Co-operative Central Exchange

Co-operative Central Exchange (CCE, Finnish: Keskusosuuskunta), founded in 1917 and known from the spring of 1931 as Central Co-operative Wholesale, was the coordinating entity of a network of consumers' co-operatives located primarily in the states of the American Upper Midwest. Based in the Great Lakes port city of Superior, Wisconsin, located adjacent to the Finnish enclave of Duluth, Minnesota, the Co-operative Central Exchange produced an array of its own branded products under the "Red Star" and "Co-operators' Best" brand names and did annual volume well in excess of $1 million from 1928 on.

The Co-operative Central Exchange was closely associated with the radical Finnish-American workers' movement associated with the Finnish Socialist Federation of the Socialist Party of America and later with the Finnish Federation of the Communist Party, USA (CPUSA). A split took place in 1931, with hardline adherents of Communist Party control departing the organization to form a rival cooperative group which lasted until 1939.

With its size and strength diminishing in the era of the supermarket, the Central Wholesale organization was terminated through merger to Midland Cooperatives in 1963, which in turn became part of the Land O'Lakes cooperative in 1982.

History Early years

The Co-operative Central Exchange (CCE) was a cooperative federation established at a meeting of representatives of 19 Finnish-American consumers' co-operatives held in Superior, Wisconsin, on July 30, 1917.Arnold Alanen, "The Development and Distribution of Finnish Consumers' Cooperatives in Michigan, Minnesota, and Wisconsin," in Michael Karni, Matti E. Kaups, and Douglas J. Ollila (eds.), The Finnish Experience in the Western Great Lakes Region: New Perspectives. Turku, Finland: Institute for Migration, 1975; pg. 114. The idea for a central coordinating agency to unify the existing network of cooperative stores in the Upper Midwest of the United States had been brewing for several years, based upon a desire to buy commonly sold goods more cheaply if purchased in bulk.Hannu Heinilä, "Amerikansuomalainen Keskusosuuskunta" (American Finnish Central Cooperative), Siirtolaisuus/Migration, vol. 29, no. 2 (2002), pg. 22. In Finnish. Also driving the cooperatives to action was discriminatory credit practices practiced by the largest regional grocery and hard goods wholesaler, who restricted the extension of credit to the cooperatives at the behest of the privately owned retailers who were competing with them.Bertram B. Fowler, Consumer Cooperation in America: Democracy's Way Out. New York: Vanguard Press, 1936; pp. 265-266. The magazine Pelto ja Koti (Farm and Home) was instrumental in coordinating the launch of the central cooperative initiative.Hannu Hainilä, "'Sooner or Later You're A Cooperator': The Finnish-American Cooperative Movement," in Auvo Kostiainen (ed.), Finns in the United States: A History of Settlement, Dissent, and Integration. East Lansing, MI: Michigan State University Press, 2014; pg. 163.

With a paltry $15.50 in working capital and access to free office space in Superior from a sympathetic local newspaper,Fowler, Consumer Cooperation in America, pg. 266. the stores began pooling their wholesale orders under the CCE name. Establishment of the entity as a formal federation of cooperative stores soon followed, although the organization started small, with only a total of 15 cooperatives agreeing to join the enterprise by the end of 1917.Eskel Rönn, "Plans and Possibilities," Co-operative Pyramid Builder, vol. 2, no. 9/10 (Sept.-Oct. 1927), pg. 259. The combination of orders won the participants in the group quantity discounts in the prices of their necessary supplies and generated a profit for participants in 1917 of $268 on a capital investment of just $480.

Shares were sold in the cooperative wholesale to member stores, raising just short of $16,500 by the end of the CCE's 10th year of existence."Plans and Possibilities," pg. 260. Additional funds were raised through the reinvestment of wholesale profits, bringing the net worth of the CCE up to about $67,300 by the end of 1927. Additional funds were raised through the sale of investment bonds and loans, which made possible the establishment of a 3-story headquarters facility in Superior.

Although originally conceived as an institution that would link farmers with consumers with reduced intermediary expense, in practice the Central Exchange quickly developed into a thriving wholesale supply operation, which ultimately manufactured and marketed its own branded products to a network of more than 200 cooperative stores.

The CCE was based upon the Rochdale system of consumer cooperation and served as a wholesale distribution center for a network of stores predominantly in the Upper Midwestern states of Michigan, Minnesota, and Wisconsin.Heinilä, "Amerikansuomalainen Keskusosuuskunta," pg. 21. The group also engaged in common activity with other cooperatives in the region through the Northern States Co-operative League (NSCL), established in 1921, in which the CCE was the largest constituent member."The Seventh Convention of the NSCL," Co-operative Pyramid Builder, vol. 3, no. 9 (Sept. 1928), pp. 261-264. Severi Alanne, a leading member of the Co-operative Central Exchange, was the executive secretary of the NSCL during the late 1920s.

Educational activities

In addition to offering its affiliated member-stores reduced wholesale prices generated from economies of scale, the Co-operative Central Exchange conducted educational activities aimed at making retail stores more successful. These included a training school for store managers, established in 1918, and the introduction of a simple and efficient system of bookkeeping for cooperative stores developed by H.V. Nurmi.Alanen, "The Development and Distribution of Finnish Consumers' Cooperatives in Michigan, Minnesota, and Wisconsin," pg. 115. The CCE also campaigned against the practice of stores selling on credit — a risky practice which tended to create cash flow problems and to accentuate the effect of periodic economic downturns.

