THE COOPERATIVES IN YUGOSLAVIA'S PLANNED ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600350046-2
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: August 22, 2011
• Sequence Number: 46
• Publication Date: October 6, 1950
• Content Type: REPORT

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PUBLISHED
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CLASSIFICATION RESTRICTED REST~~C~'~J -
FOREIGN DOCUMENTS OR RACIO BROADCASTS CD NO.
CENTRAL INTELLIGENCE 11GENCY
INFORMATION FROM
Yugoslavia
Economic -Agriculture cooperatives
Doctoral dissertation
Zurich
Sep 1949
7NH DOCU^[NT CORTAIM IN/ONNATION AT[[CTIM 7NI MATONAL Dl1[{f[
0/ TM[ UNIT[D [TAl[{ tI1NIN TN[ {GNIM 01 [[ryONM[ ACT [D
Y. {. C., {I AND fl. M AN[ND[D, Ill TNAN1NIf{IDN OA TNt NtTRAT10M
Dr lu coan{n IN ANT rANNU r~ AN uNAUTNO{n[D ra{for a rw?
NulnD n u{. w{oournoN Dr rxu roar a rNOxnmo.
INFORMATION 1949
DATE DIST,6 ~+~' 1950
NO. OF PAGES 23
SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED INFORMATION
SOURCE Das Genogsenschaftsaesen in der P1aL-wirtschaft Jugoslsviens.
~,COOpT'RATTVFR Tg YUGOSIseVTA'S PL?~ANk~ EGOAOMY:
Dr Ranko M. ~rasic
"' `I:`~Z'LGI?T,ATIOR COAERIIQG COOPERATIVES
The 1937 law on cooperatives remained in force-during World War II in occu-
pied Serbia. In the independent state of Croatia the law aldo continued to apply,
with one .additional statute of?4 Dec 1941, according to which the'Mi>7'l.ster of the
Interxpr-vas empowered to dissolve acooperative-on his own judgment, if this or-'
ganization "exceeded the sphere oY activity allotted to it by law and by its stat-
utes." There was no appeal against a dissolution order by the Ministry of the In-
terior. The regions of Yugoslavia which had been annexed by Axie powers were sub-
,ject to the appropriate laws in force in the annexing rountry.
The law of 1937 was reinvoked after q~8cmetsGpgfi~ou,++andr~Od3AOildti'~ta,1.#d~adltiil
the passing of-the uew FLSdamental Law ~a;~'c~OuTt+1~.1~+1-~,~kfly6j-~lbefuaate
valid on 31 July 1946. This law is the basic `law covering the entire country. It
laid down.fwidamental regulations on coops;atives and left the Federative Repub-
lics the right to formulate their own regulations in accordance with the basic
law. Legislation by the Federative ~'epublics was to b~ limited to technical pro-
cedures, but not to infringe-upon the regulations?stipnl.ated by the basic law.
Accbrdin~ to, this basic law, the legislation of the individual Federative Repub-
lics is to cover the following points: - - ..
.Article 8: The procedure iacfoiindiag cooperatives, th-e statutes of the co-
operatives, and the entries in-thfe cooperative registers. -
Article 10: The admission, expulsion, and resignation of members to or from
cooperatives. ,,
Article 18: The types of asse'"?~b~liea; their.- authority ancj. their convocation,
the method of making, decisions at assemblies, and the voting procedure.
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Article 2~: The dissolving of the cooperative as Qecidad by .the assembly,
fusions, ~ruptcies of cooperatives, dissolving of cooperatives by decision
of the state authority which approved their ilouadatioa, the process oP disso-
lution, the use of the assets of a cooperative .dissolved either by disberiding
or by bankruptcy. ,
Psticle 33; Thee qualifications of auditors, their rights anc} duties, aud-
lting procedures, the method of handling auditing reports, manner of payment
for auditing.
Article 31??: Fines.. The preamble formulates the reasons for the enact-
ment of'the law: "To strengthen and to accelerate the provisions of the Conte
stituti:on (Article 17) on special care and assistance to people's cooperatives,
"To strengthen and accelerate the dAvElopmenti~of cooperetivesiin.;oldEr;,to._mtike
them into p, strohpsupport of the State for the protection of the interest s. of
the working people,
"To utilize the economic potential of agriculture and dmall trades beneficially
by use of cooperative organizations, in order to integrate them into the general
national economic plan,
"To give special protection to small and to poor peasants,
~~To reorganize properly?theusupply o~''th~'Droadest mass of th& pempl~."
