In Whose Interest?: Quebec's Caisses Populaires, 1900-1945 9780773562479

Table of contents :
Contents
Illustrative Material
Preface
PART ONE: THE PETITE BOURGEOISIE AND THE POOR
1 The Counterattack of the Petite Bourgeoisie
2 Attracting the Masses
3 Investing the People's Savings
PART TWO: CHALLENGE FROM A NEW CLASS
4 Centralization
5 Dealing with Outsiders
6 The Role of the State
7 Conclusion: A Reflection of Quebec Society
Appendix: Caisse Members and Their Communities
Notes
Bibliography
Index
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B
C
D
E
F
G
H
L
M
N
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P
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Citation preview

In Whose Interest?

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In Whose Interest? Quebec's Caisses Populaires, 1900-1945 RONALDRUDIN

McGill-Queen's University Press Montreal & Kingston • London • Buffalo

®McGill-Queen's University Press 1990 ISBN 0-7735-0759-0 Legal deposit third quarter 1990 Bibliotheque nationale du Quebec

Printed in Canada on acid-free paper This book has been published with the help of a grant from the Social Science Federation of Canada, using funds provided by the Social Sciences and Humanities Research Council of Canada.

All illustrations are from the Confederation des caisses populaires et d'economie du Quebec.

Canadian Cataloguing in Publication Data Rudin, Ronald In whose interest: Quebec's Caisses populaires, 1900-1945 Includes bibliographical references. ISBN 0-7735-0759-0 1. Credit union - Quebec (Province) - History. 2. Banks and banking, Cooperative Quebec (Province) - History. I. Title. HG2709.Q8R83 1990 334'.22'09714 C9O-O9I25-X

This book was set io'A on 12 Janson regular by Nancy Poirier Typesetting Limited (Ottawa).

To my best friend

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Contents

Illustrative Material viii Preface ix PART ONE THE PETITE B O U R G E O I S I E AND THE POOR

1 The Counterattack of the Petite Bourgeoisie 3 2 Attracting the Masses 28 3 Investing the People's Savings 51 PART TWO CHALLENGE A NEW C L A S S

FROM

4 Centralization 77 5 Dealing with Outsiders 104 6 The Role of the State 120 7 Conclusion: A Reflection of Quebec Society 142 Appendix: Caisse Members and Their Communities 147 Notes 151 Bibliography 175 Index 183

Illustrative Material

PLATES FIGURES

following page xviii i Percentage of Quebec Catholics Belonging to Caisses Populaires, 1916-46 29 2 Percentage of Catholics Belonging to Caisses Populaires: Five Communities, 1916-46 35 3 Distribution of Assets in Caisses Populaires,

1945 71 4 Structure of Caisse Populaire Hierarchy, 1900-32 88 MAPS

TABLES

i Locations of Five Caisses Examined in This Book 20 2 Area Served by CPIC in Eastern Montreal 24 i CPL: Occupations of Original Members, 1900 16 2 CPL: Members and Population of Levis, 1913-45 37 3 CPIC: Membership and Population of District, 1911-45 37 4 Rural Caisses and Property Values, 1910-45 39 5 Rural Caisses: Property Values of Administrators, 1910-45 46 6 CPL: Loans Secured by Promissory Notes, 1912-45 56 Ai CPL: Total Members and Members in Sample 148

Preface

Quebec has only recently come to be be seen by its historians as a society fundamentally divided along class lines. While historians of Europe and Englishspeaking North America have long accepted the concept that the relations between different groups in society are governed largely by their place in the economic structure, this notion has gained widespread respectability among Quebec historians only in the past decade. Thanks to Louise Dechene, Allan Greer, Paul-Andre Linteau, and Brian Young, we now have a much clearer picture of a society in which feudal lords used their class privileges to exploit the habitants who lived on their seigneuries, in which the social relations connected with feudalism gradually passed away under the pressures of industrial production, and in which land speculators bolstered their place in an increasingly urbanized society with the hard-earned dollars of the working class.' These class-oriented interpretations have come as a breath of fresh air for a historiography that was too long obsessed with the question of the survival of the French-Canadian nation. Prior to the Second World War, Quebec history was focused largely on the search for heroes in the past whose actions might be held up for emulation in the present. During the quarter-century following the end of the war, the major debates between Quebec's historians became more sophisticated in terms of method, but the point of the exercise was still largely to pass judgment on such questions as the impact of the conquest or the origins of French-Canadian nationalism. In the treatment of these issues, however, French-speaking Quebecers were rarely perceived as divided by cleavages grounded in the profound economic changes of the two centuries since the arrival of the British.2 This older preoccupation with nationalism has not been completely replaced with a newer orientation based on the class structure of Quebec society; there simply has not been enough time for all aspects of Quebec's past to be reconsidered in a different light. Accordingly, there still are various important issues

x Preface

in the history of Quebec which have been written about almost solely from the nationalist perspective. A case in point is the history of the co-operative savings and loan societies of the province, the caisses populaires. The caisses represent a major social and economic movement of twentiethcentury Quebec. The first one was established at Levis, across the St Lawrence from Quebec City, in 1900. At the outset this co-operative managed to entice only 128 people to acquire a five-dollar share that would make them eligible to deposit their funds in the caisse and apply for credit from the institution. At the end of that first year, the assets of the Levis caisse amounted to less than $5,000, hardly enough to suggest that by 1986 there would be total assets of over $23 billion for the nearly 1,400 caisses then in operation. While the rest of Canada was leaving the bulk of its savings with the chartered banks and only 15 per cent with credit unions, in Quebec the latter proportion exceeded 33 per cent.3 This figure takes on even greater significance when one realizes that the caisses have proved attractive almost exclusively to the French-speaking population of the province. Within Quebec in general and Montreal in particular, it is frequently possible to determine whether a neighbourhood is predominantly English-speaking by noting the absence of a caisse. Based on the assumption that only French-speaking Quebecers are members of caisses, then over three-quarters of this population belonged to one of these co-operatives in i986.4Just as French-speakers have displayed a certain affinity for the chartered banks run by their co-linguists, so too have they strongly patronized the caisses populaires.J Given both the manner in which the caisse populaire movement developed, as one of the most important French-run business enterprises of the twentieth century, and the expressed intentions of the man most responsible for its establishment, it is little wonder that the history of the caisses has been written largely in the nationalist mould described above. This orientation was certainly encouraged by the founder of the institution, Alphonse Desjardins, who constantly sought support for these co-operatives by noting the need for Frenchspeaking Quebecers to have financial institutions that they could truly call their own. This message had a certain attraction at the turn of the century for Quebecers who saw English-speaking capitalists increasingly taking control of the resources of their province as monopoly capitalism set in. Accordingly, Desjardins called for creation of an institution with resources that "would be under our control and always at our disposal."6 In the search for figures from the past who were worth emulating because of their efforts to assure the survival of the French-Canadian people, Desjardins became an attractive subject for historians of a nationalist bent. For instance, in the preface to a 1950 work Desjardins was described as "a devout Christian, a man of integrity, a hard worker who was methodical, cautious and selfless."7 This hagiographical style was also evident in a 1962 book that had as its title Alphonse Desjardins, fondateur des caisses populaires, un modele pour la

xi Preface

jeunesse* Even in a publication otherwise much more analytical, Yves Roby also fell prey to the tendency to place Desjardins on a pedestal, noting that he "deserves a place of honour among the great men of our nation."9 It is not that Alphonse Desjardins is unworthy of the praise that has been lavished on him. Rather, the emphasis on the leader has distracted previous authors, many of whom were personally tied to the caisses or whose work was commissioned by these co-operatives, from fully appreciating the social and economic context within which the caisses were established and operated.10 Even those relatively few historical studies of the caisses that have managed to free themselves of the personality of Desjardins have had difficulty in inserting these institutions into the larger world in which they functioned. This institutional focus is particularly apparent in Jacques Lamarche's, Le saga des caisses populaires. As the title suggests, this is a heroic account of these co-operatives from their humble beginnings to the present. In place of any real analysis, Lamarche offers an awe-inspired account of the growth of their membership, assets, and services. Nowhere in his narrative, however, does one have a sense that this was an institution that had to grapple with a changing social and economic environment. In a similar manner, several recent histories of particular parts of this province-wide movement have done little more than recount facts and figures attesting to a constant march forward." Even Milton Bauer's highly useful analysis of the financial affairs of the caisses between 1932 and 1950 is limited ultimately by its removal of these institutions from the circumstances in which they functioned.12 One comes away from a reading of most works dealing with the caisses poorly informed as to what sort of role they played in either the social or the economic life of the province. In a similar fashion, a preoccupation with the leader and the institution has left its mark on much of the literature pertaining to the history of co-operatives outside Quebec. Concerning the co-operative movement in the Maritimes, for instance, RJ. Sacouman has bemoaned a literature that has concentrated "upon generalized distress and dynamic leadership ... to the neglect of the structural factors which may explain receptivity to the [Antigonish] Movement's cooperative programme."'^ This same criticism could just as easily be applied to the major general history of the co-operative movement in English Canada, Ian MacPherson's Each for All. Across the years 1900-45, the period of this study, MacPherson emphasizes the role of leadership, but with little explanation as to why the leaders chose to become involved in the first place other than a desire to help their neighbours. As for the institutions themselves, MacPherson describes their ups and downs, but without any real analysis of the economic environment that allowed success in some places but not in others. The major overview of the history of credit unions in the United States is also marked by a narrowly conceived institutional focus.'4 According to Andre Gueslin, the same could also be said about much of the literature pertaining to the history of credit unions in Europe.

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He found that "many works have been devoted to this subject, but they are largely incomplete and suffer from a decided institutional bias."'* While much of the literature dealing with the history of co-operatives beyond Quebec has many of the same shortcomings as that pertaining to the caisses populaires, several studies radically depart from the norm. In addition to criticizing his predecessors, Gueslin, for instance, has provided a penetrating study of the emergence of credit unions in nineteenth-century France. What distinguishes his work is its effort to explain the social and economic forces that pushed certain men to take the lead in establishing these institutions. Without a trace of the hagiography so powerful in Quebec, Gueslin identifies these leaders as members of a traditional rural elite that feared the loss of its social standing should French farmers move to the cities because they lacked credit to keep their farms afloat.'6 In more general terms, Brett Fairbairn has tried to cut through the strong moral tone in many works that stress the commitment of the co-operative leaders to the masses. As he notes, for instance, in terms of the German experience, "Cooperatives were an effort to preserve a vanishing middle-class reality, rather than an attempt at social progress in uplifting labourers."'? Looking beyond the leaders, Sacouman has also tried to integrate the history of co-operatives into the larger social and economic setting.18 By distinguishing those Maritime communities that gave rise to cooperatives from those that did not, he has found, contrary to conventional wisdom, that the poorest enclaves were less hospitable to co-operatives than communities with somewhat greater means."> What distinguishes these works is their insistence that the history of cooperatives must be grounded in the economic and social circumstances of the time. Vague references to the personal qualities of the leaders or to the growth of the institutions in question simply leave too many questions unanswered. In the Quebec context there have been very few studies that have attempted to view co-operatives, more particularly the caisses populaires, in terms of the interests of both the leaders and the rank and file.20 Earlier authors showed a certain awareness of the importance of class interests, as they never failed to cite Desjardins's insistence on the need for all Quebecers to join together for the betterment of what he called "the labouring classes." While recognizing this class distinction, these authors praised the manner in which Desjardins sought to play down class divisions by fostering co-operation, of course always in the name of the national interest. In this context, class divisions were never taken very seriously, since they were not the focus of the analysis, but rather an unfortunate situation that had to be overcome. The point has rarely been made clear in other works that Desjardins belonged to a particular social class, namely Quebec's traditional petite bourgeoisie of small businessmen, clerics, and professional men. These men, like their counterparts elsewhere in the Western world, were suffering from a loss of prestige caused by industrialization and urbanization. The petit bourgeois leaders of

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the caisses faced difficulty in convincing the poorest members of Quebec society to join their movement until the eve of the Second World War, by which time their own leadership of the movement was being openly contested by members of a rising middle class. Needless to say, these aspects of class relations in the history of the caisses have rarely been reported by previous authors. Rather than shying away from the class relations evident in the affairs of the caisses populaires, this study is oriented toward exploring them. In this fashion, the caisses can usefully highlight significant divisions within a society with a class structure that was itself undergoing significant change as Quebec's economy evolved. To pursue this approach, the body of this study is divided into two distinct sections. The first three chapters focus on the relationship between the petit bourgeois founders of the caisses and the poor of both urban and rural Quebec; chapters 4 through 6 explore the passing of the leadership of the movement to a new middle class that was emerging in the province and would eventually usher in the Quiet Revolution. More specifically, chapter i focuses on the factors that motivated Desjardins and his petit bourgeois colleagues to lay the groundworks for the caisse populaire movement from 1900 up to the death of "le fondateur," as Desjardins was known, in 1920. Chapters 2 and 3 then explore the extent to which the original conception of these men came to fruition up to the end of the Second World War. They had hoped to build a structure that would appeal to the large numbers of Quebecers in the "labouring classes," a term that was employed to take in not only the very poorest members of society, but also skilled labourers and even small businessmen. Clearly, however, the establishment of the caisses was oriented particularly toward appealing to the poorest Quebecers, as was evident from the rules put in place to govern the affairs of these co-operatives. In spite of the efforts of the petite bourgeoisie to interest the poor in this new institution, the results were hardly impressive. The difficulties of the leaders of the caisses on this account are discussed in chapter 2. They had imagined that the savings collected from the population would benefit the poor, but in practice, as will be shown in chapter 3, the caisses provided credit to their wealthier members and invested large amounts of their funds in the bonds of municipalities, school boards, and religious communities. Sometimes the investments went sour, forcing these independent and locally based co-operatives to develop a hierarchical structure to impose central control over the actions of individual caisses. This structure was hierarchical in the sense that certain powers were assigned to the regional federations that were established starting in the 19205 and to the provincial federation formed in 1932. Nevertheless, many leaders at the local level insisted that these federations were the creatures of the local credit unions from which all power emanated. In constitutional terms power resided at the lower levels of the hier-

xiv Preface

archy, but in practice it was becoming increasingly concentrated at the higher levels. This conflict between theory and practice helped fuel the debate over centralization which is discussed in chapter 4. The participants in this controversy were members of two very different classes, with opposing conceptions of the role of the caisses and of the future of Quebec society. Chapter 5 explores further the ideological differences between the members of these two groups by examining the role of these co-operatives as agents of nationalism and Catholicism. Finally, chapter 6 examines the clashes between the petit bourgeois founders and their middle-class rivals over the relationship between the caisses and the state. As this thematic organization suggests, this is not a narrow institutional study of the caisses populaires. Rather, it is an analysis of certain selected aspects of a co-operative movement whose history can shed light on larger issues in Quebec society. Accordingly, the conclusion stresses how the caisses can explain the relationship between the petite bourgeoisie, on the one hand, and the poor and the members of a new middle class on the other. Throughout this study, however, the role of class is not stressed to the exclusion of other factors. There would hardly be any advantage in exchanging a narrow institutional approach for one limited to appreciating the impact of class relations. While the members of the petite bourgeoisie were inspired to establish the caisses to a great extent by their desire to regain their lost place in Quebec society, they were also motivated by a genuine humanitarianism. As for the passing of the leadership of the movement from the petite bourgeoisie to the new middle class, the conflict pertained not only to questions directly related to class but also to other concerns, such as the political allegiances of the individuals involved. Anyone reading the province's newspapers during the first half of the twentieth century would have been hard pressed to know that there were significant strains in the relationship between the clerics, notaries, and lawyers who founded the caisses and the poor who were sought as members. By contrast, the conflict between the new middle class and the petite bourgeoisie spilled over onto the front pages of the newspapers as a major split nearly tore the movement apart in 1945. This clash provides one of the reasons for the conclusion of this study at the end of the Second World War. Moreover, the end of the war marked the beginning of a spectacular period of growth for the caisses populaires which completely transformed their prewar role in Quebec society. Between 1939 and 1945, the relative prosperity brought on by the war provided Quebecers with considerable savings worth depositing in these co-operatives. Accordingly, the number of caisses in operation nearly doubled, membership grew by 275 per cent, and total assets increased by more than 500 per cent. After the war, as Quebec increasingly took on the characteristics of a post-industrial society, with a growing percentage of its population living in cities, working in the tertiary sector, and enjoying

xv Preface

higher-than-ever average incomes, this growth continued. In the process, however, the caisses became less involved with providing funds for the basic survival of the population, as they increasingly provided consumer loans for the purchase of what Desjardins would have deemed luxury items, such as automobiles. With a leadership that was no longer part of the same petite bourgeoisie that had given rise to the caisses, the movement in the post-war era played a dramatically different role within Quebec society. A final, more pragmatic reason for ending this study with the close of the Second World War was the need to make manageable the vast archival material, little of which had been employed by earlier researchers. By 1945 there were nearly one thousand individual caisses in existence, and they had created ten regional federations; these regional bodies had in turn established a provincial federation. At each of these levels, rich archival sources exist: I might theoretically have looked at i,on individual collections spread across Quebec, from Val d'Or to Perce.21 To complete this project in my lifetime some practical decisions had to be made. Starting at the top of this hierarchical structure, I invested considerable time in examining nearly all files relevant to the affairs of the caisses held by the provincial federation, the Confederation des caisses populaires et d'economie Desjardins de Quebec, located at Levis. The Confederation possesses the Desjardins papers, which are crucial to any study of the caisses and have been used by other researchers. However, it also has a mass of other reports, correspondence, and financial data not heretofore employed and easy to use because of the care that has been taken in their organization. At the level of the regional federations, I was forced by practical considerations to examine the collections of only four bodies, the federations for the regions of Montreal, Quebec City, Trois-Rivieres, and the Gaspe, which were the only ones in existence until the mid-i93os. Finally, at the level of the individual caisses even harder choices had to be made. To provide this work with a concrete sense of the role played by the caisses in various different types of socio-economic contexts, I chose five caisses to study in depth. The Caisse populaire de Levis (hereafter CPL) was the first caisse and the one that Desjardins personally managed until his death. Even after 1920, however, the CPL was referred to as the "caisse-mere," as it played a crucial role in the evolution of the emerging hierarchical structure. The Caisse populaire de I'lmmaculee Conception (CPIC) was established in 1909 and was the first caisse to be opened in Montreal. Situated in the east end of the city, just north of Lafontaine Park, this caisse was selected in part because of its involvement in 1945 in the debate over the future direction of the caisses that resulted in a highly publicized rupture within the movement. The other three caisses were chosen to view the role of these co-operatives in various rural environments. The Caisse populaire de Maria was established in 1908 to serve a Gaspe community on the Baie des Chaleurs. In the following year

xvi Preface

a caisse was established at St-Theophile du Lac (currently known as Lac-a-laTortue), near Grand'Mere, north of Trois-Rivieres, to serve the settlers who tried to survive by combining farming with labour for forestry companies. Finally, the operations of the Caisse populaire de St-Remi, established in 1912, were examined to view the role of a caisse in a relatively well-to-do agricultural community only twenty kilometres south of Montreal. The affairs of these five caisses are particularly discussed in the first three chapters, which focus on the relationship between the petite bourgeoisie and the poor. To understand the nature of that relationship, detailed information was collected regarding the members of each of these caisses as well as the residents of the communities in which the co-operatives functioned. 22 By developing profiles of the social composition of each of the five communities and then comparing them to profiles of the membership of the caisses, I was able to determine whether the caisses attracted a representative cross-section of the local population. The overrepresentation of the wealthier elements in each community is one of the major findings of this study. To be able to discuss the affairs of those caisses that could not be visited, I relied on the detailed information available in the Annuaire du Quebec, the province's statistical yearbook. Beginning in 1915, caisses were compelled by law to send yearly reports regarding their operations to Quebec City for publication in the Annuaire. These reports contain a wealth of detail regarding such matters as the changing structure of the assets and liabilities of the caisses and the size of the loans they granted. Further information was gleaned from collections in the Archives nationales du Quebec and the National Archives of Canada, as well as from various journals of the period, most notably the Revue Desjardins, the official organ of the Confederation. The material derived from this last source, like much of the material collected for this project, was originally in French. At the insistence of the publisher, I have translated all quotations into English. Given the immensity of available documentation, I could never have completed this study without help from several quarters. Financially, the project was viable only because of the support provided by the Social Sciences and Humanities Research Council of Canada (SSHRCC). Funds were thus made available for my travel to the various caisse populaire archives noted above. At each of my stops I was treated with great kindness and endless amounts of free coffee. The list of people who assisted me is too long to present in full here. Special thanks go, however, to Jean-Marie Tremblay of the Caisse populaire de 1'Immaculee Conception, Laurent Bisson of the Caisse populaire de Levis, Louise Tremblay and Rita Lafresnaye of the Confederation, Yves Tetreault of the Montreal federation, and Guy Belanger of the Societe historique Alphonse Desjardins. Funding from SSHRCC, also allowed the hiring of a number of research

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assistants, several of whom distinguished themselves by their conscientiousness, most notably Alan Marshall, Sandra Steiman, and Carlos Triassi. Much of the material they collected had to be prepared for computer analysis. Large amounts of data were painstakingly placed on disks by Wendy Lindsay. The inevitable headaches associated with the use of a university computer were sympathetically resolved by Anne Barkman of Concordia University's computer centre. Support, encouragement, and hand holding were kindly provided by my friends and colleagues Jacqueline Anderson, Graham Carr, Peter Deslauriers, Bill Hubbard, and Mary Vipond. Harold and Florence Woll deserve my thanks for having provided me with the Macintosh which facilitated the preparation of this manuscript. They also played another role in the completion of this project, since they are the parents of my best friend, Phyllis, whose help as always was invaluable and to whom I solemnly swear that I will never embark again on a project to study financial institutions.

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Alphonse Desjardins, founder of the caisses populaires

Eugene Poirier, leader of the secessionist caisses Cyrille Vaillancourt, first leader of the provincial federation

Chanoine Philibert Grondin, promoter of the caisses populates

Desjardins's home in Levis, site of the first caisse populaire Offices of the Caisse populaire de Levis, 1920-50

PART ONE

The Petite Bourgeoisie and the Poor

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CHAPTER ONE

The Counterattack of the Petite Bourgeoisie

Establishment of the caisses populaires involved the participation of two distinct groups of Quebecers. On the one hand, there were the workers and farmers of the province who required these institutions to allow their survival. On the other hand, there were the doctors, notaries, lawyers, clerics, and small businessmen who made up the petite bourgeoisie and who looked to the caisses as a means of re-establishing the social relations of the nineteenth century. Unfortunately, many who have written about the origins of the caisses have stressed the service of these institutions to the poor, often creating the impression that these co-operatives were actually established by Quebecers of limited means. In this spirit, Lomer Gouin, the premier of the province, observed in a 1915 address to the Quebec legislative assembly: "The caisses populaires are entirely different from the banks. They have not been founded by the rich. Rather, they are the work of the poor, the working class and the farmers of Quebec."1 It was, of course, of great benefit to the petit bourgeois founders of the caisses to encourage the impression that these institutions belonged to the poor, given that ordinary Quebecers were extremely reluctant to sign up as members. Nevertheless, as a longtime leader of the movement recently remarked in an interview, " "I often hear people say that the poor were responsible for the establishment of the caisses; this is simply not true. They were the achievement of the petite bourgeoisie."2 In more general terms, one historian of co-operatives throughout the Western world has observed, "Although a great many cooperatives were founded for the working classes, it was not always true that they were founded by the working classes."J The poor certainly did not play the central role in the establishment of the caisses populaires. In fact, the affairs of these institutions, through most of the period up to 1945, were governed largely by members of the petite bourgeoisie. Giving the members of this class their rightful place in the history of the caisses still does not explain, however, why they chose to play the

4 The Petite Bourgeoisie and the Poor

role that they did. From Desjardins's point of view, the elite of French-Canadian society was simply fulfilling its Christian responsibility to the less fortunate. Desjardins called upon "the well-to-do and the intellectuals to help the poor and the ignorant to escape from the poverty that [had] been forced upon them by the trusts."4 Nowhere did the founder of the caisses or any of his successors suggest that the petite bourgeoisie also stood to defend its own position in society by aiding in the establishment of the caisses populaires. While not excluding the humanitarian impulse that motivated a particular class of Quebecers to become involved with the caisses, this chapter will concentrate on the social and economic circumstances of the founders which were crucial to their involvement and which have largely been ignored by previous historians. Focusing on the period of Desjardins's leadership of the movement, from the establishment of the first caisse at Levis in 1900 to his death in 1920, this chapter seeks to explain why the clerics, professionals, and small businessmen of Quebec chose to invest so much energy in this new institution. RE-CREATING THE NINETEENTH CENTURY

The caisses populaires were established in large part to re-create in the early twentieth century what the petite bourgeoisie believed life to have been like in mid-nineteenth-century Quebec. Prior to the onset of urbanization and industrialization, Quebec consisted largely, in this vision, of a series of isolated, rural communities, largely free of control from outside forces and with very clear lines of authority. The family unit formed the basis for each community, and within the family the husband was the unchallenged master. His wife and children provided their labour as required, but the notion of either working outside the home and beyond the authority of the husband was inconceivable. Such paternalism also extended beyond the family unit, as a local elite provided the same direction for the community that the father provided within his domain. This elite had both clerical and lay components, but each, in the petit bourgeois view of the not-so-distant past, acted with the interests of the community at heart. The clergy attended largely, but not exclusively, to the moral concerns of the people, while the lawyers, doctors, notaries, and small businessmen attended to the material needs, always with the interests of the community in mind. In this regard, Desjardins and his colleagues were fond of extolling the virtues of the local merchant, who recognized his responsibility to his neighbour by refusing to grant more credit than he believed his client could afford and by refraining from encouraging the consumption of luxuries that would only compromise the financial viability of the family and, ultimately, the integrity of the community. The second half of the nineteenth century saw the decline of this tidy world, as large numbers of Quebecers moved from the farm to the cities. Even those

5 The Counterattack of the Bourgeoisie who remained in rural Quebec were subject, however, to the overturning of the very clear lines of authority that had characterized the petite bourgeoisie's ideal world, as the population came into contact with a bewildering array of new influences. With the penetration of capitalism into rural Quebec, a process that picked up steam during the late nineteenth and early twentieth centuries, farmers came into contact with people from outside their community who were frequently neither French-speaking nor Catholic and who were prepared to offer a vast array of new services. For instance, as farmers abandoned more traditional forms of agriculture, such as the growing of wheat largely for home consumption, and embraced such market-oriented activities as dairy farming, they came increasingly into contact with machinery salesmen. The need for machinery, in turn, led farmers to seek credit from banks and money lenders from outside the traditional community.1 Even those farmers who did not radically transform their farms felt the impact of economic change, since industrial production limited the amount of income that could be derived from small-scale production carried out by women in the home. Benoit Tremblay has observed that in the absence of this income even farmers who were poorly integrated into larger markets found themselves forced to seek credit from outsiders.6 For those who moved to the city, there was the prospect of even more intimate contact with people who neither spoke their language nor professed their faith. In Montreal this did not mean the possibility of contact simply with English-speaking Protestants, since the early twentieth century also marked the arrival of significant numbers of immigrants from Europe, the most important of which were the Jews. For Desjardins and his colleagues, the Jews became a favourite target for attack, not because they held much economic power but rather because they were viewed as representative of the outside forces that were destroying a society in which the petite bourgeoisie had held sway. One of Desjardins's closest associates, Chanoine (Canon) Philibert Grondin, sounded the anti-semitic alarm: "Everyone knows that our commerce and our financial institutions are in the process of being taken over by the Jewish element. If nobody tries to stop them soon, it will be too late. The Jew will soon have us under his control."? To the traditional elite of French Canada, these various elements that did not speak French and did not practise Catholicism were to be feared, as they controlled the levers of power in this new society. To Desjardins, impersonal forces, embodied by the large corporation run by "anonymous people from Montreal and elsewhere,"8 menaced "the well-being of the working class."9 Insufficient wages were paid to labourers, who became too preoccupied with the practical concerns of survival to worry about maintaining contact with the church and who were forced to send their wives and children from the home to seek employment, thus breaking down the traditional lines of authority in the family.

