TRADE WITH UKRAINE Ukraine’s Natural Wealth, Needs and Commercial Opportunities: The Ukrainian Co-operative Societies and Their Influence By EMIL REVYUK 1920 WASHINGTON, D. C. OTHER PAMPHLETS PUBLISHED BY THE FRIENDS OF UKRAINE 1. Bolshevism and Ukraine. Two cents. 2. Ukraine, Poland and Russia and the Right of the Free Disposition of Peoples. By S. Shelukhin. Ten cents. 3. Protest of the Ukrainian Republic to the United States Against the Delivery of Eastern Galicia to Polish Domination. Ten cents. 4. The Jewish Pogroms in Ukraine. By Julian Batchin- sky, Israel Zangwill and others. Fifteen cents. 5. What About Ukraine ? Three editorials. Five cents. 6. Ukraine and Russia. By Woldemar Timoshenko, Vice Director of the Economic Institute at the Academy of Sciences of Ukraine. Ten cents. Address all communications to FRIENDS OF UKRAINE 345 Munsey Building :: :: :: Washington, D. C. Ukraine’s Natural Wealth, Needs and Commercial Opportunities: The Ukrainian Co-operative Societies and Their Influence By EMIL REVYUK 1920 PUBLISHED BY FRIENDS OF UKRAINE 345 MUNSEY BUILDING WASHINGTON, D. C. COMPARATIVE POPULATIONS OF SOME OF THE RACES OF EUROPE, CM CO o o o o o o o o o o o o o o o rs O •• o o o o o o o o o o o © o o o •X, f\ » O CD OO tP O x# CO rl H H o o o o o o o o o f\ o o o o o o O ic ID •s ^ rs © oo i> o o o o o o o o o o o o o o o o o o »N »x r» r* »\ o o o o o o lO O O O O to c- 10 10 o o c- r\ «S rx 10 in co co 03 m d Cj OQ A OS • pH d • 1 w eh • pH 03 Pi ■4 • rH fCS CD Eh fl O rd O • pH £ o 03 ci 4 03 W t> O) •+j • rH s p a e. o P 00 •4-3 o India • pH c3 Eh P P a bJD g § £ w K*^ r—1 o$ 4-3 M rt • rH o3 P GO a o pp rH oi co" H id o’ tF GO 05* 03 00 c3 ... • • • • * m ;>-> • ' ' 5 ^ * _ © r^j S 01 P fl fl 03 § 2 P ^ *P +> C fl l .h C3 » *d ?-t o3 c3 © Jh S 03 ft Pi ft rid ^ O ^ H cc 0Q P I mm t i Q Z < J O Z Ed Ed O z < cd &H O m w (A < P-4 DMkIXIXI a rO © Cj ft © Sh Ph c3 H-H o 3 nd p o ?“l P © P3 c3 © c3 Td p c3 m nS O o ft P c3 00 03 © CO © ft © rH 00 © ?h P bfl • rH Ph © .P H * ofessor Feschenko-Chopivsky. 11 ' This development was reached by the Ukrainian co-operative bodies in the face of the stubborn opposition of the Czarist Government. The old Royalists who encircled the Czar* always looked with dis¬ trust upon movements which initiated with the people. They dis¬ couraged and blocked them in every possible way. Now that the Revo¬ lution, has removed all the restrictions built up by the old regime, there exists in Ukraine hardly a village which does not possess a co-operative venture of some sort. Ukrainian co-operation has there¬ fore grown into a many-sided movement, influencing every phase of economic life. Co-operative Banking Highly Developed . The co-operative movement in Ukraine has reached its greatest development in banking. The first steps in this direction were taken because of the desire of the peasants to free themselves from the clutches of “loan sharks,” who preyed upon them. The situation was this. In the spring months the small farmers usually found themselves in difficulties. They had sowed out all their grain, and were waiting for the new crops. In order to keep their heads above water and buy the sup¬ plies which they needed, they often resorted to the village usurers. These individuals made a practice of loaning out money upon terms which were almost ruinous. They were almost equally a pest to the more prosperous farmers, who felt the need of developing their holdings more extensively and therefore borrowed capital in order to go into business on a larger scale. In this way, the peasants, both the poor and the moderately well-to-do, were more or less at the mercy of usurers. There were practically no banks which would lend to them. The banks in those days were primarily institutions of credit for the merchant, manufacturer and great landowner, and did not lend the small sums of money needed by the small landowners, nor upon such long terms as were convenient for that class of bor¬ rowers. These unfortunate conditions awoke the more progressive peasants of Ukraine to a realization that the necessary credit facilities could be furnished only by organizing the small landowners and making the members of each association jointly and severally liable for the debts of each and every member. These new bodies defied the village THE NEW MAP OF EUROPE APPROXIMATE BOUNDARIES OF PEOPLES HERBERT ADOLPHUS MILLER 1918 SLAVS IN STRAIGHT LINES LATINS-EMESS fORMER EMPIRE OF AUSTRIA-HUNGARY UKRAINE AREA: 330,000 square miles. POPULATION 