''Cooperatives are voluntary economic organizations of the working people,
which by their cooperation toward developing the national economy link the farm
"By realization of these tasks, the cooperatives support the State in its
program of increasing the wealth oP the broadest sections of the people.
"The cooperatives are a support of the State in carrying out its economic
plan and in strengthening the union between urban and rural workers. Th9y are
an instrument of the spirit of general enterprise of the people, of accounting,
and of control in the economy."
trop td cooperatives with shares, there are also those without shares, but they
The law recognizes cooperatives in the following-ppheree of activity: snpply~
sales, consumption, production, processittg, agricultural production, credit, hous-
ing, and health: A sp.:cial subgroup of the agricultural production and process-
ing cooperatives are the farm work cooperatives, which carry out point cultivatimn
of the land. Since they are covered by a number of special regulations, they
will be discussed in detail below.
Founding of a Cooperative
For the purpose of Pounding a cooperative, the founders must submit the draft
of the statutes to the executive committee of the District Peoples' Council. If
the draft is approved, a constituent assembly of the cooperative is called for the
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purpose of approving the statutes, as approved by the authorities, and for elec-
tion oP the administrative and supervisory committees. This means that the lav
has instituted a system of licensing cooperatives, for constituent assembly ~f
the cooperative may apt exercise unlimited freedom is the drafting of the stat-
utes, and would have to request approval by the authorities again if it xere to
make any changes in the draft approved by the authorities. The regulations on
the content of the statutes of cooperative are determined by the ind~-vi dual Fed-
erative Republica.
Legal Status of Cooperatives
Although the lav noxhere'gives the cooperative the legal status of a per-
son, the lav could be interpreted in this sense.. ThP lav restricts itself to
the clause:
"A cooperative beco~mea s legally authorized organization and is alloyed to
begin its activities as soon as it has been entered in the register of coopera-
tives."
This clause was supplemented it the Official Gazette of 24 Jan 1947 by the
interpretations
"Provided that the activity of cooperatives aevelops within the scope of
their approved statues, special:permission for carrying out such activities is
not required."
Membership
While the regulations covering the admission and release of members are
left to the. individual Federative Republics, the basic lay states that member-
ship is to be on a voluntary basis anal that members are all to enjoy equel rights.
It is alto necessary, in order to become a member according to the lay, for an
applicant to be over 18 years of age and to be in possession of full political and
civil righti. The law, like that of 1937, recognizes three types of loss of mem-
berships voluntary resignation, death, and expulsion by decision of the admini~-
trative committee.
Shares
On1.y.Articles 11 and 13.contain regulations covering this aub~ect. The Yormer
atatesa "oa entry into a cooperative xith shares, members moat sign for at least
one share, the amount of xhich ie determined by the statutes. While they are
members, the shares may not be returned or mortagaged or used as collateral for the
liabill.tiea of the members." '
Article 13 stipulates, "shares are returned to members xhoae membership has ex-
pired only after their liability for the liabilities of the cooperative hex ex-
pired." ,
Liability
The lax gives no dgYinite regul~tiona on this subject.. Liability ie met~-
t~.oned only as a basic concept, according to which a distinction ie made between
cooperatives with limited an,d unlimited liability,,ae in the shove Article 1~,
covering paymea~ of shares pending the settlement of liabilities. The lay dose
not contain any specific regulations bn the legal status ofliability, its nature,
or when it is to be invoke3.
Organs of Cooperatives
The law of 1946 recognizes the same three organs as the law of 1937. The
regulations covering the meetings, the administrative co?-miittee, and the super-
visory committee are, on a whole, only a shortened version of the 'equivalent?
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por*,icne ofr,.he ].937 law. The reason for the condensation of these regulations
is probably the fact that Articles 18 and 'r.0 of the 1946 law state that the de-
tails of these regulations are left to the discretion of the Federative Republics.
The pr.incinles, however, are the same as those of +,he 1937 ].aw.
Bookkeeping
Article 21 covers the financial records of the cooperatives. Ao mention is
.made in the law of the manner in which administrative records are to be kept.
Article 21 also gives s shores resume of the manner in which the annual statements
are to be made out.
Profit and Loas Funds
The net profit is .treated according to the same principles as in the 1937
law. The only difference is the fact that the regulations are now all covered
in one single article, Article 4, while the same references were distributed in
the 193? law throughout several articles. Otherwise, there ie no change what-
soever.
