 

At a time when one U.S. Poseidon 
submarine could theoretically de- 
stroy every large- and medium-size 
Soviet city, Americans are increas- 
ingly given to questioning the need 
for a nuclear stockpile fifty times that 

Moreover, Americans of quite dis- 
similar views have been brought to- 
gether by the insidious and irrevocal- 
ly poisonous nature of nuclear de- 
struction. Justified fear of a nuclear 
holocaust fueled by an intensification 
of the cold war have marshalled pub- 
lic sentiment in favor of a freeze in 

the production of nuclear weapons in 
every state of the union. 

The purpose of the national head- 
quarters of the Nuclear Weapons 
Freeze Campaign, located in St. 
Louis, is to collect and disseminate 
information. It has no grand designs 
to mastermind the campaign. Indeed, 
it has difficulties keeping abreast of 
events at the grassroots. The move- 
ment from the beginning has had a 
momentum of its own, in some areas 
becoming a state issue, in others re- 
maining local. 

In February 1982 in Denver the 
Freeze Campaign held its first annual 
National Conference. The 300-400 
people present were given informa- 
tion about circulating petitions, lob- 
bying state legislators, fund-raising, 
etc. They were also informed that 
while they could count on some assis- 
tance from the national Freeze office, 
the representatives of each state had 
to decide for themselves exactly how 
to procede in their states. Did they 
want to try to place a Freeze referen- 

dum on the November 1982 ballots? 
If so, would this be accomplished 
through an initiative (collecting 
enough voter signatures) or the ac- 
tion of the state legislature? Did they 
want to try to get referenda on coun- 
ty or city ballots? Or did they simply 
want to generate some local or state- 
wide support for the idea of a Freeze? 

The Freeze Campaign is being built 
from the bottom up and the national 
headquarters is doing what it can to 
keep up with developments. “We 
didn’t even know there was any 
Freeze activity in North Dakota, for 
instance, until these wonderfully de- 
tailed reports began coming in from 
an organizer there,” says National 
Freeze Co-director Barbara Roche. 
When this reporter contacted Refer- 
endum Coordinator Ben Senturia to 
get facts and figures about Freeze ref- 
erenda in the various states, he com- 
mented slightly wistfully, “I wish I 
had all that information to give you. 
Things have just been happening too 
continued on page 14 

Victimized by 
nuclear testing 

By Congressman Paul Simon 

At his press conference the other day, 
President Reagan said that if there was a 
nuclear war, there would be no winners 
even if a nation survived. 

He was right. 

I saw visible evidence of that a few days 
ago when three Southern Illinois veterans 
who had been exposed to radiation after 
the post-World War II H-bomb test came 
into my office. All three have serious 
problems. Let me tell you about one. 

Bob Farmer lives near Chester, Illinois. 
After the H-bomb test at Eniwetok, he 

was one of those in the armed forces who 
visited this South Pacific paradise, played 
in the sands and took a dip in the ocean. 
No one warned him that he might be ex- 
posing himself to radiation. Now, like an 
unusually high proportion of the veterans 
who were with him, he has cancer. 

But that is only part of the story. Bob 
Farmer was discharged from the service 
and came back and established his home. 
He was happy and healthy— except for a 
slight heart problem which did not seem 
that significant then— and he and his wife 
started their family, a large family. He 
and his wife had nine children, all of whom 
appeared to be completely healthy except 
for one boy who was bom with no hip or 
thigh bone. That turned out to be only the 
beginning. Now eight of the nine children 
have developed some type of serious prob- 
lem apparently related to genetic damage 
which Bob Farmer suffered. 

One child developed breathing prob- 
lems and tests discovered a lung deformi- 

One child developed deformities of the 
skull which caused severe headaches and 
other problems. 

One child had an 8-pound tumor re- 
moved at the age of 15. 

One child has developed small lumps all 
over his body just below the skin. 

One child now finds an extra bone grow- 
ing in his right leg. 

One child has developed a serious 

breathing problem that is genetically 

One child has a heart deformity. 

And one child is completely normal and 
healthy, so far. 

Bob Farmer is interested in protecting 
his children and, unfortunately, up to this 
point there is no protection for the 
children of these veterans. The armed 
forces will not acknowledge any respon- 
sibility for the problems which the 
Farmer children face. I’m having legisla- 
tion prepared which would protect the 
children of veterans who have suffered 
from radiation exposure, for the financial 
problems which Bob Farmer and his fami- 
ly face are overwhelming. Right now, one 
son has an artifical leg and has broken 
that leg. The Farmers don’t have the 
$2,200 to get him another leg. 

But even more important than the im- 
mediate problem of Bob Farmer and the 
other two veterans with whom I talked is 
the grim reality that not only would a 
nuclear war kill hundreds of million of 
people, those who survived would face 
frightening futures in a radiation- filled 
world. I wish President Regan could talk 
to these three men or to the survivors of 
the bombings of Nagasaki and Hiroshi- 
ma. The world’s leaders need a greater 
sense of the urgency of moving ahead to 
reduce the threat of nuclear destruction. 

The evidence for it is in Southern Illi- 
nois and everywhere. 

Volume 15, Number 93 

Page Thirteen 

Hard times in America are kindling new interest in cooperatives. Many 
citizens view cooperation as the best method to beat high prices, cheap 
and unhealthy goods, and the dog-eat-dog marketplace. Although the 
cooperative movement has a rich and colorful history, it is still an in- 
fant Nevertheless, cooperatives provide a “ first step ” toward economic 
democracy. But translating desire into reality requires an understand- 
ing of the successes and failure of existing cooperative efforts. FOCUS/ 
Midwest takes a succinct and to-the-point look at Missouri's cooperative 
legacy— a legacy that provides a foundation for new, energetic efforts. 
We appreciate the assistance extended by Robert Mayer in assembling 
this section. 



• A revolution in the making / 16 

• Food coops reflect regional needs / 1 9 

• Independence coop: top sales in Missouri / 20 

• East Wind builds a new community / 22 

• Capitalist, socialist or something else? / 24 

• Coops organize to provide energy / 26 

• Resources / 27 
—Literature on cooperatives 
—Organizing a cooperative 
—Cooperative organizations 
—The law and cooperatives 

Volume 15, Number 93 

Page Fifteen 

Cooperation, not competition, marks movement 


By Robert Mayer 
and Roland Klose 

An American revolution is in the 
making. It is a revolution being built 
by the farmer squeezed by high in- 
terest rates and depressed commodi- 
ty prices, by the worker whose fac- 
tory is closed, by the parent who 
can’t feed his or her family, by men 
and women who can’t get goods and 
services at reasonable prices. 

The revolution is being constructed 
with the principles of cooperation, 
not competition. Americans are rely- 
ing on a healthy combination of hard- 
nosed self-interest and altruism to 
join with each other and beat the 
monopolies that run America. For 
many in the movement, there is polit- 
ical purpose to their cooperative ef- 
forts. Others are driven by a simple 
goal of obtaining better quality goods 
and services at lower prices. 

An interest in cooperatives is not 
new— America’s consumer coopera- 
tive movement traces its roots to the 
mid-nineteenth century. Rural coop- 
eratives have weathered the econom- 
ic dislocations of this century and 
many of them are now the surrogate 
grandparents to a generation of en- 
thusiastic newcomers. 

Cooperative types 

Students of the contemporary coop- 
erative movement distinguish be- 
tween two waves of cooperative activ- 
ity that are exemplified by Missouri’s 
cooperatives: an “old wave,” repre- 
sented by farmer cooperatives founded 
in the 1920s and ’30s and a “new 
wave,” coops established in the late 
1960s and ’70s. This distinction is 
made, in part, because the older coop- 
eratives were not directly responsible 
for initiating the new. The economic 
conditions when coops were organized, 
their membership, and even then- 
goals are dissimilar. 

Yet, a common denominator links 
different generations of cooperatives 
together and distinguishes them as 

Page Sixteen 

business ventures: their deep-rooted 
belief in collective decision-making, 
economic democracy. The principles 
of cooperation, derived from the 
Rochdale pioneers of the 1840s, are 
simple: ownership by members, one 
vote per member regardless of the 
share of the business owned, and 
operation at cost. 

“Economic democracy” is a euphe- 
mism that embraces four types of 
cooperatives, although their unique- 
ness is blurred when actual 
cooperatives are examined. 

• The consumer cooperative is orga- 
nized for the purpose of providing 
goods and service to its membership, 
which usually is open to the public. 
The consumer coop provides services 
and equal financial rebates to its 
members, and has democratic elec- 
tions. The focus of such a cooperative 
can ir£lude food, laundry, pharma- 
cuetical drugs, books, gas or other 
products and services. 

• A producer cooperative is engaged 
in manufacturing, growing or supply- 
ing a product at a reasonable price to 
its membership. All members share 
in the profits. Farmland Industries of 
Kansas City is a producer coopera- 
tive that manufactures various pro- 
ducts for its members as well as the 

• A worker cooperative involves a 
group of individuals who organize a 
business for the purpose of providing 
goods and services to the public. 
Sometimes a worker cooperative will 
act suspiciously like a private part- 
nership, especially when the coopera- 
tive is a retail operation with few 
laborers. Thousands of bakeries in 
the early half of this century were 
cooperative ventures. Worker cooper- 
atives can exist in virtually any in- 
dustry or business. A worker coop re- 
quires only that all employees share 
equally in management and that the 
reward of their labor be shared fairly. 

• The purpose of a federation, or 
simply, a cooperative of cooperatives, 
is to strengthen market buying pow- 

er. share services and expertise For 
example, producer coops (such as 
East Wind in Ozark County, Mis- 
souri) could depend on cooperative 
warehouses, (such as New Destiny 
Federation in Arkansas) to distribute 
their product (peanut butter) to con- 
sumer cooperatives (such as Limit 
Avenue in St. Louis). Often this form 
of cooperation takes on a simple busi- 
ness relationship. However, the 
organization of formal cooperative 
federations promises a more con- 
certed effort by coops. 

These distinctions are of limited 
use. Every consumer product in- 
volves production. And every activi- 
ty, from extracting a resource to 
manufacturing to retailing, involves 
work Federations are organized to 
recognize this interrelationship. They 
are also formed to exchange experi- 
ence and information— the keys to in- 
itiating and sustaining cooperatives. 
An inability to sustain the coopera- 
tive movement has been the unfortu- 
nate hallmark of 130 years of coopera- 

Early cooperattoon 

The first viable cooperative buying 
club in the United States was a child 
of the early labor movement, itself 
the reaction to the ills wrought by the 
new industrial age. Low wages, long 
working hours and child labor pro- 
voked the first organization of trade 
unions in the first half of the nine- 
teenth century. 

