The cooperative movement in Jugoslavia, Rumania and North Italy during and after the World War

Front matter

arnegie Endowment for International Peace

DIVISION OF ECONOMICS AND HISTORY

SfeltELIMINARY ECONOMIC STUDIES OF THE WAR

Author's Preface

The following studies of the cooperative movement in Serbia and Rumania during and after the War are the outcome of an investigation undertaken by me at the instigation in the first instance and with the financial support of the Horace Plunkett Foundation Trust and the English Labour Research Department. The preparation of a report for the Carnegie Endowment for International Peace enabled me to extend the time and scope of my investigation. I had originally intended to make a full inquiry into Italian cooperation, but I found that were I to attempt this I should have to devote six months or a year to Italy alone. The extraordinary number of cooperative organizations in Italy and the wide range of their activities are such that no one could attempt to speak with authority who had not spent a very long time in the country and who did not speak Italian almost as his native language. I therefore attempted only a cursory view of Italian cooperation and have appended a few brief and inadequate notes of what I saw in Italy.

My investigations in Jugoslavia and Rumania were far more fruitful, and I think I may claim to give a fairly comprehensive view of cooperative conditions in these countries. I have not seen any accounts of them which give as general a description as I have attempted, and therefore I hope that the reader will find matter which will interest him.

I had originally intended to return to Ireland through Hungary, Austria and Czechoslovakia, but the fates decided against this. My companion on the journey was an Irish agriculturist, Mr. A. Vere O'Brien, whose practical knowledge of farming was of great assistance to me. Unfortunately, he became seriously ill, which necessitated the curtailment of my plans. After a month in a hospital at Brasov (Cronstadt) he became well enough to travel again. But traveling in Eastern Europe was very difficult. The trains were so crowded that, with luck, standing

Vl AUTHOR S PREFACE

room in a corridor only was obtainable. Many persons traveled on the roofs of the coaches, and I have seen them climbing down and hanging on between the carriages while passing through a tunnel! There was only one good train from Rumania westward, the Simplon Orient Express, and as it passed through Jugoslavia we had reluctantly to abandon our visit to Hungary and Austria.

The reports were written under certain disadvantages arising out of the political situation in Ireland. My diaries, written in the form of letters, were seized by the British military authorities. Fortunately, my note-books were not discovered, and I have therefore been able to supply the technical details, but by the loss of my record of casual remarks and impressions my report has been deprived of much that would not only have made it pleasanter to read but would also have thrown light on the social conditions which influence cooperative movement in the various places I visited.

I should like to take this opportunity of thanking those who by their hospitality and kindness made it possible for me to learn much that would otherwise have been difficult to discover. I should particularly mention Signor Fortis of Milan, Dr. Costanso of the International Institute of Agriculture at Rome, Signor Mami at Bologna, Signor Zanchetta at Treviso, MM. Galyer and Vukmir at Zagreb, the Secretaries of the Cooperative Unions at Ljubljana, Split and Sarajevo, and, last but not least in Jugoslavia, M. M. Avramovitch and Dr. Prohaska of the Union of Belgrade, to whom I owe more than I can well express. In Rumania the Director of the Union of Credit Societies and the Director of the Union of Agricultural Societies, and M. G. Mladenatz and M. Teodorescu, who accompanied me on visits to societies, were all of the greatest assistance and kindness. M. Lupu also gave me valuable help.

Diarmid Coffey.

Dublin, Ireland, August, 1921.

Introduction

The cooperative movement as a whole seems to have survived the war more successfully than many other forms of enterprise. In Central Europe reports show that, comparatively speaking, at least, the cooperative societies have made progress since the World War. In France and Switzerland all forms of cooperation are flourishing, and in the former there has been some cooperative effort for reorganizing the devastated areas. In the countries with which this report deals there can be no doubt that cooperation has demonstrated its efficiency and elasticity in meeting economic difficulties. Where private enterprise has failed, cooperation has been able to insure the fair distribution of supplies. It has kept the economic nation alive in many districts where other forms of trade have actually ceased to function.