6 The Petite Bourgeoisie and the Poor

In addition to being forced to submit to the dictates of the "outsiders" who owned the factories, Quebecers had to cope also with the growing influence of the department store and the mail-order business, which permitted the penetration even of rural communities by people who had little concern for the best interests of their clients. As a result of this competition, "small businessmen had to operate under precarious conditions and were clearly becoming marginal in the economy as a whole."10 Pushed aside by forces beyond his control, the local merchant was no longer in a position to worry about the purchases of his clients. Now the population was encouraged to fritter away its limited means on luxuries. The cure of Levis, site of the first caisse populaire, decried "this plague of extravagance for fancy clothes, for carriages, for alcohol, and for all sorts of pleasures.... In the cities, most people spend all they earn, and sometimes even more than that; in the countryside the people spend too much and sometimes even more than the farm brings in."" Paid too little and encouraged to spend too much, French Canadians were further exploited by outsiders, as they were compelled to seek credit to keep their families afloat. Financial institutions, most notably the banks, wanted litde to do with the poor, since these firms were dominated by English-speakers, who preferred to provide support for large enterprises controlled by their own." The banks did show themselves to be very efficient in collecting the meagre savings of the poor through the establishment of large numbers of branches, but they were less forthcoming in terms of credit. As Desjardins put it, "Almost all of our savings are put at the disposal of the English by the banks."'J The poor were thus forced into the hands of unscrupulous money-lenders. In fact, it was outrage at the actions of these money-lenders, some of whom charged up to 3,000 per cent interest per year on loans, that provided the immediate incentive for Desjardins to help establish a different type of financial institution. Gone were the days when French-Canadian society existed in isolation from outside forces. The early twentieth century was marked by increased American influence not only in terms of control over Quebec's natural resources but also by the penetration of American ideas through the growing popularity of movies.1* At the same time, monopoly capitalism was altering a world that had only recently been disrupted by the impact of industrialization. Now, with control over the economy concentrated into fewer and fewer hands, there were even further threats to the survival of French Canada. In the face of this concentration, which benefited certain English-speakers, Desjardins asked one correspondent, "After this fundamental economic change, what role will be left for the French Canadians? What will be our influence in the face of such financial power?" '* These changes left the poor exposed to a variety of pressures that they had not previously known, and the petite bourgeoisie saw the redefinition of its

7 The Counterattack of the Bourgeoisie

own role in society. The local merchant was displaced by the mail-order house, the cure was pushed aside for the factory boss, and even the notaries, long crucial in Quebec because they handled the paperwork for a wide array of economic activities, were marginalized with the emergence of new institutions to take their place. Andre Vachon has noted that, in terms of the processing of mortgages, "loan companies formed at the end of the nineteenth century took from the notary a significant part of his business. Moreover, the banks, by opening large numbers of branches in all of the major centres, contributed to the reduction of the work of the notary by extending credit in a fashion that did not require his involvement."16 Faced with the decline of its traditional role in society caused by the intrusion of outside forces, the petite bourgeoisie was further challenged when the poor began to explore new means of coping with their own problems. Much to the dismay of clerics, professionals, and small businessmen, workers and farmers did not initially look to this traditional elite for assistance. Rather, the poor carefully considered two institutions that would be vitally important in twentieth-century Quebec: the state and trade unions. The petite bourgeoisie was uncompromising in its opposition to the emergence of such new forces which might preclude reconstruction of the old lines of authority. Desjardins saw the state as yet another outside force that would perpetuate individual irresponsibility as Quebecers came to believe that "the state could do everything."1? For the longer term, Desjardins and his colleagues feared that growth in the responsibilities of the state would lead to socialism and the complete obliteration of the role of the petite bourgeoisie. No less daunting for these leaders was the rise of trade union influence, particularly during the wave of strikes that hit Montreal during the first decade of the twentieth century. Trade unions, particularly those formed under the influence of American labour leaders, suffered from a lack of "Christian responsibility" in their emphasis on conflict between classes instead of conciliation. Again, the only conceivable consequence was "a social revolution or the establishment of a socialist state, neither of which was a very appealing prospect."'8 To offer an alternative to these institutions, both the clergy and the lay members of the petite bourgeoisie embraced establishment of a number of new organizations, one of which was the caisse populaire, to re-create their earlier ties with the masses. If the outside forces that preyed on the poor could be removed, if the attraction of an increased role for the state could be reduced, and if the utility of international trade unions could be minimized, then the traditional leadership of French Canada might reassume its earlier influence. In this spirit, the church led the way in the late nineteenth century by erecting a vast array of social services, from soup kitchens to day care facilities to orphanages, to reinsert the clergy into the everyday lives of Quebecers.1' Into the early twentieth century, the church joined with lay members of the traditional elite in encouraging establishment of Catholic trade unions that

8 The Petite Bourgeoisie and the Poor might distance French-Catholic workers from labourers and union leaders of different backgrounds. This alliance achieved its goal with the Confederation des travailleurs catholiques du Canada (hereafter CTCC), set up in 1921. That same coalition won a further victory in 1924 with the Union catholique des cultivateurs (UCC), designed to counter the influence of another farmers' movement, the Fermiers-Unis. The latter organization was deemed dangerous because it defended the principle of religious neutrality, which encouraged contact with outsiders and stood in the way of the petite bourgeoisie reestablishing its authority.20 As historian Robert Mignier has observed, the UCC was designed to counter the emergence of "a farmers' movement capable of working against the power of the rural bourgeoisie."21 In the same spirit, co-operatives, which would accept into their ranks only French Catholics, were formed in the early twentieth century, not merely to aid the needy, but also to help restore the lost authority of the petite bourgeoisie. Mignier has argued that these co-operatives, caisses populaires included, were designed to allow a traditional elite to maintain control over rural society during the penetration of capitalism into rural Quebec. "Aided by the state, the rural bourgeoisie played a dominant role in the establishment and operation of co-operatives."22 Desjardins fit the caisses populaires into this mould: he noted on several occasions that it was crucial for the "leading classes" to provide "a good example to the other classes by involving themselves in social works such as the caisses populaires."2^ The actions of the petite bourgeoisie in Quebec paralleled those of their counterparts elsewhere in the Western world, which should come as little surprise given this class's general loss of influence in the face of first industrialization and then monopoly capitalism. In the midst of these challenges to its role in society, the petite bourgeoisie launched a counterattack in the late nineteenth and early twentieth centuries, as members on both sides of the Atlantic sought ways to redefine and revitalize their place in society. Lawyers and doctors formed professional organizations to try to maintain their autonomy and to thwart the inroads being made by "quacks."24 As for the churches, both Catholic and Protestant institutions worked to shore up a declining status. In Europe, the Catholic church responded to this crisis, as did its counterpart in Quebec, by involving itself in social action designed to reassert its role in the lives of urban workers. Similarly, in both Canada and the United States the Protestant churches tried to respond more effectively to the needs of their congregations.2' As in Quebec, co-operatives were established by the petite bourgeoisie across Europe as one means to reinforce its role in society. The leaders of the European movement to set up co-operative banks - Friedrich Wilhelm Raiffeisen and Hermann Schultze-Delitzsch in Germany, Louis Durand and Charles Rayneri in France, Leone Wollemborg and Luigi Luzatti in Italy, and Henry Wolff in England - were invariably members of the petite bourgeoisie who could see advantages for the poor through provision of cheap credit, and for

9 The Counterattack of the Bourgeoisie themselves, through reinforcement of their place in society. As one historian of the European co-operative movement has observed, the small businessmen and professionals of rural Europe who saw the movement of small landholders to the cities as a threat to their own well-being responded with cooperative credit facilities to try to keep the population on the land/6 In urban co-operatives, ameliorating the position of the working class stood to distance the poor from seditious organizations, such as trade unions, and dangerous ideas such as socialism. The clergy, in both urban and rural Europe, found in the co-operative means to re-establish ties with the masses challenged by developments of the nineteenth century. It was in precisely this context that Alphonse Desjardins, a recorder of debates in the Canadian House of Commons, was drawn to the idea of establishing co-operatives in Quebec to provide savings and loan facilities for the poor. Like other members of the petite bourgeoisie, both in Quebec and elsewhere, Desjardins was sincere about aiding the poor. At the same time, however, one is telling less than the whole story if the social and economic circumstances of the founders are not considered as well. The caisse populaire was not simply a financial institution but also a tool to re-create a vision of life in an earlier age. DESJARDINS'S DREAM By all accounts, the birth of the caisse populaire movement came in 1897, when a recorder of the French debates in the House of Commons became spellbound by a discussion of usury laws. Alphonse Desjardins was struck in particular, by the speech of a Montreal member of Parliament, Michael Quinn, who described people in Canada's largest city being forced to pay outrageous rates of interest on loans from unscrupulous money-lenders. As Quinn noted, "There was one notable case in Montreal within the last few days, in which a man obtained a loan of $150, and was sued for, and was compelled to pay in interest, the sum of $5000, for the loan of $150."2? That someone might have been struck by such exploitation is not entirely surprising, but why Desjardins moved to action requires further explanation. Desjardins may well have been touched because his own childhood had been marked by such hardship. He was born in 1854, tne seventh of fifteen children, to Francois Desjardins and Clarisse Miville dit Deschenes. The couple began married life at St Jean-Port-Joli, fifty kilometres east of Quebec City, on the south shore of the St Lawrence. When it became evident that Francois was going to have a long wait to inherit any of his father's land, the couple, like many mid-nineteenth-century Quebecers, moved to the city, in their case to Levis, just across the St Lawrence from Quebec. There Alphonse grew up in a household that depended largely on the domestic labour of his mother, as his father was sickly and seldom able to work. In spite of poverty, Alphonse received an education at the College de Levis;

io The Petite Bourgeoisie and the Poor

in later years, professors of the college proved loyal supporters of his efforts to establish caisses populaires. After completing his studies in 1870, and following a stint in the militia that took him to Red River to quell the uprising led by Louis Riel, Desjardins spent most of the 18705 working for various newspapers. In 1879, he began publishing, at his own risk, the debates of Quebec's Legislative Assembly. He received a small subsidy from the government, but his was essentially a private commercial venture. In 1890, Premier Honore Mercier tried to get Desjardins to change the substance of a speech that he had made. Desjardins refused, the government subsidy was suspended, and the debates were no longer published. After a brief and unsuccessful effort to launch a newspaper of his own, Desjardins returned in 1893 to the recording of debates, this time in Ottawa, a job that he retained until 1917. From his vantage point in Ottawa, Desjardins had the resources after that fateful day in 1897 to pursue his interest in ending usurers' exploitation of the poor. French interventions in the Commons were fairly rare in those days, so that his tasks were not unreasonably onerous. With the time at his disposal he read in the Library of Parliament about the various means available to the poor in Europe to finance the necessities of life. He learned about the major figures in the development of co-operative financial institutions in Europe, studying what each had to offer and frequently corresponding with them for elaboration. By 1900 he had pieced together parts taken from various schemes to design a system that he thought would work throughout Quebec, in both urban and rural areas. Desjardins thought that he had developed "a new model which would bring together in perfect harmony the different characteristics of the [urban] People's Bank and the rural credit union."28 In selecting characteristics for the caisses populaires, Desjardins sought to aid the poor and to re-create the lines of authority that had formerly favoured the petite bourgeoisie. For instance, while some European co-operatives extended over large territories and had vast memberships, Desjardins planned to respect parish boundaries. If the members of a caisse were to have faith in the institution, they should be personally familiar with their fellow members. This provision stood to generate confidence among the poor, but at the same time Desjardins was attempting to revive an institution - the parish - that had a long tradition in French-Canadian history and had suffered from the destruction of older lines of authority. It was within the parish that lawyers, doctors, and notaries had been seen as figures worthy of respect, so that by giving that institution renewed importance Desjardins was also reviving the influence of a class that had suffered at the hands of outsiders. More particularly, by depending heavily on an institution with an ecclesiastical base, the caisse could add to the prestige of the cure. As Desjardins put it, it was impossible to imagine a caisse "without the participation and approval of the cure."29 All those living within the parish, except married women and minors, were

ii The Counterattack of the Bourgeoisie

eligible to seek admission to the caisse. As part of a class deeply bothered by destruction of paternal control of the family, Desjardins denied full membership to married women. Instead, they could be auxiliary members, neither voting at meetings nor holding office. Since Desjardins's wife, Dorimene, managed the caisse at Levis while he was away in Ottawa, there was the odd spectacle of the manager of the caisse failing to qualify for full membership.'0 As for minors, their exclusion is easier to understand, but even here Desjardins made his view regarding the place of women quite clear by encouraging establishment of a special caisse de dotation in each parish. All children could use the caisses scolaires established in each school; but for older girls, approaching the age of marriage, the caisse de dotation was a means of building up a dowry for the only legitimate role that Desjardins could imagine for a woman.'1 Full membership in the caisse was thus restricted to adult men who were judged to be of good moral character. An applicant had to be "industrious, honest, punctual in his payments, sober, of good habits and honourable above suspicion."'2 Desjardins left the final decision regarding membership to the elected officials of the co-operative. In this manner, he hoped to prevent those who were neither French-speaking nor Catholic from securing the benefits of the caisse. As Desjardins wrote in 1919 to an organizer in the Gaspe who was setting up a caisse: "Do not forget that each member must receive the approval of the board of directors. This is your guarantee against the invasion of Protestants that you fear."" The caisse populaire was conceived to isolate the French-Catholic population from outsiders. In this context, it made no sense to allow outsiders to secure the privileges of membership. If accepted for admission, the applicant had to subscribe for at least one five-dollar share in the caisse to be able to use its services. These shares were made accessible to the poorest members of the community by allowing payment in weekly instalments of ten cents; also, the shares could be sold back to the caisse if disaster struck. In this manner, all that the member stood to lose was the entry tax, normally a nominal sum, payable on acquisition of a share. Purchase of this share made a member eligible to receive a dividend, or boni, from the profits of the caisse at the end of the year; to deposit funds with the caisse, frequently at a rate higher than that paid by the banks; and to borrow on terms that the banks would rarely offer. Unlike certain European systems, these advantages were to be made available only to members. Also in contrast with the experience in much of Europe, members bore no responsibility for the debts of a caisse, if it were to fail, beyond the value of the shares for which they had subscribed. Reflecting on the recent collapse of the Banque du Peuple in 1895 and that of the Banque Ville Marie in 1899 - two chartered banks laden with the savings of French-speakers who were never fully repaid - Desjardins understood that Quebecers of limited means were not about to leave themselves open to an unlimited liability.'4

12 The Petite Bourgeoisie and the Poor The difficulties of the chartered banks must have also influenced Desjardins to develop rules regarding the setting aside of specified sums into various contingency funds to be used in case of financial disaster.'? Further, each caisse was to be independent, with no links to any other institution. Members were thus encouraged to assume that the caisse would keep their funds within the community, in striking contrast with the chartered banks. From their beginnings in the early nineteenth century, Canada's chartered banks had been organized to move funds from widely scattered branches to a head office, where decisions would be made regarding their future use. This centralization of funds was encouraged in the late nineteenth and early twentieth centuries both by the opening of large numbers of branches and by the reduction in the number of banks in operation. While the number of branches operating in Quebec increased from 29 in 1871 to 121 in 1901 and 740 in 1921, the number of corporate entities operating such offices across Canada declined from a high of 51 in 1875 to on'v !^ m tne ear'y 19205. Some banks failed because of financial mismanagement or pressures exerted by larger institutions; others were acquired by the titans of the industry. In either case, however, the movement of funds to the vaults of a shrinking number of head offices meant that monopoly capitalism was making its impact felt in even the smallest parishes in the province. This concentration of control over the banking industry was not simply an economic issue for Desjardins, however. There were also cultural implications, since the banks, such as the Royal Bank and the Bank of Montreal, that came to dominate the sector were controlled by English-speakers. In the early twentieth century, these institutions showed increased interest in the Quebec market, extending their chains of branches beyond the largest cities of the province for the first time. English-run institutions had only thirty branches in the province in 1891, a figure that had increased more than tenfold by 1920. As a result, Desjardins was deeply bothered by what he described as "an invasion of our territory." He feared the deposit of the savings of French-speaking Catholics "for the benefit of Protestants and outsiders."36 The growing interest of the English-run banks in the French market, together with the apparent vulnerability of the French-run banks, gave even greater meaning to Desjardins's nationalistic insistence that French-Canadian savings be placed "at the service of our community, instead of being sent off elsewhere, to our disadvantage and for the benefit of the businesses of others. "^ He wanted the caisses to amass "a capital which would be under our control and always at our disposal."j8 Once the savings of the parish were safely pooled in the vaults of the caisse, credit was to be made available to as many members as possible by giving preference to small loans over large ones and to loans for productive purposes over demands for the acquisition of luxuries. Accordingly, a request for credit for the purchase of seed was acceptable, as it would lead to the financial security

ij The Counterattack of the Bourgeoisie

of the borrower, but demands for credit for the purchase of furniture or a fancy carriage were to be rejected. Desjardins envisioned the caisse as an educational institution, as well as a financial one: he hoped that people, particularly the poor, would be taught the virtues of living within their means. To illustrate his point, Desjardins told the following story a few years after the opening of the first caisse: "A member came to me and asked for a $15 loan. I put to him the usual question: What do you want the $15 for? ... He told me that his object was to visit some distant relatives on a pleasure trip." Desjardins immediately rejected the request, even though the member's "credit was splendid, and I had not the least doubt about his ability and willingness to pay at maturity. Why such a prompt refusal? Because the object was not of a productive character, and to grant it would have been an encouragement to useless expenditure, whatever good sentiment may [have inspired] the demand."59 All these principles were to be watched over by a democratic governing structure. True to the principles of co-operative organizations, only members could transact business at a caisse, and each full member, regardless of the size of his investment, was entitled to only one vote at the annual general meeting, where questions of policy were discussed and officers elected for the coming year. This was a radical departure from the situation in a capitalist organization such as a chartered bank, in which voting rights at the annual meeting were reserved for the few investors owning stock in the institution. Most clients had no say over the affairs of a bank, and even the majority of shareholders found themselves powerless, as each held voting rights proportional to the size of his investment. Accordingly, practical control over the affairs of a bank rested in the hands of a very few. Once elected, the leaders of a caisse populaire found themselves in a very different position from those chosen to direct the affairs of a chartered bank. Bank directors received a small stipend for their services and constituted the ultimate authority on major policy issues. By contrast, the leaders of the caisse provided their labour free of charge. Moreover, they were unable to operate as freely as the members of a bank's board of directors because of the checks and balances that Desjardins built into the governing structure. There were three distinct governing bodies, the most important of which, at least in Desjardins's initial conception, was the conseil d'administration, which watched over day-to-day affairs. The commission de credit determined who should receive advances from the caisse, while the commission de surveillance made sure that the books were properly kept. Unlike directors of the chartered banks, who frequently extended credit to themselves, members of the commission de credit and the commission de surveillance were denied access to credit to avoid even the suggestion of a conflict of interest. Once more, this was no doubt comforting to Quebecers who in the late 18905 had seen their savings evaporate through the machinations of the directors of several chartered banks.

14 The Petite Bourgeoisie and the Poor All of these elements of the system that Desjardins worked out between 1897 and 1900 suggested an institution that would respond to the needs of the poor. As Desjardins testified to a committee of the House of Commons studying co-operatives, the caisses would give ' 'to the humblest people the all-powerful weapon of capital, however small it might be .... It [would] also help the poorest classes by offering them the credit which they deserve when hard pressed by adverse circumstances."4° In spite of Desjardins's insistence that the poor were the sole object of his concern, the following two sections will show that the caisses also had much to do with the needs of the petite bourgeoisie. LAYING THE FOUNDATION Satisfied that he had considered as many details as could be handled in the abstract, Desjardins was finally ready in the fall of 1900 to put his design for the caisses populaires into practice by establishing such a co-operative at Levis. In addition to being Desjardins's hometown, other reasons made Levis an appropriate site for establishment of the first caisse. In spite of Desjardins's diatribes against the banks, he did not want to enter into direct competition with them in his first effort to establish a co-operative. Levis was a good choice in this regard, as it had held the distinction at the start of the 18905 as the largest city in Canada lacking any branch of a chartered bank.*' Even at the turn of the century, there was still only a single branch, belonging to the relatively insignificant People's Bank of Halifax. Just as Quebec's French-run banks thrived where there was little penetration by the major English-run institutions, so too did the caisses do best where they had relatively unobstructed access to local savings.*2 The chartered banks' lack of interest in Levis was no doubt related to the local economy's decline throughout the i88os and 18905. Although Levis's prominence by the start of the i88os as a railway centre led some local leaders to imagine a day when their city would surpass Quebec,^ such dreams had long since evaporated by 1900. Levis, with its location on the St Lawrence and its rail yards where three lines intersected, was briefly a centre of some importance, but in the late nineteenth century Quebec gained rail connections with the outside world, which compromised Levis's position. The city's population barely increased between 1881 and the turn of the century, and affairs did not take a turn for the better after 1900. The city's largest industry, Carrier et Laine, which employed 600 workers in its machine shops in the late 18905, was closed by 1906. The last blow for Levis's dreams came in 1917, when the Quebec Bridge was completed, allowing rail traffic from the south shore of the St Lawrence to move easily to Quebec City .44 The city experienced some short-lived spurts of economic activity caused by shipbuilding during the two world wars, but by and large the first half of the twentieth century was less than kind to Levis.

ij The Counterattack of the Bourgeoisie Largely shunned by the chartered banks and with too many labourers competing for too little work, Levis was an ideal site for the debut of an institution designed to cater to the poor. There was even the prospect of also attending to the needy rural population, as the area mapped out by Desjardins extended into the farming areas on the outskirts of the city.45 But if the first caisse was designed to cater to poor labourers and farmers in the vicinity of Levis, this is not readily apparent from the occupations of the fifteen men invited in September 1900 to the initial organizational meeting. Only one of these men, a telegraph operator, had even the remotest affinity with farmers and labourers; six were small businessmen, and five were local professionals.46 Over the next two months they met regularly, putting into place the details for Desjardins's grand scheme. They made decisions regarding the maximum value of loans to be made to members, the maximum dividend to be paid on shares of the caisse, the interest to be charged on loans and for deposits, and the disposition of profits at the end of the year, acting in each case in a manner that appeared consistent with Desjardins's commitment to the poor.4? Satisfied that they had taken into account as many details as could be imagined prior to the launching of such an unprecedented enterprise, these lay leaders called a meeting for 6 December to sign up members. Their task was aided by the publicity provided by the cure of Levis, whose participation had heretofore been minimal. However, in the weeks leading up to the December meeting he encouraged his flock to take part in Desjardins's dream, and at the meeting itself he expressed his confidence that the caisse would be of great help "among the labouring classes."^ With this support, the assembly was, in Desjardins' words, attended by "more than one hundred people representing the various classes in society."49 In fact, however, the audience at this assembly was no more representative of Levis than the small cadre of men who had been meeting to organize it. Once again professionals and small businessmen, members of the petite bourgeoisie, were overrepresented.*0 As Table i indicates, these two groups, which accounted for only 20 per cent of the population of Levis, made up over 50 per cent of the people who signed up as members of the CPL at its first public meeting; moreover, they controlled nearly 60 per cent of the shares acquired at that assembly. Within the two leading groups, priests and merchants were particularly conspicuous, members of each occupation making up 15 per cent of all those who attended the CPL's first meeting, but only 4 per cent and 2 per cent respectively of the city's population.*1 As for the poorest people in Levis, the unskilled workers who sought day labour at the city's port, they made up nearly a quarter of the local population but only 5 per cent of the people at the meeting. Given this limited participation by the poor, it is little wonder that they were not visible on the first boards for the management of the caisse, which were dominated by the petite bourgeoisie. This situation should not come as any great surprise. The CPL was an enter-

16 The Petite Bourgeoisie and the Poor Table 1 GPL: Occupations of Original Members, 1900

% in Each Occupational Category Selected occupations Professionals Small businessmen Commercial employees Skilled labourers Unskilled labourers N

CPL Members

Le'vis Population

18 56 19 7 5 128

3 16 10 18 25 611

Sources: CPL, premier grand ledger; L'lndicateur de Quebec et Levis, 1900-1. For details regarding sample employed to generate the distribution within Levis, see appendix. While samples of the CPI. membership were used throughout this study, all the original members were considered here.

prise without precedent, and people who had few resources were understandably reluctant to commit their limited savings to such a venture, particularly if they were aware of the crisis among the French-run banks of the province. At the same time, the petite bourgeoisie strongly supported the institution, seeking both to aid the needy and to re-establish its own authority. The central role of the petite bourgeoisie and the seemingly minimal participation of the poor did not end with the opening of the first caisse, however. These characteristics continued in evidence throughout Desjardins's efforts to form caisses populaires across the province during the next two decades. Few caisses were set up in the first years after the opening of the CPL, as Desjardins was hampered by the absence of any legislation, either federal or provincial, to govern their affairs.*2 He had taken a considerable personal risk with the Levis caisse, as any losses incurred might well have been viewed by the courts as his personal responsibility. Accordingly, he moved very slowly to bring other caisses into existence, aiding in the formation of only two further co-operatives prior to passage of provincial legislation in 1906. Even before the ambiguities regarding legal status had been resolved, however, Desjardins was busy soliciting the support of Quebec's clergy and professionals, which would be crucial in the years ahead. In 1904 he tried to encourage the participation of these men by forming an organization, Action populaire economique, whose board of directors read like a who's who of the petite bourgeoisie of the Quebec City area. It was dominated by clerics, doctors, lawyers, and journalists, who committed themselves to the promotion "of cooperative methods for the safekeeping and productive use of the savings of the people."" After 1906, buoyed by the support of these men and the passage of provincial legislation, Desjardins's campaign to blanket the province with caisses populaires

iy The Counterattack of the Bourgeoisie

moved into high gear. Prior to the death of "le fondateur," as Desjardins came to be known, organizational meetings took place for the creation of over two hundred caisses. Desjardins was personally involved in launching 170 of them, an achievement not diminished by the failure of nearly onequarter to move beyond the initial signing up of members. In 1908 alone he logged 5,389 miles, in the process giving fifty-two talks to groups interested in establishing a caisse in their community.** Given the growing scale of the operation and his employment both in Ottawa as a recorder of debates and in Levis as manager of the caisse, Desjardins could hardly afford to visit any parish where the actual formation of a caisse was in doubt. His arrival presupposed a base of support, which in practice meant securing the adherence of representatives of the local petite bourgeoisie, to whose influence the rest of the population might defer. As one leader of the movement noted, "When it was time to start up a rural caisse, it was necessary to look to the three educated people in the community: the cure, the notary, and the agwnome, or agricultural specialist."" Desjardins placed particular emphasis on the cure. A caisse populaire, he noted, was "a parish institution which necessitated the direct and active support of the Cure."*6 He counted on cures across Quebec to spread the idea of the caisses among the local population in the weeks preceding his arrival, just as the cure of Levis had performed the task in the early winter of 1900. Desjardins was not content, however, simply to wait for evidence of interest on the part of cures. Rather, he explored all possible means of cultivating their support. He closely allied himself, for instance, with two major movements within the Quebec church which provided support for social institutions that might respond to the challenges of industrialization. As with the Catholic social action movement in Europe, the initiatives that Desjardins tried to build on were dedicated to re-creating the social relations of the nineteenth century. In the Quebec archdiocese, the Action sociale catholique movement was formed in 1907 to generate support among both the clergy and their followers for institutions that might overcome "the great evil of our time, individualism."57 Evidently, the caisses qualified, with their message of co-operation. More successful in promoting Desjardins's dream, however, were the Ligues du Sacre Coeur. Based in Montreal and operated by the Jesuits, this movement was begun in the late nineteenth century to fight, much like its counterpart in Quebec City, what it saw as the consequences of industrial society and individualism, namely "Freemasonry, Jewish influence, and socialism."*8 The ligues had considerable success because of their efforts to create an elite of loyal followers prepared to create institutions such as the caisses in each parish .59 Their task was greatly facilitated by formation of the Ecole sociale populaire (ESP), which was created by the federation of the ligues in 1911. The ESP was to provide information about projects worthy of support, most

i8 The Petite Bourgeoisie and the Poor

notably the caisses. Hamelin and Gagnon see the work of the ESP as that of "an elite addressing an elite."60 Through its brochures, which frequently discussed aspects of the caisses, the ESP could educate the leaders of the various parishes, both lay and clerical. As the archbishop of Montreal, Mgr Bruchesi, noted: "Social works require an elite. The Ecole sociale populaire will form this elite by establishing social and economic institutions ... Priests and laymen, you must join together to study our economic problems from a truly Christian perspective."6' In addition to associating himself with organizations that might mobilize the clergy to support the caisses, Desjardins also acted on his own. Most notably he associated himself with priests interested in and capable of diffusing his message to their peers. Some of these priests, known as propagandistes, travelled in advance of Desjardins to cultivate the support of church leaders. However, the most successful propagandiste did not even need to travel to make his contribution. Chanoine Philibert Grondin spoke directly to the clergy of the province by means of a regular column that appeared in the strongly Catholic newspaper La Verite from the mid-i9oos to the early 19105. To create the illusion that a team of Desjardins's supporters was extolling the virtues of the caisses, Grondin wrote under no fewer than six pseudonyms, in the process covering topics ranging from the impact of the caisses on the reduction of alcoholism to their role in curbing the desire of women to work outside the home. Not surprisingly, Desjardins enthusiastically supported Grondin's efforts, noting in a letter to his colleague: "Write! Write! Never stop and continue with even greater vigour. By La Verite you reach the clergy, you mobilize them, and little by little you are creating a powerful force at the disposal of our cause."62 There is considerable evidence that the cures of the province responded enthusiastically to the call for support put out by Desjardins and his emissaries. One researcher has indicated, for instance, that cures were involved in the management of over three-quarters of the caisses set up prior to 1920.6j The role of the clergy was so significant that a crisis was provoked in 1910 when the pope decreed that priests should no longer directly involve themselves in the management of social institutions such as the caisses.6* It was one thing for the clergy to facilitate establishment of a co-operative, but the Vatican feared the consequences for the image of the church if one of these caisses were to fail under the management of a cleric. Desjardins asked the archbishop of Quebec, Cardinal Begin, himself a native of Levis, to appeal to the pope for an exemption from this order. Begin complied with Desjardins's request, noting that due to the 1910 decree "the operation of the institutions already established and the opening of new ones have become very difficult, especially in the rural parishes and in working-class districts of the cities. In the absence of laymen with the time, the desire and the ability to assist, the clergy are forced to serve as directors, secretaries and treasurers."6* After

19 The Counterattack of the Bourgeoisie

some years of uncertainty, which resulted, for instance, in the resignation of the president of the Caisse populaire de Maria in 1911, the desired exemption finally came through in 1916.66 Desjardins's insistence on securing the ongoing support of the clergy in the administration of the caisses was apparently linked to his own doubts about the ability of laymen to pick up the slack. Shortly after formation of the Levis caisse, Desjardins expressed the belief that "the doctors, notaries, and merchants would benefit by involving themselves in the establishment of cooperative societies."6? For reasons that are not altogether clear, however, Desjardins seems to have lost faith in these lay members of the petite bourgeoisie by the late 19105. Desjardins was annoyed, in particular, by the lack of assistance provided by notaries. In a letter to Omer Heroux of Le Devoir, he noted his "bitter disappointment at the selfishness of the professionals who have displayed their indifference, if not hostility, towards this work of benefit to society .... There are hardly any notaries who have assisted my efforts ... Even here at Levis I have had to struggle against their hostility and indifference ... In general, our professional class is selfish. The caisses have only progressed because of the support of the clergy and of the ordinary people."68 Desjardins's hostility toward professionals in general and his faith in "the ordinary people" do not seem to correspond, however, with his actual experience in extending the caisse populaire system throughout the province during the first two decades of this century. He could not hope to involve the lay members of the petite bourgeoisie as readily as he could the clergy, because of the church's hierarchical structure. Mobilization of the clergy was also facilitated by sympathetic newspapers such as La Verite and study groups such as the Ligues du Sacre Coeur. Nevertheless, his own experience at Levis indicated considerable support from professionals and small businessmen and relatively little encouragement from common labourers and farmers. In his hometown the caisse populaire was launched through mobilization of both the lay and clerical elements of the petite bourgeoisie, and this situation was repeated in each of the other four caisses populaires singled out for special attention in this study. THE PETITE BOURGEOISIE IN A C T I O N

On almost two hundred separate occasions, Alphonse Desjardins visited a community in Quebec to preside over the launching of a caisse populaire. His arrival was preceded by that of supporters whose role was similar to that of publicists who precede politicians, performers, or evangelists to generate enthusiasm. In terms of the caisses populaires, this preliminary work, at the very least, had to secure the support of the cure. Then it was up to the parish priest to assure a good crowd for the appearance of le fondateur. As the move-

2O The Petite Bourgeoisie and the Poor

MAP 1 Locations of Five Caisses Examined in This Book Source: Bibliotheque nationale du Quebec, 1985

ment became more sophisticated, standard forms were made available to local organizers on which the names of the initial subscribers for the shares of the caisse would be inscribed. Desjardins no doubt hoped that the names on this list would largely be those of the poorest groups in the population, but the situation was usually the same as it had been at Levis or at St-Sauveur, where the initial members were "the businessmen and best farmers in the community."6' The dominant role of the petite bourgeoisie was similarly evident at the foundation of a caisse in the Gaspe town of Maria (see Map i), which Desjardins visited at the start of a swing through eastern Quebec in the early fall of 1908. He came to this farming community on the shores of the Baie des Chaleurs to build upon the efforts of the cure Theodule Smith and his predecessor, Jacob Gagne, with whom he had corresponded over a number of years. Confident that they could assemble enough residents to launch the caisse, the two priests invited Desjardins to the founding meeting on 13 September 1908, but what he encountered was far from a representative sampling of the local population. While nearly 90 per cent of the adult men on the town's evalua-