Among the many trade umons born 
during this time was the New En- 
gland Workingmen’s Association, 
founded in Boston in 1844. One of its 
members, a tailor by trade, suggested 
that attendance at association meet- 
ings could be improved if the mem- 
bers organized a buying club. The 
membership was smitten by the idea 
and overlooked other goals they had 
set for their organization. In 1845, a 
store was established for the purpose 
of “bettering the condition of the 
continued on page 17 



continued from page 16 
working class.” Within two years, 
twelve groups of people were operat- 
ing businesses using the New En- 
gland Workingmen’s Association as 
their example. They banded together 
in what became the New England 
Protective Union. By 1852, 167 orga- 
nizations, the majority of them run 
by labor unions, reported sales of 
nearly $1.7 million. 

What was a burgeoning movement 
collapsed, as did many things, in the 
economic dislocations caused by the 
Civil War. By the end of the war, only 
a few of the original stores were left 
and, of those, only three survived the 

The depression that followed the 
war spurred the second great wave of 
cooperative activity. The difference 
was that it drew its strength from 
rural America. The desperate condi- 
tions American farmers found them- 
selves in in the 1860s and 1870s ex- 
pressed themselves in the militancy 
of the Granger movement. Movement 
farmers pursued cooperative buying 
and selling. Iowa was a key state in 
the Granger cooperative movement, 
where, in 1873, Granger cooperatives 
did a total business of $5 million. Yet, 
within two years, the Granger cooper- 
ative movement had peaked at 21,000 
local organizations and then began a 
precipitous decline. By 1880, the first 
wave of rural cooperation had passed. 

Two concurrent efforts were also 
marked by their brief existence. The 
Sovereigns of Industry, a secret soci- 
ety modeled after the Grange but 
open to non-farmers, opened its first 
cooperative store in Springfield, 
Massachusetts in 1874. Within three 
years, the Sovereigns operated 94 so- 
called “councils” that reported a 
total business volume exceeding one 
million dollars. Three years later, the 
stnres disappeared and the Sover- 
eigns as well. 

The Knights of Labor, whose pri- 
mary function was to bargain collec- 
tively for better wages and working 

Volume 15, Number 93 

conditions, also found time to estab- 
lish consumer cooperatives— at least 
185 at the height of their activity. 
The only shortcoming to these 
cooperative ventures was that they 
were tied to a labor organization that 
reached its zenith well before the 20th 
century. Indeed, while Europeans 
already had a virtually unbroken 
60-year tradition of producer and con- 
sumer cooperatives by 1900, 
Americans had only unfulfilled 
dreams to show for their efforts. 
Some of the shortcomings in the 
American experience could be traced 
to unsound business judgments. 

Members were given excessive dis- 
counts on goods, dissuading non- 
members from shopping the coopera- 
tive stores. Accounting practices 
were lax. More importantly, these 
cooperative ventures were dependent 
on parent organizations. Sometimes, 
as in the case of the Knights of Labor, 
profits went into the coffers of the 
parent group instead of into expan- 
sion and reinvestment. The American 
cooperatives were tied to the fate of 
organizations that did not purport to 
serve a general membership. 

The cooperative movement re- 
mained quiescent until the 1920s. 
Two factors figure prominently in its 
resurgence: the arrival of a new 
generation of immigrants and a post- 
war depression that, like the post- 
Civil War years, hit rural America 
first. Europeans played a major role 
in the cooperative movement. For ex- 
ample, in Wisconsin, Michigan and 
Minnesota, over 100 coop societies 
were run by Scandinavians by the 

But the cooperative movement was 
led principally by farmers. Farmers 
were the largest class of Americans 
until 1921. To stay competitive, they 
often had to risk soil fertility. Floods, 
pestilence and erosion were hin- 
drances matched by man-made nui- 
sances, such as fluctuating crop 
prices and transportation costs. In 
Missouri and virtually all 47 other 

states, rural cooperatives were form- 
ing: not only to market produce (dairy 
products, prunes, grapes, etc.) but to 
purchase supplies. 

Cooperatives were responsible for 
telephone and electrical service, some 
gas and oil refineries and grain 
elevators. The farmers’ objective was 
simple: a larger share of the con- 
sumers’ dollar, without necessarily 
increasing the price of their products. 
In short, cooperative farmers wanted 
to beat the middleman. Likewise, the 
farmer could buy supplies at 
wholesale, not retail prices, if he 

Needless to say, rural cooperatives 
often served and protected special in- 
terests in a manner not unlike the 
great monopoly trusts. Complained 
one vexed contemporary observer, 
Charles Gide, a professor of political 
economy at the University of Paris: 
“Much publicity has been given to 
the fruit-growers, prune and grape 
producing organizations of the Pacif- 
ic Coast. They have been called ‘co- 
operative.’ . . . Their success may be 
measured by the following fact which 
is also a test of their character: before 
the prune producers’ co-operative 
was organized, the people were able 
to buy prunes for nine cents a pound; 
but so successful has this organiza- 
tion become that the consumers are 
now paying twenty-nine cents a 
pound for the same prunes.” (Con- 
sumers' Co-operative Societies, 1922.) 

WlossourO Pooffneers 

Missouri was one of the pioneering 
states in rural cooperation. Already 
by 1919, the state had adopted the 
Stock Act, the first cooperative state 
law. Four years later, the General As- 
sembly adopted an even broader stat- 
ute authorizing cooperative organiza- 

Two national federations organized 
to embrace the growing cooperative 
movement. Both are still in existence. 
The first, the Cooperative League of 
continued on page 18 

Page Seventeen 

Cooperative federations promise bright future 

A revolution 

continued from page 17 
the U.S.A. was founded in 1915. The 
organization was designed to repre- 
sent the educational and promotional 
interest of cooperatives. The begin- 
ning of the national federation was 
close to the heart of the midwest, 
with the first national Co-operative 
Congress held in Springfield, Illinois 
in 1918. A second national federation, 
the National Council of Farmer Coop- 
eratives, was organized in 1929 to 
represent organized farmer coopera- 

The cooperative movement had 
widespread support during this time. 
Republicans. Democrats, Socialists, 
unions and churches all jumped on 
the cooperative bandwagon. 

The Missouri experience is typical 
of the growing movement at the time. 
Farmers, already feeling the pinch 
nine years before the depression, 
banded together to have access to 
supplies. Although they formed con- 
sumer cooperatives, they were inter- 
ested in the movement as producers. 
Hence, in Missouri, the Consumers 
Cooperative Association of North 
Kansas City (later to become Farm- 
land Industries) began in 1929 as an 
oil and gas distributor. Ten years 
later it had completed its own refin- 
ery. Food processing, now a dominant 
part of Farmland’s activity, was only 
a future plan in the 1940s. 

Another major Missouri coopera- 
tive, the Missouri Farmers Associa- 
tion, was bom in the 1930s. MFA has 
grown to include insurance, grocery 
stores, and gas stations among its 
services to members. Many familiar 
trade names and products were born 
of the rural cooperative activity of 
the 1930s, such as Welch grape juice. 
Tree Top apple juice, Farmland 
bacon, Sue Bee honey, Land O’Lakes 
butter. Smokehouse Almonds, and 
Sun Maid raisins. 

Rural and cooperative efforts fol- 
lowed their separate paths through 
the second World War and the 1950s. 
Different constituencies required dif- 
ferent services. Many rural coopera- 
tives abandoned consumer-related 
services to non-members. Farmland 
and MFA, for example, abandoned 
some of their grocery, hardware, and 
service station activities. Post-war 

America was becoming one of two 
dominant world forces, though with 
significantly greater success than its 
Cold War sparring partner. The 
midwest became the bread basket of 
the world. Industry and technology 
promised an unlimited future. A pall 
of suspicion greeted any capitalism- 
defying philosophy. 

The Post-Sixties 

Whatever the reasons, new vigor in 
the cooperative movement had to 
await the late 1960s. Responding to 
the common nemesis of Americans, 
monopolization, the new cooperators 
were imbued with the social values of 
the civil rights era: equality, service to 
the poor and a studied awareness of 
ecological issues. Nevertheless, some 
of their cooperative ventures were 
marked by the same problems that 
continually dog the cooperative move- 
ment: a lack of investment, unsound 
management, a failure to serve general 
community needs and dependence on 
a “parent” group. Social divisions in 
the late 1960s limited community par- 
ticipation in some cooperatives be- 
cause of exaggerated cultural and 
ideological differences. 

The Missouri cooperatives that 
trace their beginnings to the late 
1960s and ’70s include the Columbia 
Community Grocery in Columbia, 
Limit Avenue Food Coop in St. Louis, 
and the now-defunct Westport Food 
Cooperative in Kansas City. Coopera- 
tive efforts in the areas of energy and 
housing also trace their beginnings to 
this period. 

It is always tempting to debunk 
anything old and established. The 
health food enthusiast that joined his 
first cooperative in the 1960s proba- 
bly saw little relationship between his 
efforts and interests and, say, the 
Rural Electric Cooperatives. The 
“conservative and staid” farmer or- 
ganizations seemed no more progres- 
sive than the local banks. And, yet, as 
the efforts of the 1960s and '70s have 
demonstrated, a stronger link exists 
between the two generations of coop- 
eratives than is at first apparent. 
That relationship has been recog- 
nized in Missouri, and formally ex- 
pressed with the formation of a new, 
statewide organization. 


In March 1982, 70 cooperators rep- 
resenting 20 cooperative organiza- 
tions from Missouri and adjoining 
states came together at the Farmland 
Industries cooperative training facili- 
ty and founded the Missouri Associa- 
tion for Community Cooperation 
(MACC). The various components of 
the cooperative movement were rep- 
resented, including food, housing and 
energy cooperatives. The organiza- 
tion’s purpose is not only to develop 
existing cooperatives, but to promote 
new coops and to cultivate public 
awareness about the movement. 

MACC had been two and a half 
years in the making, owing its birth 
in large part to a brainstorming ses- 
sion during a University of Missouri 
extension service conference. 

Although much too early to deter- 
mine, federations such as MACC 
suggest a brighter future for the 
cooperative movement. Older 
cooperatives are working hand in 
hand with newer coops, rural coops 
are linked to urban coops, and 
cooperative methods are being in- 
troduced into new industries. In 
Missouri, cooperative-based enter- 
prises are being explored in 
everything from nut butter produc- 
tion to laundromats to legal services 
to making bicycles. 

The potential for cooperative enter- 
prises is limited only by the degree of 
cooperation between individuals with 
dreams and enthusiasm. 

Robert Mayer is the former Midwest Field 
Representative of the National Consumer 
Cooperative Bank and presently works as 
a consultant for non-profit cooperatives 
and small businesses. Roland Klose is as- 
sistant editor of FOCUS/M idwest. 

Page Eighteen 

FOCUS /Midwest 

Different in character and history 

F®©d coops reflect regional needs 

Limit Avenue Food Coop, St. Louis’ largest and oldest. 

By John Noller 

Every one of Missouri’s hundred- 
odd food cooperatives has a unique 
character and history. 