This must largely be ascribed to the fact that the cooperative societies command the confidence of their members and are therefore regarded as of especial importance when rapid fluctuations in value encourage profiteering and speculative buying. The value of this confidence is shown by the fact that in Southeastern Europe not only did the Governments of Serbia and Rumania use their cooperative societies as the means of distributing essential commodities, but the Austrian and Hungarian Governments actually used cooperative societies formed by members of the subject races of their old dominions both for collecting agricultural products and for distributing manufactured goods.

The more particular reasons why cooperation has gained rather than lost by the economic catastrophe of the War are: ( 1 ) The increase in the cost of living has made the savings effected by cooperative purchasing of great importance to the vast bulk of the people of Europe. (2) The continued necessity of distributing has controlled necessities of life, such as bread, salt, flour and tobacco. (3 ) The general upset of international trade has made the procuring of the raw materials of agriculture (seeds,

2 INTRODUCTION

manures, etc.) more difficult and has therefore reacted in favor of cooperative supply. (4) The rapid change from large estates to small holdings which is taking place in the Balkans and to some extent in Italy is causing a development of agricultural cooperation. (5) The spread of revolutionary and communistic ideas in Europe has caused the governments of the countries in question to favor a movement which, by providing a means of solving economic difficulties, may make actual revolution less probable.

Cooperation differs greatly in the three countries with which this report deals. In Jugoslavia it was, except for Serbia itself, largely political and anti-Austro-Hungarian in its aim. In Rumania it is very much in the hands of government departments, and in Italy it is mainly political and in the control of the different political parties. But dspite these differences the main stream of cooperation is the same. It is at bottom a democratic movement, with the well-being of the groups of individuals forming the societies as its object. It is open to all citizens of the state and in so far its aim is for the well-being of the state. Europe is now in a state of disorganization and change, and the cooperative societies everywhere represent a stabilizing element which can adapt itself to change without violence. In Jugoslavia and Rumania it is clear that a united cooperative movement will be a great element of strength. They are both agricultural countries, where cooperation takes on a simple and unifying form. In Italy the problem is more difficult and the elements of discord more obvious. What the end will be there it is impossible to say; but whatever may happen, Italy is the country which has led the way in cooperative production and the application of the principles of cooperation to industry.

Part I The Effects Of The War On Cooperation In Jugoslavia

General Conditions

The cooperative movement in Jugoslavia was strong previous to the War and has emerged from the struggle stronger than before; but its orientation has been completely changed and its character is undergoing great modification. Jugoslavia is formed ofanumberofthestateswhichwere part of the Austro-Hungarian Empire but which at the end of the War broke away from that empire and joined themselves to Serbia. The three main divisions of the population — Serbs, Croats and Slovenes — recognized the King of Serbia as the head of their united country, and called their new kingdom the Kingdom of the Serbs, Croats and Slovenes (S. H. S. Monarchy). This is still the official title of the new state; but the name Jugoslav or Southern Slav is a generic term for all these people and the name Jugoslavia is more convenient than S. H. S. Monarchy and is therefore adopted in this report. It is probable that the name Jugoslavia will be officially recognized before very long, as it is already generally used by the people of that country.

The divisions of the country are, first, Serbia, which has been an independent country since it threw off the last vestiges of the Turkish yoke at the Treaty of Berlin in 1878. It has an area of 18,650 square miles, and its estimated population in 1911 was 2,957,207, of whom about 2,900,000 belonged to the Greek Orthodox Church. The country is almost entirely rural. Belgrade is the only big town, but it has less than 100,000 inhabitants. The Rivers Save and Danube form the northern boundary of Serbia, and north of the Danube comes the Banat of Temesvar, a portion of which, at the end of the World War, came into Serbian hands. North of the Save lies Slavonia, and east of Slavonia, crossing some of the middle ranges of the Save, Croatia. These two provinces have as their northern boundary the River Drave and the Danube. They form one administrative whole with its capital at Zagreb (Agram). The area is 16,421 square miles and the population was 2,621,954 in 1910. The bulk of the population is Serb or Croat, who are respectively Greek Orthodox and Roman Catholic in religion. The principal town, Zagreb, is the seat of government for these two provinces, which up to the end of the War were under Hungarian rule. There is very little manufacturing in the country. It is chiefly agricultural and pastoral.