2i The Counterattack of the Bourgeoisie

tion role were farmers, only sixteen of the initial thirty-one members of the caisse worked the land; another five were merchants, four were craftsmen of various types, and two were clerics. Moreover, the men who subscribed for the first shares in the Caisse populaire de Maria, regardless of their occupations, were considerably wealthier than most local residents. While the average value of land held by the adult males of Maria was $512, the average for the founders was $6567° The same scenario largely repeated itself when, almost one year to the day later, Desjardins took his campaign to the parish of St-Theophile du Lac, located near the pulp and paper centre of Grand'Mere, roughly forty kilometres north of Trois-Rivieres. Many of the residents of St-Theophile had made the trek north as part of the colonization movement, strongly supported by the church in the late nineteenth century as part of its campaign to re-create pre-industrial Quebec society. More specifically, the idea was to deflect the movement of Quebecers from the St Lawrence Valley to Quebec's cities and to New England. It was hoped that older lines of authority might be revitalized by keeping Quebecers on the land, but once established in St-Theophile few residents found it possible to earn their living by farming the inhospitable soil. Many were soon forced to supplement their incomes by working either at the Laurentide Pulp and Paper mill at Grand'Mere or in the local iron mine.7' To supporters of the caisses such as Chanoine Grondin, this diversion of the colon from the land negated the justification for the colonization movement. By providing him with capital through a caisse populaire, Grondin hoped to attach the impoverished settler firmly to his land so that he might experience the regenerative powers of agriculture.?2 Focusing, as was their custom, on obtaining the support of the local cure, Grondin and Desjardins hoped in short order to secure the adherence of the poorest colons, but they seem to have failed." Occupational data are not available for the period during which the caisse was formed. Nevertheless, the property evaluation roles suggest that this institution, too, initially attracted the wealthier elements in the community, particularly the local petite bourgeoisie and the more comfortable farmers. While the average landholder on the town's evaluation role owned property worth $1,074,tne average for the initial members of the caisse was Si.jdj.74 As had been the case at Maria, members of the caisse at St-Theophile owned land whose average value was more than 25 per cent greater than that of local property owners. Nor did Desjardins see the impoverished masses turn out in large numbers for the opening of the Caisse populaire de St-Remi in 1912, even though there were ideal conditions for widespread acceptance of a caisse. This farming community, twenty kilometres south of Montreal, had good reason to embrace a co-operative savings and loan association, given its unpleasant experiences with the chartered banks. In 1895 the residents of St-Remi lost most of the $100,000 that they had deposited in the local branch of the Banque du Peuple

22 The Petite Bourgeoisie and the Poor

when that bank suspended operations, and the collapse of the Banque de St-Jean in 1908 resulted in the loss of nearly all the deposits entrusted to its St-Remi branch." The residents of St-Remi needed the capital that might be provided by a caisse because of the evolution of their farming operations by the early twentieth century. While the commercialization of farming proceeded relatively slowly in areas such as the Gaspe or the Mauricie, which were distant from significant markets, such was not the case at St-Remi, located on the doorstep of Montreal. When detailed census data regarding agricultural activities in each parish of the province first became available in the 19305 and 19405, St-Remi stood out because of the relative absence of small farms when compared to either Maria or St-Theophile.76 On their somewhat larger farms, the residents of St-Remi owned more dairy cattle than did the residents of the other two parishes indicating the greater commercialization of their affairs." With larger operations, oriented more toward the market, the average farm in St-Remi in 1941 was worth roughly $7,500, nearly three times the average in either Maria or St-Theophile and over 50 per cent greater than the provincial average.?8 Historian Robert Mignier has found that Quebec farmers were chronically short of capital in the early twentieth century, and one might have thought that this problem would have been even more pronounced in a parish such as St-Remi, where farmers were trying to accommodate their affairs to the demands of the growing urban market.79 However, if St-Remi's farmers were eager to gain access to a new source of credit, only a select few showed up in 1912 to help establish a caisse populaire. While the property of the average landowner in St-Remi was worth $2,785, the average for the initial members of the caisse was §4,295, more than 50 per cent above the figure for the parish.80 Events in these three rural communities thus suggest that neither a bad experience with the older financial institutions nor the extent to which the local economy was tied into larger markets drew the masses to the caisses. These were institutions both established and initially patronized by the wealthier people in the community. The same pattern was also evident in the first caisse in Montreal. The Caisse populaire de ITmmaculee-Conception (hereafter CPIC) was brought into existence under Desjardins's watchful eye in 1909, but in classic fashion the groundwork for its founding was laid by the meeting over several months of the Groupe Pie X, the local Ligue du Sacre-Coeur for this parish, situated in the east end of the city, just north of Lafontaine Park (see Map 2). Contrary to the experience in rural Quebec, however, the discussions in Montreal indicated serious doubts as to how successfully a caisse might work in a major industrial centre. One member of the Groupe Pie X noted, for instance, that the intimate knowledge of the other members of the caisse, possible in a rural setting or even in a smaller town such as Levis, would be difficult in Montreal.

23 The Counterattack of the Bourgeoisie

"The instability of the population will be a major problem in the establishment of this caisse." Another participant observed that the caisse would offer "fewer advantages than a bank because of its limited capital." Even if the caisse could provide credit to workers, there was the fear that "by extending credit the caisse would encourage spending instead of saving." Yet another speaker noted the difficulty of keeping proper books, since very small sums of money would have to be scrutinized.8' The members of the Groupe Pie X had sufficient doubts about the project that they adjourned for the summer of 1908 still unsure whether they should proceed. All doubts seem to have evaporated, however, by the end of the year, when an organizing committee, composed largely of clergymen and lay members of parish organizations, met to finalize arrangements for the founding assembly, to be attended by Desjardins early in 1909. Among their concerns was the drafting of a slate of candidates for the various offices of the caisse prior to the founding meeting. In apparent contradiction of the democratic precepts on which the caisses were founded, they wanted to leave nothing to chance and feared the nomination and possible election of candidates whom they might have perceived as ill-suited.82 The men they chose were members of the petite bourgeoisie, mostly small businessmen and professionals. Nor is this surprising, given the audience that turned out to hear Desjardins speak and to subscribe for shares in the new caisse. In spite of the support of the cure on the morning of the assembly, an all-too-familiar pattern recurred.8? While less than one-quarter of the population of the area was made up of professionals and small businessmen, more than one-third of the initial members - subscribers for nearly half the shares acquired at the founding assembly - belonged to the petite bourgeoisie.84 Skilled craftsmen, many of whom owned their own shops, were also overrepresented, while poorer groups, most notably semi- and unskilled workers, were underrepresented. As Benoit Tremblay has observed, it was the "skilled craftsmen and small businessmen of the cities who were most likely to organize caisses to serve their own interests."8* Not only did members of the petite bourgeoisie occupy their customarily prominent role in the establishment of the CPIC, but those who patronized the caisse tended to be among the wealthier members of this class. Accordingly, while only 9 per cent of the professionals in the quartier owned property, this figure exceeded one-third among professionals who supported the caisse. This superiority was further reflected in terms of the value of the premises inhabited by the petit bourgeois founders of the caisse. As other researchers have already discovered, Montreal is one of the few North American cities for which there are tax rolls indicating the rental value of the premises occupied both by owners and by renters.86 On the basis of this information, we can see once more the greater wealth of the initial members of the CPIC. While the average dwelling occupied by a professional man in the district had a rental

MAP 2 Area Served by CPIC (Shaded) in Eastern Montreal Defence, 1977 Source-. Mapping and Charting Establishment, Ministry of National Defence, 1977

25 The Counterattack of the Bourgeoisie

value of $143, the figure was 25 per cent higher for members of this class who joined the caisse in 1909.8? The area to be served by the CPIC had little in common with most of the Montreal communities described by historians of the late nineteenth and early twentieth centuries.88 While Terry Copp and Bettina Bradbury have focused on the poor, working-class districts along the Lachine Canal or in the east end relatively close to the St Lawrence, the area served by this caisse, located north of the river and within easy reach of the green spaces of Lafontaine Park, was much more hospitable. While the areas discussed by Copp and Bradbury recorded infant mortality rates of over 150 per 1,000 live births in 1922, the figure for the Delorimier ward, which took in most of the area served by the caisse, was 102. While this figure was double that for Westmount, it still stood near to the norm for the city as a whole.8? In a similar fashion, distribution of occupations within the area served by the CPIC was almost identical to that for all of Montreal.9° This was not an area overwhelmingly populated by unskilled labourers, whose tendency to change residences each year would have worked against a co-operative institution that depended on neighbours' willingness to work together. Accordingly, the area was an appropriate quartier for the introduction of Desjardins's movement to Montreal. However, even within this district, which was better off than most French-speaking parts of Montreal, those who were wealthier than the norm initially joined the caisse. In this, as in the various rural contexts, the founding of a caisse, though facilitated by the clergy, was largely supported - from the drawing up of the plans for Desjardins's arrival through to the opening of the co-operative for business - by doctors, notaries, lawyers, accountants, teachers, and small businessmen. CONCLUSION In 1897 the notion of establishing a chain of co-operative savings and loan societies was no more than a fantasy for Alphonse Desjardins, whose life up to then had largely been consumed by working for newspapers and recording parliamentary debates. Nevertheless, only three years later the first caisse populaire was established, and by the time of Desjardins's death in 1920 there were 140 caisses in operation. Put in these terms, the early years of the caisses were an unqualified success, particularly in a Quebec economy in which power was being concentrated into the hands of fewer and fewer people, most of whom spoke English. In a different context, however, the achievements of the caisses look much more limited. While accumulation of assets of $6.3 million might seem impressive for an institution that did not even exist at the start of the century, the figure appears insignificant in contrast with the assets of the chartered banks. Only one of these institutions, the Weyburn Security Bank of Saskatchewan,

26 The Petite Bourgeoisie and the Poor had total assets less than those controlled by the caisses at the end of 1920; among banks with headquarters in Quebec, the smallest was the Banque Provinciale, with assets of over $40 million. Moreover, while steps were taken for creation of 201 caisses during Desjardins's lifetime, only 154 ever opened their doors for business, and fourteen of these had already failed prior to 1920. By 1945 only eighty-one of the caisses that had opened for business during Desjardins's lifetime were still in operation. Depending on one's perspective, the caisses offered evidence between 1900 and 1920 of both success and failure also in terms of their ability to induce large numbers of Quebecers to become members. The five caisses discussed in detail in this chapter proved extremely attractive to members of the petite bourgeoisie; after all, it was members of this class who joined with Desjardins to launch the movement and then to encourage its spread throughout the province. These men devised the caisses not only to assist the poor but also to deal with the sorts of problems besetting the petite bourgeoisie both in Quebec and throughout the Western world in the late nineteenth and early twentieth centuries. They acted during the first two decades of the twentieth century to lay the foundations for the caisse populaire movement out of a desire to re-create an earlier golden age that probably never existed precisely as they imagined it. The petite bourgeoisie probably never had the sort of unchallenged authority imagined by the leaders of the caisses, and for that matter male heads of households probably never exercised the sort of authority imagined by Desjardins and his colleagues.9' Be that as it may, these men believed that they were reconstructing a world that had turned against them, a motivation that produced a vast array of institutions, both confessional and secular, one of which happened to be the caisses. To re-create the nineteenth century, however, the petite bourgeoisie needed to bring poor Quebecers into the caisses so that the masses might learn to appreciate once more the enlightened leadership of men who spoke their own language. Committed to the idea of the caisse as an institution to bring together the petite bourgeoisie and the poor, one of Desjardins's colleagues called on the traditional elite of French Canada: "Let us descend into the homes and workshops of our brothers who labour for a living .... Let us establish caisses populaires everywhere that we are able."92 This call to action reflected a sincere desire to provide the poor with "the credit which they deserve when hard pressed by adverse circumstances."93 In addition to providing services for the poor, however, the petite bourgeoisie also wanted something from them as well, namely recognition once again of French-Canadian clergy, professionals, and small businessmen as legitimate leaders. As Chanoine Grondin succinctly noted: "If we organize Christian organizations for the ordinary people, they will not be seduced by socialism."9* In distancing the poor from socialism, Grondin wanted to free them from poverty, but he also sought greater influence over their lives. There was nothing irreconcilable about the

27 The Counterattack of the Bourgeoisie

humanitarian and self-interested motives of the petite bourgeoisie, which, taken together, moved a particular class of men to found the caisses populaires. Even if the motives of the petite bourgeoisie can be understood, the caisses were not particularly successful in convincing the ordinary workers and farmers of the province to join this institution. The caisses had attracted 31,000 members by 1920, roughly 2 per cent of the French-speaking population of the province. Since most of Quebec's parishes did not yet have a caisse, this figure is a bit misleading. More telling, in the five communities under study here the figure never exceeded 15 per cent. Moreover, those who joined were consistently among the wealthier people in the community, many of them part of the petite bourgeoisie. The members of this class had given life to a new institution, but it was not yet clear at the end of the Desjardins era that they had created a viable institution of interest to the poor.

CHAPTER TWO

Attracting the Masses

In spite of Alphonse Desjardins's fond hopes that the caisses populaires would result in the mingling of the poor with the traditional elite of French Canada, this goal was still far from being achieved nearly twenty years after his death. While roughly 2 per cent of the French-speakers of Quebec belonged to one of these co-operatives in 1920, this figure had barely increased by the end of the 19305. Then, quite rapidly, as Figure i indicates, the situation changed, with the proportion reaching roughly 5 per cent in 1941 and 15 per cent by 1945. By 1946, over 400,000 Quebecers could claim membership in a caisse, finally giving some credibility to Desjardins's insistence thirty years earlier that the caisses constituted "an association of all the worthy residents of a parish."1 The long road toward widespread membership had been blocked until the end of the 19305 by two problems that Desjardins had not fuiiy appreciated as he was formulating his scheme in the comfort of the Library of Parliament. On the one hand, he probably did not anticipate the large number of caisses that would be forced to close their doors. While 140 of these co-operatives were functioning at the time of his death in 1920, there were still fewer than two hundred in operation as late as 1932, even though 266 caisses had opened for business since 1900. Beginning with the first caisse forced to close, in 1912, ninety-three such closures followed prior to 1934, over half of them during the Depression. With caisses in operation in only a relatively small number of parishes, many Quebecers were effectively incapable of joining one. However, the movement had difficulties in attracting the masses, even to caisses that had existed, with no apparent financial difficulty, for some time. For instance, membership of the first caisse, at Levis, actually declined, from over twelve hundred in the late 19105 to less than one thousand in 1926. It was only beginning in the 19305 that the Levis caisse enticed a substantial percentage of the local population to join its ranks. By 1946 there were over four thousand members

29 Attracting the Masses

FIGURE 1 Percentage of Quebec Catholics Belonging to Caisses Populaires, 1916-46

Sources: Canada ecclesiastique, 1916-46; Annuaire du Quebec, 1916-46.

in the province's largest caisse, and nearly 50 per cent of the people in the area owned at least one share.2 Both the slow spread of the caisses across the province and their slow acceptance where they were established were the result of a variety of factors, some of which were beyond the control of the movement's leaders and others for which these men did bear some responsibility. Clearly, Desjardins's successors cannot be held responsible for the ups and downs of the economy which greatly influenced the success of their efforts. While the decline in membership at Levis was the result of numerous factors, it did coincide with the recession that followed the First World War and sapped the savings of all Canadians, creating serious difficulties for a number of the chartered banks, whose depositors clamoured for savings that could not readily be repaid. Similarly, the closure of many of the caisses coincided with the Depression, whose impact could not have been entirely negated by even the most astute financial management. These closings not only reduced the number of parishes served by caisses but also tempered the interest of Quebecers in joining those co-operatives that survived the Depression unscathed. Confidence in even the healthiest caisse was no doubt shaken when the collapse of several resulted in losses to members. In the demise of the Caisse populaire de 1'Ange-Gardien, for instance, established under Desjardins's watchful eye in 1913 but forced to close in 1923, members lost 25 per cent of the savings and 45 per cent of the share

30 The Petite Bourgeoisie and the Poor

capital that they had entrusted to the institution .3 Such closures no doubt left their mark on workers and farmers, who could ill afford to lose their limited savings. Those same people may well have personally lost, or known someone who lost, their savings in the collapse of the Banque du Peuple in 1895, the Banque Ville Marie in 1899, or the Banque de St-Jean in 1908. French-speaking depositors were further inconvenienced by the Banque Jacques Carder's temporary inability to repay its depositors in 1899, along with the same problem faced by the Banque de St-Hyacinthe in 1908. Only massive intervention by the Quebec government prevented unprecedented losses, as the Banque Nationale, with deposits of over $30 million, teetered on the brink of collapse throughout the early 19205.4 These chartered banks were backed by the most powerful business interests in the province and operated under the supervision of the federal government. If enterprises such as these could fail, what hope could there be for community-based institutions such as the caisses? Following the worst years of the Depression and particularly upon the outbreak of the Second World War, Quebecers found themselves with savings in their pockets that made the caisses more attractive than they had ever been before. With the heavy demand for the goods produced by farmers and the improved wages paid to workers whose services were in great demand, there was a rapid increase in per capita income. While per capita income in Quebec, expressed in constant dollars, hardly changed from the first publication of such statistics in the 19205 up to the eve of the war, they increased by 30 per cent both between 1936 and 1941 and again between 1941 and 1946.5 As one caisse leader noted in 1942: "The war has created an exceptional situation from which our farmers and workers have profited. This has also been to the benefit of our caisses populaires which recruit their members from these two classes."6 One year later an inspector remarked that savings deposits in the caisses were increasing rapidly because the greater wealth at the disposal of ordinary Quebecers led them to join the co-operatives to "deposit their savings upon an unprecedented scale."? With the passing of the worst years of the Depression, the institutional instability of the caisses came to an end: closures were fairly uncommon after 1934. Only twenty-two caisses closed between 1934 and 1941, while none suffered this fate in the last years of the period under study. This feat is particularly impressive in light of the opening of nearly eight hundred new caisses between 1934 and 1945, bringing the number in operation to nearly one thousand by the end of the Second World War. The establishment of caisses in communities that had not been served prior to 1933 resulted in the signing up of 278,000 members by 1946. During the same period there were also nearly 85,000 new memberships taken out in parishes where caisses were already functioning in 1933. Under improved economic circumstances, new caisses

ji Attracting the Masses

were established and existing ones saw their membership roils swell; over 400,000 Quebecers belonged to one of these co-operatives by 1945. Better economic circumstances, however, do not tell the whole story. Improved practices of the caisses themselves made a difference as well. During the Depression, while the failure of members to repay their debts, together with the inability of depositors to leave their savings with the caisses, resulted in a number of closures, there had also been cases of financial mismanagement. These instances surfaced as a result of an inquiry carried out in 1934 by Cyrille Vaillancourt, president of the provincial federation of caisses populaires, which was formed in 1932 to administer a provincial grant to aid in the formation of new caisses and to hire a professional team of inspectors to watch over the co-operatives' financial affairs.8 Vaillancourt's inquiry reinforced the need for such supervision, as he learned of cases of "bad administration," of the "incompetence of the manager," and even of "the embezzlement of funds."? Even when there was no evidence of mismanagement, however, the policies of caisse leaders could affect decisions by ordinary Quebecers to become members. Each co-operative had to make decisions regarding such matters as the value of the entry tax to be charged on each new share acquired, the rate of interest paid for savings and charged for loans, and the size of the dividend to be passed on to members out of the year's profits, if there were any to distribute. Particularly for people of limited means, these decisions could determine whether joining a caisse made good economic sense. People faced with crushing poverty had no reason even to consider what a caisse had to offer. After all, what was the attraction of advantageous interest rates on savings if there were no savings to deposit? What was the allure of easy repayment terms on loans if any interest charges at all would have proved unbearable? There were, however, others among the province's farmers and labourers who did have small sums to save, who might have profited from credit, and for whom the policies of the local caisse were crucial in any membership decision. While ordinary Quebecers were left to assess the implications of the policies of the caisses, members of the petite bourgeoisie were frequently the authors of these decisions. The caisses had been established by these local leaders, and this same group largely administered individual caisses throughout the pre-1945 period. These leaders frequently echoed Desjardins's commitment to have the caisses work for "the protection of the needy,"10 but their policies at times seemed to work against this goal. Throughout much of the period the movement was run by the petite bourgeoisie, but not necessarily for the ordinary Quebecer, who was often reluctant to join, not only because of economic circumstances but also because of the way in which the caisses operated.

32 The Petite Bourgeoisie and the Poor BLANKETING THE PROVINCE There were effectively only two ways to increase the ranks of members: through creating co-operatives or expanding membership in existing caisses. The former was the more significant contributor to the expansion of the 19305 and early 19405. Roughly three-quarters of the increased membership between 1932 and 1946 came from caisses that had not existed in 1932." In the process, parts of the province that had scarcely been touched by the caisses were brought into contact with them. Up to the 19305 the caisses had been heavily concentrated in the areas that had proved to be fertile ground during Desjardins's lifetime. They were firmly established in the area near Levis on the south shore of the St Lawrence, the Gaspe peninsula, the St-Maurice valley, and the Eastern Townships. This movement was heavily concentrated in the eastern half of the province, even though roughly half of the population of Quebec at the start of the 19305 was concentrated in and around Montreal. Consequently, a north-south line drawn through the province just to the west of Trois-Rivieres would have divided the areas where the caisses had been firmly established prior to the Depression from those where the movement was only weakly implanted. In 1936, as had been the case fifteen years earlier, roughly 60 per cent of the caisses could be found in the same four regions where enthusiastic priests had helped le fondateur get the movement off the ground. The areas where the caisses first took hold were united, however, by more than the chance distribution of Desjardins's most loyal supporters. Up to 1920 Desjardins himself played the pivotal role in the operation of the caisses and promoted the co-operative at Levis as the unofficial head office for the entire system. Accordingly, the caisses took root in parts of the province most accessible to Desjardins's hometown.'2 Moreover, there was a tendency to establish caisses in communities where the chartered banks had not yet made their mark. Just as Levis had been an appropriate site, given its long history of poor banking services, so too were well over half of the caisses set up prior to the 19305 located where local savings had not yet been captured by the chartered banks.1' This issue of bank competition was not taken lightly by caisse officials. During Desjardins's lifetime a veritable war was waged between le fondateur and Napoleon Lavoie, general manager of the Banque Nationale, whose headquarters were in Quebec City and whose operations were concentrated in the same parts of the province where the caisses had started up. Lavoie encouraged his branch managers to spread rumours regarding the vulnerability of the caisses and sent lettters to influential Quebecers, including the archbishop of Quebec, pointing to the dangers of encouraging these co-operatives. As Desjardins wrote to one correspondent: "The Banque Nationale is waging war against us in the nastiest fashion imaginable."'4

33 Attracting the Masses

While the animosity between the two institutions seems to have passed by the 19208, following Desjardins's death and Lavoie's removal, the competition offered by the banks continued to concern caisse officials. For instance, the Vaillancourt inquiry unearthed numerous cases in which the banks had played a central role in forcing caisses out of business. The cure of the parish of St-Frederic in Drummondville informed Vaillancourt that the caisse in his parish had closed in 1929 "because the banks were competing aggressively" against it. As for the caisse in Papineauville, it could not survive in the presence of two branches which took most of the local business.'5 Faced with the prospect of such competition, the caisses were wisely established, if possible, wherever the banks had not yet set up shop. A small percentage of these early caisses were established in cities and towns such as Levis. Nearly three-quarters, however, were set up in rural communities that the banks had passed by. Obviously, these were not the wealthiest parishes in the province; otherwise the banks would have been there already. However, they were not communities still practising the subsistence agriculture of the nineteenth century, remnants of which could still be found in early-twentieth-century Quebec. The rural communities penetrated by the caisses up to the Depression seem to fall somewhere between these two extremes. In 1921, for instance, the average farm in Quebec encompassed 125.4 acres, nearly indistinguishable from the 124.8 acres recorded in those parishes where caisses had been formed. Nor does the similarity end here; in terms of every indicator of agricultural activity provided in the census, there was scarcely any difference between the province as a whole and the parishes with caisses."5 Co-operatives seemed to appeal to those farming communities that were neither the very wealthiest nor the poorest. A similar situation is described by R.J. Sacouman in his writings on the Maritime co-operatives of the Antigonish Movement. He finds that well-to-do farmers could afford to secure financial services through existing channels, while the very poorest farmers did not want the burden of debt, even the more bearable type available through a co-operative. The greatest support came from farmers somewhere in between, "not wealthy enough to obtain easy credit and yet [who] had to expand to remain viable."'7 Up to the Depression, then, the caisses had made their way into a relatively small number of communities, most of which were rural and located in certain regions of eastern Quebec. These communities rarely had branches of chartered banks and were neither fabulously wealthy nor terribly poor. As a group, however, these early caisses constituted only a relatively small percentage of all those established between 1900 and 1946. In fact, fully twothirds of the co-operatives formed during the period under study were created after 1936, as part of the process that vastly extended caisse membership. With this expansion, parts of the province barely touched by the move-

34 The Petite Bourgeoisie and the Poor

ment up to the 19308 came to be dotted with caisses. Relatively peripheral parts of Quebec, all north of the St Lawrence - such as the Saguenay-Lac St-Jean region, the areas immediately north of both Montreal and Quebec City, and the northwest - had only 20 per cent of all caisses in 1936, but more than 30 per cent ten years later. In the process, however, the type of rural community amenable to a caisse did not appreciably change. Parishes without bank branches were still prominent. Accordingly, 85 per cent of all rural caisses established between 1941 and 1946 were in communities without banking services - a situation encouraged by the chartered banks, which cut back their branches in the province from nearly 1,200 in 1930 to 1,045 by 1945 • In addition, farming activities in parishes boasting caisses continued to parallel the norm for the province as a whole. In 1941 the value of the average farm in the province was $4,783, while the average for parishes with caisses was $4,514, or 94 per cent of the provincial figure.'8 The type of rural community served by the caisses was not altered by the expansion of the late 19305 and early 19408. The growth also did little to change the status of the caisses within the Montreal market. While the caisses had always been visible in Quebec City, perhaps because the movement had been born just across the St Lawrence in Levis, this was not the situation in the province's largest city. In 1946, as had been the case ten years earlier, only 7 per cent of the caisses were situated on the island of Montreal. While 15 per cent of the French-speakers in the province belonged to a caisse, fewer than 5 per cent of French-speaking Montrealers were members. This percentage had increased significantly since 1941, but not enough to remove Montreal's distinction as an inhospitable terrain for the caisses. Given the apparent reluctance of Desjardins and his successors to compete directly with the banks outside Montreal, it is little wonder that the caisses showed similar reticence in what was still the most important financial centre in Canada. Moreover, as was made clear in the establishment of the Caisse populaire de ITmmaculee-Conception, the formation of caisses in Montreal was impeded by the movement of many of the city's French-speakers from year to year, a process that inhibited the development of strong ties within the community, so essential for a co-operative. Lastly, the penetration of the Montreal market was impeded by the relative poverty of the French-Catholic population.'9 While a caisse might be formed in a relatively affluent district, such as that served by the CPIC, many of the poorer French-speaking areas were less inviting, as there was neither a large enough pool of savings nor sufficient demand for credit to justify a co-operative. As in rural Quebec, the caisses were most successful in areas neither too wealthy nor too poor. The formation of nearly 700 caisses in the decade leading up to the end of the Second World War made membership possible for large numbers of Quebecers who had not previously had access to these co-operatives. This expansion helps explain the rapid growth in the percentage of the Quebec

35 Attracting the Masses FIGURE 2 Percentage of Catholics Belonging to Caisses Populaires: Five Communities, 1916-46

Sources: Canada ecclesiastique, 1916-46; Annuaire du Quebec, 1916-46.

population with membership by 1945. There were, however, some things that new caisses could not automatically achieve: the profile of the type of community served by a caisse barely changed, and mere establishment of a caisse did not guarantee sizeable membership. A M O V E M E N T W I T H O U T THE MASSES

The only way that new members could be found, along with establishment of new caisses, was through recruitment in communities where these cooperatives already existed. In the five caisses introduced in the previous chapter this recruitment was greatly facilitated by improved economic circumstances. In each case the end of the Depression and the coming of the war allowed rapid growth in the percentage of residents who belonged. This generalized growth could not erase, however, the considerable differences that had existed since early in the century in terms of the place of each caisse within its community. By the end of the war, as Figure 2 shows, nearly 50 per cent of the population of Levis belonged to the first caisse - not entirely surprising, given the

36 The Petite Bourgeoisie and the Poor

central role of the co-operative movement in the local economy. By the mid19408 the city was home not only to the first caisse but also to the offices of both the regional federation of caisses for the Quebec City region and the provincial federation. Desjardins had hoped that Levis would become another Neuwied, "the hometown of Raiffeisen which is the headquarters of the federation of 12,000 caisses."20 By 1945 this idea had become a reality, and as a significant local employer, the caisse populaire had become a major part of the lives of Levisiens. At the other extreme was the situation in Montreal, where the CPIC failed to attract more than 5 per cent of its potential clientele at any moment prior to the end of the Second World War. Three factors - the instablity of the urban population, which weakened the bonds of trust between co-operative members; the relative unimportance of parish identities, which further diluted any sense of solidarity; and easy access to a wide range of alternative financial institutions - all worked against both establishment of caisses and their attractiveness once they started to operate. Finally, the situation of the three rural caisses lay somewhere between the extremes offered by Levis and Montreal and close to the norm for the province. These communities had the advantages of stability not evident in Montreal without the co-operative "mystique" that existed at Levis. For all these differences, however, these five caisses were united by their attractiveness to the wealthier members of each community. This feature had been true of the initial members, and while the poorer members became more visible during the prosperity that came with the outbreak of the Second World War, the wealthier parishioners were generally overrepresented throughout the pre-1945 eraAt the start of the 19108, as when Desjardins put the first caisse into operation, the professionals and small businessmen of Levis were more prominent within the ranks of CPL members than within the local population. In contrast, labourers, particularly the unskilled, were underrepresented. Because of both the economic dislocations that followed the First World War and, more important, policy decisions by caisse leaders (discussed below), the ranks of unskilled labourers declined dramatically by 1926, as did total membership. Following a dramatic shift in policy, workers were more visible in 1927, a situation upset by the coming of the Depression. As Table 2 indicates, only with the outbreak of the Second World War did the poor of Levis once more become prominent within the caisse. Even though support for Desjardins's movement was much less widespread in Montreal than in Levis, the evolution of the CPIC's membership had many of the same elements (see Table 3). Once more, there was the same overrepresentation of the petite bourgeoisie, particularly professionals, who as late as 1945 made up 20 per cent of the membership but only 5 per cent of the population of the territory served by the co-operative. As for the labourers, or journaliers, their place within the membership in 1911 was roughly the same

37

Attracting the Masses

Table 2 CPL: Members and Population of Levis, 1913-45 % in each occupational category 1913 Selected Occupations Professional Small business Commercial employee Skilled labourer Unskilled labourer

N

1926-7

1945

1936

CPL CPL

Levis

1926

1927

Levis

CPL

Levis

14

5

13

22

14

12 24

12

4

18

6

12

5

13

14

11

17

14

15

13

15

22

19

15

15

17

21

16

19

24

23

21

17

21

20

27

10 1,099

14 656

7

23

2

9

23

8

21

194

729

ISO

297

616

111

547

CPL

Levis

Source: See Appendix. Table 3 CPIC: Membership and Population of District, 1911-45 % in each occupational category 1911

Selected occupations Professional Small business Commercial employee Skilled labourer Unskilled labourer

N

CPIC

1923

District

CPIC

1945

1934

District

CPIC

District

CPIC

District

12

4

12

10

19

7

20

5

19

15

20

15

23

16

15

15

15

17

19

22

15

20

18

20

28

29

26

19

21

22

16

23

23 287

21 334

15 479

16 565

8 356

17 758

5

13

1,245

795

Source: See Appendix.

as within the community. By 1945, however, 13 per cent of the male residents of the area were journaliers, as opposed to only j per cent of the CPIC's members.