Article 22 orders the establishment of a reserve fund, but does not estab-
lish a minimum rate of endowment for this fund, as was the case in the 1937 law.
Like the ly3? law, this law permits tflie. es*abli~ehmhnt bf ~~+.hex? thtul.~s,;. delegating
detailed .le3ielation. oh this pointi~.bo 'tti-e.3ndividual Federative Republics.
D'_aselution of Cooperatives
This subject is discussed in Article ^c2. The following methGda Gf dissolution
are possible, according to law: (a) by decision of the meeting of the cooplezative~
(b) flision, (c) bankruptcy, (d} legal order of dissolution isFUed by the authority
which gave permission for the founding of the organization. Instances (a) through
(c) are not discussed in detail. Instance (d) is not discussed in as much detail
as It was in the 1937 law, but? is covered only by the statement, "the State
authority which first gave approval for the foundation of the cooperative may
also decide to dissolve the cooperative fcr reasons according to law." (Artic~e 23).
Farm Work Cooperatives
Special attention ie given to this type of cooperative. The law makes .
reference to them in 12 of its 48 articles. These cooperatives are a creation
of the new Yugoslav economic system, and did not exist previouly, either in
practice or in law. Membership is restricted by law. A farm work cooperative
may be founded only by "persons whose main, occupation is agricLtii ~:'.>~. 2"~+si 532,819 9!:6ittskle fO:? this purpOB@y
"~. 'T~'~~t ~3':.^y. -i+e owed by 4 '+i'_:.?d p~:~tv mbr ?~e 3or3.re3 by th@ gtate to the cooper-
8.'.'~.~..P:w. .'.~ 6.~_..~..C e .;~~~ the: ~:3r~.Fx ao` +~,a site w_1.:. *F compensated by being giv@n an-
.`:'~~. p:... br:longing r":::i:.TS.~_..3 ...._ m&~:r.:ii_..,..,. .,c..t~:tr5t'O~L^~" Tt.ey ~.`?e tC be formed
p W r~ ~..:1.~~ :~V xr =_ _ ~ . _ t . _ .,_ . _._._,. ~ ` :,o:.F:.:?st~:?ya z.:ct-, _a lvcS:.Ei. Such blocks
~,}...~. _~. .._.cS"5" 'y,_... _ '':.y L'7 _._ 5R-."_.:'?lt~r }r._. Td~c.^_. ~'~.lE.' :'6fi'~RS.'9 Cf the ~BTId B.Tld
2NA' ...,.n2_"it.'.:u'E:,, cai2.:U.11 ._.. t~ .'vr.._aii...c' ,, .. _~?..;.';i. 5.T_. ~+.T~:eB.:Qe?~t~ aII eacchsnge Of
1;;.*.~. __ tc ?:.~ _... ~^'i=.d r. _~: by ~ coa~~~s~or. as9~ up o_? ;:.:, t:gr'czox:.st appointed by
r ~.r. ?~~~ ,. ,;?; .:; ~.;~.:_cu:~t~^~.~ c? t'"_- r'e:3~:;rat_v= RepLb~.,~, ~3 `oy on.e member esch of
L.Fgio-4.1 ~:>~ '` :~ d:.~t?~'_.~t ~.~~_1.ti.,. Tk.~ cam~i.~'SSen. is to dc~."_ai~' the technical
~ua;s*.i,c.-w ':r~'r-,~r~3 :~~. T:o~=.x^?:y.:~s;. ea%. t~' d?` v~m].r~ y?-:y msie~ug Fs}'~rta t,o be ma9.e for
ecchavge e ~.ttvr_,i.:} ?:b.e ?,~i::?i _ ~ t;~a clot ~ o b s ~:ch~Len oea not differ by more
i:bas 1 ~ p~.~c?~ ~t . Eo'we'3 er' ~ ' *, eho~~3 3e? ; s?+dc*' ~*;; c "All main cooperative associations of the
Fade*ative Republics are members of the main cooperative association of the FPRY
(>redarative People?a Republic of Yugoslavie),'~
According to this, there are today in Yugoslavia a total of seven main cooper-
ative saeociations or au3lting associations, sad one main cooperative association
prope*~ for the entire country, "the association of all auditing associations".
According to Article 28, the statutes of the main cooperative associations
+a:?e approved by the goveY~nments of the respective Federative Republics, while the
statutes. of the main cooperative asecciation of FFRY are approved by the federal
govez?~nent at Baler: de.