West of Croatia lies the country of the Slovenes, Carinthia, part of Styria and Carniola. At the time this report was compiled the question remained unsettled as to whether the Klagenfurt area of Carinthia should be Austrian or Jugoslav, but the result of the Klagenfurt plebiscite has given the whole of the district to Austria. The southern portion of Styria forms part of Jugoslavia. Carniola, with its capital Ljubljana (Laibach), is the most important part of the Slovene district and had a measure of local autonomy under the Austrian Government. East of this again lie Istria and Goritzia, which have a mixed population of Italians and Slavs and which have been assigned to Italy. The area of Carniola is 3,989 square miles and the population is about 530,000, practically all Roman Catholic. There are a few industries in Laibach and the surrounding district. The country is rather hilly. The total Slovene population of the Austrian Dominions was given as 1,252,940 in 1910. South of Croatia and running along the Adriatic Coast is Dalmatia, with an area of 4,955 square miles and a population of about 670,000, chiefly Croat Roman Catholic. At the time of the making of this report there was a dispute between Jugoslavia and Italy as to ownership of a portion of the Dalmatian Coast and Islands, which was settled at the Treaty of Rapallo. That treaty assigned practically the whole to Jugoslavia, but left the Italians some control over the town of Zara and some other towns and islands. Split (Spalato) is the capital and seat of the local gov-

GENERAL CONDITIONS b

ernment, which was at Zara under Austrian control. East of Dalmatia, lying between that province and the Kingdom of Serbia, are Bosnia and Herzegovina, which were occupied and administered by the joint Austro-Hungarian Government from the Treaty of Berlin in 1878 until October, 1908, when the two provinces were formally annexed. The area is 19,768 square miles and the estimated population in 1912 was 1,962,411, of whom 626,000 were Mohammedan, 856,000 Greek Orthodox and 451,000 Roman Catholic. The population is mixed — Serb and Croat; the Roman Catholics are Croat, the Greek Catholics are Serb and the Mohammedans may belong to either race but are not Turks.

The language spoken throughout the whole country is the Southern Slav language, which is very like Russian. It is possible for an inhabitant from one part of the country to understand one from another part; the difference in dialect is said to be not greater than the difference in English dialect; the noticeable distinction is that the Serbs use the Cyrillic alphabet, which is much like Russian, while the Croats and Slovenes use the Roman character, but an educated man can easily read either character, and the distinction is not of much more importance than the use of Gaelic or Roman characters in Gaelic, or German or Roman characters in German. The religion has been mentioned in each case, as broadly speaking it distinguishes the Serb from the Croat or Slovene, and as will be seen in later stages of this report it has played an important part in the prewar development of cooperation throughout Jugoslavia.

As may be seen above, the whole population is predominantly rural. There is no big manufacturing town in the whole country, and except on the Dalmatian Coast, where there is a certain amount of fishing, the population depends directly upon the land for its support. The towns are administrative and distributing centers. As far as cooperation is concerned, outside of Zagreb there is hardly any non-rural cooperation, but there is a strong agricultural cooperative movement in every province, based chiefly on credit societies of the Raiffeisen type, which have developed various forms of activity.

Up to and during the War, what is now the cooperative movement of Jugoslavia was divided into four main branches: (1) cooperation in Serbia proper; (2) cooperation in those districts which are under Hungarian rule; (3) cooperation in districts under Austrian rule; and (4) cooperation in Bosnia and Herzegovina under joint Austrian and Hungarian rule.