The first year's training program, held towards the end of June 1918, taught basic bookkeeping to 16 students.H.V. Nurmi, "Central Exchange Co-operative Courses," Co-operative Pyramid Builder, vol. 2, no. 9/10 (Sept.-Oct. 1927), pp. 271-272. The following year this program was expanded to a four-week course and an expanded curriculum, with 40 students attending.Nurmi, "Central Exchange Co-operative Courses," pg. 272. Further expansion to a 5-week course was made in 1920, followed by a move to an 8-week program in 1927.Nurmi, "Central Exchange Co-operative Courses," pg. 273.

A total of 222 students completed the program during the first 9 years of the CCE's training program, of whom approximately 80% went on to employment in cooperative stores. Instructors included a number of top officials of the CCE and the editorial staff of Työmies, including George Halonen, Eskel Rönn, Severi Alanne, Matti Tenhunen, and H.V. Nurmi, among others.Nurmi, "Central Exchange Co-operative Courses," pp. 273-274.

The CCE was also influential in urging its members to centralize their operations, expanding through satellite branches rather than spinning off independent cooperative entities to alternate locations. In this way bookkeeping and purchasing operations could be consolidated and streamlined and the learning curve shortened for the administrators of new cooperative shops.

Brands and products

A politically radical institution, the CCE's best-known house brand was "Red Star," with a logo prominently featuring the hammer and sickle emblem of the communist movement.Elis Sulkanen, Amerikan suomalaisen työväenliikkeen historia (History of the Finnish Labor Movement in America). Fitchburg, MA: Raivaaja Publishing Company, 1951; pp. 296-299. The hammer and sickle were removed in 1933 following a split of the CCE over the issue of Communist Party control.

One of the CCE's biggest items produced for sale was coffee, with sales spurred to nearly 325,000 pounds in 1927 with the introduction of vacuum packed one pound cans."Our Own Affairs: Our 1927 Coffee Sales," Co-operative Pyramid Builder, vol. 3, no. 4 (April 1928), pg. 111. This represented the second greatest product in terms of sales for the cooperative. In addition to the flagship "Red Star" brand, the CCE distributed its coffee in lesser quantities under the brand names "Peaberry," "Red Boy," "Co-operators' Favorite," and "Rochdale."

The CCE also used the Red Star brand name for its canned tomatoes,"Co-operators' Best Canned Vegetables (ad), Co-operative Pyramid Builder, vol. 3, no. 10 (Oct. 1928), pg. 316. peas, corn, peaches,"Get Acquainted! Red Star Canned Fruits" (ad), Co-operative Pyramid Builder, vol. 3, no. 12 (Dec. 1928), pg. 382. soup,"Red Star Soups" (ad), Co-operative Pyramid Builder, vol. 3, no. 12 (Dec. 1928), pg. 383. olives and olive oil,"New Red Star Products" (ad), Co-operative Pyramid Builder, vol. 3, no. 7 (July 1928), pg. 223. potato starch flour,"Our Own Affairs: Potato Flour," Co-operative Pyramid Builder, vol. 3, no. 4 (April 1928), pp. 110-111. dried fruit,"Our Own Affairs: New Red Star Products," Co-operative Pyramid Builder, vol. 3, no. 10 (Oct. 1928), pp. 308-309. breakfast cereal, toothpicks, matches,"Red Star Matches," Co-operative Pyramid Builder, vol. 3, no. 2 (Feb. 1928), pg. 55. The source indicates that Red Star brand matches were introduced to the market in January 1926. and other products.

The "Co-operators' Best" brand name was used by the CCE for wheat flour,"Co-operators' Best Flour" (ad), Co-operative Pyramid Builder, vol. 3, no. 8 (Aug. 1928), pg. 250. work gloves,"All Co-operative Stores Sell Co-operators' Best" (ad), Co-operative Pyramid Builder, vol. 3, no. 5 (May 1928), pg. 158. and other dry goods.

The CCE operated its own bakery in Superior from October 1918, supplying cooperative stores throughout the region with bread and other bakery goods.I.L., "Our Bakery," Co-operative Pyramid Builder, vol. 2, no. 9/10 (Sept.-Oct. 1927), pp. 267-269. Located originally in the CCE's headquarters building, by 1925 the growth of the wholesale operation was straining the facility to capacity and the decision made to move the bakery to new quarters. A one-story brick building located at the corner of 5th Street and Grand Avenue was purchased and remodeled and a new oven installed. First year sales of the bakery from its new quarters totaled $70,000.

Battle with the Communist Party

During the winter of 1929-30 a bitter split developed within the leadership of the CCE between loyal members of the rapidly centralizing Communist Party, USA (CPUSA) and those who favored an independent cooperative organization.Michael Karni, "Struggle on the Cooperative Front: The Separation of Central Cooperative Wholesale from Communism, 1929-30," in Michael Karni, Matti E. Kaups, and Douglas J. Ollila (eds.), The Finnish Experience in the Western Great Lakes Region: New Perspectives. Turku, Finland: Institute for Migration, 1975; pg. 186. The underlying struggle was not a radical versus conservative battle but was rather was a battle between radical factions over the question of political philosophy and tactics — should the CCE continue to remain open to all working class groups and attempting to remodel society through economic means, or should the organization become a formal disciplined auxiliary of the Communist Party, thereby lending primacy to the political struggle?