September 30, 1948 THE COOPERATIVE Consumer Page 3 Professor in Little Retailers Can't Beat DOES RESEARCH FOR Nation Needs FOUNDATION Rough Blast Great A & P's Super Tricks With its suit against the ma- jor packers and many other big Steady Flow legal battles just beginning, at Farmers U. S. Evidence Shows Competition Based on Methods the antitrust division of the United States department of of Criticism Other Than Economies of Buying justice already has won the first round of a tussle with one Writer for Oil Foundation By David C. Coyle corporate giant: the Great At- Late Dean of American Calls Them Seekers of W HEN one of the big food chains sets up a store, the co- lantic & Pacific Tea Company. Historians in Plea Special Privilege operative store and independent retailers in the com- In the accompanying article David C. Coyle describes some for Bluntness munity have to compete against the efficiencies of very HARD-BOILED EGOISTS of the practices that the gov- large-scale operation. But they may find themselves up ernment charged, and the court IN SHIFT TO FREEDOM against more than that. found, that A&P employed to Ludwig von Mises, the eco- In the recent suit against the Great Atlantic & Pacific put the squeeze on farmers and nomics professor who wrote "Democracy," said Charles Tea Company, the antitrust division of the United States De- food manufacturers and to put his Observations on the Co- A. Beard, "requires the con- partment of Justice introduced evidence to show that A&P's small competitors out of busi- operative Movement for the tinuous development of inde- price competition was based on many features besides the ness. Mr. Coyle is director of Petroleum Industry Research research for the Shinner Foun- pendent thinking and criti- Foundation, has a low opinion natural economies of bulk buying or efficient management. dation, 816 21st Street N. W., cism of the prevailing order." In this case, tried at Danville, Ill., in 1944, the A&P was Washington, D. C. The dean of American his- of cooperatives, especially of convicted and fined about $650,000 for what the court de- the idealism associated with torians, who died September scribed as illegal use of its cooperatives, and even more tives with trips to New York and 1 at his dairy farm near New concentrated financial powers. the A&P set up a produce- other favors, and that once a co- Milford, Conn., believed with especially of this idealism The company has appealed the buying company, the Atlantic operative had come to depend on Milton in an open mind which when applied to farmers' co- case to the United States Su- Commission Company (Acco), Acco for its market, its prices permits emphasis to be laid on operatives. preme Court. which acted as a broker for were squeezed down to ruinous order and conformity at cer- Of the latter he said: The government charged farmers and farm coopera- levels. tain times and which allows a "The reference to idealism, that the A&P took advantage tives. It took the usual com- Among other devices, Acco was shift to liberty and indepen- unselfishness and similar of its size and power to ob- mission, and sold the produce alleged to have insisted on shift- dence of judgment on other high-sounding notions is espe- tain cost savings that were in the open market, but mainly ing its buying from shipping point occasions. cially inappropriate with re- not the result of efficiency to the A&P. As the court said: "A to delivery point. That put the risk gard to farmers' cooperatives. but of squeezing the produc- person cannot be a purchaser of of spoilage on the shippers without Irving Dillard, writing in The farmers are businessmen property and at the same time the compensation, and allowed A&P to the St. Louis Post-Dispatch, ers. To the extent that any agent of the vendor." set an arbitrary price after the reports Beard as saying that and entrepreneurs of the type grocery company can merely which the cooperative litera- The farmers intrusted Acco with produce had traveled far from "the great mass of people, force the farmers or manu- home and could not easily be with- ture denounces as hard-boiled the job of getting the best pos- rich or poor, do not invent facturers to give it a special sible terms for their apples or po- drawn and shipped to a better anything, do not conceive any callous egoists. They do not low price, it is plain that the market. These accusations, which tatoes from the market, but the new ideas, do not desire to till the soil for a heavenly re- public gets no such net bene- "market" was just Acco's other deeply impressed the court, surely go a long way beyond what people depart far from a common- ward, but for their own gain. fit as it would get from a sav- self. After the Robinson-Patman usually mean by efficiency of buy- place routine in life. Every They