The Co-operative Movement of the Russian Far East

This page is made up Russian Far East Association of Co-operative Movement for accumulation, collection and systemization information of Russian and Foreign Scientists, experts, practicians, representatives of co-operative society and all who will be interested make prove and develop Co-operative movement in Russia, Russian Far East Aria and all countries of our small World.

1.3. First Ukrainian Cooperatives - FARMER COOPERATIVES VERSUS COLLECTIVE FARMS American Studies on Ukrainian Problems Vitaly V. Zinovchuk

The cooperative ideology came to Ukraine from Western Europe. The Rochdale Equitable Pioneers' Society and Raiffeisen Credit Society had served as models for Ukrainian cooperatives, as they did all over the World. The educational level of Ukrainian peasants was too low for them to get to understand the essence of the foreign experience. That's why an essential role in rooting cooperative ideas in Ukrainian ground belonged to independent intellectual enthusiasts. They were members and employees of local agricultural assemblies (elected bodies) or representatives of the voluntary agricultural societies (non-government organizations). In addition to promoting the cooperative idea, they also dealt with a broad spectrum of activities such as improving peasants' knowledge in agronomy, crop selection, animal breeding, veterinary, etc. through lecturing, consulting, publishing, library service, etc. Unfortunately, this tremendous mission was not valued enough and followed sufficiently by next generations of rural intellectuals.

At the end of the last and in the beginning of this century, Ukrainians also contributed a certain theoretical development of cooperative ideas and the systematization of cooperative experience (Dragomanov, Podolynsky, Levytsky, Tugan-Baranovsky, later Borodayevsky, Mytsuk, Vytanovych). Mykhailo Tugan-Baranovsky was the most famous Ukrainian cooperative scholar who headed the All-Russian theoretical center for agrarian legislative projects [Atkinson, p.127]. He actively supported agriculture of cooperative type and suggested that cooperation would lead to destruction of totalitarian regime and the creation of local self-government. It is even possible to state the fact of the formation in the end of last century of a scientific economic school in Ukraine (Kiev University) where the problems of restructuring agriculture and the evolution of cooperatives were in focus (Professors Antonovych, Bilimovych, Bunge were the most famous representatives of the Kiev school). They mainly concentrated attention on the positive role of private ownership, market relations and competition in the development of agriculture and supported the appearance of these institutions in Ukraine [Ushchapivsky, р.ш].

Ukrainian peasants made more active attempts to act jointly as early as immediately after the abolishment of serfdom in 1861. They were frustrated by extreme poverty of peasantry, lack of means of production, unfavorable market environment, and inadequate prices for industrial and agricultural products. Traditionally they were engaged in different actions for mutual aid such as joint fulfillment of agricultural work, extinguishing fires, providing security for transportation of products to marketplaces, and clubbing together for purchase and use of expensive implements. Although it is too much to pronounce these as real cooperatives, a certain kind of -common economic interest united the efforts of independent producers. The most active cooperatives developed in the consumer and in credit spheres. In the beginning of 1870s twenty consumer cooperatives already existed in Central, Eastern and Southern Ukraine. The first credit society was formed in Poltava region in 1869.

The cooperative initiative also actively developed in Western Ukraine. In 1883 the first consumer cooperative society in that region was started in Lviv with the main purpose of avoiding the influence of expensive trade middlemen. The work of the society was very successful, and that was the reason to turn it later into the center of Ukrainian consumer cooperation. The first credit society in Western Ukraine appeared in 1894, and the first cooperative association in the sphere of credit (Regional Credit Union) was established in 1898 [Vasuta, p.77,78]. A special 1903 law introduced a compulsory system requiring self-control and financial audits for cooperative organizations. A cooperative audit service (Regional Audit Union) was created which made cooperatives more effective. It gave an important impulse for the growth of membership in existing cooperatives and the appearance of new ones. In 1910s there were already about 320 consumer and more than two thousand local credit societies in Western Ukraine [Galagan, p.13}