45,000,000. FORM OF GOVERN¬ MENT: Republic. ESTABLISHED: 1917. CAPITAL CITY: Kiev. © NlS 0* M000ERT AOOLPHUJ KILLEB oa JERUSALEM 14 usurer and sought to bring together the small lender and the small borrower. They were, in fact, saving-and-loan societies. The first of them sprang up in Ukraine during the seventies of the last century, but their development was rather slow because of the limited re¬ sources of their members. In 1895, a new basis for co-operative banking was provided by the empire. A system was sanctioned whereby the the State Bank of Russia and the credit departments of the “zemstvos” (the autono¬ mous district bodies) could furnish the peasant co-operatives with the credit which they needed. Thus arose a new form of co-operative, depending for credit not upon its membership but upon public insti¬ tutions. A sort of competition was inaugurated between the state and the zemstvos, each anxious to emulate the other in the number of co-operatives dependent upon it for support. In the years that followed, Ukrainian co-operative banking de¬ veloped very fast. In 1901, the province of Kiev possessed only 8 banking co-operatives. In 1912, there were 198, and approximately one-fifth of the population was served by these organizations. The same rapid strides were made in other provinces. Effect of War on the Co-operative Banks . The outbreak of the world war changed the condition of the peas¬ antry. They began to find themselves in possession of plenty of money, realized from the sale of various commodities to the armies. The prohibition of the liquor traffic kept them from spending too much. The lack of labor hindered them from putting the surplus into the development of their farms. As a result, they turned a great deal of their earnings over to the co-operative banks. According to the report dated October 1, 1915, there were in Ukraine 2,914 such associations, with a total membership of 2,084,053 persons, 167,777,778 hrivnyas* of deposits and a volume of business amounting to 359,230,778 hrivnyas. As compared with the entire Russian empire, in which the Ukrainians constituted 18% of the population, these figures repre¬ sent 19% of the number of co-operatives, 20% of the total member¬ ship, 18% of deposits, and 21% of the volume of business. Even before the war, there had been a movement to federate the *Hrivnya: the monetary unit of the Ukrainian People’s Republic, equal in value to about 25 cents. COMPARISON OF THE CHIEF CATTLE-RAISING NATIONS. i 'Z o I—I H O P P o C3 P r^} r P r ^S r P oS oi ci P © © © © ,P P5 ,P Pi o o o o o o o o o o o o r, *\ *\ o o o o o o o o o o o o •s N P N o O rH r—I rH 03 < & W C3 pH a o <3 03 m > < p < P £ Z < xn © m © -*-* • nH P P P o3 a © P fc£> P • rH P © - 4-3 • rH P P © P • r—t 03 P3 P h ej cc ^ 16 co-operative banks. In 1905, the beginnings of civic freedom granted in the first Russian revolution offered these banks a chance to free themselves somewhat from their dependency upon the State Bank and the zemstvos. Seven such co-operative credit federations were soon formed in Ukraine. The largest of these was at Kiev. The Kiev federation grew enormously during the war. On January 1, 1913, its volume of business was 2,390,000 hrivnyas. On January 1, 1918, it had reached 160,000,000 hrivnyas. At the same time, the Co-operative Credit Federation of Kharkov had a volume of business amounting to 70,000,000 hrivnyas, and that of Poltava about 30,000,000 hrivnyas. The revolution of 1917 gave these federations their long-awaited opportunity to establish one great central bank: the Bank of Ukraine. As early as 1911, they had appealed to the Russian government for permission to found such an institution in Kiev. The government, however kept silence for six years, withholding its permission. When the old bureaucracy was overthrown, the way was clear for the Bank of Ukraine. By November 1, 1918, it had a membership of 124 co-operative credit federations, subscriptions to the amount of 34,122,800 hrivnyas, and a volume of business reaching 93,360,800 hrivnyas. Co-operative Banks Flay Double Bole . This net-work of co-operative banking associations culminating in the bank of Ukraine at Kiev, will become a factor of prime impor¬ tance in Ukrainian foreign trade: (1) by bringing the peasants and larger landowners in touch with foreign capital seeking invest¬ ment in Ukraine, and (2) by actually undertaking to distribute to them and furnish them against credit agricultural machinery, live¬ stock, fertilizers, seeds, tools, building materials and all kinds of manufactured goods. The first service will be of great value during the period of re¬ construction. The Ukrainian peasantry will need a great amount of capital to rebuild their country, crippled by a long war and devas¬ tated by several foreign invasions. The credit co-operatives, stand¬ ing, as they do, closest to the peasant, will be called upon to furnish the necessary financial backing. Even should the Ukrainian govern¬ ment offer its help in a large way, the credit co-operatives, with their knowledge of the personal character of the borrowers, will be called upon to act as chief agents in the distribution of credit. The second function is of even greater significance just now. In 1918, the Bank of Ukraine bought at wholesale prices and resold immediately goods to the aggregate value of 88,000,000 hrivnyas, and received orders to the amount of 152,000,000 hrivnyas. It has also conducted the reverse commercial operations, taking goods from its members, granting them credit against these goods, and selling them on account of the co-operators. The chief object of commercial operations of this last sort is the staple product of the black earth belt; i. e., grain. The whole system of elevator co-operatives started from very small beginnings. By this method, the peasants w T ere saved the losses occasioned by the practice of selling grain to large dealers, who often enjoyed a posi¬ tion of natural monopoly, and also the need of disposing of their crops immediately after the harvest when the market was glutted and prices low. Gradually the arrangement came to be the char¬ acteristic procedure, and elevators were built all over Ukraine. At the present time, the Ukrainian co-operatives possess elevator facili¬ ties having a capacity of many millions of bushels. Similar assistance was furnished by the credit co-operatives in marketing sugar-beets, cattle, fruits and the products of household industry. To carry on this great trade, the Bank of Ukraine has opened thirteen branch offices in various cities of Europe and plans to install new offices in Galicia, Crimea and the United States, The banks are not the only co-operative organizations doing a large business. In many cases, commercial activities have been detached from purely banking transactions, and special societies have been created to perform the functions of the middleman. One group of this sort distributes to peasants of small means the machinery, tools, seeds, etc., which they require. Others act as selling agents, disposing of grain, sugar-beets, etc. A few organizations of this type combine both functions. Consamers’ Associations Are Active. Wholly independent of the banks and marketing associations are the consumers’ co-operative organizations. There are about 10,000 of these in Ukraine, and they have a membership of 12,000,000. 18 Taking into consideration the fact that such a society will serve a whole family if one of them belongs to the organization, we are safe in concluding that the bulk of Ukraine’s population is reached by their system. They differ from the banking co-operatives in purpose and method. The object of the banks is to afford credit facilities. That of the consumers’ organizations is to reduce the cost of living. The bank, with its commercial activities, has served the more prosperous farmers, who are anxious to improve their land and agricultural methods. The consumers’ societies have ap¬ pealed primarily to the poorest elements of the Ukrainian population. The idea of the consumers’ associations did not originate in Ukraine. It was imported from Western Europe. For a long time they were looked upon with a certain degree of mistrust by many of the peasants. It was only in 1906, after the first Russian revolu¬ tion, that the poorer classes suddenly realized that they must some¬ how band together in order to reduce the cost of the necessities of life. As they looked into the matter more closely, they found the idea of the consumers’ societies a very persuasive one. The prin¬ ciple behind them is simple: to eliminate the profits of the middleman. These profits used to be mercilessly high in Ukraine. Moreover, the consumer often suffered from dishonest weight and measure. In fact, the village store and the village usurer often worked hand in hand, and the movement against unscrupulous middleman spread and kept pace with that against the “loan sharks.” Barter Substituted for Money Exchange. By providing a system of