Certainly, the most striking differ- 
ence is size. Independence Food Fair 
has annual sales approaching $3 mil- 
lion. Limit Avenue in St. Louis sells 
half a million dollars of food in a year. 
Most other Missouri cooperatives are 
much smaller. 

Food coops differ also in operation. 
Some require pre-ordering of food. 
Others are operated as stores. 

Differences in size and operation of 
Missouri cooperatives often reflect 
regional needs. 

The most “rural” group of coopera- 
tives are located in northern Mis- 
souri. These 12 coops were created 
mainly to meet the need of their mem- 
bers for access to bulk and “whole” 
foods. Their major supplier is the 
Blooming Prairie Cooperative Ware- 
house in Iowa City, Iowa. Blooming 
Prairie, founded in 1974, serves coop- 
eratives in five states, although 
three-fourths of its members are in 
Iowa. In addition to purchasing, 
warehousing and trucking food, 
Blooming Prairie gives technical 
assistance to groups in their service 
area which are interested in develop- 
ing a cooperative store. The Missouri 
members of Blooming Prairie are con- 
centrated in the northwest of the 
state, reaching down into St. Joseph, 
although there is also a large coop in 

Most of the 30 to 40 pre-order coop- 
eratives in southern Missouri (south 
of 1-70) were also founded for access 
to bulk and whole foods, although 
there have been coops organized in 
the Springfield and Joplin area with 
more emphasis on canned and pack- 
aged goods. These coops include rural 
groups as well as groups in such 
population centers as Springfield, 
Joplin and Cape Girardeau. The main 
supplier of these pre-orders is the 
Ozark Cooperative Warehouse, which 
is operated by the New Destiny Co- 
operative Federation, located in Fay- 
etteville, Arkansas. 

The New Destiny Federation was 

Volume 15, Number 93 

founded in 1976 with broad goals of 
promoting regional cooperative eco- 
nomic development. Its Ozark ware- 
house services six states divided into 
four regions, one of which is the 
“Missouri Region.” The Missouri Re- 
gion has about 50 members, most of 
them coops. Like Blooming Prairie, 
the warehouse supplies its own truck- 
ing and is operated by a worker col- 

Over the last year, twelve pre-order 
cooperatives in southcentral Missouri 
and northcentral Arkansas have 
come together to create Mid-Ozark 
Reliance Effort. MORE’s activities 
include communication and educa- 
tion, and locating local producers. Re- 
cently, MORE has expanded into 
trucking, both to assure reliability 
and to help distribute local products. 

Southcentral Missouri has also 
seen the development of two impor- 
tant cooperatively oriented producers: 
Morningland Dairy, which produces 
raw cheese, and East Wind Commu- 
nity, a community which is producing 
and distributing nut butters to the 
cooperative movement on a national 

Urban cooperatives 

While the northern and southern 
Missouri pre-order coops have been 
created primarily to meet a demand 
for bulk whole food, the 30 to 40 pre- 
orders in St. Louis fill a greater diver- 
sity of needs. Some specialize in 
canned goods, packaged goods, dairy 
products, or whole foods: others spe- 
cialize in fresh produce from Produce 
Row or the Soulard Market; still 
others combine all these for their 
members. Some serve primarily 
middle-income or lower-income 
members, others serve a mixture. 
Size of coops vary from a few families 
to over 100 families. 

The Limit Avenue Coop is the old- 
est (dating to 1971) and largest (500 
households) of the pre-order coops in 
St. Louis. It has helped other pre- 
order coops get started. Recently, it 
opened a store at a nearby locations 
permitting immediate purchases. 

A 1981 survey of St. Louis coops 
by the St. Louis Neighborhood Re- 
source Center found much interest in 
working together. In some cities — no- 
continued on page 20 

Page Nineteen 

Blazing a new trail 

Independence crops 

By Pat Heady and Ken Reveill 

Independence is the fourth largest 
city in Missouri and best known as 
the hometown of former president 
Harry S. Truman. Independence was 
also made famous years before as the 
queen city of the overland trails. 
Thousands of families started their 
long trek west from Independence 
over the Santa Fe, California and 
Oregon Trails. 

Independence today is blazing a 
new trail in consumer action that 
could potentially benefit hundreds of 
other communities. More than 2,000 
families in Independence are mem- 

bers of the cooperative Food Fair and 
are able to buy their groceries and 
household supplies at near wholesale 
cost. They share in supporting an in- 
stitution that serves the needs of 
many poorer families. Food Fair is 
the largest consumer food coopera- 
tive in the state of Missouri with an- 
nual sales for 1982 expected to ap- 
proach three million dollars. 

Interest in a coop developed in 
1975 and 1976 when separate neigh- 
borhood, community and church 
groups discovered a common concern 
about nutrition and the continual in- 
crease in the cost of food. The coop 

rood coops 

continued from page 19 
tably Chicago— coops have been link- 
ed together by a warehouse and 
resource centers, but no such link ex- 
ists in St. Louis. The Resource Center 
has attempted to serve as a “net- 
work” for cooperatives in the St. 
Louis area, but recent funding diffi- 
culties have impaired its efforts. 

Outside of the St. Louis and Kan- 
sas City metropolitan areas, the larg- 
est food coop in Missouri is the Com- 
munity Grocery in Columbia. Like 
three other stores in the state— Com- 
munity Groceries and K&W Coop in 
St. Louis, and Good Hope Grocery in 
Cape Girardeau— the Columbia store 
sells primarily whole foods including 
produce and dairy products and a few 
canned or frozen foods. 

The Community Grocery has ex- 
panded twice since its founding in 
1974 and now owns and occupies a 
4000-square-foot building close to the 
campus of the University of Mis- 
souri. Although students from the 
university and two other colleges in 
Columbia contribute to the coop’s 
membership of 200, year-round resi- 

dents unconnected with the universi- 
ty are more important to the coopera- 
tive’s strength and growth. The 
cooperative’s sales are budgeted to 
reach half a million dollars in 1982. 
The coop has also assisted and served 
as a distribution center for several 
other cooperatives, and was the spon- 
sor of a CETA-staffed community- 
wide nutrition education project in 
. 1978-79. 

The largest coop in the Kansas City 
area is the Independence Community 
Cooperative, which owns the 
10,000-square-foot building from 
which it operates Food Fair as well as 
a pharmacy and an auto supply retail 
outlet. The coop is strongly commu- 
nity oriented and has worked with 
local churches in helping needy peo- 

In 1978, the same year that the In- 
dependence coop opened Food Fair, 
about a dozen pre-order cooperatives 
merged to create the Open Market, a 
small full-service neighborhood gro- 
cery store. While it had provided im- 
portant services to its members for 
two years, it had never established 

method, they agreed, was a good way 
to obtain nutritional foods, whole 
grains and health foods at reasonable 
prices. Other grocery and household 
products could also be included in a 
cooperative’s inventory. 

After two years of research and 
discussion, a cooperative plan was 
selected and modeled after the Hub 
Cooperative in Nanaimo, British Co- 
lumbia. At the invitation of Rod 
Glen, the board president of Hub at 
that time, two members of the In- 
dependence Board went to Canada 
visited the Hub Coop and brought 
continued on page 2l 

the capital or membership base to 
sustain sales at a break-even point. 
Consequently, the Open Market was 
dissolved, and a number of new pre- 
order cooperatives are re-emerging to 
replace it. 

John Noller was the coordinator of Project 
Taproot in 1979-81 and has been an active 
member in the Community Grocery since 
its founding in 1974. He currently serves 
on the board of directors of Missouri As- 
sociation for Community Cooperation 
(MACC) and North American Students of 
Cooperation (NASCO). 

Page Twenty 


top sates In Missouri 

continued, from page 20 
back enthusiastic reports about this 
large community cooperative. Hub 
offered encouragement and technical 


In the summer of 1976, a member- 
ship drive was started. By late sum- 
mer 1977, approximately 100 families 
in the community agreed to join the 
coop effort. A small, out-of-the-way 
location was chosen and after a 
month of clean-up and painting, Food 
Fair was opened in November 1977, 
with about 600 square feet of rented 
floor space, $3,000 in inventory and 
three broken down grocery carts. 

The business is run according to 
the Rochdale principles: open mem- 
bership, democratic control (one 
member, one vote), limited return on 
share capital and savings returned to 
the patrons in proportion to their pur- 
chases. The savings are returned at 
the time of purchase in the form of 
lower prices rather than at the end of 
a period in the form of dividends. The 
store is not a grocery store designed 
to sell something. It is, rather, a pur- 
chasing agency which operates to 
buy quality products for its mem- 

The principle of a “direct charge’’ 
coop is very simple. The inventory is 
paid for by an initial amount con- 
tributed by each family and refunded 
if they leave the coop. In order to 
meet operating costs, each member 
family pays a “direct charge.” If the 
inventory is paid for and the operat- 
ing costs are met, then each family 
buys at the wholesale cost of putting 
the product on the shelf. These prices 
usually range from five to twenty per- 
cent below normal retail costs. 

Members must pay a $5 fee which 
pays for a monthly newsletter and ed- 
ucational materials, a one-time “In- 
ventory Investment Fee” of $50 for 
families (or $25 for individuals or re- 
tired people) which gives the coop the 
buying power for that family and is 
refunded upon withdrawal from the 
coop, a five percent of purchases ser- 
vice fee (the direct charge) and a two 

Volume 15, Number 93 

“The strength 
and stability of the 
coop is reflected by 
its broadbased 
membership, which 
is strongly 
influenced by 
middle-class values 
and goals . ” 

percent of purchases investment in 
“Savings Certificates” each time one 
shops. The savings certificates give 
the store expansion capital and are 
redeemable in three years with in- 

This plan has allowed the coop to 
expand using the resources of its own 
members and keeping ownership in 
their hands. In five years, the mem- 
bership has grown from 100 to 2,000 
families and the weekly sales of the 
store have risen from $1,000 to 
$50,000. The floor space has been ex- 
panded to 8400 square feet. There is 
no indebtedness to any lending in- 
stitution, and the coop owns its build- 
ing and the land. 

A key factor in the early stability 
and growth of the coop was the dedi- 
cation of the coop managers, a hus- 
band and wife team that supported 
the cooperative principles and who 
were experienced in the grocery busi- 
ness. Their salaries started at zero 
the first month and went up a little 
each month as the business increased 
until they reached a reasonable level. 
It would be difficult to overestimate 
the value of their contribution and 
the contributions of those first 
members, young and old, who gave 
hundreds of hours of volunteer time 
during the first critical months. 

Volunteer participation 

The coop’s success owes much to 
volunteers. The board believed that 

in order for members to identify with 
the cooperative, they needed a way to 
participate so that the store would 
not be “just another business.” For 
that reason, the idea of the “Gold 
Star Volunteer” was conceived. Gold 
Star volunteers are those members 
who donate four hours a week to ser- 
vice in the store. In exchange for 
their service, they do not pay the five 
percent service fee on their groceries 
when they shop. 