But the real age of cooperatives in Ukraine followed Stolypin's reform, and cooperative activity was expanded even more in agriculture. Peasants found joint interests mainly in the sphere of supply, marketing and credit. At the beginning of 1915 there were 1500 agricultural cooperatives in Ukraine or around 40% of their total number in the Russian Empire [Prokopenko 1992, p.15]. During this reform period, agricultural cooperation developed a ramified structure, market economic relations, skilled personnel, and international connections. The following factors explain the rapid growth of cooperative activity in agriculture:

1. Structural transformation of agriculture resulted in the expansion of market oriented peasants' economies, and production increases available for market.

2. A more advanced market and supply activities under bigger business operations.

3. Necessity for joint actions in the struggle with monopoly of private business particularly in processing industries and trade, the wish to avoid market intermediaries.

4. Increasing demand for credits to compensate for the lack of capital.

5. Positive role of the State Peasants Bank granting credits for cooperatives.

There were two types of cooperative organizations in Ukrainian agriculture. The first one, cooperative societies, were local organizations of agricultural producers. Among them the majority were called general societies which were engaged in a broad spectrum of activities, and a smaller part belonged to specialized societies which dealt with a certain brand or kind of activity. Often local agricultural authorities used the societies for promotion of important innovations, progressive farm practices and education. One of the best examples of this kind of collaboration was in Poltava province (Central Ukraine). As a rule the societies were relatively small, approximately 50-100 members. Number of members depended on market area, term of existence, and prestige of organization. They were also not strong enough economically and could not exist with only members' contributions which were very low. Subsidies of the central and local government were needed constantly. Of course, there were some exceptions. One of the three biggest societies in Russian Empire acted effectively in Kharkiv (Eastern Ukraine). The Kharkiv Society covered the vast majority of fourteen of the most important agricultural southern provinces of Ukraine and Russia. In 1912, the Kharkiv Society consisted of 34 departments including the American Bureau in Minneapolis for marketing of sugar beet seeds in U.S.A. [Antsiferov 1929, p.365].

Cooperative associations could be recognized as another type of cooperative organizations. They were initiated by producers in specific brands of agriculture which grew most rapidly with a clear commercial orientation. They were not as much attached to a certain territory as cooperative societies. About three-fourths of cooperative associations were connected with dairy farming, among the rest..the organizations of machinery and implements supply, bee-keeping, vine-growing,, and fruit and vegetables production were most important [Antsiferov 1929, p.360]. Cooperative federations, especially dairy cooperatives, were considerably stronger economic organizations than local cooperative societies.

New opportunities in the development of agriculture presented by Stolypin's reform also needed an essential amount of capital for agricultural producers. The most acceptable way to get it under reasonable conditions was through cooperation. That's why a new stage of expanding cooperative credit occurred simultaneously with the agrarian reform. In Ukraine participation in credit cooperatives was higher than in the rest of the Empire (Table 3). The work of credit cooperative societies was enlivened wifh the creation of unions of credit cooperatives. Their main functions were to use the possibility of collaboration between local credit cooperatives for better use of their financial assets, to make available funds of general money market for cooperative credit, to provide regular and systematic auditing for member societies, and to extend the system of cooperative credit by promoting the foundation of new associations. The case of Kiev credit union could show how effective it was. In 1907, there were 4 member societies in the union, by 1913 it had united 91 member societies or 36.1% of their total number in the district [Antsiferov 1929, p.302]. The evolution of credit cooperation led to the creation of Ukrainian People's Cooperative Bank in 1913. In the peak of its activities, the bank had as shareholders 34 credit unions, 55 unions of consumer societies, 2 agricultural unions, 33 unions of mixed type [Antsiferov 1929, p.353].
Table 3. Comparing development of credit cooperation in Ukraine and other part of Russian Empire, 1914

Credit and Agricultural Cooperation

Adopted from: Antsiferov, Alexis N. 1929. "Credit and Agricultural Cooperation". The Cooperative Movement in Russia During the \Nar. New Haven: Yale University Press, pp.266,269.