38 The Petite Bourgeoisie and the Poor

The underrepresentation of the poor in the CPIC was similarly reflected by the city's water tax evaluation rolls. While the mean rental value recorded by caisse members in 1911 was roughly the same as that registered by all residents of the district, the situation had greatly changed by the end of the war. By 1945 the figures were $277 for members and $233 for residents.2' Moreover, property ownership was consistently more widespread among caisse members. Although the gap had narrowed somewhat by 1945, 19 per cent of caisse members owned their home, but only 7 per cent of all residents.22 There was absolutely no evidence that the poorer elements were at any time more prominent within the membership than in the community. Rather, the caisses at Levis and in the east end of Montreal were more accessible to those who held higher-status jobs, who resided in more expensive accommodations, or who owned the dwellings in which they lived. This impression is only reinforced by the rural caisses in the very different circumstances of St-Remi, Maria, and St-Theophile du Lac. Invariably, the mean value of property owned by members was greater than that for the community at large, as reflected in Table 4. In both St-Remi and Maria, as at Levis, the differences between the members and the community became less pronounced upon the enrolment of many poorer residents following the Depression and with the coming of the prosperity engendered by the War. Widely differing local circumstances did not prevent similar patterns in these two rural communities. St-Remi was a relatively prosperous agricultural community, on the doorstep of Montreal, where the mean value of a farm was $7,493 in 1941, while Maria was far from large markets, situated as it was on the shores of the Baie des Chaleurs, where the mean farm value was only $2,876.*' In spite of these differences, most families in the two parishes had been able to retain their farms throughout this period, and by the late 19305 and early 19405 the poorer landowners were better able to acquire memberships in the caisses. In St-Theophile, by contrast, the lot of the poorer elements actually deteriorated during the 19305 and 19405. While most residents earned at least part of their livelihood from farming when the caisse opened, the situation was greatly changed by the 19305. Consolidated Bathurst acquired much of the land to provide raw materials for its pulp and paper operations, and as a result, one heavily farmed part of the parish was depopulated, with many leaving St-Theophile altogether.2* The population fell from roughly one thousand in 1920 to less than seven hundred by 1940. As the administrators of the caisse noted in 1941, numerous families were leaving because "there is nothing to do in our small parish."2* Those who remained often retained small plots of land, but their livelihood depended on securing work outside the community, usually at the mills in nearby Grand'Mere. These people often found themselves too poor to benefit from the caisse, while the relatively well-to-

39 Attracting the Masses Table 4 Rural Caisses and Property Values, 1910-45 Mean Evaluation for Members as Percentage of That for Local Residents Caisse

St-Remi St-Theophile du Lac Maria

1910s

1920s

1930s

1940s

153 127 114

161 130 104

151 120 135

115 163 119

Sources- Caissc populaire de St-Remi, membership lists, 1916, 1924, 1933, 1945; Viile de St-Remi, evaluation rolls, 1916, 1924, 1933, 1945; Caisse populaire de St-Theophile du Lac, membership lists, 1 9 1 3 , 1923, 1934, 1945; Municipalite du Lac-a-la-Tortue, evaluation rolls, 1 9 1 3 , 1923, 1934, 1945; Caisse populaire de Maria, membership lists, 1912, 1923, 1934, 1945; Municipalite de Maria, evaluation rolls, 1912, 1923, 1934, 1945. Note-. Since data from the various caisses and municipalities were not always available for the same years, the information is presented on a decade-by-decade basis to simplify presentation. For further details, see appendix.

do were retaining their memberships. As a consequence, the gap between the value of the land owned by the average local resident and that of the average caisse member widened. Those left without property, not surprisingly, were less likely to join than those who did own land. In various contexts across the province, professionals and small businessmen were more likely to become members of a caisse than labourers, wealthy landowners than their poorer counterparts, and anyone owning property than a propertyless Quebecer. These blunt distinctions dulled with the improved economic circumstances of the late 19305 and early 19405. Nevertheless, economic conditions cannot entirely explain the persistent overrepresentation of more affluent groups in an institution designed to assist the poor. Equally significant were the policies put into place and administered by the petit bourgeois leaders. POLICIES AND MEMBERS

The actual running of a caisse populaire left many decisions to elected administrators. While Desjardins made recommendations from the very beginning as to how each caisse should be run, and while suggestions "from above" came to have considerable force following establishment of the provincial association of caisses in 1932, the individual caisse never completely abandoned its autonomy. From the very creation of one of these co-operatives, a number of interrelated decisions had to be made that would influence its attractive-

40 The Petite Bourgeoisie and the Poor

ness, particularly to poorer residents. Frequently, however, the leaders of the caisses seemed to forget that actions such as the setting of interest rates on savings and loans had social implications. If cast unwisely, these decisions could dissuade poor Quebecers from acquiring memberships. The first decisions that had to be made concerned attracting funds to be used in day-to-day operations. These funds took on two forms: savings deposits and share capital. To maintain a sufficient supply of savings, the rate paid to depositors had to be marginally above that offered by the chartered banks, so that funds would not be siphoned off in that direction. As for shares in the caisse, at least one had to be acquired by each member. Taken as a whole, the share capital of the caisse was designed to provide a relatively permanent source of funds that could be depended on from year to year. Desjardins stressed the importance of this stable base, on which "a caisse is able to make larger loans for a longer period of time. Savings deposits are too unstable, and it is dangerous to commit these funds for a long period of time, not knowing when depositors might want to withdraw them."26 Since shares could be cashed in by a member at any time, however, means had to be found to discourage their withdrawal. First, each caisse would set a ceiling on the maximum number of shares that any one member could hold. In this manner no one member could unduly disturb the affairs of the caisse by demanding reimbursement. Second, each caisse required the purchaser of each share to pay a tax, the taxe d'entree. At the beginning this tax was set by most caisses as a ten-cent charge on every five-dollar share. If a member cashed in the share, the tax would be sacrificed. Desjardins hoped that making a member think twice about returning his share to the caisse would turn share capital into a relatively permanent fund. Third, a caisse could offer a rate of return on members' shares that was superior to that offered on savings deposits. Since savings deposits could be withdrawn on demand, a premium might encourage members to leave their investments in the shares over the long term. In light of the rate of interest paid on savings, the conseil d'administration would recommend to the annual general assembly of members the size of the boni, or dividend, to be paid out from the previous year's profits. The paying of a generous boni was only one of several options open to a caisse fortunate enough to have earned a profit on its operations. Prudence dictated that a certain part of these profits go toward a reserve fund to cover unexpected crises. The setting aside of profits for a rainy day was required by the original by-laws for the caisse at Levis, and after 1911 this practice was made mandatory for all caisses by provincial legislation.2? In addition, a caisse could use the profits to provide a rebate to its clients in direct relation to how much use they made of the institution. Such rebates, or ristournes, returned to borrowers a portion of the interest that they had paid on their loans during the year; in terms of savings deposits, a ristourne offered a supplementary interest payment on the funds left with the caisse. One critic of

4i Attracting the Masses

the practices of the caisses argued strenuously that the failure of many to provide such rebates to their members violated one of the cardinal rules of any co-operative, namely, that members should be rewarded for their use of the institution.28 Whether there were any profits to distribute depended, of course, upon the ability of the caisse to secure a satisfactory return on its use of the funds at its disposal. More specifically, profits were obtained by the caisse the same way that they were secured by any financial institution, namely, by lending out funds at a rate higher than that paid for securing them in the first place. The greater the gap between the interest rate charged to borrowers and that paid for savings deposits, the greater would be the profits. Of course, a policy of relatively high interest rates upon loans stood to limit the accessibility of credit to the poor. The annual assemblies of the members of the CPIC resembled those of other caisses in the province, where demands for lowering the interest charged for loans were regularly voiced. In the governing structure of the caisses, interest rates were set by the commission de credit, but this did not prevent the ordinary members from calling for change. As early as 1914, only five years after the founding of this caisse, an unsuccessful attempt was made to reduce interest rates on loans. This might have had the effect of reducing profits, but the lost profits could have been compensated for by reducing the boni. Instead of benefiting shareholders, the policies of the caisse would then have been oriented toward its primary goal: "to wage war against usury and to aid the worker who wishes to borrow a small sum."29 At the very least, members sought an increase in the rate paid on savings deposits if the interest charged on loans were to remain unchanged. Once more, this would have reduced profits and, as a result, the boni. For the poorer member, this was an attractive trade-off, since interest was credited quarterly to savings accounts, while the boni was paid only at the end of the fiscal year. One director of the CPIC, clearly unwilling to see the profits reduced by any means, responded that an increase in the interest paid to depositors would attract the savings of people who were little better than speculators, since they were unlikely to leave their funds with the caisse for long. Such a situation, this director observed, was "harmful to the best interests of the caisse."'0 More generally, the leaders of the caisses indicated their commitment to a policy of high dividend rates by amending their internal regulations to allow the use of part of the reserve fund to maintain the boni at the level that had been paid over the previous three years.J1 Further demands for reductions in the rates charged on loans were regularly presented during the Depression. As interest rates on savings declined, the failure to make comparable reductions for loans meant an increase in profits. In spite of repeated demands to lower the rates for credit, the only satisfaction that the members received was a gradual increase in the ristourne. As

42 The Petite Bourgeoisie and the Poor the president of the CPIC noted in 1938, in spite of interest rates which were generally at 7 per cent, thanks to a rebate "the real rate of interest paid by our members upon mortgage loans does not exceed 4.5 % net."*2 Of course, what the president did not point out was that a borrower would have to wait until the end of the fiscal year and hope that the caisse had amassed sufficient profits to give him his ristourne, a difficult situation for poorer members. In spite of these various complaints, throughout the period under study the interest rates charged by the caisses were generally lower than those set by the chartered banks. One commentator has calculated that in the course of one year shortly after the Second World War members saved upward of $750,000 from the lower interest rates available from the caisses." Nevertheless, as Robert Mignier has noted, many Quebec farmers in the 19205 complained about interest rates which were still beyond their means.'4 The conscious decision by leaders of many caisses to charge higher rates than were absolutely necessary, largely to allow substantial profits, could only have discouraged particularly poor members from applying for credit. More significantly, it probably discouraged many from even bothering to acquire membership. The setting of interest rates reveals the way in which the policies of a caisse could work against the interests of those in whose name the institution had been created. Moreover, this aspect of the running of a caisse indicates how the various financial decisions were related to one another. Just as the interest charged against loans was related to what the caisse paid as a boni, to what it offered for savings, and to what it provided to borrowers as a rebate, so too was the rate set for the taxe d'entree linked to the value of the boni, with dramatic consequences for both the size and the composition of membership. Such a relationship was not envisioned, however, in Desjardins's initial design. At the very outset the tax charged against each share was set at ten cents. This token charge would help build up the reserve fund and discourage members from frivolously cashing in their shares; the tax was not intended to be an obstacle to membership. The role of the taxe d'entree had changed by 1907, when Desjardins's caisse at Levis increased the tax to fifteen cents, "since the dividend had been increased from 4% to 4.5%." This was the beginning of a policy that Desjardins attempted to impose on other caisses by which the tax was supposed to increase by five cents for each 1/2 of i per cent increase in the boni above 4 per cent. Desjardins feared that an increase in the boni without a comparable increase in the entry tax would encourage members "to convert their deposits very suddenly into shares. This is a danger that must be avoided."" Moreover, he believed that it was only fair that members who acquired shares when the dividend was high should pay a higher tax than those who had received lower dividends in earlier years. The taxe d'entree served to maintain "a fair relationship between

43 Attracting the Masses older shares and newer shares and between long time members and newer ones."'6 While Desjardins' formal linking of the dividend and the taxe d'entree worked its way into the regulations of numerous caisses, its spirit was somehow perverted at Levis in the years immediately following his death. The tax was carried to seventy cents in 1922, and to one dollar in 1923, finally peaking at $1.50 in 1924. If Desjardins's original formulation were still being respected, then the tax charged in 1924 would have reflected a boni of 18 per cent, when in fact the rate was only 7 per cent. The directors called these increases, as had Desjardins before them, the price for such a high dividend "compared to the rate currently being paid on bonds offering the same security."'7 What they seem to have forgotten, however, was that this "penalty" against speculative investors would also preclude acquisition of membership by the poorest Levisiens. The effect of the taxe d'entree on the poor was painfully clear as early as 1917, when the rate was still only thirty-five cents and the guidelines established by Desjardins were still being respected. In that year the total number of members in the Levis caisse exceeded twelve hundred for the first time, but then a decline began that bottomed out at less than one thousand in 1926. The problems were related to the economic downturn after the war, but the decline began even before the post-war recession, and so some other influence was also at work here. After 1917 the number of depositors continued to grow, while membership shrunk. In 1917 there were over 1,400 depositors but only 1,235 members; by 1926 this gap reached its maximum, with nearly 2,400 depositors and fewer than 1,000 members. In theory, only members were supposed to do business with the caisse. In practice, however, local residents too poor to acquire one share in the face of the high entry tax were still being encouraged to deposit their savings by directors who feared loss of a major part of the institution's resources. As a result, in 1926 non-members were responsible for the bulk of deposits. Among poorer groups this situation was most pronounced: only 15 per cent of unskilled labourers with deposits owned shares. For most unskilled labourers with deposits, the Levis caisse had become little more than a savings bank administered by the elected representatives of those with sufficient means to own at least one share in the enterprise. A clause in the Quebec legislation ruling co-operatives permitted borrowing of funds from non-members. At least one leader of the Levis caisse, however, saw that accepting the savings of people too poor to pay the entry tax was not what the law had intended. In a 1926 letter to Raoul Desjardins, son of Alphonse and president of the caisse after his father's death in 1920, Elias Roy, a priest and a member of the commission de surveillance, threatened to resign if the entry tax were not immediately lowered. He called for a policy by which "each depositor would be able to acquire at least one share."'8 In the end it was Desjardins who left his position, and not Roy, because

44 The Petite Bourgeoisie and the Poor

of apparent support for a return to the principles on which the caisse had been founded. Following a meeting of the board of directors on 30 December 1926, Desjardins was no longer president, although he stayed on as manager and a director. More significant, the same meeting responded to Roy's call by setting the fee on the first share purchased by a new member at ten cents, "in order to permit even the poorest depositor to become a member." The tax was to remain at $1.50, however, for all additional shares.'9 This dramatic shift in policy led to an equally striking increase in the CPL's membership from less than one thousand in 1926 to nearly seventeen hundred one year later. More specifically, membership grew among the poorer elements. From 1926 to 1927 the number of unskilled workers who were members increased by 400 per cent.*0 The number of depositors declined over the same period, as certain people, still too poor to both pay the entry fee and purchase one share, took their deposits elsewhere. Still others stayed on as depositors without shares, even though this was now clearly contrary to policy. In 1927,30 per cent of the depositors who were unskilled labourers remained without shares and without a voice in the affairs of the caisse. Such depositors were gradually weeded out, and by the 19305 they were no longer depositing their savings with the co-operative. Membership varied wildly over a decade, for reasons largely of the caisse's own making. While the problems related to the taxe d'entree had been resolved in Levis by the end of the 19205, the tax continued to inhibit recruitment of new members elsewhere in the province throughout the 19305 and 19405, particularly among the poor. Accordingly, in 1945 one official expressed his concern over the implications of a high entry tax for the social composition of the membership. Rosario Tremblay, director of the inspection service of the provincial federation, noted: "From my point of view, the entry tax should always be set at ten cents to allow all classes in society to have access to the caisses. Unfortunately, however, this view is not universally accepted. In principle, the door should be open to all."4' The size and composition of the membership were influenced greatly by economic circumstances beyond the control of any caisse leader. However, in terms of issues such as setting the interest rate on loans or establishing the taxe d'entree, these leaders could facilitate or discourage membership, particularly among the poor. In the entry tax issue, the policies pursued by caisse leaders seemed totally contrary to the declarations regularly repeated about the caisses' responsibility to the poor. This apparent contradiction can be at least partially resolved by looking at the social status of the men who led the caisses during this period. LEADERSHIP

The caisses were established largely by the petite bourgeoisie, and there is considerable evidence that members of this class and other well-to-do citizens

45 Attracting the Masses

largely ran these co-operatives throughout the period up to the end of the Second World War. Members of the three bodies that ran each caisse - the conseil d'administration (board of directors), the commission de credit (credit board), and the commission de surveillance - were elected annually by the members of the co-operative, with each casting one vote regardless of the number of shares in his possession. This structure was not always as democratic in practice, however, as it appeared. At the very inception of many of the caisses, a slate of candidates, chosen in advance from the local elite, was put forward by the organizers, who also belonged to the petite bourgeoisie.*2 The organizers wanted respected members of the community to guide the caisse during the initial signing-up of members, but their methods effectively precluded spontaneous nominations from the floor. In practice, the list of possible administrators was short, since few members were competent to direct the affairs of a financial institution. This list was further narrowed by Desjardins's insistence that the administrators be volunteers. In both urban and rural Quebec, it was obviously easier for a lawyer to find time and energy to attend meetings than for either a factory labourer or a farmer. Once the caisse was off the ground, the initial administrators were normally re-elected, given their standing in the community and their expertise in running the co-operative. Even if new candidates were put forward, they usually formed part of an official slate that rarely met with any opposition when presented to the members at the annual meeting. Attendance at this meeting was frequently poor: the leaders at St-Theophile du Lac announced in 1916 that "there would be surprises at the end of the annual assembly to attract members and to keep them at the meeting until the very end."45 The problem of poor attendance had apparently not been resolved by the 19305, as no more than twenty-five of the roughly 125 members were present at the annual meeting in January 1936. Considering that the thirteen administrators were probably at the meeting, only 10 per cent of the total membership was in attendance, and so subsequent annual assemblies were moved to the fall, when travel would be less difficult and when a guest speaker could be more easily brought in to fire up the troops.*4 Even if more people had attended, it would have been their only involvement of the year. Under these circumstances, they were hardly going to challenge leaders of the community in public. Reflecting on this problem, one inspector noted: "No one is going to stand up to nominate an opponent."« The administrators of the caisses were generally better off than the average member. This domination by the local elite was easily discernible, for instance, in the affairs of the Levis caisse. Throughout most of the period up to 1945, professionals and small businessmen accounted for between one-quarter and one-third of total membership, even though these two groups made up less than 20 per cent of the local population. These same men accounted for over 60 per cent of the members who served at some point on one of the caisse's

46 The Petite Bourgeoisie and the Poor Table 5 Rural Caisses: Property Values of Administrators, 1910-45 Mean Evaluation for Administrators as Percentage of That for Members Caisse

St-Remi St-Theophile du Lac Maria

1910s

1920s

1930s

1940s

113 165 114

115 146 104

114 166 135

113 126 119

Sources: Caisse populaire de St-Remi, membership lists, 1916, 1924, 1933, 1945; Ville de St-Remi, evaluation rolls, 1916, 1924, 1 9 3 ? , 1945; Caisse populaire de St-Theophile du Lac, membership lists, 1913, 1923, 1934, 1945; Municipalite du Lac-a-la-Tortue; evaluation rolls, 1913, 1923, 1934, 1945; Caisse populaire de Maria, membership lists, 1912, 1923, 1934, 1945; Municipalite de Maria, evaluation rolls, 1912, 1923, 1934, 1945. Note-. Since data from the various caisses and municipalities were not always available for the same years, the information is presented in this table on a decade by decade basis to simplify the presentation. For further details, see appendix.

governing committees. A similar pattern emerged in the other urban caisse, the CPIC, where more than two-thirds of the administrators between 1909 and 1945 were either professionals or small businessmen. The greater wealth of these leaders was reflected by other factors as well. While only 19 per cent of all male CPIC members in 1945 owned the dwellings in which they lived, the figure reached 45 per cent for administrators. Moreover, the mean rental value of the leaders' residences exceeded the average for ordinary members by nearly 20 per cent. As Table 5 indicates, this same pattern also prevailed in the three rural caisses; nowhere did administrators own property whose mean value was less than that of the ordinary members. In terms of social status, committee members stood above the average member, who in turn occupied a higher standing in the community than the average resident. There was also a certain hierarchy, however, within the governing structure: members of the commission de credit seemed to have higher status and to own property of greater value than those on the conseil d'administration. At Levis, for instance, over three-quarters of credit administrators were professionals and small businessmen; on the board of directors the figure fell to 56 per cent. Similarly, at Maria the mean value of the property owned by credit commissioners consistently surpassed that in the hands of members of the conseil d'administration. In 1934, for instance, the average for the former group was $3,088 and for the latter only $1,583. Just as there was a certain logic in having leaders of the community directing the affairs of a caisse, there was a similar logic in placing men with business expertise and considerable wealth on the board that disbursed funds entrusted

47 Attracting the Masses to the co-operative. Who could have been more fit to look after the funds of the co-operative's members than those who had had the most experience in handling funds in their private lives? However, these influential men all too often made decisions that seemed logical from their perspective but were not necessarily in the best interest of the ordinary residents of the community. In addition, changes in the distribution of power within the governing structure concentrated greater and greater power in the hands of the wealthy. In his original conception, Desjardins envisioned the annual assembly ruling on various issues that could affect the institution's attractiveness to prospective members. The annual meeting had the final say over such issues as the maximum number of shares that any member could possess, the ceiling on the value of loans, and the size of the boni. Since the taxe d'entree came to be linked to the boni, the decision about the size of the dividend substantially determined the caisse's ability to attract members. As was clear from the experience at Levis, raising the entry tax to unimagined heights in the 19205 effectively excluded the poorest members of the community. These increases were not the work of the annual assembly, however, since in 1918 the power to set the boni, and by extension to establish the entry tax, had been ceded to the conseil d'administration.t6 Four years earlier, the members of the caisse at Maria had made the same decision, leaving to the conseil d'administration "the power to set the dividend each year without referring the issue to the annual assembly."47 Noting the dangers of abandoning its authority, Chanoine Grondin admonished members for giving the board of directors "carte blanche .... Inevitably, some administrators will abuse this power. They will come to see themselves as kings and masters of their caisses."48 Parallel to this ceding of power, there was also evidence of the conseil abandoning some of its own powers to the commission de credit. While the credit board had the power to set interest rates and to determine which members should receive credit and on what terms, it did not have the right to purchase bonds, which many caisses did extensively in the 19205, resulting in financial disaster in a number of cases when the Depression struck.49 While Levis's involvement in the bond market did not threaten imminent collapse, its experience indicates how the initial distribution of power could evolve over time. Contrary to the division of responsibilities laid out in the statutes of the caisse, the credit board, apparently with the compliance of the board of directors, entered the bond business. The credit board's role in this regard became public knowledge only in 1932, as the caisse was trying to extricate itself from a contract that it had signed in 1925 to purchase $200,000 in bonds from a religious order on the outskirts of Quebec City. The caisse was quite appropriately concerned about its ability to repay deposits to its members in the midst of the Depression and sought to free itself from a contract made at a time when liquidity was less of a concern. The lawyer for the caisse found a way out, since the deci-

48 The Petite Bourgeoisie and the Poor sion to purchase the bonds had been made by the commission de credit, even though "the power to rule upon such issues belonged to the conseil d'administration." He noted that this irregular procedure had been going on for a long time, with the result that the conseil d'administration was unaware of how the bulk of caisse funds were being employed. He found that the caisse had to honour its commitment to prevent its loss of credibility and called for a return to the management practices set out at the institution's inception. *° By 1932 bonds, most of them issued by religious institutions outside Levis, made up over 90 per cent of the total value of the investments held by the co-operative.*' Accordingly, the directors had allowed the relatively wealthy - and seemingly more qualified - members of the credit board to remove funds from the community that might well have been put to good use by the poor. The credit board's embarrassment resulted in return of responsibilities for bond purchases to the conseil d'administration/2 although with no immediately discernible impact on the use of funds. During the 1936-7 fiscal year well over half of the value of investments went for bonds. Two critics of the Levis caisse called it little more than an "investment house ... We fear that le fondateur would have difficulty recognizing this caisse as the institution that he created ... The Caisse populaire de Levis has systematically refused to grant loans to members so as to invest in bonds which require less work and less supervision."" The commission de credit, although stripped of its ability to acquire bonds, retained control over the interest charged on loans to members. Just as the CPIC's annual assembly frequently sought lower interest rates, so too the CPL's archives refer to failed attempts to lower rates so that credit could be accessible to the poor. In 1926, for instance, the credit board was asked either to lower interest rates or to establish a rebate on loans at the end of the year out of profits. The board rejected both ideas, noting that an increase in the annual dividend could ease the burden of borrowers. As we have seen, however, such an increase in the boni resulted in a higher taxe d'entree and was available only at the close of the year. Nevertheless, the commission argued that such a course would adequately compensate borrowers "because the great majority of loans to members are secured by shares of at least an equal value."54 Clearly, the board believed that credit was dependent on ownership of a sufficient number of shares in the caisse, an assumption that was not part of Desjardins's original conception and that placed the poor at a considerable disadvantage. The wealth and power of the leading citizens in the community helped to alter the distribution of power set out by Desjardins. Even more significant, however, wealth seems to have blinded these leaders at times to the implications of their policies for the poorer members of the community. Accordingly, there were revolts from within the membership from time to time regarding

49 Attracting the Masses

the direction set by the leaders. In Levis up to the 19305 the members passively accepted the director's slate of candidates to fill the various elected positions. However, in the midst of growing concern regarding caisse policies during the Depression, particularly about the interest charged on loans, the 1931 general meeting saw nomination of opposition candidates from the floor. These candidates lost, in spite of a vote by secret ballot, and the same scenario was repeated at the 1932 assembly." More successful was the 1937 attempt to elect "unofficial" candidates to both the conseil d'administration and the commission de surveillance.*6 The commission de credit, composed of the wealthiest members of the caisse, remained impervious to this "revolt," even though its policies were at the centre of the protest. The greatest success by defenders of the poor in Levis came in 1938, when an opposition slate forced off the conseil d'administration Patrick Doyle, the incumbent president. Significantly, Doyle's downfall was precipitated by the board of directors' refusal to consider various proposals from the floor regarding payment of a rebate on loans and the matter of the entry tax, issues of specific concern to the poor. In each case the proposal was ruled out of order by the president, who declared that the matters fell within sole jurisdiction of the board. Doyle was rewarded for his arrogance by his removal as president after eleven years in office.v In 1942 there was a similar rejection of a long-standing leader, when the members of the Maria caisse removed from the commission de surveillance J.A. Cyr, who had held his seat since 1915.^ It was no accident that these successful challenges to entrenched leaders occurred at the same time that membership across the province was rapidly expanding, in the process generally becoming more representative of the general population. In Levis, the Depression may have given rise to protest, but it took significant changes in both the size and the composition of the membership for these protests to achieve some success. In the earlier absence of a strong voice to defend the poor, leaders of the caisse, who belonged to a different class, had rarely been pushed to consider the social implications of either high entry taxes or high interest rates. Had they considered such issues, the phenomenal growth in membership that began with the outbreak of the Second World War might have taken place much earlier. CONCLUSION With the rapid expansion of the caisses during the late 19305 and early 19408, leaders of these co-operatives found themselves in control of a movement that was suddenly operating on a scale that they could scarcely have imagined only a few years earlier. Between 1935 and 1945 the number of caisses in operation increased by over 300 per cent, while the ranks of the members grew by over 600 per cent and the value of assets shot up by nearly 1,000 per cent.

50 The Petite Bourgeoisie and the Poor

As one leader from that period recently noted in an interview: "We experienced during the 19408 a period of much enthusiasm for the opening of new caisses populaires. Unfortunately, there were insufficient resources for the proper inspection of these caisses, and the managers were incompetent in a number of cases ... This was a difficult period, one which was quite nerve-racking. "*9 Throughout most of the pre-1945 period the leaders did not have to worry about an overabundance of caisses, members, or assets. Up to the mid-i93os caisses were opened sporadically in only a few parts of the province, were closed more frequently than anyone wanted to admit, and, perhaps most important, were hard-pressed to enroll more than a small percentage of the population of any given parish in their ranks. Economic circumstances delayed the penetration of the caisses into many parishes and, within those parishes, into large numbers of households. At the same time, the policies of the caisses dissuaded poorer groups within the community from joining up. The caisses had been founded by the petite bourgeoisie and were administered largely by the wealthier elements in the communities in which they were established. These men involved themselves with the caisses both to help the needy and to improve their own place in society. Frequently, however, their own perceptions coloured the policies they devised for the poor. For instance, they seemed genuinely unaware of the problems created by the steady increase in the entry tax. Similarly, they seemed just as genuinely to believe that the impact of high interest rates could be softened through the paying of a higher dividend or of a rebate at the end of the fiscal year. In their reluctance to join the caisses, the poor seemed to understand the implications of a policy that, like our current method of withholding income taxes, forced them to repay their loans throughout the year and to wait until much later for relief. With the relative prosperity that followed the outbreak of the Second World War, a large number of poorer Quebecers were finally able to join caisses, some of them decades old. These newer members added substance to intermittent protests against the rule of the well-to-do. Such opposition highlights the way in which the movement had long been run by only a small segment of the community, and not necessarily in the best interests of the poor. More significant, the growing influence of these poorer people helped to alter the policies of the caisses, thus making the still further enrolment of Quebecers of limited means a real possibility. In this, as in other contexts, the combined impact of economic circumstances and policy decisions controlled the growth of the caisses populaires.