The strength and stability of the 
coop is reflected by its broad-based 
membership, which is strongly influ- 
enced by middle-class values and 
goals. A diverse membership gives 
Food Fair a cohesiveness and 
strength it might otherwise lack. 

At present, the store is spacious, 
clean and functional. It offers a wide, 
though not exhaustive, selection of 
groceries, natural food products and 
household goods. While respecting 
the individual’s freedom of choice re- 
garding food preferences, the store 
continues to have a strong commit- 
ment to nutritional education. It re- 
cently held a workshop and classes 
for its members on whole food cook- 
ery, specialized diets and whole 
wheat bread baking. Newsletters not 
only attempt to keep members in- 
formed of progress at the store; but 
also to provide nutritional and con- 
sumer information. The store does 
not advertise nor promote loss 
leaders commonly associated with 
grocery retailing. The thrust is 
toward economy and improvement in 
the quality of food selection. 

In addition to serving its family 
members, the store now has a number 
of commercial accounts. It has also 
recently opened a two-bay auto shop 
on its property and has plans for its 
own bake shop. 

Like the Hub Coop of Nanaimo, the 
co-op's goal is to bring into the world 
of business a little consumer democ- 
racy and a voice in determining such 
things as quality and price. 

Pat Heady is a past board president of In- 
dependence Food Fair. Ken Reveill is a 
treasurer of Food Fair. 

Page Twenty-One 

Reaching out to other alternative movements 


East Wind is a secular community 
of about 60 people located in Ozark 
County, Missouri Since 1974, East 
Wind has been working toward their 
vision of the “ good life. ” It is econom- 
ically self-sufficient, first relying on 
rope products and now making and 
selling nut butters. The community 
draws inspiration from different 
philosophies, combining pragmatism 
and idealism. 

By Allen Butcher 

In May 1974, eleven people came to 
Ozark County, Missouri with just 
enough money to make a down pay- 
ment on 160 acres of stony, tree-cov- 
ered ridges, a small and barely ade- 
quate single-story farmhouse and a 
few other small buildings. East Wind 
began quite literally from scratch 
with the intent of building a wholly 
new society where before there were 
only woods and pasture. This new 
society was to reflect values that 
would be attentive to the needs of in- 
dividuals and consistent with the 
needs of this planet. East Wind is an 
community, born of the dynamics of 
social change unleashed in the 1960s. 

In its early days, the mood at East 
Wind was vibrant. Founders planted 
a garden, built a basic showerhouse 
and a small residence building of ten 
100-square-foot rooms. They prompt- 
ly ran out of money just as winter ar- 
rived. The 35 members were desper- 
ately in need of money that first win- 
ter. Savings, family loans, assistance 
from Twin Oaks Community, and 
outside work sustained East Wind. 
Members took turns filling what few 
jobs were available in the area. East 
Wind also kept an outside work 
apartment in St. Louis and a house in 

This was a difficult period, working 
in a region of the country quite differ- 
ent from which East Winders had 
come. Yet, this period of struggle was 

Page Twenty-Two 

Wiiti builds 

characterized by a spirit often refer- 
red to as the “East Wind Magic.” 
Although the community was very 
poor, spirits ran high and members 
felt they were building something 
meaningful and important. Frequent- 
ly, the phrase “for the revolution” 
was heard as a reason for what East 
Wind was attempting to do. 

In the autumn of 1975, East Wind 
had grown to 45 people. The hand- 
woven rope hammock industry, 
which Twin Oaks helped develop, had 
grown to a large enough volume per- 
mitting an end to outside work. A 
two-story, twenty-room residence 
was built and named “Fanshen” after 
the first Chinese agricultural com- 
mune. In February 1976, “Rock Bot- 
tom,” a new kitchen-dining complex, 
including a library and public space, 
was built, relieving the pressure on 
the overcrowded farm house which 
was now named “Re’im” after an 
Israeli kibbutz. 

East Wind founded the Federation 
of Egalitarian Communities in early 
1977 in an attempt to reach out to 
other alternative communities. East 
Wind itself continued to grow to a 
high point of 70 in the late 1970s. 
However, a major controversy was al- 
ready brewing which brought divi- 
siveness and a loss of members. 

Orowiimg-up paons 

Half of the community’s labor was 
required to produce rope products in 
order to cover support costs and pay 
for 1976 construction projects. When 
East Wind overextended its financial 
resources, much of the community’s 
labor was diverted to produce income, 
rather than being directed towards 
domestic projects. A desire for 
children, for example, was stifled by 
the lack of space, money and labor. 
Resources were devoted to building 
inventories, buying equipment and 
building a warehouse and loading 
dock. Making all of this even more 
unpalatable was the feeling, despite 
an attempt to create attractive work- 

ing conditions, that the rope business 
was drudgery. 

Twelve discontented members left 
East Wind in early 1980. The issue 
that prompted the schism centered 
on labor-related matters: how much 
and what kind of work members had 
to provide. Yet, the deeper question 
had been brewing for at least three 
years: what direction would the com- 
munity take? The community had al- 
ways valued a diverse membership, 
with strong and different opinions! 
For example, members argue over 
food, television, child raising, 
agricultural practices, the weather! 
and even nuclear power. Some com- 
munity members charged that East 
Wind was not so much a commune 
than a factory. But others asserted 
that the commitment to economic 
stability was lacking, that some 
members didn’t care enough to do 
what was needed to keep the com- 
munity afloat. 

Unity was gone and “utopia” 
seemed far away. The alternative 
world was becoming quieter in the 
1970s and the social change move- 
ment seemed bankrupt. Yet, for 
many members, East Wind was the 
best there was. Those who stayed felt 
that “if we cannot work harder, we 
have to work smarter.” 

Turning point 

A turning point for East Wind 
came during its darkest period. The 
vehicle for renewal was the commu- 
nity’s increasing contacts with other 
alternative organizations. Groups in- 
volved in the East Wind-sponsored 
Federation of Egalitarian Com- 
munities were beginning to reach out: 
the first was Kibbutz Artzi, one of 
the federations of the Israeli kibbut- 
zim. They had read the book, A 
Walden Two Experiment: The First 
Five Years of Twin Oaks, by East 
Wind member Kat Kincade. Several 
members from federated com- 
munities have visited kibbutzes 
continued on page 23 
FOCUS /Midwest 

a new community 

continued from page 22 
through the financial aid of the Kib- 
butz Artzi Federation. 

Increased contact with two other 
alternative movements, Movement 
for a New Society (MNS) and the Co- 
op Movement, brought additional 
changes. In January 1980, East Wind 
invited four trainers from the Phila- 
delphia MNS Life Center to travel to 
the Ozarks and present a week of 
workshops and discussion. MNS em- 
phasized skills in conflict resolution, 
decision making, facilitation, and in- 
dividual and social communication. 
The community realized through 
these discussions that although East 
Wind had made truly unique ad- 
vances in dealing with material pos- 
sessions and economic needs, the 
community had overlooked what 
MNS terms “the moral functions of 
an organization.” Members were 
aware of the need to do social plan- 
ning, but no one knew how to verbal- 
ize those needs. MNS gave East 
Wind an effective way of looking at 
the concept of community morale. 



East Wind’s direct contact with the 
cooperative movement also began 
through the previous experiences of a 
few members. An East Wind member 
with a co-op background was elected 
to the board of directors of the New 
Destiny Cooperative Federation, the 
local regional federation of food coop- 
eratives. At a meeting in Texarkana 
in spring 1979, a presentation was 
made by a representative of the 
Southern Cooperative Development 
Fund (SCDF) on the availability of 
developmental capital through their 
fund. Another East Wind member 
was involved in the Economic Democ- 
racy Association (EDA) which sought 
to aid the development of worker or 
consumer-owned and -operated busi- 
nesses. This organization had a short 
life, nevertheless, it produced infor- 
mation about alternative businesses, 
including a few offers from existing 
businesses to help set up others. 
EDA provided East Wind with news 
of the Once Again Nut Butter Col- 
lective’s willingness to aid in setting 
up a nut butter factory. 

Ready for the Nuthouse 

East Wind was more than ready for 
a new industry. Industrial diversifi- 
cation is a key to economic stability , 
plus it provides diversity in the work 
place. Hammocks and other rope pro- 
ducts had served the community well 
and by 1980 the Twin Oaks/East 
Wind Joint Hammocks business was 
doing almost three quarters of a 
million dollars a year in sales. Ham- 
mocks involved little investment, less 
skill and had a fairly quick payback. 
Yet many members were unhappy 
with the prospect of being forever 
tied to the hammock business. 
Besides its labor intensity, ham- 
mocks are luxury items. It didn’t 
seem to square with the alternative 
lifestyle pursued at East Wind. Often 
East Winders felt compelled to con- 
ceal their “alternativeness” from 
their “straight” business contacts. 

continued on page 25 

East Wind 

The East Wind philosophy is 
expressed in some of the practi- 
cal applications of their laws. 
For example, a fair share of 
community work is expected of 
every able bodied member. 
That means, members are ex- 
pected to work about 50 hours a 
week, including what is termed 
“hard to assign work.” Every 
member is guaranteed a one- 
week vacation a year, although 
many take longer vacations — a 
privilege they earn by working 
longer hours. 

All East Wind members must 
contribute a minimum amount 
of labor to the community as a 
whole and all income derived 
from their labor is contributed 
to the general pool. In return, 
the community assumes respon- 
sibility for fulfilling members’ 
needs: food, clothing, shelter, 
medical coverage, transporta- 
tion, recreational facilities, 
equipment, childcare, educa- 
tional and travel opportunities. 
In addition, every member re- 
ceives a small weekly discre- 
tionary allowance. On joining, 
members don’t turn over life 
savings or assets; however. 
East Wind requires that after 
one year, all individual assets 
should be loaned to the commu- 
nity on mutually agreeable 

East Wind emphasizes ener- 
gy-saving technologies. Solar 
heating is used in the commu- 
nity’s industrial building. The 
sewage system is designed to 
recycle waste as fertilizer. 

Equality of sexes is empha- 

Volume 15, Number 93 

Page Twenty-Three 

Same tests apply to all coops 

Capitalist socialist 

By C. Brice Ratchford 

Are Missouri’s largest cooperatives 
“true” cooperatives? The multi- mil- 
lion dollar enterprises whose roots 
stretch to the Great Depression must 
meet the same test as the smallest 
pre-order food coop. 

Missouri’s largest cooperatives, 
which serve the state’s farmers, easi- 
ly meet this test. 

Missouri has a high concentration 
of cooperative activity. Farmland In- 
dustries, headquartered in Kansas 
City, is the nation s largest coopera- 
tive. Missouri Farmers Association, 
headquartered in Columbia, Mis- 
souri, has sales approaching one bil- 
lion dollars. Mid-America Dairy, 
headquartered in Springfield, has 
sales exceeding 600 million dollars. 
The farm credit banks that serve Illi- 
nois, Missouri and Arkansas are lo- 

cated in St. Louis. 