However, the "honeymoon" for Ukrainian cooperatives wasn't long because of the unleashing of the World War I in 1914. Many cooperators had to join the army, sell horses, livestock and food to the state at the reduced prices. Peasants lost the support of the government and as well as a hope for economic stability. They became intent on ceasing land purchase as well as any cooperative activity, and finally the decline of agricultural production occurred in that time. It should not be forgotten that Ukrainian agriculture was relatively small-scale (Table 4). That's why the war seemed to be too big an ordeal for it. In 1917, 19% of Ukraine peasant families didn't have acreage under crops, 41% didn't have horses, 34% didn't have cows [Galagan, p.15].

Size of peasant holdings in Ukraine

Source: Borys, Jurij. 1980. The Sovietization of Ukraine 1917-1923: Communist Doctrine and Practice of National Self-Determination. Revised Ed. Edmonton: The Canadian Institute of Ukrainian Studies, p.280.

The consumer cooperatives became dependent on the army purchasing campaigns and their supplies, and were about to go out of existence. But at the same time in Russia cooperative movement wasn't affected as much by the war, especially in Siberia, and remained an alternative to destructive processes in the national economy:

The only ray of light to be discerned in the black chaos of Russian economic life during the war and the revolution was the activity manifested by various cooperative organizations" [Leites, p.53].

The October Revolution 1917 and following withdrawal from the World War I didn't stop the destruction of the cooperative movement in Ukraine although there was big growth of peasants' social activities. These kind of activities could be explained by the fact that the revolution by the Decree on Land (one of the first Soviet Decrees) abolished landlord property rights and passed the land to only those who cultivated it. It gave birth to substantial enthusiasm among peasants and their support of revolutionary transformations in the early beginning. In many places in Ukraine, peasants had distributed confiscated estate land themselves, i.e. spontaneously without special permission and assistance of new state institutions [Volin 1970, p.130]. Their behavior might be quite understandable taking into consideration the social injustice of the tsarist regime during the previous ages and an easy way to get more land property. But in a very short period they recognized that the new power accepted even more organized practice of agricultural products expropriation than other occupants did.

It also should be taken in consideration that the Soviet regime abolished the private ownership on land. According to a Marxist doctrine under socialism the land like other means of production must be a subject of state property. It meant that to be presented land from the state, peasants were actually only users but not its owners. In fact they even lost the right to their own land acquired before the revolution. This was not yet a trouble for them because they were living on the land and continuing to work with the land as previously. The major problems raised were on the basis of equalizing distribution of land between wealthier peasants and the poorer and landless ones. But the attempts of the central government to introduce collective agriculture into Ukraine faced strong opposition even from poorer peasants [Borys, pp.282,284]. Individualism of Ukrainian peasants had strong historical and economic roots.

In the period of the Civil War (1918-1920) the territory of Ukraine had been involved in active military operations. Frequent changes of political authorities with opposing ideologies and programs brought nothing for peasants really. The Soviet Power established the food dictatorship in an attitude towards peasants which was called as "War Communism". The new, extremely rigid policy envisaged confiscation of grain, efforts to maintain stiff control on the pricing and distribution. Rural trade, money-payment relations and any business activities were forbidden. Peasants lost any incentives to increase the production, possibility of imports were restricted by both the lack of financial assets and an international isolation, and country faced with a dramatic shortage of food resources. Urban population was on the verge of hunger.

The new regime nationalized industries, transportation and banks owned privately. But very soon they diffused this practice to the cooperative organizations. In 1918 special Soviet decrees stopped the existence of important cooperative associations. Their properties were expropriated and also nationalized. Other cooperative organizations had been merged with Soviet administration, lost the initiative and the freedom of actions. The government considered cooperatives, first of all,: as an additional channel of agricultural products requisition. Many cooperative leaders who challenged this policy were arrested and imprisoned [Leites,2l4j.