CHAPTER THREE

Investing the People's Savings

While the caisses populaires may have disappointed some leaders because of their inability to attract all elements of Quebec society prior to 1939, Desjardins, his colleagues, and his successors may occasionally have felt that they had been too successful in mobilizing the resources of Quebecers. The caisses were founded, in part, to retain savings within the community from which they were derived, but it was not always possible to find local outlets for the funds collected. If these savings were left to moulder, potential profits would be lost; if they were exported from the community, then a basic principle would be compromised. In 1925 one caisse leader noted: "One of the goals for the establishment of caisses populaires is the decentralization of the savings of the people; at the same time it is necessary to gain profit from the surplus of funds of certain caisses." It was therefore logical that the savings of one parish might be invested elsewhere.1 Such a dilemma must have seemed highly improbable, however, when the caisses were launched, for various obstacles stood in the way of their securing a significant share of the savings of Quebecers. To begin with, the chartered banks were rapidly establishing new branches to attract savings. The banks had traditionally depended on the sale of shares to raise operating capital, but in the late nineteenth and early twentieth centuries they were discovering that savings deposits offered a relatively inexpensive source of loanable funds.2 For those Quebecers who either mistrusted the banks or found themselves in a community without a branch office, savings could also be deposited with private individuals. Desjardins described the case of one local businessman to the south of Levis who was paying 6 per cent on savings when no legally constituted financial institution was paying more than 4 per cent. Of course, the hidden cost to the depositor was the possible loss of his savings should the businessman go broke or abscond with the funds.' Finally, the caisses had to contend with the reluctance of people who had never removed their savings from their mattresses. This reticence was not necessarily over-

52 The Petite Bourgeoisie and the Poor come by the co-operative structure of the caisses, which allowed an individual's neighbours to learn the details of his financial affairs. As Desjardins noted to one colleague, some potential clients had "an unfortunate mentality that only time will change."4 In spite of these obstacles, there were savings of over $4 million in the caisses by the time of Desjardins's death, and $8 million before the Depression struck at the end of the 19205. Then, following the spectacular growth in membership during the late 19305 and early 19405, savings deposits reached $100 million in 1945. This last figure is not very impressive when compared with the $668 million in savings that the chartered banks mobilized from the province in the same year. Nevertheless, the deposits held by the caisses grew more rapidly between 1935 and 1945 than did those of the banks: savings held by the banks roughly doubled, while the caisses experienced an increase of more than 1,000 per cent.* For the banks, accumulation of savings within a community carried with it no commitment for their reinvestment locally. As one caisse official, a former banker himself, noted in 1929, "Our farmers should not expect too much from the banks whose branches function to drain funds from rural parishes to the benefit of the cities."6 The banks were far-flung institutions that collected deposits from some communities for investment elsewhere. The caisses, by contrast, had been formed to offer an alternative to this export of funds. A member of the Levis caisse reminded administrators who had become seduced by the purchase of bonds: "The caisse populaire is an institution in which the residents of a parish deposit their savings so that they can be loaned, upon easy repayment terms, to those who can make use of them."7 Given this commitment, failure by a caisse to reinvest savings locally was potentially embarrassing, as Desjardins learned in his dealings with Napoleon Lavoie, from 1910 to 1920 general manager of the Banque Nationale, the bank against which the caisses most directly and most bitterly competed. Desjardins wrote to one correspondent, "The Banque Nationale works against us everywhere as is clear from the letters that I receive from the rural areas. It is trying to destroy the caisses by opening sub-agencies wherever a caisse has been established."8 These sub-agencies became an efficient means for the bank to counter competition from the caisses. In towns too small to support a regular branch, an agent, who would receive a commission on the basis of the quantity of funds taken in, was hired solely to collect deposits. There were 211 subagencies in operation by 1921 to compete with the caisses. By 1924 they had taken in $10 million in deposits that might have otherwise gone to Desjardins's co-operatives, which in 1924 had total assets of less than $8 million.' This conflict between the two institutions was taken extremely seriously by the two chief protagonists. Desjardins once described Lavoie as "a pretentious man with an exaggerated sense of his own importance."10 As for the Banque Nationale itself, Desjardins was fond of ignoring its very existence.

53 Investing the People's Savings

He always seemed slightly ill at ease in criticizing Quebecers for patronizing the French-run banks, given his own nationalistic inclinations. In terms of the Banque d'Hochelaga and the Banque Provinciale, he got over this reluctance by characterizing them as "so-called French Canadian banks" which would eventually be swallowed up by the larger, English-run institutions." As for the Banque Nationale, however, the other French-run bank that operated throughout the first decades of the twentieth century, Desjardins did not even refer to it when discussing the francophone institutions. Lavoie returned the favour by sending letters denigrating the caisses to numerous parties, including the archbishop of Quebec.12 In these letters, however, Lavoie did not merely respond to Desjardins's name-calling. More significant, he commented on the business practices of the caisses, specifically the way in which they employed the savings entrusted to them. Lavoie was bothered by what he saw as the hypocrisy of Desjardins - criticizing the banks for practices that the caisses engaged in themselves. While Desjardins claimed that the role of the caisses was to aid the poorest elements in the community, Lavoie noted in his letter tc Cardinal Begin: "It has frequently been repeated that the establishment of caisses populaires will aid certain needy classes in society which do not have access to the services of the banks. Moreover, it has been claimed that these co-operatives will not harm the affairs of existing institutions. Unfortunately, this is not true. The caisses populaires operate as do ordinary banks. They lend their funds to the same parties who would be able to borrow from the banks such as municipalities, school commissions, industrialists, merchants and well-to-do farmers ... In a word, the caisses populaires do the same business as do the banks."'3 Lavoie accused the caisses not only of providing significant credit to welloff members of the community but also of removing funds from the community, in contradiction of their avowed policy. As a banker, Lavoie accepted the fact that some communities would have a surplus of savings while others would have a greater demand for credit than savings to satisfy it. A centralized banking system was required to redress the imbalance. The caisses, he claimed, had been less than honest in advertising that they were not going to become involved in the movement of funds from the community: "If the demand for credit cannot absorb the funds deposited, the institution cannot advantageously lend out the deposits that it receives in a parish. The demand does not absorb the supply. It finds itself paying 3 or 3.5% interest upon a considerable amount of deposits that it cannot utilize in the same locality as its statutes require. Accordingly, it is obliged to provide loans elsewhere ... One of these caisses, in the county of Dorchester, has invested $12,000 in the bonds of an Ontario municipality."^ Competition for Quebec savings clearly led Lavoie to challenge the impression that Desjardins was trying to spread. One Banque Nationale director observed in 1922, "If cooperative banks were established on a large scale, they would

54 The Petite Bourgeoisie and the Poor end by taking a considerable amount from the bank. Until now the amount has been very small. But established on a large scale, they would lead inevitably to the taking of a large portion of the deposits of the commercial banks."1* At the same time, however, there was more than a glimmer of truth to Lavoie's claims. About lending funds to wealthier elements, Chanoine Grondin could respond only that the bulk of loans granted in the early years, of the Levis caisse had been small, a fact that he saw as putting the lie to "our opponents," who would claim that "these loans were made to people who could have done business with a bank."'6 Of course, small loans were not necessarily destined for poorer people, a point that will be discussed in the next section of this chapter. As for the complaint that the caisses removed funds from the community, Desjardins responded not by denying bond purchases but merely by pointing out that the caisse in question, in Dorchester County, had bought the debentures, not of an Ontario municipality, but of "a neighbouring one, situated about twenty miles from the caisse."1' The external use of local funds will provide the focus for the third section of this chapter. Desjardins inevitably had to compromise some of the abstract notions that he had conjured up in the years prior to the opening of the first caisse. In this sense, Lavoie's jibes were a bit too easy to make. However, le fondateur, his colleagues, and his successors continued to promote the caisses on the basis of these principles long after they had abandone'd them in practice. Just as there was often a gap between rhetoric and reality in the social composition of the caisses' leadership and rank and file, so too there was frequently a discrepancy between what the leaders of the caisses said about the use of the savings entrusted to them and how those funds were actually employed. LOCAL USE OF FUNDS Upon establishing the caisses, Desjardins envisaged the retention of savings within the community. These funds would then be loaned, primarily to the poorer elements, for a relatively short time and only for what were described as productive purposes. To secure this credit, members would apply to the manager, who would then send the application on to the commission de credit to consider the security that could be provided by the borrower and his guarantors.'8 This security consisted of the financial means of the individuals involved as well as moral attributes, such as "honour, spirit of order ... and honesty."1' Although there were complaints that these non-material qualities were far too frequently ignored, their inclusion had been designed to provide yet another means of distinguishing the caisses from the chartered banks.20 The credit board had the final responsibility for deciding on individual applications, but it did so within the rules established by the membership of the co-operative. Accordingly, the maximum size of any loan could not exceed

55 Investing the People's Savings

the limit set by the members. In the Caisse populaire de Levis, this limit was set initially at $100 but within a year had been raised to $500. In the years that followed, this tendency to permit ever-larger loans continued until 1913, by which time the limit for credit secured by a member's promissory note had reached $3,000, and even it could be exceeded by those wealthy few who owned shares in the caisse of a value equal to their loan.21 The situation at Levis was paralleled in other caisses as well. At Maria the initial limit was set at $150 in September 1908, only to be increased to $500 three months later; at Immaculee-Conception the limit was raised from $800 to $1,200 in 1910 "provided that $600 in cash remains on hand."22 The need to increase the value of loans was symptomatic of the central problem faced by the caisses throughout much of the pre-1945 era - namely, what to do with the accumulation of local savings for which there was an insufficient local demand. Desjardins's correspondence with the managers of numerous caisses indicated that this problem was fairly widespread during the 19105. To one manager he wrote, "You complain of an insufficient demand for loans. This clientele will come in time, and you will find yourself complaining about insufficient funds to satisfy the demand."23 By setting a low ceiling on the value of loans, the caisses were potentially putting off the day when there would be a considerable demand for the funds at their disposal. Desjardins was warned about this by one of his European correspondents shortly after the Levis caisse opened for business. Henry Wolff described such limitations on the granting of credit as "a questionable provision since the [caisse] must employ its capital somehow and there must be some tolerably large business which is profitable to make up the loss which may occur on small business. "24 Indicating his acceptance of Wolffs logic, Desjardins stressed to the members at Levis: "We cannot afford to miss out on opportunities to make loans simply because the authorized ceiling is too low. Funds which are not loaned bring in no profits, and without profits it is impossible to pay a dividend."2* Even if the caisses were co-operative enterprises, Desjardins had to be in a position to pay decent dividends to the holders of CPL shares, lest they cash them in and take their savings elsewhere. Accordingly, at the same time that savings accumulated in the vaults of the first caisse, the loans that were made became ever larger, a tendency pointed out with great relish by Napoleon Lavoie. In 1914, as part of a lengthy rebuttal of Lavoie's attacks, Chanoine Grondin noted that most of the loans made during the previous thirteen years by the Levis caisse had been of less than $ioo.26 Grondin neglected to point out that in 1913 more than two-thirds of the total value of the loans had gone to borrowers asking for more than $500. As Table 6 indicates, even taking into account the changing purchasing power of the dollar, there was a general decline between 1913 and 1945 in the importance of small loans extended on the security of a member's note. In terms of the number of loans granted,

56 The Petite Bourgeoisie and the Poor Table 6 CPL: Loans Secured by Promissory Notes, 1912-45 % in each size category for each fiscal war Distribution by number of loans

Less than 150

1912-13 (N == 992) 1925-6 (N = 805) 1955-6 (N = 97) 1944-5 (N = 143)

22

31 30 29

45

6 8 4 12

6 6 4 7

3

5

22

12

59

3

5

24

19

48

3

3

18

9

68

!

4

22

23

4?

36 39 45 14

22

Distribution by value of loans

1912-13 (total value 1925-6 (total value 1935-6 (total value 1944-5 (total value

= $225,659) = 5233,763) = 514,817)

50-99 100-499 500-99? J/,000 or More 18 18

= 583,894)

Source. CPL, listes des prets fails. Note: the values of all loans have been converted into 1925 dollars to permit comparison.

if one ignores the impact of the Depression evident in the figures for 1935-6, there was a general decline in the importance of loans under Sioo.27 As for the value of loans, even the data for the Depression years are consistent with a general progression toward larger loans. The pattern evident at Levis was also visible elsewhere in the province. This general trend toward granting larger loans was particularly pronounced in the larger urban caisses. Indeed the CPIC operated very much like its counterpart at Levis. In both 1934 and 1945 roughly two-thirds of the credit extended on the security of promissory notes went to borrowers seeking more than $500.28 This is not to say, however, that rural caisses were strangers to the practice of granting loans of more than a few dollars. At Maria, for instance, as early as 1912 the bulk of the credit granted was consumed by loans of more than $100. From the 19205 through to 1945, loans worth more than $200 accounted for most of the credit granted by the Gaspe co-operative. For most caisses, the Depression served as a brake on the growth of the size of loans secured by promissory notes, but with the start of the Second World War and the piling up of unprecedented surpluses in the caisses, these loans became larger and larger. For all the caisses in the province, roughly

57 Investing the People's Savings

one-third of the value of credit extended throughout the 19305 was in the form of loans of more than Jtjoo.2? By the end of the war this figure had climbed to more than 50 per cent, a far cry from the initial conception of Desjardins and his colleagues. That the original idea could not be maintained is understandable. Funds had to be used in some fashion, lest they sit in the vaults collecting nothing but dust. Nevertheless, there were those who bemoaned the growth in the size of loans. A member of the commission de surveillance at Levis complained as early as 1926 that "that there were too few small loans given the total value of the outstanding loans."*° The same critic had to concede, however, that the credit board could hardly grant smaller loans if "there was an insufficient demand" for them. There was no evidence that credit-worthy members were turned away. Nevertheless, another leader at Levis expressed dismay that the principle that "the moral qualities ought to be considered as seriously as material guarantees" was too often ignored, thus discouraging poorer members from applying for credit.*' Moreover, as was shown in the last chapter, the credit board consistently resisted pressures to lower interest rates, preferring instead to assist borrowers in other ways. Assuming, quite erroneously, that poorer people could secure their loans with their shares, the caisse instead offered borrowers an increase in the boni.'2 In still other cases, borrowers were granted a ristourne on their interest at the end of the year if the caisse had had successful operations cold comfort for the poorer member who had to wait until year's end to see if a rebate would be coming his way. Though interest rates were not as low as they might have been, the credit provided by the caisses was frequently unavailable from any other institution at any rate. The banks, for instance, were not in the business of lending to individuals on the simple security of the borrower's wealth. Rather, diey loaned funds largely on the security of goods, which brought them into frequent contact with commercial and manufacturing firms. Individuals were the clients of banks only rarely, such as when a farmer could offer his cattle as security for the purchase of livestock: throughout the period from 1934 to 1945 little of the roughly |i billion in outstanding bank loans was secured by the personal wealth and moral qualities of individuals." As for those instances in which the caisses were in competition with other institutional lenders such as the banks, the rates offered by the co-operatives were generally lower.^ The advantages of the caisses were even more striking when one compares their rates with the usurious ones demanded by private lenders. A 1936 inquiry by the provincial federation into the lending practices of the caisses indicated that many loans were designed to liquidate debts with other lenders, in the process allowing the borrower to pay a lower rate of interest. For instance, the majority of loans granted by the Caisse populaire de St-Felicien were designed "to permit the consolidation of debts already contracted." Similarly, the members of the caisse at St-Edouard de Gentilly

58 The Petite Bourgeoisie and the Poor borrowed to "reimburse the banks and individuals."w Further, the caisses charged interest only on the amount outstanding at any given moment. For instance, if a member borrowed $120 at 6 per cent, with the principle to be repaid in twelve equal monthly instalments, the interest would have come to only $3.90 for the year, as opposed to the $7.20 that would have been paid to most competitors.^ As attractive as they were, however, these features of a caisse's operations did not induce poorer members to borrow. Just because the terms offered were better than those available elsewhere, they were not necesssarily affordable to most of the workers and farmers of the province. Accordingly, at Levis even the smallest loans tended to benefit relatively well-to-do members. During the 1925-6 fiscal year, for instance, 566 loans were granted to individual members on the security of promissory notes. Only seventy-one members gained the benefit of this credit, and four of them were responsible for nearly half of the loans. Leading the way was one local businessman who secured credit on 168 separate occasions. The loans to this member were not particularly large, averaging slightly more than $100 each, while the average for all loans secured by promissory notes was close to $200. Nevertheless, such transactions seemed to violate the spirit of Desjardins's insistence that a caisse "should never lend to a merchant because it could not afford to expose itself to such a risk."'? In a similar fashion, in 1922 nearly one-third of the loans granted by the CPIC went to six members, all either small businessmen or professionals. In the east end of Montreal, as in Levis, local businessmen and professional people returned to the caisse frequently to secure short-term credit to assist their affairs. Accordingly, 65 per cent of the credit granted on the security of members' promissory notes in Levis in 1925-6 went to these two groups. In 1935-6 the figure reached 78 per cent, while in 1944-5 it declined somewhat but still exceeded 60 per cent. At Immaculee-Conception, the bulk of such credit also consistently went to professionals and small businessmen. As funds accumulated with the caisses, the original notion that credit should be allotted in small portions was largely abandoned; along the way the idea that the poorest members should gain the bulk of the available credit also seems to have been discarded. However, even with the granting of larger loans the caisses still found themselves with surplus funds, particularly with the outbreak of the Second World War, which brought with it a flood of new members. Having already moved in the direction of larger loans secured by promissory notes, the caisses now embarked on the large-scale granting of credit to their members secured by mortgages, a practice no doubt encouraged by the fact that the banks did not provide such credit until long after the war. As for private lenders, their rates were so high that mortgages from the caisses were sought, as at St-Jean des Piles in 1936, "to lower the interest rate." The manager of the co-operative reported that "farmers who borrowed from

j9 Investing the People's Savings individuals at 7% wanted to borrow from the caisse at 5% upon loans secured by mortgages. "j8 Such loans had not been encouraged by Desjardins. Nevertheless, by the mid-i92os mortgages occupied an important place in the affairs of these cooperatives. In 1926 over one-quarter of all funds invested by the caisses were secured by mortgages, and while the figure declined during the Depression it rose again with a vengeance with the outbreak of war, reaching 40 per cent by 1946. That this growth was linked to the impact of the war was made clear by one caisse leader, who noted in 1943 that "with the increased assets of the caisses, it is necessary to find new ways to invest funds so as to maximize their return. In this light, we are using surplus funds to make loans secured by mortgages."39 Tying up the credit of the caisses with mortgage loans precluded a return to the initial emphasis on providing small, short-term loans to the poorest members. In spite of the urging of the chief inspector of the caisses that "one should always leave the door open for the poor," these co-operatives were attracted by the superior security that property appeared to offer.40 Just as important, the granting of mortgage loans appealed to the professionals and small businessmen who ran the caisses and who hoped to add the poorer members of the community to the ranks of the propertied so as to make them less of a threat to the existing order. This was a classic example of the leaders of the caisses acting to help the poor as well as themselves at the same time. In 1939 Cyrille Vaillancourt, who emerged as one of the most powerful leaders of this co-operative movement, noted: "Everyone is concerned about communism. Everyone is frightened by the subversive ideas being spread across the world. In particular, those who own property are uneasy about the future. The countries which have most effectively combatted these ideas are the ones which have made property owners out of the poor."4' In a similar spirit, the general assembly of the CPIC resolved in 1943 to support the widespread ownership of property by Quebecers because "the securing of property by the middle and the labouring classes is the surest way of promoting harmony and of favouring human progress."42 In practice, however, granting loans on the security of mortgages did not aid the poorest element of the population any more than did the extension of credit on the security of a member's promissory note. A person contemplating the purchase of property required a certain amount of capital to begin with, just as the applicant for a loan secured by a promissory note apparently was required to own a certain number of shares in the caisse. ImmaculeeConception had strict rules forbidding loans that exceeded 60 per cent of the value of the property; the remainder would have to come from the purchaser.4? Accordingly, in 1946 the east-end Montreal caisse tied up nearly three-quarters of its credit with mortgage loans, the bulk of which went to professionals and small businessmen. Similarly, at Levis, where mortgage loans

60 The Petite Bourgeoisie and the Poor

accounted for over half of all investments by 1946, 40 per cent of the credit secured in this fashion went to the these two elite groups of the city. In their two major forms of credit, the caisses provided the bulk of their available funds to relatively well-to-do Quebecers. In the CPL and CPIC, professionals and small businessmen were overrepresented within the ranks of the members, in terms of their numerical importance within the community, and among the ranks of the borrowers, given their place within the membership. As for the rural caisses, even though mortgage loans never became as important as in the urban co-operatives, the dominance of wealthier elements in the community among the borrowers was just as pronounced. In Maria, for instance, the mean value of property owned by a resident of the community in 1945 was $457; for members, $547; for borrowers, $622. In spite of the various critiques that can be made regarding the allocation of credit by the caisses, the fact remains that over $220 million of credit was dispensed between 1900 and 1945. Much of this credit was unavailable from other lenders because the goal for the loan was deemed inappropriate, because the rate charged for the credit was exorbitant, or because the borrower did not offer what was deemed sufficient collateral. Had a caisse not existed in 1936 in the parish of St-Andre de Kamouraska, then the funds provided for such purposes as the purchase of a horse, the rebuilding of a barn, or the payment of taxes might not have been available for local residents.^ At the same time, however, the policies of the caisses still left the poorest groups in the community out in the cold. Such factors as the granting of ever-larger loans and reluctance to lower interest rates produced a group of borrowers considerably wealthier than the average member. There is no reason to believe that the leaders of the caisses went out of their way to devise policies that served the interests of the wealthier members, but this none the less was the result of the actions of men, particularly the members of the credit board, most of whom were professionals and small businessmen. As a result of their decisions, there was an element of truth to the criticisms leveled by Napoleon Lavoie. The general manager of the Banque Nationale noted that the caisses "provided credit to people capable of borrowing elsewhere."« While the purposes of many of the loans made by the caisses would not have interested the banks, Lavoie was correct in identifying the borrowers of the caisses as similar to those who frequented institutions such as his own. Although these were co-operative enterprises, they were not philanthropic ones. The administrators, following Desjardins's lead and reflecting the values of men with ties to the world of business, felt an obligation to provide members with a return on their investments, and this led to the granting of ever-larger loans, secured by promissory notes, to well-established members of the community and to the widespread use of mortgage loans. Even with these variations on Desjardins's design, however, the managers of the caisses still felt that there

61 Investing the People's Savings were frequently more savings in their vaults than reasonable demands for credit from their members. As a result they looked, in opposition to another one of Desjardins's cardinal rules, for ways to export funds from the community, in the process giving credibility to another of Lavoie's complaints. LOCAL FUNDS FOR EXTERNAL USE Desjardins and his successors were fond of portraying the banks as efficient in establishing branches for the mobilization of savings but incapable of appreciating local opportunities for reinvestment of these funds. As a result, it must have been awkward when the caisses, having been successful in attracting savings, had to admit to having funds for which, given their own lending policies, there was no demand in the community. Nearly all the caisses found themselves at some point with the dilemma faced by the Caisse populaire de St-Remi in 1927, when its commission de credit remarked that there was a "surplus" because "there is an insufficient demand for loans."^ Throughout the pre-1945 period the caisses dealt in various ways with this problem, which first came to light as part of the bitter conflict that emerged between the caisses and the Banque Nationale for the savings of Quebecers. Among the various ways in which Napoleon Lavoie managed to annoy Alphonse Desjardins was his refusal to provide the caisses with advantageous rates of interest on the savings that they wished to leave with the bank. As was shown in the previous section, Desjardins was concerned that funds not loaned out to members would earn no interest and would bring no benefit to the members. As a result, in addition to granting larger loans than he had originally imagined, he sought to deposit the surpluses of the caisses with the chartered banks, so that the savings at the disposal of the co-operatives would not prove completely useless. This situation was potentially profitable to both the caisses and the banks. No matter how many branches it had opened since the start of the century, there were still limits to the ability of the Banque Nationale to blanket the province. By 1921 most of the communities in which caisses were established (outside Montreal and Quebec City) lacked a branch of any chartered bank. Accordingly, Desjardins's allies argued that by accepting the deposits of the caisses the banks stood to secure the savings of Quebecers without having to go to the trouble of either hiring personnel or renting an office. As Henry Wolff, one of Desjardins's European correspondents observed, "Cooperative banks come into the field not as rivals but as feeders to ordinary banks .... By opening a road for business, by instilling banking habits, by stimulating thrift and building up little fortunes, the credit unions in effect bring new customers to the banks, "v Somewhat more poetically, Chanoine Grondin wrote that "the caisse is to the bank what the creek is to the stream, the stream is to the river, and the river is to the ocean."«*

62 The Petite Bourgeoisie and the Poor All that Desjardins asked in return for this service was a better rate of interest than the banks offered to their ordinary customers. He reached such a deal with the Quebec City-based Caisse d'Economie de Notre Dame de Quebec, which offered 4 per cent instead of the usual 3.5, for the surplus funds of the caisses, which could be deposited at any of the offices of the savings bank, all of which were located in the Quebec City area.49 In 1908 the directors of one of the caisses in the provincial capital noted: "The Caisse d'Economie at first looked negatively upon the establishment of our caisses. Today it is pleased that they exist because they bring to it thousands of dollars that it would not have were it not for the caisses. "J° This arrangement came to an end in 1914, however, when the general manager of the Caisse d'Economie caught wind of the fact that Desjardins had worked out a deal with the Quebec Bank.*1 Ignoring the fact that he had been caught courting two institutions at the same time, Desjardins preferred to see the hand of the Banque Nationale in the actions of the Caisse d'Economie, which had had close ties with the bank for over fifty years. He could not understand otherwise why he had been refused preferential treatment: "As for the preferential rate of interest, it was no more onerous for your Caisse d'Economie than for the Banque Nationale which pays 4 per cent to its sub-agents in the parishes. The caisses populaires might have been seen by the Caisse d'Economie in the same light as these agents without the difficulties of opening and then maintaining a new branch." All he could imagine was "an incredible coincidence" between the cancellation of this arrangement and "the mischief of the Banque Nationale."52 There was, of course, a good reason why the Banque Nationale would have frowned on such an arrangement. While it may have paid its own agents 4 per cent, the same rate sought by the caisses, establishing sub-agencies did not encourage the growth of a competitor. By contrast, the competition from the caisses did not concern the Quebec Bank, whose affairs were not closely tied to the Quebec market at the start of the twentieth century. Rather the Quebec Bank was in the process of extending its operations to the prairies, which allowed it to offer the preferential rate to the caisses without fear of undermining its long-term interests. Recognizing this fact, Desjardins wrote to one of his supporters, "It is important that we maintain cordial relations with the English-run banks because the so-called French-Canadian bank (the Banque Nationale) wages war against us. With the support of the English banks we can hope to succeed."« Desjardins did not appear particularly bothered by the contradictions between certain aspects of the rhetoric that he used to drum up support for the caisses and the implications of his ties with the Quebec Bank. In spite of his nationalistic posturing, he engineered the transfer of French-Canadian savings to an English-run institution. Moreover, he all but ordered caisses to send their deposits to branches of the Quebec Bank in spite of his avowed support for

63 Investing the People's Savings

the autonomy of each co-operative. To the manager of one caisse he wrote, "We must all remain loyal to the Quebec Bank; we must not abandon it even if other banks offer us the same deal."** When that same manager defied Desjardins by talking to an official of the Banque Nationale about depositing his surpluses there, Desjardins harshly rebuked him.** The efficient disposal of the surpluses of the caisses led to a certain centralization of decisionmaking, foreshadowing a pattern that will be seen again later. Most significant, however, by moving funds to a chartered bank, regardless of the language spoken by its directors, Desjardins was violating the notion, so central to his justification for establishing the caisses, that local funds should be used for local purposes. Ever the pragmatist, Desjardins had to find some means of putting to good use the savings left over after credit-worthy members had been satisfied. The depositing of funds with the banks, which he clearly saw as a temporary measure, was only the first of three strategies that Desjardins envisaged for the export of local funds from the community. He also encouraged caisses to invest in bonds and to leave deposits with a caisse centrale, a co-operative whose members would be caisses populaires instead of individuals and whose goal would be the collection of surplus savings. In spite of Desjardins's efforts, most caisses were still leaving their funds with a branch of a bank up to the 19205. The situation changed drastically, however, by the end of the Second World War. At the end of December 1946, the caisses had roughly $3 million deposited in the chartered banks, but this paled in comparison with the $62 million invested in bonds and $17 million on deposit at caisses centrales.*6 Desjardins's interest in the first of these alternatives to dealing with the banks, the purchase of bonds, went back to the earliest days of the caisse at Levis, though never advertised as loudly as the principle that local funds should be retained for local purposes. In January 1902, scarcely more than a year after the meeting that had established the first caisse, the conseil d'administration authorized Desjardins, as manager, to advance funds on the security of bonds to "public bodies."*? These were religious institutions, municipalities, and school commissions and did not have to be situated within the territory served by the caisse. Moreover, no limit was placed on the size of the advances that could be made in such cases, unlike the strict limits on the maximum value of loans to members. The only restriction was that such advances not impede the ability of the caisse to "satisfy the demand for credit from the members."58 Desjardins and his colleagues, perhaps a bit uncomfortable about the transfer of funds from the community, were always careful to stress that bonds would be acquired only after the local demand for credit had been met. This sheepishness was also reflected in the frequent reference to the acquisition of bonds as the extension of ordinary loans on the security of bonds.*? The leaders of the caisses may have hoped that this word play would make their pur-

64 The Petite Bourgeoisie and the Poor chase of a long-term investment appear less of a departure from granting shortterm loans than it really was. In fact, however, there is no evidence in the records of Desjardins's own caisse at Levis that ordinary loans were granted to any great extent with bonds serving as collateral. However, there is considerable evidence of the actual purchase of bonds. In 1933, the Levis caisse had loans worth only $50 secured by bonds but owned over $i million of bonds, which were not being held as collateral.60 Caisse leaders, perhaps rather selfconscious about participating in the bond market - a central part of the modern economic world that their institution had been established to combat - concocted awkward wording for a very straightforward activity. As time went on and the practice became more and more common, this activity came to be described as what it was - namely, the purchase of a security. As other caisses were established during the first two decades of the century, Desjardins encouraged them to include in their statutes provisions similar to those put in place at Levis. As a result, the use of surplus funds to purchase bonds was an accepted part of the operations of most of these co-operatives from their beginnings.6' Desjardins regularly encouraged this practice in his correspondence with caisse managers. He noted: "These public bodies do not die .... No one has ever complained about losing a dollar by supporting a religious community. Such losses are relatively common in dealing with individuals."62 In 1911 Desjardins supported a provision in the provincial law governing the caisses that obliged them to invest jo per cent of their reserve funds in the bonds of public bodies.6' Because of both Desjardins's informal prodding and the impact of provincial legislation, by 1926, when province-wide statistics regarding distribution of the annual investments of the caisses became available, roughly one-quarter of all funds were already being tied up in the purchase of bonds. This figure fell off during the Depression, only to rise once more in the late 19305. During the Second World War, as savings flowed into the caisses at an unprecedented rate, bond purchases took on renewed importance as a means of employing surplus funds. During the 1944-5 fiscal year, nearly half of all funds invested by the caisses went for the purchase of bonds. By the end of the war bonds accounted for nearly one-third of the total assets of the caisses.64 These statistics fail, however, to reveal several significant aspects of the involvement of the caisses in the bond market. They fail, for instance, to reflect the changing structure of the bond portfolios held by these co-operatives. Up to the Depression nearly all the bonds of the Levis caisse were those of religious institutions, but by 1945 such bonds accounted for only half of the value of the portfolio, the slack being taken up by municipalities and school commissions and, to a lesser degree, the federal and provincial governments.6j This shift reflected the growing role of the state and the declining place of the church in Quebec society, issues discussed in greater detail in later chapters. However, in spite of these changes, the investments of the CPL throughout

65 Investing the People's Savings this period supported institutions led by the same type of people who had founded and then directed the caisses. The clergy had provided assistance from the very start, so that it somehow seemed appropriate that these co-operatives supported religious institutions. Similarly, since the lay petite bourgeoisie played such a prominent role in the affairs of the caisses, it was only fitting that these co-operatives should support municipalities and school commissions, which were led by men of the same class. Statistics for the province as a whole also conceal the way in which certain types of caisses were more active in the bond market than others. Since bond purchases were a way of disposing of surplus funds, the caisses most involved were urban, large, and well established. For instance, while the caisses with less than 110,000 in assets tied up only 13 per cent of their assets in bonds in 1946, the figure reached 58 per cent for caisses with assets of over $2 million. Similarly, caisses formed within the previous year had less than one-third of their assets tied up in this manner, as opposed to over 50 per cent for caisses created at least twenty years earlier. Given this profile, it is little wonder that the Levis caisse particularly stood out. Except for the Depression years, the caisse that Desjardins built annually invested the bulk of its funds in the purchase of bonds, with the practice becoming so prevalent that in 1928 over 90 per cent of the funds that it invested were used for the purchase of debentures. As was shown in the previous chapter, this apparent preference for placing the funds in bonds instead of the hands of members was at the centre of the conflict that brewed within the Levis co-operative during the 1930$. In 1935 an inspector looking into the affairs of the Levis caisse wondered whether its leaders had forgotten that the primary function of the institution was to attend to the interests of its members; he concluded that the co-operative had become little more than "a bond dealer."66 In a more global analysis of the role of the caisses in the bond market, Jean-Paul Lachance, writing in 1946 in Actualite economique, called for clear guidelines to lead the caisses away from an activity that "does not correspond to the primary responsibility of a financial cooperative."6? Such critiques, of course, assumed a demand for credit, which had been ignored because of preoccupation with the bond market. Caisse leaders would have pointed out, quite correctly, that there were no long lines of members clamouring for unavailable credit. Critics would have responded, however, that policies deterred poorer people from joining a caisse or from seeking credit if they did become members. The acquisition of bonds became attractive when leaders abandoned their avowed policy of providing credit to individuals who were both needy and deserving. The debate at Levis over the use of members' savings was a genuine discussion of the proper role of a co-operative. It does not seem to have been provoked by any major crisis arising from the failure of the public bodies in which the first caisse had invested to meet their interest payments. Such was not

66 The Petite Bourgeoisie and the Poor the case, however, for other, less well-established and more vulnerable caisses. Take, for instance, the Caisse populaire de St-Theophile du Lac. It was not until the mid-i92os that savings deposited there far outstripped local demand for credit. As a result, in 1925 the board of directors authorized the manager to acquire debentures "to secure the greatest possible return."68Accordingly, in 1927, nearly half the funds invested by the caisse were tied up in bonds; the figure exceeded two-thirds two years later. With the onset of the Depression, however, not only did this practice tail off, but the caisse found itself in some difficulties because of the failure of several public bodies to meet the payments due on bonds in the caisse's vaults. In 1938 the manager cryptically reported to the board of directors that he regretted "that interest was not being paid upon some of the bonds. We hope that the principal will not be lost."6?