In Croatia, which is under Hungarian rule, there were three types of society: (1) societies encouraged and partly financed by the Hungarian Government, which group has practically disappeared; (2) Croat societies, and (3) Serb societies. Both of these latter are largely controlled by the priests of the Roman Catholic and Greek Churches, respectively. Neither had government support, but each was regarded with suspicion by the Hungarian Government, which, however, encouraged anything which kept the two races disunited, and on the whole favored the Croat rather than the Serb society. In Slovenia the cooperative societies were divided into clerical and anti-clerical, the latter being slightly, but only slightly, socialistic in tendency. In Dalmatia there were no visible traces of such divisions, though it is possible that the Italian element, where it is strong enough, may produce a division there ; but at the time of writing, the Italians and the Croats were strictly kept down in districts occupied by the other nation and had little opportunity of expressing themselves. In Bosnia and Herzegovina the distinction between Serb and Croat societies was much the same as in Croatia. The Mohammedans had no societies. The cooperators of Jugoslavia wish to form one united movement out of these various elements, and the steps they are taking to secure this unity will be dealt with in the conclusion of this section of the report.

The cooperative movement in Serbia proper is a united movement. Its difficulties were considerably less than in the other parts of the country, because Serbia was a united and independent country without the strong religious and political divisions which mark the other portions of Jugoslavia.

The moving spirit of cooperation in Serbia is M. Avramovitch, to whose energy and enthusiasm cooperation in that country owes a very great debt. M. Avramovitch is still far from being an old man, and he has seen his work bear fruit and what is sure to be lasting fruit, and now it is likely that he will unite all Jugoslavia in one consolidated cooperative movement, which will lead the Jugoslav peasantry into a better, more prosperous and more social life than has hitherto been possible for them.

The first cooperative society in Serbia was founded in 1894 and by 1910 there were 908 societies, of which 615 were credit societies, 42 distributive societies, 153 machinery societies, 12 dairies and 3 wine societies. There was also a central bank, with its headquarters at Belgrade, for lending money to and receiving deposits from societies. The bank also supplied seeds, chemicals, manures, agricultural machinery, etc., and in 1909 it had granted loans to the value of 968,000 dinars and received deposits of 320,000. The state lent the bank 2,000,000 dinars free of interest; 5 per cent was charged by the bank for loans and 4 per cent interest was paid on deposits. The bank does not distribute a dividend and its profits and reserves are indivisible, so that if it should ever come to be liquidated, after the state loan has been repaid, any money over must go to some public purpose. The figures and facts given above were supplied by M. Avramovitch to the International Institute of Agriculture at Rome in 1910. The invasion of Serbia by the Austrians in 1914 and the Balkan Wars of 1912-13 made it difficult to obtain accurate information about cooperation during those years; but according to statements made to the writer by M. Avramovitch, there were in 1914 about 1,200 societies, with a membership of about 80,000. Of these societies, 800 were credit societies, 200 agricultural consumers societies, 154 machinery societies, 8 wine societies and 40 for the insurance of livestock.

During the War the whole of Serbia was occupied by enemy forces, and as a result the cooperative movement was brought to a complete standstill, though in some cases the machinery of the societies was used by the invaders in a way that made it easy to re-form them. It may thus be said that for the period of the War the history of cooperation in Serbia is a complete blank. As soon as the Serbs were able to reoccupy their country, M. Avramovitch set himself to the reorganization of the cooperative movement, and by June, 1920, there were about 800 societies, of which 600 were old societies revived and 200 were newly formed. The whole work of revival was so new and was proceeding so rapidly that M. Avramovitch was not able to give definite and accurate figures of the growth of his movement since the war, but the figures given above may be taken as being a near approximation to the actual state of affairs. But the revived movement differs to a considerable extent from the movement before the War, and this difference, as might be expected, is practically universal throughout the countries of Europe with which the present writer is acquainted. Before the War the need of credit was greatly felt by the farming community in general, and this was particularly the case in undeveloped countries like Serbia. The War, however, exercised a profound effect upon the economic state of the rural population. Prices of all foodstuffs rose enormously and at the same time the spending power of the farmer was greatly restricted, owing to the difficulty of procuring goods. As a result, at the end of the War the average peasant found himself with large supplies of money, though probably not greatly increased wealth, as he had less stock, and, owing to the difficulty of obtaining fertilizers, his land had in many cases deteriorated in quality. An obvious result of this was that for the moment he did not need credit but had a large amount of currency to deposit. Almost invariably it is found that in credit societies before the War the loans greatly exceeded the deposits and after the War the deposits exceeded the loans. On the other hand, there was a general shortage of manufactured articles and in fact of everything which could not be grown or produced in the immediate district. Transport in Eastern Europe was slow and bad, railway bridges were usually temporary structures, over which a train could pass only very slowly, rolling-stock was heavily depleted and out of repair, and fuel was bad and insufficient. The need, therefore, was not credit societies but supply societies, which were organized for the distribution of the necessities of life and manufactured goods in general. The formation of these societies was to some extent stimulated by the fact that the government used