Most cooperatives were started by 
farmers, not to get better prices, but 
to gain dependable access to supplies 
and markets. Better prices were real- 
ly a side benefit. Cooperatives still 
place high priority on providing ac- 
cess. The latest major example was 
prompted by the oil embargo. Major 
oil companies began to withdraw 
from sparsely populated areas be- 
cause they were less profitable mar- 
kets than densely populated areas. 
The cooperatives continued to serve 
the rural areas. 

Marketing and supply 

Large organizations, such as the 
MFA and Farmland, have local out- 
lets. There are 120 local, independent 
farm supply/marketing cooperatives 
affiliated with them. In addition, 


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Every cooperative must meet the same tests 

Page Twenty-Four 

MFA has 80 company-owned ex- 
changes in Missouri. Every farmer is 
within a short drive of a farm supply 
and marketing cooperative, and every 
farmer has ready access to a Produc- 
tion Credit Association or Federal 
Land Bank Association, which pro- 
vide short- and long-term credit re- 
spectively. Mid-America Dairy, an- 
other large cooperative, also has a 
number of receiving and dairy proces- 
sing plants in the state. 

Service cooperatives are also impor- 
tant to rural Missouri. Most of the 
state is served by Rural Electric Co- 
operatives, which have moved be- 
yond simple power distribution to 
generation and transmission. A num- 
ber of rural communities have tele- 
phone cooperatives. The Dairy Head 
Improvement Associations are coop- 
eratives. Other cooperatives are ma- 
jor providers of artificial insemina- 
tion materials and services. 

Farmers and rural people do use the 
cooperatives. On average every farm- 
er belongs to 2.3 cooperatives. 

The cooperatives have achieved sig- 
nificant market shares for some com- 
modities and supplies. Nationally 
(and Missouri would be close to the 
average), cooperatives market 44 per- 
cent of all farmers’ grain, 69 percent 
of the milk, 30 percent of the cotton, 
25 percent of the fruit and vegeta- 
bles, 8 percent of the poultry and 11 
percent of the livestock. On the farm 
supply side, the cooperatives provide 
39 percent of fertilizer, 36 percent of 
pesticide, 35 percent of petroleum 
and 20 percent of the feed market. 
The farm credit banks are the major 
providers of all types of farm credit- 

All of the farm supply and market- 
ing cooperatives began either as local 
assemblers of raw farm products or 
distributors of supplies produced by 
others. While these functions are es- 
sential, they are the least profitable 
of the many functions in the market- 
ing channel and do very little to ad- 
dress the critical problem of an as- 
sured access to markets and supplies. 

continued on page 25 

FOCJJ S/Midwest 

m something else? 

continued from page 24 

The cooperatives have responded by 

going “basic” in farm supplies. 

In the case of fertilizer, they have 
not only built manufacturing plants 
but have acquired phosphate and 
potash mines. On the marketing side, 
the cooperatives have built proces- 
sing plants and in the case of hogs, 
rice, soybeands and dairy products 
are producing nationally branded 
consumer products. They have cre- 
ated an export program for grain that 
includes export elevators, hopper 
cars and barges. 

The cooperatives are achieving 
their primary objective of helping 
farmers improve their income in two 
ways. The hundreds of millions of dol- 
lars in patronage refunds are a direct 
boost in prices received for products 
or a reduction in prices paid for sup- 
plies. While the amount cannot be 
quantified, a greater value to mem- 
bers and non-members is the added 
competition in the market place. 

“True” cooperatives 

Cooperatives had to become large 
to perform the services farmers 
needed and requested, but do they 
continue to be true cooperatives and 
do farmers control them? 

On both questions, the answer is an 
unqualified yes. The features that 
distinguish a cooperative from other 
business organizations by statute 
and practice are: 

• The equity capital of all the coop- 
eratives is owned by the members 
who are also farmers and users. 

• They are controlled democrati- 
cally by members. All cooperatives in 
Missouri permit only one vote per 
member regardless of the share of the 
business owned. 

• Equity capital has a limited re- 
turn. The Missouri statutes allow no 
more than a 10 percent return and 
most cooperatives pay none. 

• Cooperatives operate at cost. 
This principle is one that many peo- 
ple, even members, do not know. The 
Rochdale Pioneers, the founders of 
the first successful cooperative, 

Volume 15, Number 93 

adopted as an operating rule to 
charge competitive retail prices. 
Most of the cooperatives follow that 
practice today. If a cooperative fol- 
lowing such a practice is well oper- 
ated, it should show a profit at the 
end of the year. A cooperative returns 
this profit to the user (not the inves- 
tors) prorata to use. These returns are 
called patronage refunds. Legally, the 
price initially charged is a “tenta- 
tive” price with the final price being 
reached when adjusted for the pat- 
ronage refund. 

Missouri cooperatives are controlled 
by farmers. The majority of the board 
members, in most cases all, are prac- 
ticing farmers. The board of directors 
controls the professional manage- 
ment, which, of course, is responsible 

continued from page 23 
Hammock-making is also a seasonal 
industry, causing annual cash flow 
problems by wintertime. 

The decision to go ahead with nut 
butters was made in late 1979. But it 
took two years to prepare the 120- 
page loan proposal, secure a quarter 
of a million dollars financing from 
sources that included the SCDP and 
the National Consumer Cooperative 
Bank, purchase and refurbish the pro- 
cessing equipment, and build a food 
grade steel factory (affectionately 
named the “Nuthouse”). Plus, the 
community had to learn how to make 
good peanut butter. 

The nut butter industry hasn’t 
been without its problems. The 1980 
drought tripled the price of peanuts. 
The machinery in the Nuthouse cre- 
ated a sound pollution in the commu- 
nity. East Wind now has an enormous 
debt to service. 

Workpflaee democracy 

In its eight-year life, the East Wind 
community has steadily grown to 

for the day-to-day operations. Boards 
make and/or approve all major policy 
decisions and operating plans. Farm- 
ers, then, control the cooperatives 
they own. 

Finally, are cooperatives part of the 
capitalist, free enterprise or market 
economy or something else — perhaps 
socialist? Since they fully meet the 
three way test of: ownership by the 
private sector, control by the private 
sector, and all benefits go to the 
private sector, cooperatives in the 
U.S. are totally part of the private 

C. Brice Ratchford is a professor of agri- 
cultural economics at the University of 
Missouri-Columbia. He has been exten- 
sively involved in the cooperative move- 

meet the needs of its members. Now 
changes are coming quickly and furi- 
ously. New members are joining, 
some old members are returning and 
the community is planning for new 
buildings, programs, children, a 
school, better medical and recreation- 
al facilities, more agricultural pro- 
grams and more publicity. 

But social change remains the top 
priority at East Wind. Members 
share the belief that the community 
can someday serve as a model — an ex- 
periment— in building a new social 
order in place of one they believe is 

East Wind’s success as a collective 
business distinguishes it as one of the 
most dynamic of the current alterna- 
tive efforts. If individuals have con- 
trol over the work they do, it is of sec- 
ondary importance how the rest of 
their lives are structured. 

Allen Butcher is an East Wind resident. 
He has written several profiles on the 
community, including one for Communi- 
ties magazine. 

Page Twenty-Five 

East Wind 

Poor denied access to energy 

Coops organic® to 
provide energy 

By David Haenke 

Energy production in the U.S. is a 
high stakes, money-making business. 
But the traditional system doesn’t 
seem to be working efficiently and 
the stakes are becoming greater. 
Widespread environmental pollution, 
destruction and resource depletion 
have become the sad realities of this 

Like traditional market forces, 
cooperative economics emphasize the 
provision of services and goods at the 
best possible price. But cooperation 
introduces a new element: consumers 
and producers of energy share in de- 
ciding what is the real price of energy. 
An energy system that is extremely 
profitable for a private concern is 
nevertheless too expensive if it 
despoils the environment and en- 
dangers life. 

Environmental concerns 

The cooperative movement is criti- 
cally aware of the relationship bet- 
ween energy, the environment, 
economics and politics. 

In Missouri, the recently-formed 
Missouri Association for Community 
Cooperation emphasizes the central 
role of energy in economic planning. 
MACC is an umbrella organization 
for coops that monitors and assists 
the development of energy coopera- 
tives. They include both producer and 
consumer-oriented cooperative ef- 
forts. , 

Energy cooperatives differ from 
for-profit utilities in their emphasis 
on the use of locally available, renew- 
able resources. Environmental aware- 
ness is the key to developing energy 
systems for the future. Ideal energy 
systems incorporate waste recycling 
to provide the most efficiency. 

As consumer cooperatives, energy 
coops can lessen the cost of weatheri- 
zation by wholesale purchase from 
manufacturers. Such an effort has 
been initiated by the County Energy 
Project of Columbia, Missouri. The 
New Destiny Coop Federation 
(NDFC) and its central warehouse, 
the Ozark Cooperative Warehouse, 

Page Twenty-Six 

are considering distribution of 
energy-related materials to member 

NDFC serves six states and 250 
coops in the midwest and south. The 
promise of cooperative marketing of 
energy-related materials and projects 
is demonstrated by the Columbia 
Community Grocery, which already 
offers weatherization materials and 
wood stoves, along with related 

The plight of the poor 

As the U.S. continues its economic 
decay, the poor are on the frontline of 
those denied access to energy. The 
hard winter of 1981-82 brought that 
reality home as social service organi- 
zations were hard pressed to provide 
some measure of comfort to those cit- 
izens who were in danger of freezing 
to death. Cooperatives, by providing 
conservation, weatherization and 
energy savings materials and ser- 
vices, may be the most successful 
business vehicles for keeping warm in 
the 1980s. Coops can provide wood- 
stoves, solar air and water heating 
equipment, solar greenhouse kits, ef- 
ficient kerosene stoves, etc. In Arkan- 
sas, consumers have organized to buy 
photovoltaic cells directly from man- 
ufacturers, providing lower cost 
panels which convert sunlight into 
electricity for home and farm use. 

Cooperatives can be in the business 
of manufacturing energy-producing 

equipment such as solar air and water 
heaters, solar homes greenhouses and 
wood heat equipment. One Kansas 
City effort is a window quilt coop, 
which sponsors workshops and 
makes and sells quilt panels for win- 
dow insulation. This cooperative ven- 
ture is sponsored by the Kansas City 
Citizen/Labor Energy Coalition. An- 
other energy coop is the Bluestem 
Energy Coop, which also makes win- 
dow quilts and promotes general 
energy awareness and education. 