Contrary to the manager's best hopes, some of the capital was lost because of bond purchases that had gone sour. In one settlement, the caisse accepted $300 as a final payment for a $1,500 investment; in another case it had to settle for the return of only 70 per cent of its investment.?0 In spite of these difficulties, this caisse continued to function relatively normally, but others faced much more serious consequences. As one leader noted some years after the Depression, the early 19305 saw the closing of numerous caisses "whose assets were not sufficiently liquid .... Bond peddlers were travelling in the countryside, approaching cures about the acquisition of bonds paying 7% interest, which was i to 2% above the normal rate. As a result, the caisses acquired these bonds paying 7% instead of those of municipalities which were paying only 3 or 4%. These caisses ended up purchasing the bonds of companies or institutions which never existed .... They bought nothing but worthless paper."?1 More specifically, the caisse at St-Charles de Bellechasse closed in 1931 when it could not meet its obligations to its members because of losses on bonds with a face value of $i26,ooo.72 Similarly, the Caisse populaire de St-Sebastien closed in 1932 because of "bad investments" and "the impossibility of repaying depositors."?' Even the purchase of relatively safe municipal and school commission securities posed dangers. The potential problems became public knowledge in 1932, when the caisse centrale established for the co-operatives in the Quebec City area nearly collapsed because its $100,000 in bonds, mostly of municipalities, were paying no interest.?* The depositing caisses feared that they, in turn, might be in difficulty if their own members suddenly demanded their savings. The manager of the caisse centrale, Cyrille Vaillancourt, sought relief from the provincial government, but when this was not forthcoming he secured the support of the archbishop of Quebec for a loan from the Banque Provinciale.?' Vaillancourt, as president of the provincial federation of caisses populaires, sought further assistance from the government in 1935, when he lobbied against the passing of a law that would have reduced the rate of interest on

67 Investing the People's Savings the outstanding bonds of municipalities and school commissions, of which the caisses had large numbers.76 The investment of surplus funds in bonds, which seemed such a good idea in the first days of the caisses, looked much less attractive by the 19305. While some funds invested in bonds went to local institutions, such as school boards and religious orders, most were exported from the community. In contravening the central principle of local use of local funds, some caisses, particularly rural ones whose leaders were not in easy touch with the complexities of the business world, paid too much for the bonds of solvent institutions or purchased those of institutions whose existence was ephemeral. One such caisse was so troubled by "the nuisance of purchasing bonds" that it sought establishment of some higher authority to relieve it of its burden. 77 It was partly in response to such problems that a provincial federation of caisses populaires was established in 1932, one of whose responsibilities was approval of each and every bond purchase proposed by a caisse. This was not, however, the first effort to facilitate efficient use of the surplus funds of caisses for the purchase of bonds. In the 19105 Desjardins had tried to encourage individual co-operatives to use their surpluses to acquire a portion of various large bond purchases that he was arranging for his caisse at Levis. In 1919, for instance, he facilitated the participation of the Caisse populaire de St-Isidore in the purchase of bonds of the city of Levis.78 During the 19205, following establishment of four regional associations of the province's caisses, further efforts were made to assist in the acquisition of bonds. The regional federation for the Quebec City area saw as one of its responsibilities the purchase of debentures in some quantity "at a better price than the caisses which buy only in small quantities."7* It was only with the creation of the provincial federation, however, that caisses had to secure "prior approval for all bond purchases."80 With this power the provincial body was able to act as it did in 1939 when one caisse sought to buy bonds at a price that the provincial association considered "too high." Making its authority perfectly clear, the federation let it be known that it would refuse "any purchase of bonds when the price paid exceeds that which the Federation is able to secure."8' Moreover, the Quebec law that gave teeth to this power absolutely forebade the granting of approval for the purchase of bonds other than those of the Quebec and federal governments, municipalities, school commissions, and religious institutions.82 There was going to be no return to the wild purchase of dubious securities that too many caisses had engaged in during the igios.83 The provincial federation took its responsibilities seriously, irritating the leaders of some caisses who still fancied their co-operatives as the autonomous institutions that Desjardins had conceived in the late 18905. These leaders may not have always appreciated supervision by the federation, but the reliance of the caisses on savings deposits and share capital that could be withdrawn

68 The Petite Bourgeoisie and the Poor

by members at any time made it essential. This supervision became increasingly important as mortgage loans came to form a growing part of the investment portfolios of the caisses by the late 19305. Such loans did not provide an easy source of cash for repayment of members. As a result, the federation was constantly hectoring the caisses to keep roughly 35 per cent of their assets liquid by retaining "sufficient cash as well as bonds that are easily redeemed."84 It encouraged the caisses to purchase bonds as a complement to their heavy involvement in mortgages and felt that this service grew naturally out of its supervision of all bond purchases. Nevertheless, there were numerous complaints throughout the late 19305 and early 19405 that the federation had overstepped its authority in this area. One such criticism came from certain leaders of the Montreal regional federation, only one month before a number of the Montreal-area caisses removed themselves from the hierarchical structure that had been created.8* The leaders of these caisses were imagining the sort of decentralized system that Desjardins had proposed but had done little to promote in practice. They were also distinguishing themselves from many other caisses, urban and rural alike, which by the 19305 not only appreciated the supervisory role of the federation but would gladly have transferred their surpluses holus-bolus to some central authority to invest them as it wished. The regional federation in the Quebec City area was urged to "assume control over the surpluses of local caisses, especially those situated in the countryside, to free them from the obligation to purchase bonds. The market is simply too far away for them."86 One Montreal caisse, clearly uninterested in local autonomy, called for "the rapid centralisation of the surplus funds of local caisses, following the example of the branches of the chartered banks."8? Napoleon Lavoie would have been amused by this explicit statement that the caisses should follow the lead of the banks. Desjardins had had the idea of centralizing funds in the 19105, when he first proposed some central agency as yet another way of dealing with surplus funds, but he would never have recognized any resemblance here to the actions of the banks. While a branch manager was compelled to send surplus savings to his head office, Desjardins always insisted that the caisses were free to do whatever they wished. As he wrote to a Quebec City resident active in establishing a caisse, "Once a caisse is organized, it is entirely free of my influence."88 In practice, however, Desjardins's efforts to take control of surpluses bore greater similarity to the sort of role occupied by Lavoie than the founder of the caisses would have been prepared to admit. Desjardins's attempts to seize control of the funds of outlying caisses began with an effort to have them deposit their surpluses at the co-operative that he managed at Levis. A clause in the 1906 provincial legislation governing the affairs of the caisses gave each co-operative the ability to borrow from outsiders an amount not to exceed the combined value of its reserve fund

6g

Investing the People's Savings

and its capital. Such limits seemed appropriate for institutions supposed to transact affairs primarily with their members. The Levis caisse did not take advantage of this power until 1911, when it borrowed $11,000 from the Caisse d'Economie de Notre-Dame de Quebec.8' Shortly thereafter, Desjardins's caisse began to "borrow" from other caisses by receiving their deposits.90 It seems unlikely that Quebec's legislators had imagined that the borrowing clause would be used in this fashion, but by the early 19205 the transfer of funds from various caisses to Levis had become an important activity. At the time of Desjardins's death there were thirty-four caisses depositing funds at Levis, with a total value of more than $130,ooo.9' These funds, often used for the purchase of bonds by Desjardins's caisse, were also employed to aid caisses temporarily strapped for cash. As the manager of a co-operative that had used the credit of the Levis caisse observed: "M. Desjardins told me that if we should ever require funds the Caisse at Levis would provide them."9* Desjardins saw this "voluntary" movement of funds as a step toward a formal hierarchical structure for the caisses in which surplus funds would, as a matter of course, be transferred to some central location, presumably at Levis. Such was his determination to make these transfers an automatic part of caisse operations, however, that one has to wonder just how voluntary the transfers really were. When one caisse refused to deposit its surplus funds at Levis, he failed to hide his contempt, describing the action as "inconsiderate and defiant."^ He took the movement of funds to the Levis caisse very seriously, because it was crucial to his ambition to "centralize the affairs of the caisses and establish the Federation."94 Creation of this province-wide federation, which would not take place until the 19305, was a recurring theme in Desjardins's correspondence from early in the 19105, but it became a preoccupation by the end of the decade as more and more caisses accumulated surplus funds. In a 1917 memorandum on "le projet de federation des caisses populaires," he envisioned a caisse centrale which would work like any other caisse except that it would have individual credit unions for members. Those co-operatives with surpluses would deposit them at the caisse centrale, while the poorer ones would be eligible for "loans sufficiently secured by the re-discount of outstanding debts."9* In both regards, Desjardins was simply trying to codify informal practice at Levis during the 19105. Much to his surprise, however, the leaders of many caisses were unwilling to sacrifice the autonomy that had drawn them to this movement in the first place. Indicating his commitment to a structure that would move funds among the caisses, he harshly rebuked the manager at St-Theophile du Lac who dared not to toe the line. Desjardins warned him that "the caisses which consciously choose to remain outside the federation should not be surprised if they are deprived of its benefits."96 Such threats could not eliminate opposition, however, and Desjardins died in the fall of 1920 with the federation still not achieved.

•jo

The Petite Bourgeoisie and the Poor

Soon after his death, however, a movement began that produced four regional federations by the mid-ipaos. Once again, these regional bodies would receive "the surpluses of local caisses which will then be made available to other caisses which are short of funds."97 As the manager of one federation put it, "The situation of a caisse populaire in an old parish is not the same as that of a caisse in a newer parish. In the first deposits will exceed the demand for loans; in the second it will be the other way around. The regional federation will provide the means for the channeling of the surplus of the first to satisfy the needs of the second."98 Three of the four regional organizations had set up caisses centrales by 1925, and the fourth followed suit during the 19305. As in Desjardins's lifetime, there was once again considerable opposition, not so much to associating the caisses to improve inspection or to establish new co-operatives, but rather to moving funds without the consent of the caisses in question. There was concern that the caisses would be reduced to the level of the branches of the chartered banks. In a letter to the journal Action catholique, one defender of autonomy feared that they would be obliged to "transfer a part of their capital and deposit all of their funds with the regional federation." In a rather curious conclusion, the correspondent noted that "the late M. Desjardins never considered imposing such a centralized system."9° Of course, such centralization had been one of Desjardins's dreams, albeit one that he did not live to see come true. However, in the economic downturn of the early 19205, caisses could no longer stand on principle, and most joined a regional association. Once in existence, the caisses centrales did all that they could to convince individual co-operatives to transfer their surplus funds. Lacking the sort of clout that Desjardins could wield, the regional associations had to cajole caisses to co-operate. In particular, the argument was repeatedly made that caisses should deposit surplus funds with the regional caisses instead of purchasing bonds. The Trois-Rivieres regional federation argued in this vein that "the acquisition of bonds should be resisted as it tends to distance the caisses from the goal for which they were founded."100 Similarly appealing to the cooperative conscience, the association for caisses of the Montreal region called depositing at the caisse centrale "your first duty."101 Whether such appeals had any impact is hard to determine. Nevertheless, as the size of available surpluses increased, the percentage deposited with the caisses centrales grew as well. In 1936 only 14 per cent of the assets of the caisses not tied up in investments were on deposit with the caisses centrales; the figure reached 20 per cent by 1944. Once they had these funds, however, the managers of the caisses centrales seem to have forgotten their advice to members not to invest in bonds, since they proceeded to do the same, lending only a relatively small amount to needy caisses. In 1936 the caisses centrales had total assets of slightly more than f i million, three-quarters of which was tied up in bonds. By 1944, with the rapid growth in the savings at the disposal

yi Investing the People's Savings FIGURE 3 Distribution of Assets in Caisses Populaires, 1945

Source: Revue Desjardins, 1945.

of Quebecers, the assets of the regional caisses grew to over $14 million, over 80 per cent of which was still invested in bonds. The regional caisses, like the local co-operatives, seem to have had less difficulty in collecting the surpluses of some members than in finding credit-worthy members eager to use those funds. CONCLUSION It is easy to be cynical about the way that the caisses used the funds put at their disposal prior to 1945. As has been shown throughout this chapter, almost every aspect of Desjardins's initial design was transformed in practice. Even if he and his successors continued to talk about the virtues of providing small loans to only the poorest members of the community, in practice loans secured by promissory notes grew ever larger throughout this period, giving way by the 19405 to even more substantial loans secured by mortgages. By the end of the Second World War, total assets of the caisses surpassed $90 million, but Figure 3 indicates that only one-third of this amount was invested in loans to members. Those who benefited from these loans were generally better off than neighbours who belonged to the local co-operative. As for all the talk about local use of savings, by 1945 most of the assets of the caisses were being exported from the parish, either through the purchase of bonds, which consumed nearly half of the assets, or through the depositing of funds with one of the caisses centrales, which absorbed another 14 per cent.

72 The Petite Bourgeoisie and the Poor

Regardless of the rhetoric that he employed to generate support for the caisses, Desjardins was a pragmatist who was prepared to adjust the rules so as to make his financial institution work more effectively. Less than one year after the opening of the first caisse, he referred to "certain statutes which, as wise as they might have seemed at the moment of our beginning, no longer make any sense today, thanks to the progress made by our co-operative."102 Nor had his opinion about the need to follow the stated policies changed in all his years of supervising the growth of the caisses. A year before his death, he commented that "the practical implementation of regulations naturally softens their apparent rigour."10' Had Desjardins and his successors been less pragmatic, the caisses would probably have collected large amounts of savings, earning nothing for the members. Indeed, by stretching rules written at the turn of the century, the caisses provided needed financing to certain organizations, particularly religious institutions and municipalities, which would otherwise have been strapped for cash. As for the credit granted to members, the caisses provided loans not always obtainable from other lenders. When credit was obtainable from other sources, the caisses invariably offered it at a lower interest rate, in the process adding to the wealth of Quebecers. In calculating what caisse members might have paid for credit had these co-operatives not existed, the economist Milton Bauer concluded that Quebecers saved, in 1950 alone, more than $79O,OOO.I04

Bauer's figures fail to show, and previous studies have failed to point out, however, that most of the benefits secured from this credit went to relatively well-to-do members, who were already more comfortable than the community in general. The caisses would naturally have dealt primarily with their wealthier members if there had been no other good credit risks available. After all, these were co-operative, not charitable institutions. The issue is muddied even here, however, by the fact that the caisses claimed that credit-worthy customers were those who had good moral qualities, not merely the sort of collateral that a bank might demand. Even when these non-economic qualities were recognized - although there were complaints that they were too often ignored - the demand for credit from poorer members was no doubt reduced by the terms of credit, generous as they were in contrast with other lenders. Insistence on high dividends, granting of ristournes, and securing of loans with shares in the caisse all worked against the poorer member who might well have been credit-worthy. Faced with insufficient demand for deposits, caisses sent surplus funds from the parish. Even had the caisses satisfied those poorer members who lacked collateral for loans that were becoming larger and larger, there still would have been surpluses. In most cases, however, the surpluses - which benefited primarily municipalities, school commissions, and religious institutions - would have been reduced. In the process, the caisses might have taken on some poor

73 Investing the People's Savings

risks, while losing a guaranteed return on bonds. Such a strategy might have slightly reduced the dividends paid on shares. Nevertheless, it is unlikely that members would have taken their investments elsewhere, since the dividends paid by the co-operatives were generally 2 percentage points higher than those paid by the banks to their shareholders.I0? Available alternatives were not pursued by the leaders of the caisses, who consistently sought to minimize risk even if it meant neglecting the needs of certain members. As the deposits controlled by the caisses grew, greater care was taken to guarantee that they were employed, so as to avoid loss. Larger loans secured by members' notes, loans secured by mortgages, and the purchase of bonds all were likely to bring reasonable returns. However, there was little appreciation by the petit bourgeois leaders of the caisses that the poorer members of the community might have been inconvenienced by policies that were obviously better than those offered by institutions such as the banks. The relevance of the social origins of the leaders to the evolution of the financial practices of the caisses was particularly clear in the growing importance of mortgage loans in the 19405. The lawyers, doctors, notaries, small businessmen, and clerics who directed the caisses sought to avoid financial risk by extending credit on the security of property, while trying to reduce the risk of any challenge to their social position by making property more widely accessible, so as to preclude a revolt from below. Risk was further reduced through creation of a hierarchical structure, headed by a provincial federation whose professional staff kept tabs on the local volunteers. Not entirely certain that local leaders could be trusted as funds increased, one official of the provincial federation observed that "as much as possible, uniformity is recommended."106 These provincial officials insisted, for instance, on a high level of liquidity - perhaps again good for the caisses, but less than ideal for all members. With the stepped-up granting of loans secured by mortgages, the provincial federation encouraged bond purchases and deposits with the caisses centrales to maintain local liquidity. In the process, however, little room was left for extending further credit to poorer members. In trying to reduce the risks inherent in the operation of the nearly nine hundred caisses that existed by the end of the Second World War, the provincial federation became somewhat like the head office of a chartered bank, which centralized decision-making to counteract dubious actions by branch managers too closely tied to their clients.10? Nevertheless, there were considerable differences between the caisses and the banks at the end of the war, in spite of claims made by Napoleon Lavoie twenty-five years earlier. While both institutions became increasingly involved in the bond market, the caisses consistently set aside a much smaller percentage of their assets for the purchase of securities, in the process leaving more funds for their members than the banks did for individual clients. Moreover, the caisses offered loans to

74 The Petite Bourgeoisie and the Poor

individual borrowers for a wider range of purposes and at a lower rate of interest.'08 In other ways, however, there was a certain convergence between the caisses and the banks. While central control for the caisses could never take on precisely the form that it did for the banks, fewer and fewer decisions regarding allocation of funds were being made within the parish as the period went on. As will be shown in the next chapter, the men who came to direct this increasingly centralized movement worked comfortably with the leaders of the banks, in stark contrast with the evident animosity between Desjardins and Lavoie. Even more significant for the future of these co-operatives, however, was the way in which some of these new provincial leaders came into open conflict with the petit bourgeois founders of the caisses.

PART TWO

Challengefrom a New Class

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CHAPTER FOUR

Centralization

The concentration of economic power in the late nineteenth and early twentieth centuries into fewer and fewer hands elicited various types of responses across Europe and North America. Some people sought the overthrow of the capitalist order. Most, however, looked for ways to temper the drift toward concentration. Some desired legislation to control the ease with which firms could be absorbed, while others looked to the creation of government enterprise as a counterbalance to the growing power of a few individuals in the private sector. Still others looked to the establishment of co-operatives. The historian Brett Fairbairn has noted: "The great modern wave of co-operativism developed [in the Western world] from the middle of the nineteenth century to the middle of the twentieth ... This wave of co-operation was concerned with the chief economic development of its time: the emergence of a concentrated industrial economy ... [Co-operatives were reactions to] the bigness of remote and unresponsive institutions."1 In this spirit Alphonse Desjardins conceived of a system of autonomous caisses populaires, each tending to the needs of the residents of the parish and none connected to any other institution. Once in operation, however, these co-operatives found it difficult to maintain the principle of decentralization while profitably using the funds deposited by their members. The same pressures for rationalization and efficiency that had encouraged the concentration of control over the capitalist economy also soon affected the cooperatives themselves. Some co-operative leaders, in Quebec and elsewhere, envisioned central organizations which could join local societies together to provide services more effectively to their members. In English Canada, the leaders of local farmers' organizations realized that a wide array of services could be provided more efficiently, and to the advantage of members, if local societies were linked together by provincial organizations. Similarly, the surplus savings of a caisse populaire might profitably be channelled to one requiring funds for its members, if only a structure existed to facilitate the transfer.

78 Challenge from a New Class

The danger in such umbrella organizations was chat they might take decisionmaking away from the level of the community. The co-ordination of various types of activities, such as training of personnel, acquisition of goods, and pooling of resources, would clearly help local co-operatives but might lead to centralization of decision-making. It is in precisely such a context that centralization is described throughout this chapter. Given that co-operatives were set up in reaction to concentration, it is little wonder that opposition emerged to vesting too much power in central organizations, which might spawn bureaucracies of their own and become insensitive to the needs of the people who had created them in the first place. In English Canada the formation of central organizations to represent the interests of local co-operatives prompted, according to Ian MacPherson, "centralist-local tensions [that] would perplex the co-operatives for generations to come."2 Within the caisses populaires, a similar drift toward centralization occurred, but the debate in Quebec over centralization was even more "perplexing" than that described by MacPherson for English Canada. In Quebec there was not only the same concern for the loss of local control that could be found in English Canada, but also a preoccupation with the survival of a people. The very emergence of monopoly capitalism in Quebec had an impact different from that in English Canada, since economic control was concentrated not simply in the hands of a few people, but, in the hands of English-speakers. Thus "outside" control of the Quebec economy had not only an economic but also a cultural dimension, and co-operatives were designed to deal with the problems of concentration at both levels. From this perspective, centralized control was doubly dangerous, as it threatened not only to remove decisionmaking from the community but also to raise the spectre of closer ties with English-speaking cooperatives. Opponents argued that a province-wide federation of caisses would inevitably lead to entanglements with other umbrella organizations beyond the province. Such ties, so they claimed, would lead to integration of the movement into a larger English-run organization and, ultimately, the loss of an agent for the advancement of distinctively FrenchCanadian interests. The advocates of centralization were not unaware of the dangers of concentration of power. They were prepared to accept the risks, however, because they subscribed to a set of values different from those of the founders of these co-operatives. The early leaders of the caisses were members of the petite bourgeoisie whose activities were largely limited to their communities. As one group pf historians has observed, "Local activity - the town or village, the parish, the school commission - provided the primary opportunity for the traditional elite to exercise its power."' These men could hardly support centralized control that might destroy their power. By contrast, many advocates of centralization were accustomed to performing on a larger stage. They belonged to what Michael Behiels has described

79 Centralization

as a "middle class [of] French Canadians [who] fulfilled administrative and professional functions in federal government and other national institutions and performed intermediary managerial functions in English-Canadian and American corporations."4 One might add to this list employment in such French-dominated institutions as the Quebec government or the Banque Canadienne Nationale, but the point would still be essentially the same. These were men whose careers had been tied to success in bureaucratic organizations and who had been forced by the nature of their activities to deal with people, frequently English-speakers, from outside the narrow confines of the parish. With this background, these men, who will be described as middleclass Quebecers, came to the issue of centralization with few of the objections of the petit bourgeois founders of the caisses. These new leaders were generally less fearful of the outside world and were prepared to employ all the tools at their disposal, including central bureaucratic control, to advance the interests of the co-operatives. Many members of this middle class had been educated in the various commercial academies set up, like the caisses themselves, in the early years of the century in response to the growing power of English-speaking business interests. By the start of the Second World War, over 40 per cent of the financiers, merchants, and industrialists listed in Biographies franfoises d'Amerique had been trained in such institutions, whose doors were opened to a relatively wide range of Quebecers, not merely the sons of the traditional elite.5 Accordingly, this was a new class within Quebec society which was just beginning to make its presence felt by the time of the Second World War. After 1945 the members of this class added their voices to the demands of other groups for fundamental change in Quebec society as they came to recognize the limited prospects for advancement within an economy dominated by English-speaking interests. Only the expansion of the Quebec state could satisfy both the aspirations of the new middle class and those of less powerful Quebecers who, in the midst of the relative prosperity of the post-war era, demanded a higher level of services from the state. In the long term, men such as the rising leaders of the caisses populaires were part of the coalition that led to the Quiet Revolution. In the pre-1945 era, however, their significance lay in contesting the values of the petite bourgeoisie. These new leaders offered an alternative to the clerico-nationalist ideology of men such as the founders of the caisses, who emphasized religion as a means of defending the French-Canadian nation by isolating it from the outside world. By contrast, the precursors of the new middle class were still nationalistic, but their values were more secular and open to the outside world. Accordingly, they could centralize control over the caisses without fear of contamination by contact with those who spoke another language or professed another faith. In this sense, the debate between the centralizers and their opponents reflected the beginning of a major social change within the

80 Challenge from a New Class

elite of French-speaking Quebec. The existing literature tends to treat the debate over centralization as little more than an unfortunate family squabble based on personality clashes and political loyalties.6 While not dismissing other factors, this chapter will highlight the class dimensions of this debate in order to see it in a larger context. THE T H O U G H T S OF LE F O N D A T E U R , 1 9 0 0 - 2 0

What would le fondateur have thought about creation of a hierarchical structure for the caisses populaires? This was a question that was frequently asked by both proponents and opponents of centralization during the debate that raged for twenty-five years after Desjardins's death. Given the central role of Desjardins in the founding of the caisses and the reverence that he was accorded by all connected with the movement, being able to trot out his views on centralization proved a useful tool for both sides.7 Indeed, his career provided ammunition for both the centralizers and the decentralizers. For the opponents of centralization there were his official pronouncements regarding the decentralized nature of the caisses populaires, while the centralizers could take comfort in the concrete actions of Desjardins that moved the caisses in the direction that they desired. There really was nothing to say about the links that might be created between the co-operatives when there was only one in existence. This changed, however, in 1902, with formation of a caisse at Lauzon, just east of Levis. Enthused about this new initiative, Desjardins envisioned the opening of still further caisses, "working independently but harmoniously with the one at Levis."8 For all those who would later use Desjardins to support their position on centralization, this statement provided comfort in its ambiguity. What, after all, did he mean by "independent but harmonious relations"? In the years that followed, he continually made reference to the independence of other caisses from the one that he managed at Levis, while he worked for their observance of his dictates. For instance, his commitment to a decentralized system was expressed in a letter to Archbishop Begin in 1905 in which he provided assurance that he could not possibly profit personally from the establishment of numerous caisses because of their autonomy: "Because of the decentralized system that I want to establish, no individual caisse will be strong enough to offer me compensation."' Such claims aside, the previous chapter indicated that Desjardins was tireless in his efforts to impose a certain central control over the movement that was taking form. He gave an early sign of his dedication to centralization in 1904 when he summoned various leaders from the Quebec City area to set up an organization, Action populaire economique, which had among its goals creation of associations of caisses to co-ordinate their affairs.10 More

8i Centralization

concretely, toward the end of the first decade of the new century he directed the other caisses to write to the federal government in support of legislation to govern their operations. Identical letters were sent to Ottawa from numerous caisses which were provided with a form by Desjardins to facilitate their work. As Desjardins noted in a letter to Mgr Begin, "I have directed this campaign over the past two months, seeing that resolutions were approved by the twenty-one caisses that operate in our province."" Prime Minister Wilfrid Laurier was never overly enthusiastic in his support for this bill, but he could not fail to be impressed with Desjardins's organizational skills. He noted that "M. Desjardins is what is known as a good lobbyist. He has flooded my office with a deluge of letters."12 By the 19105, Desjardins's interest in co-ordinating activities transcended letter-writing to extend to day-to-day affairs. He increasingly used the caisse at Levis as an informal head office for the caisses, a place where surplus funds could be deposited and from which supervision could be provided. He hoped that some day a federation of the caisses would formalize the links that he had tried to build to Levis, but this was a task that he never fully achieved because certain caisse leaders resolved to resist centralization. Desjardins was on record as early as 1911 as being committed to a federation that might collect surplus funds, oversee day-to-day operations, and promote establishment of new caisses.1' His efforts in this regard seem to have been intermittent until 1917, when he circulated a memorandum about a provincial federation.'4 A committee of the caisse at Levis studied Desjardins's scheme throughout 1918 and 1919, and when its work was through le fondateur remarked, "There is the plan. Now, how are we going to have it accepted by the Caisses Desjardins in each parish?"'? Desjardins had given life to institutions that, in theory at least, enjoyed "a complete autonomy in their affairs."'6 Now he wanted to convince them that they should formally sacrifice some of this autonomy. He had not yet achieved acceptance of his plan by 1920, which led him to send off one last, unsuccessful circular to the caisses. The reticence of one Montreal co-operative, the Caisse populaire de Ste-Cecile, was expressed by its president, the notary Eugene Poirier, who would be a consistent champion of decentralization over the next quarter-century. Poirier balked at going along because he had not yet seen the precise rules that would govern the federation. Desjardins could not understand this justification, because "these details will be settled by the representatives of the caisses."1? Poirier probably understood Desjardins's motives all too well and refused to allow the calling of a convention in which le fondateur would be able to use his considerable influence to draft regulations that would facilitate centralization. Such fears certainly seem warranted, given Desjardins's response to the manager of another caisse, who refused to support the federation project prior to the drafting of formal regulations. Desjardins tried to assure the manager: "No caisse will

82 Challenge from a New Class

be forced to join the federation, any more than individuals are forced to join the caisses in their parishes." But he made his personal role in such a federation perfectly clear: "As for the regulations governing the federation, they will be decided upon by the caisses, but this is not to say that each caisse should expect its demands to be entirely accepted."'8 Desjardins died in the fall of 1920, his plan for the federation of all the caisses in the province still not achieved. Nothing formal was accomplished during Desjardins's lifetime to centralize control within the caisse populaire movement. As he accurately observed, however, "I have been at the centre of the affairs of the caisses," and in this capacity he had been able to alter the structure in an informal manner, most notably through the financial role played by the caisse at Levis.1' This was the ambiguous legacy that Desjardins left to his successors. He had put in place rules, which had not been altered by 1920, that expresssed the autonomy of each caisse, but he had both formally and informally worked at undermining this autonomy. In leaving this legacy, Desjardins was reflecting an approach that was similarly adhered to by leaders of co-operatives elsewhere in the Western world, who often continued to value local autonomy while working for centralization to increase efficiency.20 While local control of the caisses appealed to Alphonse Desjardins, the member of the petite bourgeoisie of Levis, it became less attractive to him after he had travelled widely in the twenty years since the establishment of the CPL and had had to face the practical concerns of directing a financial movement with assets of over $6 million. As manager of a growing and far-flung institution, Desjardins was no longer the member of the petite bourgeoisie that he had been at the start of the century. In those moments when he gave evidence that he sought centralization for the caisses, he ran into the opposition of men, frequently members of the traditional leadership of French Canada, who had not altered the view that Desjardins himself had advocated in 1900. Both aspects of Desjardins's legacy would find forceful advocates in the quarter-century following his death.