barter of a rather primitive sort, the consumers’ associations have helped to keep trade alive, in spite of the chaotic situation created by the welter of depreciated and unre¬ deemable paper currencies. In many localities, the peasants did not care to organize special marketing societies, but preferred to charge existing organizations with that function. The process began in a small way, when a few farmers found it more convenient to pay their co-operative store with agricultural products than with actual cash. Gradually it grew in favor, and it became a regular custom with many to take from the co-operative society small iron imple¬ ments, clothing, southern fruits, shoes, etc., and offer in return the eggs, poultry, grains, vegetables and fruits from their own lands. COMPARISON OF SOME OF THE PRINCIPAL COAL-PRODUCING NATIONS. 19 o ►H < & o o S3 Q o p m * The Figures represent Russian poods, and are taken from data prepared for 1913 by Professor Feschenko-Chopivsky. 20 This imposed upon the consumers’ associations the responsibility of taking these agricultural products to the nearest market, but it was one which they were able to cope with. In this manner, the use of money was eliminated, no currency of any sort being taken or given, though it figured in the accounts as a measure of exchange. All business transactions were completed by mere settlements on paper, and the debit account of each person was carefully squared with his credit account, before the deal was ended. This extremely simple bartering arrangement has certainly saved the Ukrainian peasants a great deal of misery which is apt to follow in the wake of a depreciated currency, with its concomitant speculation, undeserved enrichment of sharpers and business failures. Like the banks, the consumers’ co-operatives have grouped them¬ selves into district federations, and these have further consolidated into a central body, known as the “ Dnipro-Soyuz ” or Dnieper Union. This body experienced a phenomenal growth and soon attained a posi¬ tion of great influence. On November 1, 1918, it embraced 69 dis¬ trict federations, represented a volume of business of 56,421,200 hrivnyas and had a capital of 2,710,000 hrivnyas. It achieved this prominence in the very face of hostile invasions from the west, south and north. In order to meet the constant demand of its members for certain staple commodities, the Dnieper Union has embarked upon several manufacturing ventures. It has opened factories for soap, linen, textiles and shoes. Its central offices at Kiev employ over 300 individ¬ uals. Branches have been established at Kharkov and Odessa, and headquarters are now being opened in England, France, Switzerland and other foreign countries. A branch is shortly to be founded in the United States, Agricultural Co-operative Societies Form Third Group. A third class of co-operative societies includes those which have for their object the development and exploitation of various products of small farming. These tend either to prevent the exorbitant charges made to a farmer for necessary work, as in the case of the oldest co-operation of this sort: viz, the flour mills, or to eliminate the middleman, whose power may become too burdensome, as in the case of the co-operative dairies. In 1915, there were over a thousand 21 such organizations. Their central association is called the Central Ukrainian Federation of Agricultural Societies. On October 1, 1918, the balance on their books amounted to 22,400,000 hrivnyas. The affiliated local federations number 31, and there are 213 co-operative societies. Not long ago, they purchased a large factory at Odessa, for the manufacture of agricultural machinery and iron utensils. Workers’ Production Societies. There is still another group of co-operative associations in Ukraine today: the workers’ production organizations. They are quite dif¬ ferent from any of the co-operative societies that have yet been mentioned. The banks, the consumers’ associations, and the agri¬ cultural co-operatives aim at a more efficient production and the elimination of the middleman’s profits in marketing. They are as a rule, very similar to ordinary capitalistic enterprises, and do not contemplate any radical change in industrial systems. The produc¬ tion co-operatives of the workingmen have, however, an original social-economic ideal. Dissatisfied with their relation to the enter¬ prise and its organizer, the master or employer, the workers do not endeavor to reform these relations, but