The necessity of "War Communism" could be explained with difficulties of the war period. But after there no doubts about its ravaging practice. The tension among peasants was becoming the principal problem of the Soviet regime. It caused the appearance of more flexible state policy initiated by Lenin in the spring of 1921. The first step of the New Economic Policy or NEP was to replace the unlimited grain requisitioning for a fixed tax in kind. It gave an advantage for peasants to use grain remaining after taxes for their own discretion. They could market these surpluses through both state and private trading networks. The government also made effective attempts to increase productivity of agriculture by supplying implements and machinery, developing agronomic service and reviving cooperatives.

The rebirth of cooperation was an important element of New Economic Policy. A special Decree of the central government in 1921 proclaimed a new official understanding of the role of cooperation in agriculture and its support. Rebirth of cooperative organizations started very rapidly. Following factors of that could be noted:

1. A lot of people had already formed opinions about advantages of cooperatives because they remembered the cooperative boom before the revolution. Cooperative experts were experienced and numerous. The organizational structure of cooperative agriculture was not completely destroyed.

2. Private business, as the main traditional competitor of cooperatives, was restricted, weakened or even fully liquidated by the new regime.

3. Favorable state policy allowed freedom of economic associations and market trade.

A certain liberalization of the economic system was brought by the New Land Code in 1922. Although the abolishment of private property was proclaimed in its first articles, and purchase, sale and mortgage of the land were prohibited as well, nevertheless the new law was oriented for support of the existing system of family farming and recognized practically unlimited tenure of land for agricultural use by its actual users. Land Code also permitted leasing of agricultural land and use of hired labor but with certain limitations [Timoshenko, p.86,87]. From historical standpoint the Land Code 1922 was the last Soviet document which still gave equal legal rights to individual farming.

The government persistently stimulated the development of collective agriculture but without any notable coercion. In that period of history there were two main types of such economies. The first one, state farms, were established on the land confiscated from estates. They were the property of the state and organized according to the principles and regulations used for other state enterprises. As a rule state farms were specialized economy, i.e. for growing technical crops, reproduction of improved seeds, animal breeding, etc. Efficiency of state farms was very low, and they could not exist without periodical subsidies of the state. In 1925 there were only 90 state farms with average area of 551.6 desytynas (1490 acres). Collective farms were another type of new farms. Mostly they were collective-operating farms. This meant that their members united only their labor efforts but not socialized land and other means of production. There were also farms where peasants had socialized fully or partly their means of productions and land. General number of collective farms was 56 in 1925. The land share of state and collective farms was only 3.7% [Male, p.26]. Hence cooperation in production was not very important in Soviet Ukraine1 to compare with its development in sphere supply and marketing.

Due to the New Economic Policy, agricultural cooperatives in Ukraine revived actively especially after the establishment of the Ukrainian Cooperative Union in 1922 which had united all cooperative organizations in the republic. The reason for the rapid revival of the Ukrainian cooperative structure in agriculture was the fact that land still remained in private property and peasants didn't forget the advantages of the cooperation existed before the revolution. The number of primary cooperative societies increased from 8,100 in 1923 to 26,100 in 1928, cooperative associations - from 68 to 114, peasants farms involved in cooperation - from 8.2% to 59.9%1. At the end of 1929 in Ukraine were brought into operation 4,000 multifunctional agricultural cooperatives, 691 credit cooperatives, 1191 sugar beet cooperatives, 390 dairy and slaughtering cooperatives, 102 poultry cooperatives, and others. The process of formation of national cooperative associations continued. The overwhelming majority of producers of meat, milk, eggs, vegetables, potatoes, fruits, and almost all producers of technical crops was enveloped by cooperation [Sytnik, р.б]. The agricultural cooperatives also owned the processing facilities. In 1926, the total number of these enterprises was about 2000 including 800 mills, 400 creameries and cheese dairies. The member share of poorer peasants among the cooperators was 31%, middle rich ones - 59%, and prosperous -10% [Prokopenko, p.17].