SERBIA y

cooperative societies of all kinds for the distribution of government monopolies, such as tobacco and salt, during the War.

The Union of Serbian Cooperative Societies at Belgrade (Glavni savez Srpskih Zemljoradnickih zadruga), of which M. Avramovitch is secretary, is at once an organizing and a wholesale society. Its function as an organizing body consists of giving advice and help to societies which get into difficulties, auditing their accounts and lending money through the cooperative bank which is affiliated with the Union. Besides the inspection work, the Union has courses in the theory of cooperation, accounting and bookkeeping, cooperative law, management, etc. Its wholesale business is carried on in a storehouse attached to the headquarters of the Union, which has stores of the chief necessities of life. Since the demand for loans has fallen off, the wholesale business has expanded; the general need of supplies felt throughout Serbia has caused a great increase in the wholesale trade. This makes up for the decrease in profits through the bank. The societies pay 10 per cent of their profits to the Union, which is the primary source of revenue.

Serbia is very badly developed as regards transport. There are very few lines of railway and most of the roads are mere tracks, though some main roads have been made and must at one time have been good, but the result of heavy traffic during the War has greatly reduced their quality. During the winter months, when there is not sufficient snow for sledges, the byroads are practically impassable. This does not, however, very seriously interfere with the economic side of the nation, as what is lost in the easy supply of manufactured goods is gained in the practical self-sufficiency of each district. The Serbian clothes are practically all home-made from wool spun by the women and woven by them. They also weave cotton yarn and hemp, which latter is grown in the country. Some cotton is grown in the southern part of the country; silk is also produced. The principal crops are wheat, barley, oats, maize, rye and roots; a considerable quantity of plums are grown and a strong form of brandy made from them, and the cultivation of vines for wine-making is pretty general. Cattle-raising and dairy products form another important part of the national economy.

Owing to the difficulties of transport, which were greatly accentuated by the bad condition of the railways already referred to, it was necessary to confine the visits to societies to a small area, and all the societies to which particular reference will be made as examples of the type of society found in Serbia lie in a district about 40 miles south of Belgrade, and in no case more than 10 miles from the main line of railway to Nish and Constantinople. The societies in this area are some of the best in the country and include agricultural distributive societies, implement societies, wine societies and credit societies.

The first society visited was at Mladenovac, a railway station and small country town, where there is a consumers' society, one of the few distributive societies which are not purely rural. It had been founded only seven months and its membership was 75, composed chiefly of employes of the state (post office, railway, etc.) and very few peasant members. The chief goods supplied were sugar, coffee, rice, boots and shoes, clothes, etc., although it supplied a small quantity of agricultural seeds and manures. Its supplies were bought from the Union of Serbian Societies at Belgrade. The fact that Mladenovac is a town implies that there is a greater demand for manufactured goods and for foodstuffs than in a purely agricultural district. The capital of the society is 8,000 dinars, divided into shares of 50 dinars, of which no member may hold more than ten shares. The turnover averages from 5,000 to 6,000 dinars a month, but occasionally the difficulty of getting supplies is so great that business is practically suspended. The society sells considerably cheaper than ordinary shops; for example, coffee was selling at 20 dinars a kilo and the current price was 24. The local shopkeepers naturally disliked the society, but so far have made no efforts to organize to undersell it. There was no society in Mladenovac before the War and perhaps local traders had not yet grasped the idea of trying to ruin the society by selling for a time at a loss. The secretary of the society, from whom this information was obtained, was teacher for the local state school, and a full-time manager was employed at a salary of 450 dinars a month. It is probable that the cooperative society in Mladenovac will grow into an important one, as arrangements were being made to start a corn-selling society, which the peasants of the surrounding districts and their cooperative societies were to finance, and it was expected that the state would also come to their assistance. This would undoubtedly cause the cooperative society in Mladenovac to become of more importance to peasants of the neighborhood. The existing society is an example of a society largely created by post-war conditions and the scarcity of supplies.