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Accor3ingly, ab it is pointed out in the law, control can be exercised only
by the administrative authorities. This control is not concentrated .n the hands
of one authority, but distributed among all ~a8miniatrative authorities. The
control begins with the local People's Council, and continues through the srez
and district People's Council, or rather through their executive committees. The
next higher control authority is the provincial People's Council, and above this,
the ministry of the Federative Republic which has ~ur~sdiction over the cooperative,
depending on its nature. As Article 31 states, "the ministries supervise the work
plans of the cooperatives and c'a~rge them with ~conom~ic and other tasks:"
The main point oP this method of control and the measures resulting there-
Prom ape discussed in Article 44 as follows:
"The State organs which are charged with the supervision of the cooperatives
sad t}e cooperative associations are ~entitaed to annul decisions merle by coopera-
tiv+5s or cooperative associations and to atop theLr activities, if these decisions
or activities do not conform to the law, the statutiea, or the orders of the State
authorities, or if they do not agree with the regulations of State planning and
with the production tasks with which the cooperatives are charged."
~-' The highest control authority is the Commission for Cooperative Affairs in
the Presidium of the Government of the~FPRY. This body was first created by an
order of 28 October 1945 under the name of Commission for Cooperative Affairs in
the Economic Council, but this later organization was dissolved by an order of
16 Feb 1946, and its jurisdiction was thransferred 'to 'the forme:. Its ~uriadiction
rovers the following points: to coordinate the methods whereby the individual fed-
rT~eJ. %inistries handle all queatioz?g regarding cooperatives sad their organization;
?tc~ coo~^dinate cooperative propaganda; to supplement the personnel of the coopera-
*.?ives; to. propose to the Federal Government all measures necessary for the inte-
gratl.on of cooperatives into the general Static economic plan; to handle all matters
delpgs,ted to the commission by the Federal Government.
The Commission consists of the c}~^i*mAn, a vice-chnirmany a secretary, and an
indEfinite number of members, and is directly supervised by the Economic Council
oE'the Federal Government.
By order of 27 Jan 1948, the name of the Commission was changed to Committee
for Cooperative Affairs of the Government of the FPRY. The only other changes in
the order were oP a technical nature, while the basic principles remained the sam e
aE those laid down in 1946.
The relation between the State and the cooperatives became even more clear-
ly defined when the law for the Five-Year Plan went into effect. The Committee for
Cooperative Affairs was charged with the following tasks:
"Realization of the directives of the Federal Government Yor assisting, devel-
oni.ug, r,.nd strengtheninr; the cooperatives and cooperative institutions,
"P;~aning work resulting from the relation between the State and the coopera-
tives, and support of -the cooperatives in carrying out such work,
"Supplying the cooperatives with technical equipment, especially for the
mechanization of agriculture.
"Instruction on work proceduree and supervision of the cooperatives and cooper-
ative organizations."
The composition of the committee remained the same as that of the two commis-
sions which had been operating previoualy. As was the case with the latter, the
committee also' . hah_ ~.brhnahes in: each ~~ederativel Republic.. Eao~i~'pt~a'6ic~~&!n
of thA Federative Republics has a committee'~for coopererative affairs.
~ESr~1er~~
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Hrnrarer, tbe~ee bodies are not mutually independent, but are controlled by the
r..ommi*,tFe in the Federal Government at Belgrade. The Institution is federal only
i.n its eppetu~nce, while in reality it is run on a strictly centralized basis.
CooPerstive Registers
The, regist~,rs,are not defined by law and their form is not specified;
neither dose the l.aw atipula+e what entries are to be made in the register.
It only determines what bodies are to keep the register. They are:
'[?~. local executive committee of all cooperatives, and the local and re-
gional business associations; The executive committee oY the vs~.n cooperative
association of the autonomous area end t~P the business association of the auton-
omous. s~s?ea; The com~ission or the committee for cooperative affairs of the
main r_coperative association of the Federative Republic and the business seso-
ciatson of the Federative Republic; The commissicn or the committee for cooper-
ative affairs of the government of the FPRY, of the ma:.n cooperative association,
and of the cooperatives' business associations whose activities cover an area
.Urger thsn one Federative Republic.
The law, like the 1937 law, contains a section dealing with the creation
of a fund for the support of.cooperarives. The difference between the corres-
ponding sections of the two laws is th.e regulation in the new law in which the
,,jurisdiction over these questions is assigned to the Minister of Finance of the
Feders.! government, who is charged with "regulating the establiai~ent and the
handling oP these YSu.+dp, and their .disposition" (Article 40).