Changing official attitude on a neglecting cooperatives in many aspects was connected with the evolution of Lenin's personal understanding of the significance of cooperatives. Generally speaking, his point of view was contradictory. The lack of correspondence between cooperative idea and the Marxist theory which was the ideologic basis of the revolution, motivated the Lenin's negative attitude to cooperatives during relatively prolonged period. He even initiated liquidation of some cooperative societies and associations in 1917-1920. The reality turned his opinion towards the advantages of cooperative organizations both in economic aspect as potentially significant contributors and in social aspect as a real democratic institution. Lenin admitted his own mistake and tried to corrected it. Thus his well-known even among Western scholars paper "On Cooperation" appeared in 1923. It influenced an official policy to a considerable extent. Lenin suggested:

"...A number of economic, financial and banking privileges must be granted to the co-operatives - this is the way our socialist state must promote the new principle on which the population must be organized... The system of civilized co-operators is the system of socialism" [Lenin, p.76l].

Of course, the question was far from an official acknowledgement and support of the institute of private property in agriculture by Soviet government and looked like a political manoeuvre, but anyway a more constructive policy toward cooperatives was pronounced. Unfortunately the shortage of time and a serious illness didn't give Lenin a possibility to formulate his ideas clear enough and to develop them later. His dogmatic followers were neither able to conduct a flexible economic policy according to reality as it was done by Lenin in 1921 nor to generate new constructive approaches. Finally using Lenin's quotations as a cover they led agriculture to the dictatorship.

Agricultural cooperatives under Soviets were significantly different from those which existed under the old regime. First of all, the new wave of cooperation started with the absence of their own financial assets. Cooperative members also could not help their organizations because they were limited in money resources. It immediately put cooperatives under influence of state credits, and, as it could be expected, following rigid state regulations such as price, tax, income distribution policy. Cooperative organizations accumulated attributes of state organizations. The process of "statization" of cooperatives was especially reinforced in the second half of 1920s.

When Soviet cooperatives were gradually loosing their cooperative features, in Western Ukraine the cooperative spirit was still strong. The structure and membership of cooperatives did not suffer (as it happened in the Soviet Ukraine because of revolutionary actions). However the development of Western cooperatives was not always and everywhere successful. The main problem was connected with high inflation of Polish currency which caused big losses in cooperative movement especially 1914-1923. But after effective currency reform in 1924 the number of cooperatives grew significantly as well as the volume of their activities. Credit, dairy, supply, livestock marketing and consumer cooperatives were the most popular among peasants. These cooperatives accounted for 90% of all Ukrainian cooperatives membership. One third of Ukrainians who lived in Poland, including members of families, were cooperators [Vasuta, p.80]. Being the national minority Ukrainians found in cooperatives a certain social defence, as for farmers the defence against private business was of great importance. The cooperative movement in Western Ukraine became even stronger in 1930s, but unfortunately after unification of Ukraine in 1939 was fully destroyed by Soviet regime.

Thus, first cooperatives both in Soviet and Western Ukraine were mainly peasant organizations. And when the government conducted policy more oriented to both peasants and their cooperatives, i.e. during the Stolypin's reform or NEP, the country received desirable increase of food and finally general economic stability. Cooperation was a core of agriculture. The following results of the cooperative agriculture before the beginning of mass-forced collectivization should be regarded as the most important ones:

1. The peasant's family farm was a primary structural unit in agriculture, and only under economic interest, peasants voluntarily entered to any kind of cooperatives including production one.

2. Cooperation in agriculture became widely distributed into most branches. Its local, regional and federal structures were practically formed.

3. Improving and stabilization of food situation significantly favor the development industries, was reached thanks to cooperatives' control of agricultural market with preference of economic incentives to administrative intervention.

The existing organizational structure of agriculture in Soviet Ukraine was coming more and more to a contradiction with the general logic of raising socialist economy. The command methods were diffused in the other branches of national economy but agriculture with its cooperatives remained relatively independent-and oriented to the market relations. The problem again moved from economic to political plane.