through their wholesale plant.

The capital was solicited chiefly through labor unions. Elaborate
promises were made to prospective shareholders: they were to have a
local store in their neighborhood, dividends were to be paid regularly,
goods could be bought at prices below those prevailing at the chain
stores and the local group was to have local autonomy. As a matter of
fact the ultimate control was always in the hands of the few promoters
in Buffalo.

These men had two large sources of revenue from the many transactions
carried on. They exacted from each member five dollars "for organizing
expenses," and they took a commission on all the business handled
through the wholesale.

By the spring of 1921 some of the members in one or two centers became
suspicious, and began an investigation. They found that stores were in
many cases grossly mismanaged. One manager had absconded with $600.
Organizing or promoting expenses in some places were as high as
thirty-three per cent. The weekly newspaper was discontinued for lack of
funds. Some wholesale merchants finally refused to give further credit
to the Buffalo headquarters and at the end of the first year of
operation one of the office force confided to a friend that there was a
ten thousand dollar deficit. When bankruptcy was finally declared in
midsummer, the promoters were not to be found. The principal organizer,
an ardent friend of labor for many years, had been completely duped by
these promoters and was left penniless and alone to face hundreds of
investors. Cooperation was put in disrepute for thousands of men and
women in dozens of cities and towns throughout the State.