As prices continue to rise, wood 
fuel cooperatives, already developed 
in the northeastern U.S., have great 
potential for development in 
Missouri. Successful fuel coops out- 
side Missouri sell wood to their 
members and to the local community 
also involving shared cutting and 

Cooperation can play a crucial role 
in controlling energy resources. The 
ethos of cooperation combines ser- 
vice, pragmaticism and defensible 
moral choices. Therefore, energy 
coops include in their bylaws and mis- 
sion statements principles upholding 
protection of resources and ecological 

Cooperatively, those principles can 
be translated into profitable business 

David. Haenke is the coordinator for the 
Ozark Area Community Congress and is 
on the board of the Missouri Association 
for Community Cooperation. 

Center for Community Organizations 

A non-profit consulting corporation for small businesses, coopera- 
tives, and non-profit organizations 

Specializing in management evaluation, fundraising, grant proposal 
development, business packaging board and staff communications 
and training. 

Workshops offered on economic development, democratic manage- 
ment and financial planning. 

Contact: CFCO 

5645 Wayne Kansas City, Missouri 

64110 816/444-0990 



Literature on cooperatives 

By John Noller 

This following sources for consumer 
cooperatives focus on general treat- 
ments, organizing and managing food 

Co-op history and philosophy: Sekerak 
and Danforth provide a view of the 
history of consumer cooperation and 
give a good introduction to the ideal- 
ists and pragmatists who have made 
cooperation a twentieth-century 
“movement” in the United States. A 
recent essay by Hoyt gives a fuller in- 
terpretation of the philosophy and 
motivation behind the more recent 
growth in cooperatives. 

Sekerak, Emil, and Art Danforth. Consumer 
Cooperation: The Heritage and the Dream, 
Consumers Cooperative Publishing Assoc. 
841 Pomeroy Ave, #20. Santa Clara, CA 

Ron Cotterill, Food Cooperatives. Interstate 
Pub. 1981. The article by Ann Hoyt is titled 
Renaissance of Consumer Cooperation. 

Business aspects/non-cooperative 
literature: Every co-op has a business 
side, and co-ops can learn much from 
“small business” literature. A num- 
ber of good paperback books directed 
toward small business are easily ob- 
tainable; three good ones are those by 
Kamoroff, Frost, and Follett. In addi- 
tion, the U.S. Small business Admin- 
istration has developed a number of 
useful books and shorter publications 
for small business. The books are in- 
expensive and the short publications 
are free. 

Kamoroff. Bernard, Small-Time Operator. 

Bell Springs Publishing, 1976 

Frost. Ted, Where Have All the Woolly 

Mammoths Gone? Reward. 1974 

Follett. How To Keep Score In Business. 

Mentor. 1978 

Small Business Administration. P.O. Box 
15434. Ft. Worth, TX 76119 for the shorter 
publications, books available from Govt. 
Book Store. 601 E. 12th St., Kansas City. 
MO 64106 

Organizational and democratic as- 
pects/non-cooperative literature: Be- 
sides its business side, every co-op 
also has an organizational side requir- 
ing, among other things, member in- 
volvement in the organization. (Coop- 
erators sometimes disagree on how 
much and what way members should 
be involved.) Many non-business or- 
ganizations have a similar concern, 
and there are useful insights to be 

Volume 15, Number 93 

gained from the extensive literature 
directed toward voluntary groups 
and non-profit organizations. A con- 
venient source for some of this litera- 
ture is the Center for Voluntary 
Action. One recent book that offers 
useful information on leadership, vol- 
unteerism and public relations is the 
Non-Profit Organization Handbook 
edited by Connors. 

Center for Voluntary Action, 1214 16th St. 
NW. Washington. D.C. 20036 
Connors, Tracy. Nonprofit Organization 
Handbook. McGraw-Hill 1980 

Business and democratic aspects / 
cooperative literature: Literature 
from the co-op movement does not 
necessarily provide any better in- 
sights into business or democracy 
than literature from non-cooperative 
sources. However, it does address the 
problem specific to cooperatives of 
bringing the two aspects into a crea- 
tive synthesis so that they work to- 
gether instead of against each other. 
Rasmussen covers the standard 
topics of financial management from 
a cooperative viewpoint. The treat- 
ment is complete and concise. This 
book is most likely to be useful to a 
co-op that is already well-established. 

Rasmussen, A. Eric, Financial Management 
in Cooperative Enterprises. Cooperative Col- 
lege of Canada, Saskatoo Saskatchewan. 
Canada, 1982 

Noller gives an overview of the man- 
agement functions that must be met 
in any cooperative. 

Five Extension Bulletins are available free 
in single copies by sending a self-addressed 
stamped envelope to the Cooperative Exten- 
sion Service, University of Missouri, Colum- 
bia 65211. Order them by number: 

EC941— "Introduction to Consumer Food 

EC942— "Steps in Organizing a New Pre- 
order Food Cooperative" 

EC943— “Managing Pre-order Food Cooper- 

EC944— "Essential Elements of Managing a 
Food Cooperative” 

EC945— "Orienting New Members” 

An effective board and committee 
structure is one of the keys to active 
member involvement, as well as busi- 
ness success, in a larger cooperative. 
Garoyan and Mohn’s manual on co-op 
boards of directors is sophisticated 
and complete. Board and committee 
functioning also receive useful treat- 
ment in non-co-op sources such as 

Connors (listed earlier) and Conrad 
and Glenn. Materials for training a 
board of directors in fulfilling its re- 
sponsibilities can be obtained from 
North American Students of Cooper- 
ation (NASCO). NASCO will also pro- 
vide names of local people qualified in 
training directors. 

Garoyan, Leon, and Paul Mohn, The Board 
of Directors of Cooperatives, University of 
California Extension (Pub. 4060), Berkeley. 

Conrad, William, and William Glenn. The ef- 
fective Voluntary Board of Directors, Swal- 
low Press. Chicago. 1976 
NASCO (North American Students of Coop- 
eration), Box 7293. Ann Arbor. MI 48107 

Another key to active member in- 
volvement is effective member orien- 
tation and education. In another Ex- 
tension bulletion, Noller gives a brief 
introduction to member orientation 
(listed earlier). NASCO has published 
a useful manual on member education 
(listed earlier). A recent special issue 
of the co-op trade journal Moving 
Food was also devoted to member 

Moving Food, published by Alliance of 
Warehouses and Federations, Box 14440, 
Minneapolis, MN 55414 

General information on food co-ops: 

Ratchford, in an Extension bulletion 
(listed earlier), gives a brief overview 
of food cooperatives with particular 
emphasis on initial organization. The 
Food Co-op Handbook has chapters 
on history, philosophy, and political 
issues as well as organization and 
management. Cotterill’s recent book 
on food co-ops (listed earlier) has valu- 
able chapters on finance and manage- 
ment as well as more general market 

Food Coop Handbook, by the Handbook Col- 
lection. Houghton Mifflin, Boston, 1975 
Pre-order food co-ops: Among a num- 
ber of manuals on pre-order co-ops, 
the most easily obtainable for Mis- 
sourians are Noller’s two Extension 
bulletins on organizing and managing 
a pre-order (listed earlier). Vellela 
gives the best book-length treatment, 
though his perspective is more useful 
for urban than rural cooperatives and 
is biased toward smallness. Snyder's 
manual for the co-op buyer, based on 
her experience in St. Louis, is helpful 
for dealing with suppliers or manag- 
ing a large pre-order. Blooming 
Prairie Cooperative Warehouse, in 
Iowa, has developed a good, short 
manual for pre-order bookkeeping. 
Vellella. Tony. Food Coops for Small 
Groups, New York. 1976 

continued on page 30 
Page Twenty-Seven 


Organizing a cooperative 

This article is excerpted from “ In- 
troduction to Consumer Food Cooper- 
ative, ” published by the University of 
Missouri-Columbia and written by C. 
Brice Ratchford, John Noller and Ber- 
nadette MahfoocL It illustrates orga- 
nizing guidelines that can easily be 
translated to other sorts of coopera- 
tive ventures. 

Starting a cooperative 

TY. The establishment of a coop 
should be guided by economical 
feasibility. Some of the most suc- 
cessful coops were organized to pro- 
vide goods or services that were not 
readily available. Goods at a lower 
price is an almost universal desire. A 
cooperative may be able to provide 
goods or services at a lower cost if 
there is inadequate competition or if 
it proposes to operate on a lower cost 
structure than the competition. A 
store can operate at a lower cost, for 
example, by using volunteers, limit- 
ing the line of merchandise, and work- 
ing in “bare-bones” facilities. It will 
be difficult for a cooperative to oper- 
ate like its competitors and show sub- 
stantial savings. 

Economic feasibility depends on 
more than an established need. The 
cooperative must address other ques- 
tions, too, such as those relating to 
size, sources of supply, dependability 
of the market, capital requirements 
and labor, management, facilities, 
health and safety requirements, and 
local licensing rules. These questions 
should all be resolved before organi- 
zation proceeds. 

BERS. A sufficient number of persons 
must have the interest to make the 
cooperative economically viable. An 
attitude of curiosity, “wait and see” 
or “if it gets started I will be a part of 
it” is not enough. The organizing 
group should determine the minimum 
number of persons necessary. The 
best test of true interest is to require 
either payment or a firm promise to 
pay some significant membership fee. 
The size of the fee will depend on the 
economic status of the prospective 
membership and the type of opera- 
tion planned. It should be large 
enough that a person will not simply 
ignore the investment. Besides, the 

Page Twenty-Eight 

coop will need all the money it can get 
for capital. 

CAN BE RAISED. The most .serious 
hurdle is likely to be securing equity 
capital. Some members will have lim- 
ited resources. Most will have some 
reluctance to invest in a new enter- 
prise. Another major problem is the 
regulations and restrictions relating 
to the sale of securities. 

Agricultural cooperatives have cer- 
tain exemptions from state security 
regulations, but such are not avail- 
able at this time to consumer coopera- 
tives. It is impossible to get a concise, 
easily understood statement about 
the evidences of equity capital in- 
vested in a consumer cooperative 
that are exempt from regulation. The 
intent is fully as important as the 
type of instrument. For example, the 
major purpose of a modest-member- 
ship fee may be ascertaining interest 
of people and accumulating a list of 
people who want to be included in all 
activities. Even though such fees 
generate equity capital, the mem- 
bership certificate would likely not be 
considered legally as a “security.” 

Retained patronage refunds have 
been the major source of equity 
capital for the agricultural coopera- 
tives. The courts have consistently 
ruled that notices advising members 
of patronage refunds earned but re- 
tained are not to be treated as securi- 
ties from the standpoint of regula- 
tion. The cooperative should maintain 
a record of the amount retained from 
each member. 

Capital retains are another fre- 
quently used and good method of ac- 
quiring capital. This entails some 
modest mark-up (one or two percent) 
on purchases which are earmarked for 
a capital account. Records are main- 
tained showing the retains collected 
from each member. 