do not fill the markets ing of material or labor. The Act forbade charging brokerage for ing by the carload. great invention, every work of art, with cereals to perform an act woman with the market bas- such a "service," the government In canned goods and some other every beneficient reform origi- of charity for the consumers, ket may pay less for a can of says that Acco merely shifted the nates in the brain of some indi- but to make money and to method, insisting on special low kinds of processed foods, A&P has beans, just because her hus- buy the products of the processing prices and select quality for the some plants of its own, which it vidual and has to make its way band is forced by the big A&P and on higher prices to all was accused of using to put the against popular hostility." trades. They use their political store's vast buying power to squeeze on the makers of national- Speaking to high school teachers others. power and form pressure groups ly advertised goods. of history, civics, and other social in order to attain special privileges work for less pay in canning There also was testimony to enhancing their incomes. They are the beans. show that Acco influenced the of- Force Concessions sciences, the imminent historian once said: anxious to pay less taxes than the According to the testimony, ficers of certain producer coopera- The financial report for 1941 showed A&P profits from its "Since many of the important rest of the people, to receive sub- "Quaker Maid' company and its policies of government are highly sidies out of the public funds, to be protected by import duties and to coffee operations of more than 3 controversial, instruction in citi- enjoy a thousand other privileges Admiring Edito. Shocked million dol- each, while total zenship cuts into difficult themes and prerogatives. There is certain- retail store profits were under 3 and affects powerful interests in ly no idealism involved in the an- ti-magarine laws." at von Mises Blast million. According to the govern- society. It would be better to ig- ment, A&P, by threatening still nore entirely the subject of gov- further extension of its own sup- ernment than to confine it to in- This is one paragraph of what von Mises has to say in his 60- IS with extreme shock, disappointment, and amaze- ply business, forced independent nocuous generalizations on which manufacturers to grant special people agree in theory and violent- page denunciation of cooperatives ment that we learn of Ludwig von Mises bitterly attack- which is Part 1 of a four-part "re- prices, advertising allowances. and ly disagree in practice. ing cooperatives in one of the four volumes on Coopera- other concessions. The effect was port" on Cooperatives in the Pe- "But because politics is contro- tives in the Petroleum Industry, being distributed by the that A&P could sell standard goods troleum Industry financed and versial, it does not follow that it Petroleum Industry Research Foundation. at low prices to attract customers, published by the petroleum co-ops cannot be treated scientifically and As a noted economist of the freedom school, von Mises and also push the sale of its own private-profit competitors. impartially. It means rather that has vigorously and ably opposed governmental control and private brands at profitable prices, Visiting Professor only highly trained and skillful In the introduction to the pam- ordering of economic affairs. Using keen logic, he has since on those it had a monopoly. teachers can handle politics in a phlets, von Mises is identified as contended that the only system that gives abundance and Another charge against the A&P way calculated to stimulate intel- the author of several books under material well-being is one in which production takes place was that it used its power to con- ligence and waken discriminating such titles as Omnipotent Govern- centrate on one locality after an- in response to the demand of the people registered in free power among pupils." ment, Bureaucracy, and Planned other, where it would run its re- At another time Beard affirmed Chaos; as a former member of the markets, and in which prices are determined by free com- tail stores at a loss, sometimes for that "the right to dissent from the economic principles commission of petition. years at a stretch, until it had views and measures of government the National Association of Man- With interest and profit, and no small degree of inspir- killed off enough of its competit- is essential to the operation of the ufacturers; and as at present a ation, we have read von Mises books, Omnipotent Govern- ors to get in a position to raise its American system." visiting professor of economics at ment, Bureaucracy, and Planned Chaos. Parts of his Om- prices. That is, it charged higher nipotent Government are as fine