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Forming Cooperation in a Forming Country

The setting of the cooperative movement in Israel is unique, for it has developed correspondingly with Israel’s Jewish national entity. It started with an organization that was intended to deal with the conditions of the peripheral reality as part of practical coping which resulted in the formation of an ideological system regulation.
The cooperation developed in two courses:

The Civic Cooperation: membership in its associations was free for all those who accepted their regulations. A cooperative association, for construction mostly, took place in Israel from the mid 19th century. These associations were not registered as cooperatives (for the lack of pertinent legislation). Their establishment was based on their members’ capital, which financed the monthly payments for the acquisition of lands over which they intended to build houses later on. When the payments were all paid, the lands and houses were registered in the names of the members, and the apartments were divided according to a raffle that was conducted between the members.

The first civic cooperatives were established with the aid of Baron de Rothschild, by way of the Jewish Colonization Association (J.C.A), and with the assistance of the Anglo Palestine Company (A.P.C.).

The Cooperation that was linked to the Histadrut Labor Federation: membership in its associations was only available for members of the federation.
Modern cooperative association in Israel started at the beginning of the 20th century and was related to the activities of the pioneers of the initial immigrations to Israel. Non institutionalized corporate activity took place within the framework of Hapoel Hatzair and Poalei Zion labor parties, which intended to create a system of mutual assistance between laborers. Within this framework there were labor kitchens, laundries, common clubs and labor exchanges – which referred laborers to work in agriculture and in construction. The laborers’ association within these frameworks was temporary and relayed on voluntary work and on membership fee payment. These frameworks did not have enough credit and they had difficulty to cover their fluid activity from the funds of the labor public, which was mobile and most of which had no work.

A certain change was evident in the cooperative association with the establishment of the Achdut printing press on 1910 in Jerusalem by Poalei Zion members for its newspaper HaAchdut. This cooperative was later supported by Poalei Zion by way of the Israel Labor Fund, which began its activity in Israel on 1912. The Fund’s objective was to organize and develop a productive cooperation in Israel. Within this framework it supported Achdut printing press; buying equipment for it and carrying for its financial foundation.

The Israel Labor Fund‘s activity was renewed when the war ended, and it organizationally and socially assisted the establishment of more cooperatives in varying professions such as carpentry, tailoring, baking and plumbing. Many of these cooperatives did not endure and were closed after a short time. Gradually, the financial means of the Israel Labor Fund became diminished, and Solel Boneh (The Office for Public Labor at that time) and HaMashbir took its place as the supporters of cooperative entrepreneurship.

The Beginning of the Productive-Service Oriented Cooperation during the Settlement Period

A temporary rise in cooperative entrepreneurship occurred during the culmination years of HaAliah HaReviit, when many cooperatives were established. With the growing number of cooperative associations for cooperative entrepreneurship and facing the hardships of raising funds and credit for their activities, the need for cooperative association was raised again. On 1926 H. Witlis, the manager of the Central Bank for Cooperative Establishments offered to establish a ‘revisal league’ which would associate all Israeli cooperatives – of the labor sector and of the civic sector. In spite of the Histadrut‘s executive committee’s secretariat’s prepossession to establish a revisal league for the labor public only within the framework of the labor association, it was eventually decided to establish a special committee for the productive-service oriented interests of the cooperation nearby the Tel-Aviv-Jaffa workers council and a central council for the cooperation’s interests nearby the Histadrut‘s executive committee. In addition a general census for the country’s productive cooperatives was conducted on July 1926.

On the Histadrut Labor Federation‘s third conference it was decided upon the establishment of the Cooperation Center for Craft Industry and Public Services. On February 1928, the Cooperation Center began its activity, within which it has centralized 52 cooperatives. The Center’s work intended to focus on two fields: the economical field and the organizational-social field. But due to the heavy financial crisis, during the first few years most of its activity was mainly focused on the financial field.

The Cooperation Center which was only established had to act in order to stabilize the existing associations – to coordinate revision arrangements within the associations and between itself and Bank HaPoalim and the Central Bank, to act in order to achieve better acquisition terms for the developing transportation branch, to attain work for existing cooperatives of other labor sectors, to create permanent relationships with credit establishments and to solve credit problems in the short run and in the long run. The essence of the Center’s activity was dictated by the surrounding reality of life, which as a result dictated a policy of reducing the cooperative’s dependence on the Histadrut‘s establishments and stabilizing their economic independence for their recovering.

The Center’s independent approach gradually resulted in weakening its force within the labor party, but also within the cooperative productive-service oriented associations. On the one hand the Center dissociated the relation between the associations and the economic establishments of the Histadrut, but on the other hand its ability to assist them was rather limited, which is why many of the cooperative plants had to address external financing agents, which increased their financing expenses and gradually damaged the social principles that initially guided them, such as: self work (with no hired workers), keeping the member’s shares in low value with no distribution of the accumulating capital.