At Koracica, about six miles from Mladenovac, there are three agricultural societies, a threshing society and a supply society. The village of Koracica is a small group of scattered houses. The peasants are practically all small farmers, with farms ranging from 15 to 30 acres; the biggest farm in the district is only 125 acres. The land is good, a considerable number of cattle and pigs are reared and wheat is grown. There are also orchards and most of the houses have small vegetable patches. The credit society was founded in 1900 by 6S members and in two years increased to 108, but by 1912 it had fallen to 30 members. The reason given by the secretary for this falling off was that the president of the society took more interest in politics than in cooperation, and as a result he offended a large number of the members. Up to the beginning of the World War the membership remained at 30 and during the War the work of the society was suspended altogether. On the Austrians occupying the country, the secretary hid in his shoes such money as he had belonging to the society and tried to escape to southern Serbia. He was not able to make good his escape and had to return, but succeeded in concealing the money. The Austrians destroyed all the books of the society and demolished its premises and furniture, and the result was that it was possible to get only a general statement as to the condition of the society before the War.

The credit society has first of all a savings fund into which each member is compelled to pay one dinar a week. The sum formed by these savings can not be withdrawn without the consent of the committee of the society, and if a member wishes money he must borrow from the society. On the death of a member his savings are payable to his family, but in most cases they nominate one among themselves to take the place of the deceased member. Six per cent is paid on savings and 10 per cent is charged for loans. Besides this compulsory savings fund, members are entitled to deposit money, on which 8 per cent is paid. The society which was founded in 1900 bought a steam threshing set in 1902, which was used to thresh for both members and non-members. The payment for the threshing was taken in kind, 5 per cent being taken from members and 8 per cent from non-members. As the books were destroyed, it was not possible to obtain any accurate figures as to the progress of this society. Figures for the year 1912, however, were available, in which year the savings amounted to 4,098 dinars, deposits to 1,284 dinars, loans to 1,576 dinars, the reserve fund to 500 dinars, and that year the reserve was spent on repairing the threshing-machine. The next year for which any figures could be procured was the year 1919, when the savings had reached 4,143 dinars and the reserve fund no less than 6,000 dinars. This large increase in the reserve fund in the first year after the War was made out of dealings in grain, which was at a very high price in 1919. There were no deposits and no loans made in that year, and the reserve was all spent again in repairing the threshing-machine, which had suffered from want of renewals during the War. Membership in 1919 increased to 120, or four times the pre-war number. This increase is partly accounted for by the fact that, owing to an alteration in the Serbian law, a society which deals with members only is entitled to a reduction of taxation. Up to July, 1920, the savings of the society amountd to 4,669 dinars. From this account it would appear as though the threshing society and the credit society were one. In theory, they are two separate societies, and the threshing society continued to work right through the War during the Austrian occupation, while the credit society was brought to a complete standstill. But when it is realized that the committee of these two societies were the same persons, the membership the same, that the books of the prewar and war periods were lost, and that since the War the accounts of the two societies have been kept as a single account, the reader can easily understand that it is very difficult to distinguish between them. The noticeable fact in the above account is that since the War there have been neither deposits nor loans and that the credit society is simply a sort of savings bank which also makes money by owning a threshing society.