THE E M E R G E N C E OF A HIERARCHICAL STRUCTURE, 1920-32 Desjardins had been dead for only a few months when efforts were made to establish a federation of the caisses in the Trois-Rivieres region. This regional federation was, as it later turned out, the first step in the process that ultimately led in the 19305 to a provincial organization, but those who created the TroisRivieres union regionale rejected the drift toward further, province-wide centralization that Desjardins had encouraged. With the leader gone, it was now possible to preclude further efforts to create a provincial organization. As an opponent of the power of the provincial federation noted some years later,

83 Centralization Desjardins had been a "centralizer in trying to create a single federation of all the caisses populaires." For those opposed to such a plan, "it was better to create a number of regional unions instead of a single provincial federation."21 Moreover, Trois-Rivieres was a likely spot for opposition to control from Levis, since the Caisse populaire des Trois-Rivieres had long competed with the CPL for the savings of caisses in the region.22 Talk regarding a provincial organization continued throughout the 19205, but it took a back seat to the regional federations, establishment of which had not been a preoccupation for Desjardins.2' Following creation of the Trois-Rivieres union regionale in 1920, regional federations were formed in Quebec City in 1921, in Montreal in 1924, and in Gaspe in 1925.24 Their organization mirrored that of the local co-operatives, except that their members were caisses instead of individuals. As in a local co-operative, each member caisse had one vote in general meetings, regardless of its size or the number of shares it had in the federation, and the general meetings not only hammered out matters of policy but also elected officers for the boards that ruled the federation. Needless to say, the men on the governing bodies were the same professionals, priests, and small businessmen who directed local affairs. Within the regional associations, there was also the same drift away from control by the annual assembly that was evident in the local caisses. For instance, some years after the founding of the Trois-Rivieres federation, when a caisse centrale was in existence, it was decided to transfer the granting of ristournes from the assembly to the conseil d'administration, "in order to avoid discussing the issue in the future."25 Given widespread hostility to a province-wide organization, the petit bourgeois leaders, who were generally ill-disposed toward centralization, set up regional federations to avoid even less desirable alternatives. These members of the traditional elite were motivated also by their fear of an expanded role for the state in the affairs of the caisses. State supervision was not out of the question: economic dislocations following the First World War increased closings among caisses and slowed down creation of new ones.26 Wilfrid Guerin, a consistent opponent of centralization, supported a regional federation at Montreal to preclude "inspection by the government which would prove to be both useless and expensive."27 Once established, these regional federations played a role similar to that envisioned by Desjardins for his ill-fated provincial organization. At first, inspectors were to be engaged by the federations to watch over existing caisses, and propagandistes were to work for creation of new ones. Later, the federations were free to set up caisses centrales to centralize the surplus savings of some caisses and to make these funds available to other caisses or to public bodies, such as religious institutions, school boards, or municipalities, which could use them. Caisses centrales could be formed later, so as not to irritate individual caisses, which might see their autonomy threatened by concentration of financial power in the regional federation.

84 Challenge from a New Class

However, even when the regional federation only supervised inspections, many caisses were still skittish about possible loss of autonomy. One representative to the preliminary meeting to establish the Quebec City federation asked whether "this federation is going to take away the autonomy of our caisses populaires."28 Such concerns sufficiently bothered members at Maria that several votes had to be taken before its adherence to the Gaspe federation was approved.Z9 Similarly, in the Trois-Rivieres region some caisses refused to join, while others joined, only to leave soon thereafter.'0 To end the freedom of caisses to remain outside one of the regional federations, the province passed legislation in 1925 making independence financially unattractive. If a caisse chose to go it alone, it would still be obliged to be inspected by the regional federation and to pay for the service.JI The province also acted against certain caisses whose members had voiced no particular objection to a regional federation but refused, often in the name of local autonomy, to allow inspectors to examine their books. Legislation was passed in 1930 to ensure such audits, if not by the federation, then by the state.*2 Nowhere was resistance to a regional federation as widespread as in the Montreal area. Throughout the quarter-century following Desjardins's death, Montreal was the focus of anti-centralization sentiment, most notably from two notaries, Wilfrid Guerin and Eugene Poirier. These men belonged to the class that had created the decentralized structures in 1900, and they were from the region that had most directly experienced the impact of monopoly capitalism and the evils of concentration. Moreover, Montreal, more than any other part of the province, had seen its population altered in the early twentieth century by the arrival of European immigrants, most notably Jews. Since the caisses were decentralized, in part to provide protection from outsiders, this need was felt particularly strongly in Montreal, where the most "foreign" of all elements, the Jew, was present in sizeable numbers. Desjardins had been bothered by the "Jewish evil which threatens all of us," and those who lived in Montreal could only have felt this anti-semitism even more strongly." Finally, Montreal's rejection of central control also reflected the longstanding battle for power between the province's two major cities. Since centralization would probably have concentrated power at Levis, across the St Lawrence from Quebec City, the drift in that direction was to be resisted at all costs. The first evidence of Montreal's reluctance to accept even a regional federation came with establishment in 1921 of an agency to conduct inspections in that region under the title Bureau central d'inspection et de surveillance des caisses populaires de Montreal. Elsewhere in the province, unions regionales had caisses as formal members, subject to their rules and regulations. The Bureau central in Montreal, however, was a much looser association of caisses, presumably because of the strength of anti-centralization sentiment.34 Even so, by 1924 only half of the caisses in the Montreal region had joined the

8y Centralization

Bureau central, and those who desired "a thorough and serious inspection" pushed for a true regional federation that might exert more pressure on recalcitrant caisses.w The Bureau central was transformed into a formal union regionale, but the change in name did not soften the resolve of many caisses to maintain their autonomy, a situation altered only by provincial legislation. The caisses from Montreal may have been forced into their regional federation, but no effort was made until the 19305, to cow them into establishing the more contentious caisse centrale, and even then it was accepted only as a means to facilite exchange of cheques with the chartered banks.'6 As was shown in the previous chapter, the potential loss of autonomy through centralization of funds became the focus for those caisses that most zealously guarded their freedom. Such caisses centrales were established in Trois-Rivieres in 1923, in Quebec City in 1924, and in the Gaspe in 1925, but in all three cases there was visible opposition to creation of a financial arm for the regional federations. In Trois-Rivieres, for instance, the leaders of the federation noted, "Even if we encourage the caisses to leave deposits with the federation, this does not mean that it is compulsory. No! Each caisse is going to retain its autonomy."57 Desjardins's legacy could be used both ways. Some cited it in opposing caisses centrales, which were perceived as agents of centralization, and thus hostile to his conception of autonomous co-operatives.'8 It was used in the opposite direction in the early 19205, in efforts to convince the CPL to join the caisse centrale of the Quebec City regional federation. As early as 1922 discussions were held regarding a caisse centrale, presumably as a department of the Levis caisse, but this had still not been achieved by 1924, because the CPL refused to participate. It had been working on its own for many years, first under Alphonse Desjardins and after 1920 under his son Raoul, to centralize the area's savings in its own vaults. Why should the CPL now relinquish control over them to the regional federation? Ultimately, the leaders of the Quebec federation tried to use reverence for Desjardins to overcome the CPL's reluctance. They wrote to Desjardins's widow to ask if a caisse centrale had been among his unfinished dreams. Mme Desjardins responded in no uncertain terms: "Your idea of a caisse centrale is absolutely connected to his [Alphonse's] idea of a federation."" Not content, however, with the wording of her response, the leaders added to the published version, presumably to increase pressure on the Levis caisse, a sentence that indicated that Desjardins had wanted the "office of the caisse centrale to be established at the same location as the Caisse populaire de Levis."40 In a similar fashion, they tried to discredit Raoul Desjardins by suppressing a passage in Mme Desjardins's letter that placed him in a favourable light.4' The directors of the regional association must have hoped that Raoul's colleagues would abandon him and bring the Levis caisse into the caisse centrale. Their dubious use of Mme Desjardins's support failed to have its desired

86 Challenge from a New Class

effect, however, and when they chose to pursue their plan anyway, Raoul Desjardins resigned from the federation's board of directors in protest.42 Without the support of the Levis caisse, the caisse centrale was established with head offices in Quebec City, where it remained until 1945. As for the CPL, its position began to change only in 1926, when the provincial government ordered all caisses populaires to terminate the practice of receiving deposits from other caisses. In the aftermath of this rebuke, Raoul Desjardins resigned as president of the CPL, and the road was clear for the Levis caisse to join the caisse centrale.45 Although a higher authority took some getting used to, by the late 19205 the regional federations were generally recognized as legitimate agents within the caisse populaire structure. Most, if not all, caisses had come to accept the idea that inspectors, appointed by federations over which they felt they had at least a modicum of control, had a right to look over their books. Everywhere but in the Montreal area, caisses were frequently leaving their surplus funds with caisses centrales. With increasing acceptance of regional federations, debate over the structure of the movement shifted again to establishment of a provincial association, but, unlike the situation in the 19105, this time the issue was the autonomy of the regional federations. Opponents of centralization had assumed throughout the 19205 that regional federations would obviate the need for a province-wide association, not serve as a step in that direction. Accordingly, they clung tenaciously to the structure that was in place by the end of the decade. Tentative steps in the direction of a provincial organization were evident by the mid-^os, with the holding in 1925 of the first "congres des caisses populaires Desjardins," which set up at its close "a permanent committee composed of one representative of each regional federation."'14 The Comite central de propagande des caisses populaires Desjardins met only months after the convention, but the very existence of a body that might evolve into a full-fledged provincial organization left some leaders cold. Representatives of the Gaspe federation balked at the idea of repeated meetings of regional representatives that might result in standardizing operations of all caisses in the province.4' As for the secretary-treasurer of the Trois-Rivieres federation, he objected in 1926 to the idea of a larger organization, which he found "premature .... The prospect of creating a provincial federation worries me."46 In a repeat of the situation after the First World War that brought the regional federations into existence, objections to a provincial body ultimately melted away in the face of an economic disaster. Between 1929 and 1933, fiftyone caisses closed their doors, more than during the previous three decades. Some funds were lost by members, and there was considerable concern that something be done to foster public confidence. One solution was a better system of inspection. During the 19205 "each federation had its inspector who, in most cases, was a priest who was devoted to the cause and who was carrying

87

Centralization

out the inspection practically for free."47 The initiative for a better system came, however, not from the caisses, but from the provincial government. The Liberal regime of Louis-Alexandre Taschereau had been providing grants to the Comite centrale de propagande since the late 19205 to facilitate establishment of new caisses. However, following the collapse of the Western economies in the fall of 1929, the government announced suspension of grants in the absence of a better system of inspection. The leaders of the caisses evinced only a gut rejection of the state's involvement in their affairs; these members of the petite bourgeoisie had been rejecting such an expanded role for the state for nearly three decades. Convinced by early 1930 that the caisses were not prepared to take the initiative, Taschereau's government had legislation passed that allowed the province to intervene in the affairs of a caisse if an inspection were demanded by any interested party .48 This evidence that the government meant business prompted some leaders to begin a campaign of letter writing, in which they protested the need for their continued autonomy from the dictates of the state.49 Other, more realistic leaders began serious negotiations to renew grants without any further direct government intervention. There is little evidence to suggest that the government wanted control of the inspection process. Rather, its interest all along was to push the caisses into forming a provincial federation which might receive government grants and control professional inspection of the caisses. These goals were expressed in a letter in the spring of 1931 from the minister of agriculture: "As long as the caisses are not joined together in a single central organization with which we can negotiate, I do not believe that the government should make any effort to aid them."*0 The provincial organization that Desjardins had so badly wanted was finally going to be established, as fear of government control proved more powerful than that of centralization. Nevertheless, concern about centralization was never far beneath the surface in discussions among caisses leaders regarding the sort of deal they were prepared to work out with the government. Those opposed to centralization had little choice but to accede to the government's insistence that the new federation be responsible for "the establishment of new caisses and an efficient system of inspection"*'; nor could they fight the government's demands that the federation be given the power to approve all bond purchases by caisses populaires. As we have already seen, the purchase of bonds had long been a way for the caisses populaires to invest their surplus funds, but following the considerable losses experienced in the crash of 1929 the government wanted a central authority to review all future purchases. Opponents of centralization did win small victories, however, indicating that the fight for control of the movement was far from over. For instance, there was the question of the name for the new provincial organization. One suggestion was to call it the Federation provinciale de Quebec des caisses popu-

88 Challenge from a New Class FIGURE 4 Structure of Caisse Populaire Hierarchy, 1900-32

laires. This proposal was quickly rejected, "seeing that the federation in question [was] going to be one of regional associations and not of individual caisses populaires. "J2 This distinction was not merely one of semantics. Instead, it had much to do with the distribution of power within an increasingly bureaucratized institution. If the federation were to represent individual caisses, then the regional federations would have a dubious place in the power structure. By contrast, if the federation derived its authority from the regional organizations, then these regional bodies would be able to fight another day from within the provincial body, in which each regional association, regardless of its size, would have an equal say in the direction of policy and the selection of officers. The hierarchical structure in place by 1932 is depicted in Figure 4. Just as each regional association was a caisse whose members were local co-operatives, the provincial federation was a co-operative whose members were the regional bodies. Since it reflected the source of authority for the provincial federation, the awkward name - Federation de Quebec des unions regionales de caisses populaires Desjardins (hereafter FQUR) - was significant. Even in terms of the inspection process, the regional federations won a minor victory. The $20,000 annual grant from the government was to aid with both inspection of existing caisses and establishment of new ones. The government was to pay for the inspectors, but they were to be nominated by the regional federations,

89 Centralization

though hired by the provincial one. For Wilfrid Guerin, a leader of the Montreal federation and longtime champion of both decentralization and freedom of the caisses from the control of the state, the structure established in 1932 provided for "the subsidization of autonomy."*? The small victories of the opponents of centralization would prove useful when prosperity returned with the outbreak of the Second World War, but through most of the 19305 the FQUR consolidated its power in order to minimize the damage caused by the Depression. This successful imposition of central control gave the leaders of the provincial association, the most notable of them members of a different class than Guerin, the mistaken impression that the forces opposed to centralization were dead. The events of the early 19405 would prove that the commitment of certain leaders to their notion of what Desjardins had stood for was still very much alive. CYRILLE VAILLANCOURTAND THE C O N C E N T R A T I O N OF POWER

The person most responsible for establishing the authority of the provincial association was its first president, Cyrille Vaillancourt, who was referred to by his biographer as "the second founder" of the caisses u Prior to occupying this new position within the caisse bureaucracy, Vaillancourt had served as a director of the CPL and president of the Quebec City regional federation. Shortly after assuming the presidency of the provincial federation he also became manager of the Quebec regional federation's caisse centrale. However, in order to appreciate the qualities that Vaillancourt brought to the presidency of the provincial federation, it is even more important to consider the professional career that he had pursued since the late 19105 in Quebec's Department of Agriculture. Between 1917 and 1934 Vaillancourt was responsible for the department's work in apiculture and maple sugar production. He developed an expertise in the two major sugar-producing activities in the province and showed himself a tireless worker in the promotion of more advanced and more scientific methods. He travelled to Europe to learn of techniques being developed there, and he gave numerous speeches to farmers' organizations, in addition to organizing the work of those who served under him in his office in Quebec City. According to Jacques Lamarche, Vaillancourt possessed "the ability to work within an organization and the experience of an efficient civil servant."^ Vaillancourt never served in any of the professions normally associated with Quebec's traditional petite bourgeoisie. Even his education, at the College de Levis, was different from that obtained by those who entered the liberal professions. Vaillancourt received a commercial education at Levis, which placed him among those middle-class Quebecers who entered the twentieth century prepared to function in business or in the employ of the state. Imbued

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with an appreciation of the value of bureaucratic control, Vaillancourt came to his job with many of the attributes of those who would ultimately usher in the Quiet Revolution and with few of the fears regarding centralization, monopoly capitalism, and the role of the state that more traditional caisse leaders would continue to display throughout the period under study. Through Vaillancourt the rationalization and efficiency of monopoly capitalism came to this co-operative movement, which had been founded in part to oppose the concentration of economic power. Even before acceding to the presidency of the provincial federation, Vaillancourt indicated his desire to create within the caisses a hierarchical structure not unlike that employed by the chartered banks. As president of the Quebec regional federation he ruffled the feathers of the CPL's leaders in 1930 by bringing in an outside accountant to double-check the work of the federation's inspector. The caisse resented paying for both inspections, but Vaillancourt responded: "We are simply doing what the banks do."?6 Once installed as head of the provincial body, he moved decisively to concentrate power, aided immeasurably by the emergency conditions of the Depression. Vaillancourt was technically responsible to the more traditional leaders, who frequently sat on the board of directors of the provincial federation, which was made up of representatives of each of the regional bodies. In practice, however, Vaillancourt, first as president and after 1956 as manager, had to deal with the day-to-day problems of the federation and could advance his vision for the future of the caisses. Within a year of establishment of the provincial association, he had provoked from the Quebec City regional federation a threat to secede over his order that inspectors send their reports directly to the provincial body." This method would strengthen ties between individual caisses and the provincial organization and weaken links between local credit unions and regional associations. *8 Vaillancourt's desire to go around the regional federations was made equally clear in 1938, when he convoked the managers of the province's major caisses, thus further reducing the role of the regional federations within the hierarchy." In more general terms, Vaillancourt was accused of keeping the unions regionales in the dark regarding day-to-day affairs. The Trois-Rivieres federation demanded in 1935 that the provincial body keep it "up to date regarding developments and that all changes to the regulations of the provincial federation be submitted in advance to the regional associations."60 Despite such complaints, Vaillancourt had become sufficiently blase about the regional federations that he proposed, albeit unsuccessfully, in 1937 to change the name of the provincial body to Federation des caisses populaires Desjardins, with no reference to the regional organizations.6' Vaillancourt did not seek merely to undermine the authority of the regional associations, however, as he also worked to expand the activities of the provincial federation. In the purchase of securities, for instance, Vaillancourt was not content with mere approval of the acquisitions proposed by local caisses;

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he wanted the federation to make the purchases for them.62 Moreover, only shortly after creation of the provincial body, he proposed a caisse provinciale to collect surplus funds of the caisses centrales, just as the regional bodies had collected surpluses from the local caisses. In a letter to the provincial minister responsible for administering the grant to the caisses, he expressed his desire to "centralize" available funds to build a movement that was "more solid and efficient."6' The clearest indication of Vaillancourt's assumption of a role similar to that of a general manager of a chartered bank came with his efforts to negotiate a deal with those same banks for the exchange of cheques written by caisses members. Chequing facilities were introduced in the 19308, just as the provincial federation was coming into existence.64 Some people, however, were bothered by this innovation, as it might induce members to use the caisse as a tool for consumption, when it had been conceived by Desjardins as a means of encouraging thrift. As one leader of the Levis caisse noted in a letter to Vaillancourt, current accounts, which earned relatively little interest and on which cheques could be written, had become too common. "The caisses are growing too rapidly because of the transfer of current accounts from the banks ... We need to put a stop to these accounts which do not reflect the true spirit which should guide the affairs of the caisses."65 In response, Vaillancourt advised his correspondent of the need to be realistic. The caisses had to offer chequing privileges to its members because of "the pace of life today. People do not have the time to withdraw money to pay merchants ... In another age, we had the time to lose an hour; today we do not have that luxury."66 In this, as in other matters, Vaillancourt indicated acceptance of the world as it was and sought no return to an earlier age, unlike other leaders. As Vaillancourt observed, in this consumer society members of the caisses were increasingly buying their goods from merchants outside their own communities. They wished to pay for their purchases by means of cheque, but "a number of firms refuse to accept cheques of our caisses populaires because the banks charge twenty-five cents for the cost of redeeming the cheque at the caisse concerned."67 The merchant receiving a cheque drawn on an account at a caisse would frequently attempt to cash it at his local branch of a chartered bank. The branch would then have to deal directly with the caisse in question to settle the transaction, a process that was time-consuming and, accordingly, costly. To minimize these inconveniences, Vaillancourt wanted to negotiate an arrangement with the chartered banks for the easy exchange of cheques drawn on caisse populaire accounts. He looked forward to the day when "people who receive our cheques would no longer have to pay to cash them any more than is charged upon a bank's cheque."68 Such negotiations interested the banks, which, in return for co-operating with the caisses, sought a series of

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concessions to reduce the high level of services that the co-operatives were providing to their customers and that worked to the disadvantage of the banks. For instance, the bankers demanded that the caisses limit the hours during which they were open, and even though Vaillancourt expressed the need to provide services when "the ordinary depositor is not at work," the clause regarding hours of business was included in the final arrangement .69 In addition, the banks demanded from Vaillancourt, and obtained, promises regarding changes in the way in which caisses credited interest to their members' savings accounts. The caisses were to credit interest on the basis of the minimum quarterly balance, not the minimum monthly balance, as had previously been the case.?0 Moreover, the bankers sought to lower the interest paid by the co-operatives to depositors by securing the promise that the caisses would not exceed the rates offered by the banks by more than one percentage point 7' Curiously, Vaillancourt seems to have forgotten in these negotiations that he did not have the power to order the individual caisses to lower these rates, since he was not the general manager of a chartered bank. When the Levis caisse failed to do as it was requested, it was visited by a deputation from the Canadian Bankers' Association, which wanted to know why the arrangement reached with Vaillancourt was not being respected. One leader of the caisse reminded the bankers about the "autonomy of each caisse populaire" and received the response, "If there is no understanding on this issue, there will be some serious consequences for the redemption of cheques drawn upon the caisses."''2 The caisse ultimately gave in on the issue of the interest paid on deposits, but it found itself under the gun once more a few years later when it sought to pay a ristourne to depositors. Vaillancourt again succeeded in undermining local autonomy in the name of appeasing the banks when he forced the caisse to back down to avoid a souring "of our current relations with the banks."73 Quite aside from the issue of local autonomy, Vaillancourt also had to contend with opponents within the movement who feared that the negotiations with the banks might integrate the caisses into the "tumultuous world of high finance."?* Those who were bothered by the very practice of writing cheques on caisse populaire accounts were further annoyed by the signing of any formal arrangement with the banks, institutions that the caisses had been formed to combat. To such complaints, Vaillancourt invariably responded that if it were possible to return to "the good old days" he would gladly do so. In fact, however, the realities of economic life in the 19305 made this impossible." When it was clear that Vaillancourt had tamed opposition from the caisses, an agreement with the banks was finally reached early in 1939, orchestrated by the provincial federation on behalf of the regional bodies. In concluding such an arrangement, Vaillancourt made clear his influence not only over

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the individual caisses but also over their regional federations. In the deal, the caisses centrales promised to leave funds on deposit with each of the banks for the redemption of cheques, so that anyone wanting to cash a cheque drawn on a caisse populaire account would be able to do so without penalty.76 With this system in place, 40,000 of these cheques were cashed by banks in the Montreal area alone between July 1939 and December 1940.77 In return for agreeing to accept the cheques of the caisses, the banks secured promises that the provincial federation would at least try to limit the services offered by local caisses to their members. In this last regard, Vaillancourt could do no more than attempt to satisfy the banks. It was with some sadness that he explained his difficulties to an official of the Banque Canadienne Nationale: "We ask the caisses to follow the instructions that we give them, but we cannot order them. As you know, each caisse is autonomous. It is sad to say that some of our caisses are led by people who are more businessmen than supporters of co-operative principles."78 This was a strange perversion of the initial design of the caisses: co-operatives that dared to maintain their autonomy were perceived as disloyal to the movement. Vaillancourt seems to have forgotten that he had no mandate to operate like the bankers with whom he worked so easily. This eagerness to have the provincial federation expand its authority at the expense of the local and regional caisses continued into the 19408, but while Vaillancourt's earlier disregard for the other components of the movement had only elicited expressions of annoyance, his later actions resulted in a serious crisis for the entire movement by 1945. Vaillancourt's centralizing activities during the 19308 were often justified by the circumstances of the Depression, but in the 19405 they were fuelled by the spectacular growth of the caisses during the war, together with concerns for the recession that many felt would inevitably follow. One of Vaillancourt's colleagues noted: "There were too many new caisses opening between 1942 and 1945 to allow a careful control over their affairs."79 As for the post-war period, in which deposits accumulated during hostilities would surely be withdrawn, Laurent Letourneau, Vaillancourt's staunch ally on the federation's board of directors, expressed the need for caution. In 1944 he remarked, "The abundance of funds in our caisses will expose us, if we are not careful, to the granting of risky loans or the undue tying up of funds that will someday be withdrawn by our clients."80 To deal with these problems, both during the war and immediately afterward, Vaillancourt and Letourneau sought to tighten central control over the lending policies of the caisses. Letourneau, who became president of the federation in 1944, shared with Vaillancourt a background that made him amenable to centralization and the emulation of the practices of large businesses. Like Vaillancourt, Letourneau received a commercial education, following which he worked for the Banque Nationale for roughly twenty years prior

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to its acquisition by the Banque d'Hochelaga in 1924. After the passing of the Banque Nationale, Letourneau was immediately employed as an inspector for the Trois-Rivieres regional federation, but he did not completely sever his ties with the world of big business, as he was still working in 1938 for the Corporation des Prets de Quebec, a firm that marketed bonds.8' With this background, which distinguished him from the petit bourgeois founders of the caisses, Letourneau was frequently at odds with certain of the principles on which these co-operatives had been established. In the 19305, for instance, he campaigned, though unsuccessfully, for an amendment to the legislation governing the caisses to make members of the commission de credit eligible to apply for credit from the co-operative.82 These members offered their services freely; why, Letourneau asked, should they be punished for their contribution by being denied access to credit? He also shared Vaillancourt's irreverence for decentralization. When it was pointed out in 1945 that the autonomy of the caisses might be endangered by closer supervision from the provincial federation, Letourneau responded: "Autonomy is a good idea sometimes, but often it works to our disadvantage and to the disadvantage of the caisses in general."85 Vaillancourt and Letourneau were not content, however, simply to expand the influence of the provincial federation over the caisses. They were also prepared to take the federation, and the entire movement, in entirely new directions. Accordingly, in 1944 they led the way for the movement's first foray outside the savings and loan business. The Societe d'assurance des caisses populaires (SACP) was solely the creature of the provincial organization, with no explicit role for the regional associations. Vaillancourt observed: "Most of those involved with the running of this insurance company are the leaders of the Federation. This initiative has the full and complete support of the Federation des Caisses populaires de Quebec."^ Here was a provincial organization eager to expand its horizons without the consent of the regional associations from which it derived its authority. Fittingly, Letourneau, president of the provincial federation, assumed the same position within the SACP. The goal of the company was to provide affordable fire insurance to members who had mortgage loans with the caisses. As we saw in the previous chapter, the mortgage business was an expanding part of the affairs of the caisses by the 19405. Unfortunately, while members may have been receiving good terms from the caisses on their loans, they were paying exorbitant prices to insure their property, often to companies based outside Quebec. The insurance company thus fit in with the economic nationalism of the caisses. It also stood, if successful, to provide another source of profits to support the movement and its members in the uncertain times that would follow the war. As Vaillancourt put it, "The primary goal of this insurance is the protection of our members, but it will also provide revenues to allow the caisses to be free some day from the government for the funds that we need for inspection and the establishment of new caisses."8*