The Cooperation Center‘s Conferences

The first conference of cooperatives in Israel was gathered on 1930 in Tel-Aviv. During this conference it was decided that new cooperative associations would be verified only after they establish a firm financial base and with strictness in their choice of members. It was also decided to examine the possibility of establishing cooperatives in other occupational branches, such as labor kitchens, loan and security funds, consumer associations and condominiums. During the same year, HaMashbir underwent reorganization and the Central Mashbir was established; all organization, revision and guiding activities within the field of consumer cooperative were transferred from the Cooperative Center to its handling.

The second conference of the Cooperation Center was conducted on 13.2.1933. Within the framework of this conference it was decided to establish the Cooperative Fund in order to assist in strengthening the existing cooperatives. It was decided that the fund’s capital would be based on percentage allocation from the cooperative associations’ net profit and from an annuity from the Histadrut‘s fundraising.

At the end of this year the British Mandate Government published the ‘Cooperative Association’s Order’, 1933 which substituted the ‘Israeli Cooperative Society Order’ of 1920. The innovation of this order was that it granted legal recognition to the central associations and to the revision leagues.
In accordance, the conference decided that the Cooperation Center will be verified as an association for cooperatives’ organization and revision. This decision was verified by the government.

The third conference was conducted on December 1934. It constituted an establishing meeting of the Cooperation Center for Craft, Industry and Public Services – Revision League Inc. In addition, the conference decided that the Cooperation Center will adopt the Constitution of Cooperative Labor which was accepted on the Histadrut‘s 29th council on July.

During this conference Israel Ritov was elected as the Center’s chairman. He served in this office until 1969.

The forth conference was gathered on 1938.

One year after this conference, World War II started. The executive committee’s struggle with the hired work issue in the cooperation caused a crisis in the Cooperation Center and raised the concern that the transportation cooperatives would depart from it. This crisis ended with a compromise which was presented in a special sitting of the Histadrut‘s council according to which, hired work in cooperatives that belonged to the Histadrut was negated, but it was determined that the process of banishing hired work will not be accomplished by way of evicting hired workers from their place of work and damaging the market.

The fifth conference – on 1949 there was an accelerated development in cooperative production. The number of cooperative associations that belonged to the Cooperative Center was tripled in one year. The gathering of the fifth conference of the Cooperation Center was marked by the establishment of the state of Israel, by the cooperative-productive association’s volunteering to assist the national effort of immigrant absorption and by the integration of liberated soldiers in the market. Its decisions were directed accordingly: the Cooperation Center established cooperatives with the assistance of national and public agents towards practical deployment for immigrant absorption.
This activity resulted in the tripling of the number of cooperatives within three years and with the doubling of the number of workers.

Half of the cooperatives that were established by the Cooperative Center during the state’s first decade were later taken apart, and yet it seems that during these first few years the Cooperation Center had an important role as an absorbing establishment for many. The cooperative system’s partnership in the national effort after the War of Independence was also manifested in the establishment of productive and service oriented cooperatives in cities and in settlements that were only founded – including bakeries, locksmith’s workshops and carpentry workshops. By the end of 1952, the productive-service oriented cooperation has reached its full growth and numbered about 391 cooperative associations.

The sixth conference – was gathered on July 1962. This conference dealt again with the problem of hired work in cooperatives and with their requirement from the government to legislate the cooperation law. In addition they claimed to establish cooperative financing means in order to organize new cooperatives. At that time the Center had 204 affiliated cooperative associations.

On 1966, an economic program, named the recession program, was introduced to the Israeli economy. The entire economy was decelerated, investments were reduced, unemployment rates were high, production and exportation were low and profitability decreased sharply. This crisis damaged severely the productive-service oriented cooperation. Between 1966 and 1968 only 6 cooperatives were established and 43 were taken apart. The number of employees also decreased due to extensive dismissals. Trying to deal with the cooperation’s state, the labor party appointed a committee headed by MP Shmuel Shoresh in order to check the state of the productive-service oriented cooperation.

The seventh conference – gathered on December 1968 – the conference adopted the conclusions and recommendations of the Shoresh committee. These recommendations included a conclusion regarding the formation of the secretariat and of the Cooperation Center, strengthening the bond between the Cooperation Center and the labor party secretariat, adopting professional guidance and reducing the employment of functionaries, as well as promoting national branch organization and local cooperative organization in order to promote the cooperatives’ working and production methods. Most of the committee’s recommendations were not actively implemented. In addition, the conference demanded from the government an increase in its financing involvement in the cooperative fund in order to support and develop the cooperation. Within the framework of this conference a new secretary general was elected for the Cooperation Center – Israel Ziv (a member of Dan cooperative). Nevertheless, the productive-service oriented cooperation did not recover substantially. One year before the eighth conference, there were 151 cooperatives (as opposed to 158 on 1969).

The eighth conference was gathered on June 1973 and did not deviate in its discussions from the subjects that were dealt with on the cooperation’s previous conferences. On 1977, the year of changeover, the labor party’s representatives no longer held the reins of government. For the next seven years, the succession that connected the government with the Histadrut was cut off and the national support of the labor party’s economic plants and the civic cooperation that was included in it was reduced. The number of associations during this year was reduced to 142.