Stock, common and preferred, is an 
ordinary means of raising equity cap- 
ital. Chapter 357 of the Missouri Stat- 
utes provides for common and pre- 
ferred stock. Most agricultural coop- 
eratives treat the common stock as a 
membership fee, issuing only one 
share with a modest face or par value 
per member. Organizers should solic- 
it expert advice about security regu- 
lations before issuing any shares of 


The most common source of capital 
is profit generated from internal oper- 
ations. Cooperatives, while making 
no profits, can accumulate surpluses 
or net savings, other names for prof- 
its. Income taxes must be paid on 
such surpluses. It is not sound for a 
cooperative to use such a method ex- 
tensively for securing capital, as it 
violates a basic cooperative principle. 
Many cooperatives use the approach 
of tax paid surplus as one method of 
getting some capital. If the profits 
are quite small, it may often be more 
practical to place them in a tax paid 
surplus account rather than to allo- 
cate patronage refunds to many mem- 

Some cooperatives keep no earn- 
ings derived from member business 
but strive to make a profit on non- 
member business, pay taxes on the 
earnings and allocate the remainder 
to the capital account. A cooperative 
should be careful to always have 
member business as the primary goal, 
or it becomes something less than a 
true cooperative. 

Some food cooperatives use the “di- 
rect charge” approach. An estimate 
is made of operating costs for some 
future period which is then prorated 
equally among all members. It is not 
a solution to long-term equity capital, 
but it does help build operating 

Organizing a coop 

Organizers should consider all 
eventualities and alternatives before 
rushing into a formal set-up. The 
organizational process can have a 
vital effect on the eventual outcome. 
Hence, a process with wide involve- 
ment is best. It is not the only way 
and it is slow, but it is probably the 
soundest approach. 

ploratory meetings should be held 
to discuss and formulate tentative 
answers to the following ques- 

• How many persons in the commu- 
nity are interested in organizing a 

• What kinds of services should the 
proposed cooperative perform? 

• What are the problems with re- 
spect to the desired services? Are 
they already available, and if so 
can they be improved through a 

• What has been the experience in 
the community with other kinds of 

continued on page 30 



Cooperative organizations 

Among the variety of cooperative or- 
ganizations in Missouri and Illinois, 
the following can assist the reader in 
locating resources and information ei- 
ther to form or join a cooperative ven- 

National! organizations 

Cooperative League of the USA 
(CLUSA) Suite 1100, 1828 L St., N.W., 
Washington, D.C. 20036 (202/872- 
0550). CLUSA is the “big daddy” of 
the cooperative movement, tracing 
its beginnings to the First World 
War. The organization serves as a 
clearinghouse of information for 
housing, health, and farmer coopera- 
tives, credit unions, consumer cooper- 
atives, mutual insurance societies, 
and rural electric coups. CLUSA pro- 
duces a Cooperative News Services, 
helps plan informational exchanges, 
educational programs, inter-coopera- 
tive trade and projects. The League 
maintains an inventory of over 250 ti- 
tles in leaflets and pamphlets availa- 
ble upon request. 

Coop America. 2100 M St., N.W. 
Washington D.C. 20063. 202/872- 
5307. Provides health insurance and 
marketing for cooperative-organiza- 

Consumers Cooperative Alliance 

(CCA). 1828 L St., N.W. suite 1100, 
Washington D.C. 20036. Umbrella or- 
ganization for “new wave” coopera- 
tives. For further information, con- 
tact Robert Mayer, 816/444-0990 
who serves as CCA national trea- 

Small Engine Repair 

of Blue Spring, Inc. 

625 W. 40 Highway 
Blue Springs, Mo. 64015 

A worker-owned business 
specializing in tune-ups, 
repair, sales, and 
trade-ins on lawn mowers, 
chainsaws & 
small engines. 

Center for Community Economic De- 
velopment 639 Massachusetts Ave- 
nue, Cambridge, 02139. The center 
provides research and publications to 
cooperatives and other community- 
based economic development organi- 

Community Ownership Organizing 
Project 349 62nd Street, Oakland 
California, 94618. The project provides 
technical assistance and research on 
economic development projects with 
special emphasis on community and 
worker-owned enterprises. 

National Consumer Cooperative 
Bank 2001 S Street, N.W., Washing- 
ton, D.C. 20009. The Coop Bank was 
chartered in 1978 by Congress to pro- 
vide financial services for consumer, 
housing and producer cooperatives. 
With the bank’s assistance, congres- 
sional supporters believed coopera- 
tives could better control costs and 
provide needed community services. 
The bank provides two tiers of lend- 
ing: loans to credit worthy coops and 
loans to coops without financial re- 
sources, but which serve a low-income 
population. Whether the bank is ful- 
filling its purpose is the subject of in- 
tense debate in coop circles. Critics 
charge the bank is being run in a 
tight-fisted manner, allying its inter- 
ests with “establishment” coopera- 
tive groups, such as CLUSA. Sup- 
porters dismiss criticism as nonsense, 
pointing out no one is served by a 
Coop Bank that wastes money. The 
bank has eight regional offices. Mis- 
souri is served by the Region 5 office, 
room 450, LaSalle Bldg., 15 South 
9th Street, Minneapolis, Minnesota 
55402 (612/725-2305). Illinois is 

served by Region IV Director David 
Friedrichs, room 608, 144 West La- 
fayette Blvd., Detroit, Michigan 
48226 (313/226-2400). 

Missouri organizations 

Missouri Association for Community 
Cooperation (MACC) P.O. Box 294 
Columbia, Missouri 65201. Contact: 
John N oiler, Marsha Taylor. MACC 
is the recently organized statewide 
federation of cooperatives. It includes 
most of the state’s large consumer 
coops. Whether MACC will develop 
into a viable organization capable of 
unifying local efforts and initiating 
new coops remains to be seen. 

TAProot Department of Agricultural 
Economics, 213A Mumford Hall, 
University of Missouri, Columbia, 
Missouri 65211. Contact: C. Brice 
Ratchford, professor. TAProot, the 
organization which helped birth 
MACC, was terminated at the end of 
last year. However, Prof. Ratchford, 
a recognized leader in the cooperative 
movement, still has educational ma- 
terials and information available as 
part of the university’s Cooperative 
Extension Service. 

Neighborhood Resource Center 724 

North Union, St. Louis, Missouri 
63108. Contact: Michael McGrath. 
The center provides information and 
assistance to individuals interested in 
community organizing. NRC can pro- 
vide a list of consumer cooperatives 
in the St. Louis area. 

Groups referred to in articles in- 

• East Wind Community Route 3, 
Box 2, Tecumseh, Missouri 65760 

• Independence Community Cooper- 
ative Route 3, #13 Oak Hill Cluster, 
Independence, Missouri 64050. 

• Citizen/Labor Energy Coalition 
P.O. Box 5952, Kansas City, Missouri 

• Limit Avenue Food Coop 6254 Del- 
mar Boulevard, University City, Mis- 
souri 63130. 

Illinois organizations 

Consumer Cooperative Center Tru- 
man College, 1145 West Wilson, Chi- 
cago, Illinois 60640. (312/878-1700 
ext. 2120) Contact: David Altschuler. 
Truman College’s coop center provide 
listings of consumer cooperatives in 
the Chicago metropolitan area, as 
well as informational resources about 

Hyde Park Cooperative Society 1526 
East 55th, Chicago, Illinois 60615. 
(312/667-1444) Contact: Gladys 
Scott. Listed because Hyde Park is 
one of the nation’s most established 
and successful food coops. 

Greater Illinois Peoples Cooperative 

(G I PC— pronounced “gypsy”) 719 
West O’Brien, Chicago, Illinois 
60607. (312/226-5931). The wholesaler 
to Chicago-area coops, GIPC person- 
nel are in the forefront of the state’s 
cooperative movement. 

Over 50 consumer cooperatives exist 
in Illinois, though some are strug- 
gling. Agricultural cooperatives are 
served by extension services of the 
University of Illinois. 

Page Twenty-Nine 

Volume 15, Number 93 


The Law and Cooperatives 

By Janet Robert 

The most common legal issues 
faced by a cooperative involve its 
choice of name and organizational 
form, liability for taxes and respon- 
sibility for complying with the 
securities laws. Cooperatives have 
the same legal concerns of any kind of 
business, but any legal decision will 
reflect the unique purposes and struc- 
ture of the cooperative. 

An organization 

The two organizational structures 
most commonly used by cooperatives 
are unincorporated associations and 

The unincorporated association is 
any group of adults establishing a 
common enterprise on an informal 
basis. They do not need to file 
organizational documents (articles of 
association) with the secretary of 
state, establish a board of directors, 
keep minutes and records or pay 
state filing fees. It can cease its 
operations and dissolve without tak- 
ing any formal steps. The two main 
advantages of the association are 
flexibility and cost savings. 

The association ought to have writ- 
ten agreements expressing the intent 
of the members and the rules by 
which they will abide (bylaws). It also 
ought to designate certain in- 
dividuals as its agents or executive 
committee and keep complete books 
of its activities and financial transac- 
tions in order to assign duties, meet 
tax reporting requirements and avoid 
financial problems. 

An unincorporated association 
does not have an identity separate 
from that of its members. Control of 
the association rests in the members 
who must authorize or consent to all 
acts to be done in the association s 
name. Also, each member is personal- 
ly responsible for liabilities of the 
association whether or not authorized 
by him. 


A corporation is a legal entity cre- 
ated by the authority of state laws 
with an identity separate from that of 
its members or shareholders. Mem- 
bers or shareholders’ personal liabili- 
ty is limited to the amount of their 
membership fees or capital contribu- 

Page Thirty 

tions to the corporation. The corpora- 
tion’s management is centralized in 
the hands of the board of directors; it 
can own property, enter into con- 
tracts, and be sued in its own name; 
its existence can be perpetual, in- 
dependent of the lives of its members. 

The disadvantages of the corporate 
form are the formalities that must be 
observed, the expenses involved, and 
additional corporate taxes. Complete 
records of the corporations’ minutes 
of meetings must be kept, annual re- 
ports must be filed with the secretary 
of state and meetings of members or 
shareholders and directors must be 
held regularly. The corporation is also 
subject to a franchise tax and cor- 
porate income tax to which unincor- 
porated associations may not be sub- 
ject if structured properly. 

Whether an organization decides to 
incorporate or operate as an unincor- 
porated association depends on its in- 
dividual needs. 

Missouri law 

Missouri law permits several types 
of consumer cooperative corpora- 
tions. They are: 

• Chapter 357 consumer coopera- 
tive corporations. This statute is 
available to organize consumer coop- 
erative corporations whose members 
are agriculturalists or which sell 
agricultural products to their mem- 
bers or non-members, such as food co- 

• Chapter 351 general business cor- 
porations. This statute is the Chapter 
under with for-profit corporations 
may organize. It was not designed for 
cooperatives, but it does not prohibit 
use by cooperatives which intend to 
issue stock. If the articles of incorpor- 
ation are structured properly, the sta- 
tute may be used to organize consum- 
er cooperatives. No reference need be 
made to the cooperative plan in the 
articles, and all cooperatives provi- 
sions can be put in the bylaws. Since 
this is the most flexible corporation 
statute it is best suited for organizing 
non-agricultural consumer coopera- 

Which chapter, if any, a coopera- 
tive chooses depends on its particular 
purposes and needs. Incidentally, no 
corporation or association may use 
the word “cooperative” in its name 

unless it is incorporated under 
Chapter 357. 