The privileges are restricted by Article 35 to only "Those cooperatives
whl.ch by proper cooperative activity according to the statutes and by their
contribution to the performance of the general State economic plan fulfill the
tasks and.+.he role assigned to cooperatives."
Thy privileges accorded to cooperatives by law are the following:
1. Obtaining of cheap credits for the purchase of equipment, and expert gui-
dance of the key personnel of the cooperative by the State (Article 35)?
~~
~. Priorifiy for payment over all other creditors from debtors' possessions
in receivership (Article 36~.
3. mcE:mption from use as ^ollateral for other debts of goods purchased en
reedit from the cooperative, until the cooperative }~ been paid for them (Art. .
icie 37).
`+. ~+ramption from all fees charged for founding a cooperative, approval of
its statutes,, and certification of its books (Article 39)?
5? ~"~ exemption for Paxm work cooperatives.
6. Regarding cooperatives? property as public property, making offenses
comrtLi.tted rgain8t cooperatives' property (theft, embezzlgmeAt~ willful damage,
etc.) liable to prosecution under the law for tha..grotection cf public property.
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r,^~ec.~~..".F'.asa~~sud Le~~41 P~ec~iurre:~
'Pne 1.3:a cove;ra thts subject only by placing r.oopea?~atives? p^operty on an
~~;;.~;. bs?31? with general public pr?opeaty. The cffe:n3et+ ant? their classifications
ano corTere:. tyr !hs .legislation of the ind!viias.i EedcVativt Republica.
.A..i rthrr l~gi?.la:*_ion referring to cooper."',~ti~Paa wa.e s~.ipereede3 h~ this law,
~~^. ? tY _: d,-te of sff'~ctivenesa or the ^>v i.3.+~- All ccoperatives had to be adapted
to ronfo.*m faith +.he new law-xithin si.x months rf that date. Those that did not were
+,o he dAsEOI`red. The Cem~oittee for Ccx~persti ve Affairs c? the Government of the
FPRY was Qi.ven ,Jur'Adiction ovew the disposal. of the properties of cooperatives
dissolved acccrding to this regulation.
Thr_ va.; r:3,3 an aquai. effect on the general economic situation, on the social
a--~;:~,tx:e. ,Seri on the coopewative system in Yugoslavia. The casualties included
msry 1esie^~a r.f cocpe~ativee and the c:oopesativea came out of the war with theix
ranks roasideratly thinned. F~a~he:.more,, t're l.aw cf 1937 would have enabled the
c,ocpw:r,s,*_ ~vrA to double is namb~? and iv membership9 had the war not inte_+?rupted a
peacaf~~i ieve:lopmsnt of k yea~?a. Thin deve:lopment?, had it continued, would have
beer, me:~e. iy:;,am;_c X19. m?,xc:a me*?~ fgr??~~?eaching +h:.an ~~thirg which ha,3 taken place
Tnr ~'..a~ae.a LroiYght a'~out by the Commurl;t?s in Yugoslavia were fast as thorn
c?ap;?t :.~. .s ~ i~;:.,~ o.p trs coopax^tive moveme~}t. as they we*?e .,~ ~tl. other sections
cf ~o:;i~Zy. 'teca~a tbe3e changer wr.,re arcomplir~hcd':~y revolutionary means. The
c:onp?S5,?;~vrC:'., ve.~lceued mate~?Yally 8nd in m3nj706TC: by the War, could not resist
i;~. ?.~,:. ::a:,;=,?~'....Hx::h wa? :ccpected on t'he gr~,:ndr of ?~tw ideolooic~ basis. Fi_~st
~,f ~:i, 1_i1tF .a ; ": the: W e:at of Yugoal:~viaY they weave caught by aurprise~ and second,
~~ 3:n;rl.?:.;:,, r'r::tier aqy r=sistavcF 5g,~1^.Et the Communists with their we11~
~~,7~ax t a.: ~ ~.c? ;nd p*?scticea wrnzl3 have amounte3 to aracr. under ~ conditions.
Tb.a .9tT.ir..?,.ie: o` the Regime TaWat?d the Cooperatives
7'.e~ ~?:_.~_ai~.t;.on of 9 March 19'5 by t1_? P'edersl ~everBm~t was the first in=
lies? i.a^. o? 1.ra r.oope~rative pzo~~gmy
"ai