These are notes from the husband wife team of Whyte, “Making Mondragon.”
Loans to the Co-op
When the management and the State of Spain refused to support the transformation of a failing capitalist firm, Union Cerrajera, into one where workers gained owernship shares, five pioneers—Luis Usatoree, Jesus Larranaga, Alfonso Gorronogoitia, Jose Maria Ormaechea, and Javier Ortubay—told Father Don Jose Maria Arizmendi they were ready to create a worker cooperative.
“In an economy that had no precedent for such a phenomenon, they were determined to be collective entrepreneurs. There were no legal provisions for collective savings accounts, so the five men put their savings in individual accounts and trusted one another to contribute these personal funds when the time came to make the collective investment.
To riase more funds, Arizmendi devised a strategy to reach the community that had supported the creation of the earlier social welfare and educational projects…an old and well established social custom, the chiquiteo. Every day after work groups of friends gather on the streets of Mondragon and move along from bar to bar, sipping wine and conversing with the patrons and bartenders in each establishment. Through these informal channels, the five men spread the word that they were planning a copoperative firm and that they were looking for help from the community in the form of loans. Arizmendi and his associates also used all their personal and organizational contacts to publicize the project. At this point they could not tell potential lenders what the firm would produce, where it would be located, or how it would be legally constituted. Nevertheless, they built on a record of succesful community organizing and their great personal prestige as the first university-educated children of blue-collar workers. With nothing more to go on than the personal promises of these men, about a hundred people in the community resonded with pledges, basically as an expression of faith in the five pioneers and in the guiding hand of Don Jose Maria. Including the commitments of the five founders, 1 million pesetats(about $361,604 in 1955 dollars) was pledged-0-an enormous sum at this time in a working-class community of Spain.
Start-up Co-op Firm’s First 3 Years Without Legal Constitution or Bylaws
November 12, 1956, is now given as the official date of the founding of Ulgor, the first worker cooperative in Mondragon. It also marks the beginning of what the founders call ‘The Cooperative Experience of Mondragon.’ Ulgor(the name was taken from the first letter or two fo the five founders’ names) functioned for more than three years without a legal constitution or bylaws…The faith the men had in one another and in Don Jose Maria enabled them to work together without knowing the form their organization would take.”
From the outset, all full-time members of the general assembly had the vote, but Ulgor began with a system of weighted voting. Votes in the general assembly were linked with job classification, and managers and supervisors thus had more votes than the rank and file. Underlying this policy was the belief that those contributing more to the firm should have greater influence. In the early years this provision was abandoned. Because the number of workers lower on the pay scale far outnumbered those at higher levels, weighting the votes made no difference. The inequality of the original policy clashed with the cultural emphasis on egalitarianism, and the memnbers recognized that it vioalted the traditional principles of cooperatives, which were well known in Mondragon.
(to be continued)