an exposition of an ar- prices where it had some degree The functions of education, New York University. The low regard in which von gument for a free economy as we have ever seen. Natural- of monopoly, and then used these according to Beard, are (1) to Mises holds farmers' cooperatives, profits to capture a monopoly posi- create rich and many-sided per- and especially idealism with re- ly, we counted on von Mises favoring anything that would tion a new town. sonalities, (2) strengthen dem- help to establish and maintain the free economic con- ocratic institutions by making spect to them, is paralleled by his This is the kind of competition regard for cooperative literature. ditions for which he so ably contended. clear their workings and point that a cooperative food store or "The cooperative literature," he But now, as quoted by Wallace J. Campbell in the Co- out defects generally agreed independent retailer may have to upon, (3) provide more effec- said, "lacks entirely the spirit of operative News Service, von Mises bitterly assails coop- meet, and what to do about it is no tive leadership, (4) illuminate self-criticism and realistic appre- eratives as inefficient and clumsy, and unable to exist ex- simple problem. Most of the prac- ciation of facts. It is full of con- cept by government favoritism. He charges the coopera- tices that the government brought every possible corner of the po- litical scene, and (5) promote ceit, vainglory and self-adulation. tive movement with "intellectual sterility," and declares up against the A&P are common habits of critical fairness It repeats again and again old fal- in business. Any good manager will that it owes its development exclusively to the benevolent lacies, a hundred times refuted, bargain for supplies, and if he buys among the electorate. and never gives a serious thought partisanship of the politicians." steadily from one producer he ex- Beard knew that the average cit- to any new idea. It thus faithfully Instead of owing its existence to government favors, pects to get favors in return. Any izen, if he lives outside a rural mirrors the intellectual sterility by far the greater part, and the stronger part, of the co- business expects to take losses on community, "finds himself caught of a movement which owes its de- operative movement has been built without any govern- some lines and cover them by prof- by an endless competition in ir- velopment exclusively to the be- mental aid or favors. And instead of being inefficient, it its on items that are not SO fiercely responsible and ostentatious dis- nevolent partisanship of the poli- is the efficiency and effectiveness of cooperatives that competitive. play, largely on account of the ticians." But when A&P does much the tendency to accept the pecuniary worry the people who employ von Mises to berate the same thing, it is treated as a crim- standard as the measure of suc- This foregoing paragraph, as you will note, cuts at both cooperative movement. inal; and the small storekeeper cess and achievement. Civic in- struction, he believed, must em- literature and the movement as a However, our principal reaction to von Mises' attack on who feels the crushing weight of whole. But von Mises has other cooperatives is one of stark amazement. Cooperatives are A&P competition is certain enough phasize the saner standards of life and wilder condemnations to make the one thing that will maintain the free economic con- that a wrong is being done, and and counteract the "barrage of ap- of the movement as a whole. For ditions he has championed. Without cooperatives, there that the law ought to protect him. peals to vanity and inferiority instance: is not a chance of maintaining free enterprise and free The courts have a hard time inter- fears, phobias, sensations and in- "Fallacious Idea" competition. They are the one guarantee against develop- peting the antitrust laws so as to flated ambitions." draw a fair line between right and "America gives greater homage "The cooperative movement is ment of the Omnipotent Government he fears and opposes. wrong. to Emerson, whose princely in- entirely based on the very popu- lar but utterly fallacious idea that If von Mises doesn't want cooperatives, then how does Moral Basis come amounted to about $2,000 a profit is an unfair toll which the he propose to have free markets and free competition? The fact is that money is power, year," Beard said, "than to Jin businessman levies on his patrons Surely not by writing books for the oil trust!-L. S. Her- and an "integrated" company with Fisk, with his millions, his loud and on the contention that, by ron, editor, in The Nebraska Cooperator. several different kindo of business clothes, his fast horses, his jewelry, (Continued on Page 11) (Continued on Page 11) and flashing equipages."