to abolish them altogether. They attempt to do away with the wage system by becoming at one and the same time capitalists and laborers. The poor development of many enterprises in the former Russian empire offered a tremen¬ dous field for these co-operative activities, especially in those branches which do not anticipate large-scale production, but do require the labor of a great number of skilled workers. The greatest success has naturally been attained by the co-operatives which need little capital. Where more capital is demanded, it has sometimes been borrowed from outsiders. This has been the case with the fishing “arteli” of the Black Sea, which are organized in the fashion described. This type of venture should not be confused with the labor union, nor with communism. It is merely co-operative production, in the strictest sense of the expression. A Pan-Ukrainian Federation. Though it does not bear specifically on the matter of foreign trade, it is impossible to treat the Ukrainian co-operative societies without noticing that they have always been inspired by high social ideals, 22 quite apart from the purely materialistic considerations of economic self-interest. They have interested themselves always in the promotion of Ukrainian culture and the spread of education. Their program of enlightenment was formulated at the meeting of the first Pan- Ukrainian Co-operative Congress, held in Kiev in June, 1917. The result of this convention was the foundation of the so-called Central Federation of Ukrainian Co-operatives, the supreme legislative body of the Ukrainian co-operative movement. Thus was completed the work of centralizing the entire system. The Central Co-operative Council is the main deliberative body, and the so-called Central Com¬ mittee is the main connecting link between the legislative and execu¬ tive branches of the organization. This Committee is composed of the following departments; (1) a legal department, (2) a statistical department, (3) a bureau of labor, (4) a bureau of press, (5) a de¬ partment of museums and libraries, and (6) a department of publica¬ tions. It issues a monthly magazine called “Ukrainian Co-opera¬ tion” which was at first edited by the celebrated Ukrainian econ¬ omist, the late Professor Michael Tuhan-Baranovsky, and a semi¬ monthly bulletin. Prospects for Trade udth Ukraine are Encouraging. Taking into consideration the economic state of Ukraine, the co¬ operative societies constitute a fairly perfect machine for facilitating foreign trade. Their organization is entirely independent of that of the co-operative societies of Soviet Russia. Dealing with them will not involve the foreign merchant or manufacturer in any negotiations with communists and he will find in the consumers’ associations of the Dnieper Union a system of ready agencies to market his commodities of every-day use. Should he offer for sale bulky or expensive goods, like machinery, he can work through the independent buying co-operatives or through the purchasing depart¬ ments of the co-operative banks. Should the merchant desire goods in exchange for the commodities which he sends into Ukraine, he can obtain them through the barter machinery provided by the consumers’ co-operatives. The future of trade with Ukraine is brilliant. Other nations are already laying their plans to participate in the profitable commerce which is sure to open up in a short time. If America desires to play 23 her part, American business men must immediately consider getting in touch with the Ukrainian co-operative associations. The war has brought about a tremendous economic reorganization of the country. For the present, the turmoil has not simmered down. This, how¬ ever, is bound to come before long. In the meantime, manufacturers and traders who are genuinely desirous of building up a profitable commerce with this wealthy new republic will reap great advantages if they are willing to devote time and energy to the study of Ukraine’s needs and her great exportable wealth. COMPARISON OF THE PRINCIPAL OIL-PRODUCING NATIONS. 24 — o> * co rH O S 3 o p m w 03 P O 44 P m m t» co co m £ 0 S3 S3 S3 S3 o o o o o o 4 -> 4-3 4-3 43 4 -> 43 O OQ o co CO O 00 CM Oq C3_ 43 • rH S3 c3 • rH CO CO C3 • rH o c 3 ccS O cS • rH O! S3 P cS • 1-4 S3 n0 S3 H S3 cS • rH S3 H 3 ccS Sh • rH ■4— > • rH ?h cS ft s rH < V P P A P A p CM co io CD t- GO 03 CO d> • rH fH 4-2 S3 S 3 O O Sh 03 00 CD uo These statistics are taken from data prepared by Professor Feschenko-Ckopivsky. r ;v