• Chapter 355 not-for-profit corpo- 
rations. This statute is designed for 
corporations whose primary purpose 
is one of the many purposes listed in 
the statute (such as educational 
health or recreational) and which does 
not distribute its income to members. 
This statute was not designed pri- 
marily for cooperatives but does 
specifically authorize its use by coop- 
eratives that cannot qualify under 
another statute. 

The prohibition on distribution of 
income is a difficult requirement to 
meet. But in a cooperative, any 
revenue that comes into the corpora- 
tion by way of members or non-mem- 
ber purchases is not income of the 
corporation, but is their savings held 
by the corporation on their behalf to 
be returned at the year’s end. Thus, a 
cooperative which makes patronage 
refunds equally to non-members as 
well as members and derives no rev- 
enue from sources other than 
patronage is not in violation of this 
statutory prohibition. 

Securities Laws 

Every cooperative that sells stock 
should be aware of the securities laws. 
These state and federal laws require 
the registration of securities offered 
for sale and prohibits the making of 
fraudulent or misleading statements 
about the stock. Securities laws often 
do not apply to sales of membership 
stock in cooperatives when the mem- 
ber joins the cooperative for the pur- 
pose of obtaining goods and services 
and not making profits. 


Cooperatives, whether unincorpo- 
rated associations or corporations 
formed under the Chapter 357, 351 or 
355, are usually not exempt from tax- 
ation. They are subject to federal and 
state income taxes, although unincor- 
porated associations may be taxed 
either as a partnership or a corpora- 
tion. Consumer cooperatives that pro- 
vide goods for the member’s personal 
use, such as food or housing, are not 
taxed on the patronage refunds be- 
fore they are returned to the members 
as savings. The individual is also not 
taxed on patronage refunds when 
they are a return of savings made on 
purchases for personal, not business 

Janet Robert is a St. Louis attorney and 
teaches law at St. Louis University. 

FOCUS/A fidivest 



continued from page 27 

Snyder. Carol. Co-op Buyers Handbook. St. 
Louis. 1976: for information contact the 
author at 1069 Colby. St. Louis, MO 63130. 
Blooming Prairie Education/Outreach Proj- 
ect, 1223 S. Riverside Drive. Iowa City. 
Iowa 52240. 

Starting a retail food co-op: Blooming 
Prairie Warehouse recently published 
a short book by Singerman on how to 
turn a pre-order into a retail food 
cooperative. The topics include 
assessing membership needs; the 
first organizational meeting; develop- 
ing a business plan; financial projec- 
tions; capitalization; legal issues; and 
assessing the co-op’s survival poten- 
tial (listed above). 

Associated Cooperatives, a coopera- 
tive grocery warehouse in the San 
Francisco Bay Area, has put together 
a guide for developing retail food co- 
ops in the absence of a pre-order co- 
op. Topics include site selection, 
leases, capitalization, operating pro- 
jections, and legal considerations. 
(Legal considerations in Missouri will 
be different from those in California 
or other states.) 

Singerman. Jesse. Starting Out Right. 
Blooming Prairie Outreach Project. 
Associated Cooperatives. Development 
Dept.. 4801 Central Ave. PO Box 4006. Rich- 
mond, CA 94804. The guide for starting 
retail co-ops is titled Guide for the Develop- 
ment of Retail Grocery Cooperatives: the 
book by Neptune is titled California's Un- 
common Markets. The Development Depart- 
ment has an extensive order list. 

Any group that is considering start- 
ing a retail food co-op should study 
some past successes and failures. 
Neptune’s history of retail co-ops in 
northern California includes an ac- 
count of the Berkeley co-op, which 
began as a pre-order in the 1930s and 
is now the largest retail food co-op in 
the United States. Puget Consumer 
Cooperative, the largest of “new” 
food co-ops and very different in its 
organization and market strategy 
from the Berkeley Co-op, has also 
published a detailed history. 

Puget Consumers Cooperative. "PCC Prog- 
ress Report: Developments in Consumer and 
Worker Democracy. " July 1979. available 
from PCC. 6504 20th Ave. NE. Seattle. WA 

Danforth’s recent study, Dashed 
Hopes, Broken Dreams, gives de- 
tailed accounts of several retail co- 

Volume 15, Number 93 

ops in this century that failed. A 
number of short papers on such 
topics as “Opening a Co-op Center in 
a New Area” and “Financing Con- 
sumer Goods Cooperatives” are also 
available from Danforth. 

Danforth. Art. 7306 Brad St.. Fall Church. 
VA. 22042 

Managing retail food co-ops: Both 
the Food Co-op Handbook and the 
book by Cotterill, (listed earlier), have 
useful sections on store management. 
Two older manuals on the operational 
and record-keeping aspects of retail 
food co-ops, issued by the Coopera- 
tive League of the USA and by the 
Office of Economic Opportunity are 
helpful and inexpensive. Associated 
Cooperatives, (listed above), is as- 
sembling a series of manual and tech- 
nical aids for co-op food store mana- 
gers. Louis Sanner of the Michigan 
Federal of Food Co-ops has put to- 
gether an excellent workbook for de- 
veloping a simple double-entry book- 
keeping system for a retail co-op. 

CLUSA (Cooperative League of the USA). 
1828 L St. NW. Washington. DC 20036. The 
name of the manual mentioned is "A Manual 
of Basic Co-op Management," by Stanley 
Simpson, published 1969. CLUSA has an ex- 
tensive order list. 

Office of Economic Opportunity. Coop 
Stores and Buying Clubs. Washington. DC. 
1972. Available through CLUSA. 

Sanner. Louis. Bookkeeping for Food Coops, 
a Workbcjok, 1978; pub. Michigan Federa- 
tion of Food Coops. 727 W. Ellsworth. Ann 
Arbor. MI 48104. Available through 

Consumer information and member 
education: Associated Cooperatives 
can provide samples of the in-store 
consumer information programs de- 
veloped by several retail co-ops in 
California (listed earlier). The Food 
Learning Center has produced a 
series of “Food Fact Sheets” that are 
useful for co-ops which include “natu- 
ral” or “whole” foods in their offer- 
ing. Besides making the books men- 
tioned above available to its mem- 
bers, co-ops can contact their co-op 
warehouse or federation for newslet- 
ters or ideas for education program. 
Food Learning Center. 114 1 /* E. 2nd Street. 
Winona, MN 55987 

Blooming Prairie, address above; New Desti- 
ny Federation. 401 Watson. Box 30. Fayet- 
teville AR 72701 (publishes the quarterly 
journal SWALLOWS); GIPC (Greater Illi- 
nois People Cooperative Warehouse). 719 W. 
O'Brien. Chicago, IL 60607. 

Co-ops In other sectors. Some 
sources of information on co-ops in 
other economic sectors are: National 
Association of Housing Coopera- 

tives; North American Students of 
Cooperation (for student housing and 
retail co-ops); Cooperative League of 
the USA (for a wide range including 
legal and medical); and Industrial 
Cooperative Association (for workers’ 

NASCO & CLUSA. see above; National As- 
sociation of Housing Cooperatives, 2501 M. 
St. NW Ste 451, Washington DC 20037: In- 
dustrial Cooperative Association. 249 Elm 
St.. Somerville. MA 02144. 


continued from page 28 

• What are the available community 
assets in terms of potential mem- 
bers, leaders, financial resources, 
facilities and potential productivi- 
ty capacity? 

• Who wants a cooperative— the 
people who will use it or someone 

TEES. If a cooperative looks prom- 
ising after the exploratory meet- 
ings, establish working commit- 
tees. Address the following issues; 
a separate group for each will 
broaden participation and spread 
the work load. 

• General Survey. This group would 
gather and develop firm data on 
the services to be provided, costs, 
benefits, and whether a coop is the 
only or best way to secure the ser- 

• Membership. This group would 
evaluate realistic size of potential 
membership and volume of busi- 

• Facilities. Even a simple pre-order 
cooperative needs some place to 
operate. This group should match 
the size and type of cooperative 
with facilities and equipment 
needed and available. 

• Finance. This group should deter- 
mine capital requirements for fa- 
cilities, equipment, and operations 
and determine possible means of 
securing the capital. 

• Legal Documents. This committee 
should consider articles of incorpo- 
ration, bylaws, and any necessary 
licenses or permits. 

The chairperson of the working 

groups might serve as the steering or 

coordinating committee. 

Page Thirty-One 


As a critique of metropolitan 
.-news media, The St. Louis 
journalism Review is an 
advocate in the continuing 
campaign to improve the 
quality and integrity of the 
press and broadcasting. Since 
1 970, The Review has been 
offering challenging and pro- 
vocative assessments of the 
state of journalism relating not 

only to St. Louis but to the 
nation as well. 

Winner of the first Lowell 
Mellet Award for “Best 
Press Criticism,” The Review 
was cited for “sustained and 
hard-hitting criticism.” which 
made a distinguished 
contribution to the im- 
provement of journalism, 
both print and broadcast.” 

Other awards carried similar 

We criticize where criticism is 
called for, praise where praise 
is due. We strive to become to 
the regular newspapers, radio 
and television stations what 
those media are to government 
and other institutions. 


For eleven years the best 
among the top professional 
journalists, many of them 
working full-time for the press 
and broadcast media, have 
cared enough about what you 

read, hear and see to act as a 
kind of loyal opposition to the 
media for which they work. 
Whether to-the-point 
reports on recent events or 
in-depth analyses, the 

credibility and authority of 
the St. Louis Journalism 
Review has remained 
unchallenged— except by 
those we expose. 


That’s because we're fiercely 
independent and staunchly 
apolitical. Given the incredible 
influence news media wield, we 

recognize the need for an 
independent voice, un- 
daunted by the private 
interests of publishers and 
broadcast executives. 

Each issue comes to you full of 
insights, candid observations, in- 
vestigative reports, scoops, 
speculation and careful research 
about the world of professional 
news media. With a probing 
eye, we’ll keep you up to date 
on the latest technology, the 
newest angle or the oldest 

trick as we vigorously examine 
every aspect of the media and 
their effect on public information. 


Some are 
offended by 
our out- 
Too bad. 

They ardently 
S hope we’d 

W l , drop ... out 

of sight. Not a 

chance. Our readers know the 
service we provide is unique in the 
country. Join us and find out. 

‘Awards wo to also mado by the journalism 
faculty of Southern Illinois University at 
Carbondale and by the St. Louis Association 
of Black Journalists. 

8606 Olive Blvd. 

St. Louis, Mo. 63132 

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