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The leaders of the federation portrayed the insurance company as a logical outgrowth of earlier activities, but not everyone involved with the caisses agreed. Not only was this venture outside the activities pursued since the days of Desjardins, but it was also the first involvement in an organization not structured along traditional co-operative lines. As a mutual insurance company, the SACP had no capital, but it did have a reserve fund to which an individual caisse might contribute an amount up to 20 per cent of the total value of its members' equity.86 In return for its investment each participating caisse would receive dividend payments if operations were profitable. In addition it would receive one vote for every $1,000 invested. This was a departure from the operations of a normal co-operative, in which one vote at the annual assembly was granted to each member, regardless of his financial contribution. Since the SACP was not a co-operative venture, however, votes at its annual meetings went both to the participating caisses, in the manner described above, and to all members with policies in force. Sensitive to criticisms that he was moving the caisses away from the most basic of co-operative principles, Vaillancourt observed that the laws governing co-operative enterprises in Quebec did not allow for establishment of insurance companies.8' This fails to explain, however, why Vaillancourt did not seek to have the legislation governing co-operatives amended to allow for co-operative insurance associations. His influence should not be underestimated, since he was a close personal friend of Adelard Godbout, premier of Quebec at the time that the law authorizing establishment of the SACP was passed. Eyebrows were also raised regarding the unprecedented transfer of funds directly from the caisses to an agency that was effectively an arm of the provincial federation. Ever since its founding, the provincial body had depended on contributions from the regional associations, along with its subsidy from the Quebec government, to finance its operations. In 1932 these contributions were set at 25 per cent of the funds raised by the regional federations from their member caisses. As its expenses increased, however, the provincial organization tried to convince the regional associations to increase its share of the funds raised from local caisses to 50 per cent and to accept a uniform system of taxing the local co-operatives, which would have increased the burden on the larger caisses. Taken together, these proposals stood to have their greatest impact on the large caisses of the Montreal federation, which partly explains the strong opposition from that region. Between 1943 and 1945 the Montreal federation refused to pay more than 25 per cent of its intake from the local caisses - while most other regions were paying jo per cent - to demonstrate its autonomy from Vaillancourt and the provincial organization.88 It was no coincidence that the provincial federation divulged its plans for financing the insurance company in the midst of this controversy regarding the raising of funds. Tired of fighting with the regional associations, most notably that based in Montreal, Vaillancourt and Letourneau sought direct contributions from the local co-operatives, cutting the regional federations

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out of the picture altogether. Accordingly, the leaders from Montreal refused to support Vaillancourt's efforts to secure the co-operation of local caisses for the insurance company. Circulars were sent to the managers of all caisses encouraging them to invest, but there was clearly more enthusiasm in some parts of the province than in others, depending on the warmth of the support provided by the regional association. In line with its general objection to centralization, the Montreal federation categorically refused either to contribute to the SACP itself or to "recommend to member caisses to subscribe for the capital of the Societe d'assurance des caisses populaires."8' The unwillingness of Montreal leaders to support the aims of Vaillancourt and Letourneau in this regard was only part of a larger battle over the direction of the movement. Tired of all the opposition that he had met in his efforts to expand the power of the provincial federation, Vaillancourt snapped back angrily in a preliminary draft of an article on the SACP that he was writing for the federation's journal. He described how he was constantly forced to overcome "every imaginable obstacle," most particularly the ill-will of men whom he thought were friends but who had become "his most bitter enemies because some back-biters were sowing the seeds of suspicion. Slander led to the death of Christ. Imagine what it can due to a man?"'0 Vaillancourt did not respond thus solely because of the opposition that he received, particularly from leaders in Montreal, over the insurance scheme. Rather, his annoyance reflected the intense battles that raged within the movement throughout the early 19405 and took it to the brink of a major schism in 1945. SCHISM

From all external appearances, development of the three-tier structure for the management of the caisses populaires was a logical response to circumstances that Desjardins could hardly have foreseen during the late 18905. Emergence of this structure has, in fact, appeared so logical to many observers of the history of the caisses that they have tended to view it as inevitable.9' In theory, as each new tier was created, the autonomy of the one below it was guaranteed. Concerted action was to be facilitated without violating local autonomy. In practice, however, each new tier took upon itself powers that had not been entirely anticipated when it was created. Not surprisingly, this contradiction between theory and practice resulted in considerable animosity between those who recognized the efficiency that could be achieved through centralization of authority and unrepentant advocates of local autonomy. This conflict, which had simmered ever since Desjardins first proposed a provincial federation in the 19105, boiled over onto the pages of Quebec's newspapers in the 19405. A variety of grievances ultimately led in 1945 to the departure of nine caisses from this hierarchical structure; some are dealt with in this chapter, while

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others will be treated in the following two chapters. However, the issue that probably brought the problems to the attention of the population at large pertained to Vaillancourt's involvement with a plan to associate these cooperatives with Canadian credit unions outside Quebec. At a meeting of American credit unions in Chicago in May 1943, Vaillancourt held discussions, presumably in his capacity as manager of the federation, about staging a Canadian credit union convention at Levis. The English Canadians were enthusiastic about possible creation of a permanent organization representing all Canadian credit unions. While Vaillancourt never fully supported the proposal, the idea of an umbrella organization to advance the interests of all credit unions was consistent with his preoccupation with centralization. When he returned from Chicago, word leaked out that he had committed himself to holding a conference of all Canadian credit unions and caisses populaires at Levis. He was quickly rebuked because the proposal implied denial of the exclusively French-Canadian character of the caisses, an issue considered in detail in the next chapter. At the same time, he was also attacked for agreeing to participate without consulting the regional associations. In spite of all the signs of danger, Vaillancourt proceeded to invite delegates to the convention at Levis in the fall of 1943, hosted by the caisse centrale of the Quebec regional federation, of which Vaillancourt was also manager. The provincial federation had no official role to play, but this distinction was probably lost on the English-Canadian delegates, who, like the leaders of the banking industry, perceived Vaillancourt as the leader of the entire movement, a perception that Vaillancourt never discouraged. The distinction most certainly was lost on the leaders of the Montreal federation. In their eyes, Vaillancourt's duplicity had been proved by his failure to send official invitations to the regional federations until one week before the convention, though plans had been in the works since the spring. When the convention passed resolutions to establish a permanent committee of the Canadian credit unions to discuss mutual problems, the Montreal federation began to talk about leaving the caisse populaire structure. At the end of October 1943 its annual meeting voted to consider "the establishment of another federation of French Canadian caisses populaires."92 Over the next two years a battle raged between Vaillancourt and Letourneau, representatives of the commercially trained middle class, and the notaries Eugene Poirier and Wilfrid Guerin, members of the traditional petite bourgeoisie. The two Montrealers had been fighting centralization of power ever since the days of Desjardins, and they continued to do so, against Vaillancourt and Letourneau, in the 19405. At the start of December 1943 Poirier, president of the provincial federation since 1936, resigned because of "irreconcilable differences" among the highest leaders of the caisses. As he later noted, "I could no longer accept a leadership that was overly influenced by people from outside the movement who were threatening to destroy everything, "w His place

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as president of the provincial body was assumed by Letourneau. Vaillancourt, sorely tempted to resign his own position because of the denunciations that he had endured, was no doubt pleased to have his close ally at his side.94 As for Guerin, he refused to stand for re-election to the Montreal federation's board of directors in 1944 to indicate his unhappiness over the regional body's failure to free itself of control by the provincial federation. In October 1945 the drama regarding the Montreal federation finally came to a head when Poirier proposed to its directors that they suspend all payments to the provincial federation, assume total control over the inspection process, and retain sole authority to approve bond purchases. In short, they were being asked to "recover their complete autonomy."9* A major rupture within the movement seemed imminent when the directors accepted these proposals by a vote of six to four. The situation became more complicated, however, when six days later one of the directors changed his mind. The directors were now effectively deadlocked, and to break the log-jam Poirier turned to the delegates of the member caisses, who were about to assemble for their annual general meeting. He and three other members of the conseil d'administration were up for re-election at this meeting, in a contest that was to be a plebiscite over separation. As Gerard Filion, a delegate at that meeting, commented some years later, "If they were re-elected, a schism would surely follow; if they were defeated, Montreal would return peaceably to the fold."?6 Concerned that he did not have sufficient votes to carry the day, Poirier tried to gain an adjournment of the meeting until early December. His hope was that rural representatives would be unable to return, thus leaving only the urban leaders, who tended to be more sympathetic to the separatists. Poirier's manoeuvre back-fired, however, when a proposal to adjourn the assembly until later on the same day was carried. Some of the Montreal representatives, perhaps reading the writing on the wall, did not return after dinner, and Poirier and two of his colleagues avoided defeat only by withdrawing their names from consideration. A board of directors interested in ending the long period of warfare with Vaillancourt was installed, and Poirier and Guerin took the caisses that supported their view of affairs out of the regional federation. If the entire Montreal federation could not be made to see the danger posed by the actions of the provincial federation, there was still room for individual caisses to express their autonomy. Accordingly, the day after the adjournment manoeuvre failed, the Caisse populaire de 1'Immaculee-Conception, of which Guerin had long been manager, voted to remove itself from the regional federation, and by implication from the provincial body, because of concerns regarding the "general orientation of the movement."97 By mid-November another eight cooperatives, including Poirier's Caisse populaire de Ste-Cecile, had also withdrawn. Before the end of 1945 all nine were members of the newly formed Federation de Montreal des caisses Desjardins, which remained independent

99 Centralization until 1982. The manager of one of the dissident caisses remarked: "We do not want centralization, we want to remain autonomous."'8 CONCLUSION The schism of 1945 involved only nine of the more that 900 caisses then in operation, and while the secessionist co-operatives were relatively large their collective assets accounted for less than 5 per cent of the provincial total. The leaders of the provincial federation were fond of pointing to such figures to detract from the significance of these defections. In fact, however, the schism reflected larger differences of opinion that began long before 1945 and continued long after the dissident caisses had departed. For instance, the complaint about "the dictatorship of Levis" registered by the members of the petite federation, as the association of secessionist caisses came to be known, resembled complaints about the centralization of decision-making that went back to the days of Desjardins.w Even after the departure of the nine cooperatives, there were still leaders within the movement who represented the petit bourgeois element that had founded the caisses and who were prepared to continue to contest the centralization advanced by members of a different social class such as Vaillancourt and Letourneau, who had their own vision for the co-operatives. The conflict between these two groups was primarily, but not exclusively, part of a larger struggle within the leadership of French-Canadian society between a traditional petite bourgeoisie and a rising middle class. At the time of the schism the former group was more numerous than the latter at all levels of the caisse hierarchy. Accordingly, it is curious that the board of the provincial federation, which was so dominated by petit bourgeois members, should have chosen someone so different to lead it. One suspects that these men did not appreciate exactly what was in store for them when they hired Vaillancourt, as is attested to by the almost immediate ill-will that emerged between him and the local notables who sat on the board. Once in power, however, he could hardly be dislodged, given his unparalleled understanding of the complex financial institution that was taking shape. Vaillancourt was not perceived as the representative of a new and very different social group: prior to 1945 Quebec's new middle class was small, and its representation in the caisses populaires was thin. Nevertheless, there was also, in addition to Vaillancourt, Laurent Letourneau, who has been discussed in this chapter, as well as Gerard Filion, who would go on to serve both as director of Le Devoir as well as in important positions in both the public and private sectors during the Quiet Revolution. In 1945, however, Filion was a delegate to the convention of the Montreal federation that was to decide on separation. He did all in his power to see that Poirier's efforts came to naught. He even successfully contested a seat on the board to express his support

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for Vaillancourt's initiatives. Nor is this particularly surprising, given the similar backgrounds of the two men. Although born in rural Quebec, Filion attended the Ecole des hautes etudes commerciales (HEC). This choice, in effect to join the ranks of a new class of Quebecers, was greeted by friends and family with "a certain surprise and a certain scandal ... Why bother, people asked, to succeed brilliantly in classical studies only to become a bookkeeper?"100 After the separatists left the Montreal federation, Filion helped to choose a new president to replace Poirier. The man selected, Jacques Perreault, though a lawyer, also fitted the profile of the new middle class leader, because his point of view toward Quebec society and the caisses resembled Vaillancourt's. Perreault was associated in the late 19305 and early 19405 with men such as his brother-in-law Andre Laurendeau who were calling for revitalization of Quebec's institutions to face the demands of a modern industrial society. He was among those who advocated the reforms of the Quiet Revolution long before their actual implementation. As for the caisses, Perreault, a member of the board of directors of the Montreal federation since 1940, distanced himself from the position of Poirier and Guerin; becoming president in 1945 he was a forceful advocate for acceptance of central direction for the movement. Following the schism, he sought to strengthen "the ties between the [provincial] federation and the union regionale and between the caisses still affiliated to the union and the union itself."101 In addition to men such as Filion and Perreault who provided their time free of charge, Vaillancourt's position was also supported by members of the growing ranks of cadres, or professional staff, whom he had installed as part of his creation of a provincial federation that bore more than a passing similarity to the head office of a chartered bank. Take, for instance, the case of one leader who rose through the ranks of the inspection service. This man was educated, like Filion, at the HEC, and, like Letourneau, was employed by a chartered bank. He naturally endorsed the efficiency that centralization could bring. As he wrote some years after the crisis of the 19405, "I am a strong supporter of centralization in terms of financial affairs. It is only logical that when the provincial federation purchases Sio million of bonds it secures a better price than if each caisse makes purchases of $10,000." Accordingly, he bemoaned the considerable power that rested with the regional bodies. Instead, "authority should be in the hands of the provincial federation."102 This sentiment was endorsed by yet another employee of the inspection service: "It is necessary to have a powerful force at the top of the pyramid."10^ Vaillancourt, Letourneau, Filion, Perreault, and the representatives of the professional staff of the provincial federation offered one vision of the movement which recognized the value of central control. These men came to this position largely as a function of their education and professional experience; little distinguished them in terms of their geographical distribution. Vaillancourt was from Levis, Filion hailed from eastern Quebec, while Perreault was

ioi Centralization

a Montrealer. Similarly, there was considerable support from across the province for the opposing vision, held by the more traditional forces, led by Poirier and Guerin. Beginning in the 19205 these men had received widespread support for their fight against centralization from petit bourgeois leaders from all parts of Quebec. Nevertheless, the bastion of traditionalist sentiment was within the Montreal federation. Accordingly, the schism of 1945 reflected not only a conflict between two classes that transcended geographical lines but also a regional battle, between Montreal and Quebec City, whose roots stretch back to the French regime and, in the history of the caisses, to the Desjardins era. As a result, when Guerin and Poirier spoke of "the dictatorship of Levis," they were objecting not merely to centralization per se, but also to direction from the Quebec City area over the affairs of Montrealers. The importance of the Montreal-Quebec conflict to the schism was made explicit by the leaders of the petite federation: "The diocese of Montreal separated from that of Quebec in 1836, the Universite de Montreal separated from the university in Quebec City in 1920, and the Federation de Montreal separated from that of Levis in 1945. If the first two developments were justified, then how could the third one be wrong?"I04 In at least one case these regional rivalries were even strong enough to cause the chief protagonists in the events of 1945 to reverse their customary positions over centralization. In the early 19405 a debate took place over establishment of a provincial caisse that would have assumed the surplus funds of the caisses centrales, just as the regional caisses had absorbed some of the local surpluses. If all the players had been true to form, Vaillancourt would have supported the proposal, while the Montrealers would have opposed it. In fact, however, the board of directors of the provincial federation approved creation of the provincial caisse in 1942, with only Vaillancourt and Letourneau opposed. Shortly thereafter, these two men blocked implementation of the proposal, noting that "decentralization is now and will always be our inspiration. "10J Vaillancourt and Letourneau were clearly bothered by "the fact that funds would be concentrated in Montreal," where the caisse provinciale would most likely have been located close to the city's financial community.'06 Indeed, when the caisse provinciale finally began to operate in 1981, its administrative offices were in Montreal.10' Vaillancourt's concern about preserving the concentration of power in the Quebec City-Levis region was further reflected in 1945, when he played a crucial role in moving the offices of the provincial association, the Quebec City regional federation, its caisse centrale, and the SACP to Levis, to make it "a significant centre of co-operative activity" and to block inroads by Montrealers.'08 Poirier, normally a staunch opponent of centralization, voted for the provincial caisse, arguing that "there would be no problem in establishing a caisse

io2 Challenge from a New Class

provinciale alongside the caisses centrales without sacrificing autonomy either on the local or regional level."'°9 Poirier never accepted such logic when it was forwarded by Vaillancourt, but in this one case, in the interest of transferring power to Montreal, he was prepared to violate what otherwise had been a guiding principle for his actions. While regional rivalries coloured the debate over the caisse provinciale, normally issues pertinent to ideology and social class divided the combattants. Seen in this context, the debate over centralization paralleled developments in other Quebec institutions, such as the Catholic trade unions. The Confederation des travailleurs catholiques du Canada (CTCC) was established in 1921 and by the 19305 had an organization that resembled the three-tier structure of the caisses. At the bottom of the hierarchy were the individual union locals, each obliged to belong to associations that were defined both regionally and by sector within the economy. These regional and sectoral federations then helped to direct affairs at the provincial level. From the very outset, rules restricted the ability of the provincial association to deal directly with union locals."0 Over time, however, the autonomy of the regional and sectoral federations was compromised, with the vesting of greater power in the provincial Confederation. The first significant change in this direction took place in the late 19305, with reorganization of the executive of the provincial body and the increase of the dues paid by locals to the Confederation. In both cases, according to Jacques Rouillard, "the power of the provincial federation over the other levels of the hierarchy was reinforced."111 With increased funds, the provincial organization was able to hire Gerard Picard as its first full-time paid employee. In 1937 Picard was secretary of the CTCC, but by 1946 he was its president. Along with Jean Marchand, who assumed Picard's former functions in 1948, the new president sought even greater centralization, arguing that this was the only way to provide efficient services to the members. In the process, however, the role of the regional and sectoral federations was diminished. Such was the case, for instance, when in 1950 the provincial leaders of the CTCC secured the right to receive dues directly from the union locals. Previously, these funds had first passed through the intermediate federations, but with the new rules in place the independence of the provincial federation was guaranteed."2 In a similar fashion, Vaillancourt and Letourneau tried to increase the financial autonomy of their provincial federation by establishing the insurance company which routed the funds of individual co-operatives on to Levis without involving the regional associations. As in the 'caisses, the opponents of centralization within the CTCC complained that Picard and Marchand were creating "a ruling elite within the union movement.""' Battles were fought over the concentration of power, but in the end the new leaders largely won the day. None of the supporters of a decentralized structure felt the need to bolt from the Catholic trade union

103 Centralization

movement, but this should not detract from the striking similarity of developments in the CTCC and the caisses populaires. In both, there was the emergence of new leaders who differed markedly from the petit bourgeois founders. While Vaillancourt and Letourneau were trained in commercial courses and . had worked for the state and big business, Picard and Marchand represented "a new generation of secular leaders" many of whom were universitytramed.11* The new leaders of the caisses and the CTCC distinguished themselves from their predecessors by their unshakeable faith in the effectiveness of centralized bureaucratic control. This faith provoked conflicts with more traditional leaders over centralization. There were also significant disputes over other matters of principle, such as the role of these institutions as agents of nationalism and Catholicism and the proper relationship with the state, issues that provide the focus for the next two chapters. In the caisses populaires, however, the issue of centralization was of primary importance, since these institutions had been founded explicitly to combat the concentration of economic power. When such an institution embraced the concentration of power, it is little wonder that a schism resulted. In spite of persistent opposition from those loyal to the autonomy of both individual caisses and regional associations, the advocates of centralization had largely won out by the end of the Second World War. In accepting such central direction, the caisses populaires reflected the experience of co-operatives throughout the Western world. Considering developments in both Europe and North America, Brett Fairbairn has commented that these institutions were conceived to fight against the uneven distribution of power within a "concentrated industrial economy." However, "co-operatives' usual solution to bigness was counter-bigness ... to make groups of smaller producers or consumers competitive with large organizations. "ns By conforming to this general pattern, the caisses populaires entered the post-war era hardly recognizable as the alternative to monopoly capitalism conceived by Desjardins.

CHAPTER FIVE

Dealing with Outsiders

The debate over centralization reflected two very different visions for the caisses populaires and of French-Canadian nationalism. Cyrille Vaillancourt and his allies sought the concentration of power not as an end in itself but rather to promote the caisses. They understood the advantages of dealing with parties from outside French-Canadian society, whether bankers or fellow cooperative leaders, and they saw no threat to French-Canadian interests in the process. They did not fear "contamination" by contact with those who were neither French-speaking nor Catholic but rather believed that only through such contacts could the full potential of the co-operatives be realized. In addition to working with "outsiders,"' who represented organizations with which the caisses populaires had to deal, leaders such as Vaillancourt were also prepared to accept outsiders as full-fledged members of the cooperatives. They did not anticipate any negative consequences from the mingling of French-Catholics with the growing ranks of Quebecers who spoke other languages and professed other faiths. Vaillancourt wrote to one correspondent, "Where I live, in the Quebec City area, we have caisses populaires with Scottish, English Protestant and French Canadian members. These caisses are all doing very well."2 Moreover, Vaillancourt did not fear that enrolment of outsiders would in any way compromise the ability of the caisses to advance certain distinctively French-Canadian concerns. Confident that French-Catholics would always make up the majority of members, he saw the swelling of membership rolls as a means of increasing the movement's influence. However logical Vaillancourt's point of view might appear from a latetwentieth-century perspective, it was categorically rejected by the petit bourgeois founders of the caisses, who deemed it both radical and dangerous. These men had established a chain of largely autonomous parish-based co-operatives so that French-speaking Catholics could develop an institution that was truly their own. From this perspective, Vaillancourt's dealings with bankers confirmed the dangers of centralization, since he had been forced to make con-

105 Dealing with Outsiders

cessions to English-speaking Protestant businessmen. Similarly, the traditional leaders were uneasy about allowing outsiders to secure membership. They feared that such pluralism would prevent the caisses from isolating French Canadians from the hostile world around them. This view was maintained by leaders from Desjardins through to Poirier and Guerin, who were convinced that any dealings with outsiders would compromise French Canada's ability to maintain its linguistic and religious identity amid the sea of English-speaking Protestants who populated North America. Finally, these men feared that the intrusion of outsiders would reduce their own already tenuous influence over French-Catholic Quebec. This perception was only reinforced by the onset of monopoly capitalism in the early twentieth century and the increasing concentration of economic power in men who spoke a different language and professed a different faith. Faced with a rapidly changing world, the traditional leaders of the caisses clung tenaciously to a mode of thought that had first gained a wide following in mid-nineteenth-century Quebec and that stressed the indivisibility of linguistic and religious concerns.' Catholicism was essential to the linguistic survival of French Canada, since religion would isolate the population from the majority of North Americans. The French language was the best assurance of the religious integrity of the population, since it also worked as an agent of isolation. In either case, however, the emphasis was on minimizing contacts between French Canadians and outsiders, a totally different point of view from the one advanced by Vaillancourt and his associates. In the early twentieth century this defensive view of the world was promoted most notably by Abbe Lionel Groulx, who was bothered by certain political issues, such as the difficulties faced by French-speakers outside Quebec and the ugliness of the conscription crisis of the First World War. Even more troublesome, however, were a wide range of social and economic influences that he perceived as threatening the survival of a vital French-Canadian society under the direction of the clergy and the professionals. Urbanization, industrialization, immigration, the rise of mass culture, and the emergence of an influential women's movement all threatened to compromise the viability of a nation united by language, religion, and a coherent set of values.^ French Canadians needed to be reminded by their leaders of their duty to preserve the integrity of their nation. To this end, Groulx wrote the novel L 'appel de la race in 1922. In this work, the main character, Jules de Lantagnac, marries an outsider and nearly loses his identity as a French-Catholic before finding his way once more, with the aid of a priest. Ultimately, Lantagnac champions the cause of his people following his separation from his wife, an English-speaking Protestant, who had converted to Catholicism prior to marriage but who was still an outsider to those such as Groulx, who defended the indivisibility of language and religion for the survival of the French-Canadian people. Some have seen this marital separation as a reflection of the need

106 Challenge from a New Class

for French Canada to free itself from the rest of the country. At the very least, Groulx was indicating his support for the isolation of his people from outside forces.* To defend their compatriots from contamination, Groulx, other clerical leaders, and the laymen of the petite bourgoisie looked for practical means to separate French-speaking Catholics from Quebecers who differed in either language or religion. For instance, the early twentieth century saw various efforts to discourage marriages between Catholics and the followers of other faiths and even the rejection of Catholics who were not native-born Frenchspeakers who sought access to French-Catholic schools.6 The desire for separation from outsiders was also evident in the creation of a variety of institutions for the exclusive use of the French-Catholic population. In this context, the Catholic trade unions were established only partly because of the influence of Europe's Catholic social action movement, which was enhancing the status of the church in the face of the challenges offered by industrialization. It was also designed to isolate French-Catholic workers from the godless and polyglot international unions that were penetrating Canada. To prevent outsiders from corrupting these unions from within, they were to be confessional institutions: only Catholics could enjoy full membership, and no decision could be made without the approval of the chaplain who would be attached to each union affiliated with the CTCC. The caisses populaires were also established in this atmosphere of xenophobia. Desjardins's own fear of outsiders was evident in his absolute conviction that Jews had been at the root of the federal government's rejection of his efforts to secure legislation governing the caisses. He confided to Chanoine Grondin, "You will notice in this defeat the hand of the Jews who soon will be pushing the French Canadians out of the province altogether .... We must act wisely and firmly because these are dangerous times."7 Accordingly, he conceived of the caisses almost in militaristic terms, as "a veritable economic fortress" that would reduce contact between Quebecers and outsiders.8 Le fondateur was acting in a manner consistent with that displayed by leaders of various co-operative movements in Europe who were motivated, at least in part, by their desire to protect a minority under siege. The historian Brett Fairbairn has convincingly demonstrated that "a primary and recurrent motivation for forming co-operatives has been the political or cultural goal of solidifying a minority culture or nationality."9 Desjardins clearly fit his movement into this mould when he called on his fellow French Canadians to create "a resource for our people, a source of funds which will be under our control and always at our disposal."10 This defensive definition of the role of the caisses, which met with relatively little opposition early in the century, was strongly contested, however, by the 19305 and 19405. While Desjardins and Groulx chose to defend FrenchCanadian society by warding off outside influences, others argued that the

ioy Dealing with Outsiders

very survival of French-Canadian institutions depended on acceptance of the world as it was. Vaillancourt felt that he had no choice but to work with English-speaking Protestant bankers to secure a mutually beneficial arrangement regarding cheques drawn on accounts in a caisse populaire. Similarly, Pere Georges-Henri Levesque insisted that the province's institutions, cooperatives included, needed to cultivate ties with outsiders to become more relevant in a society "which was becoming more pluralistic whether one liked it or not."" Just as Vaillancourt, Letourneau, and Filion distinguished themselves from other laymen such as Poirier and Guerin, so too did Pere Levesque present a completely different view of Quebec society from that offered by his fellow cleric, Abbe Groulx. Convinced that older solutions were no longer applicable in a modern and pluralistic society, clerics such as Levesque took part in the province's "first Quiet Revolution," within the church.12 From the position that he held beginning in 1938 as head of the School of Social Science at Laval University, Levesque was strategically placed to help redefine the institutions established with the support of the church earlier in the century. He and his allies totally rejected the views of the clergy that had earlier gone unchallenged. Accordingly, by the 19305 the Quebec church was home to "two points of view, two views of the world, two ideologies."'3 Pere Levesque was hardly a disinterested observer of the battle that was heating up over the proper relationship between French Canadians and the outside world. As an active participant in the debate, he noted that the views of the founders of the caisses were grounded in a negative nationalism which was "too much against everything .... It was against anything that even vaguely threatened certain French Canadian Catholics: the English, the rich, the capitalists, the Protestants, the Jews." By contrast, Levesque saw himself in the company of those who advocated a positive nationalism: "This point of view, without denying our identity and our interests, looks to other people to draw from them what can best help us. It is oriented towards the future and towards finding the best ways of guaranteeing that future, even if that means imitating others."'4 There was no easy reconciliation of these two points of view. As a result, the debate over the proper relationship between French Canadians and their neighbours, which simmered within the movement for decades, contributed significantly to the schism of 1945. ONLY FRENCH-SPEAKING CATHOLICS NEED APPLY No matter how strongly Desjardins sympathized with the anxieties expressed by Abbe Groulx, he inserted nothing into the regulations governing the caisses to indicate that these were institutions reserved for French-speaking Catholics. Just as the ambiguity regarding Desjardins's intentions about a hierarchical

io8 Challenge from a New Class structure fuelled both sides in that debate, so too could his successors exploit his silence on the national and confessional character of the caisses. Both traditional and newer leaders could cite le fondateur to defend their respective points of view. Desjardins's failure to develop clear rules regarding the admission of outsiders resulted, not surprisingly, in considerable confusion within the movement. For instance, one organizer of a caisse in the Gaspe wrote to Desjardins asking whether non-Catholics could be accepted as members. In the absence of regulations formally banning Protestants, Desjardins could only comfort his correspondent by observing that few non-Catholics were likely to attend the founding assembly for a caisse populaire, "especially if it is held in the parish church and is presided over by the cure." As for Protestants who might want to join later, Desjardins noted, "Do not forget that no one can be admitted as a member without the approval of the conseil d'administration. This is the guarantee against the invasion of outsiders that you fear."1' This response would seem to indicate that Desjardins sought the exclusion of outsiders. Nevertheless, his failure to be more explicit on this point allowed someone such as Vaillancourt to insist that the movement was open to all, since Desjardins had required only that a prospective member be "honest, reliable, sober, industrious and a hard worker."'6 Just as certain petit bourgeois leaders short-circuited the drift toward centralization with the first regional federation soon after Desjardins's death, so too did they seek to clarify the rules regarding the national and confessional nature of the caisses. Wilfrid Guerin, described by Filion as the "strategist of the isolationist faction," led the way in the early 19205 by championing insertion of "article seven" into the internal regulations governing the caisses.1? This provision stated diat to become a member one had to be a "practicing Catholic and a French Canadian." Outsiders would normally be admitted only as auxiliary members who could both deposit and borrow funds but neither vote nor hold office.'8 In essence, the rules were to parallel those for the Catholic trade unions. Even if article seven did not find its way into the internal by-laws of most caisses until the 19205, it was on the books of the Caisse populaire de 1'Immaculee-Conception as early as 1916, three years before Guerin became its manager.'? The CPIC was an early advocate of confessionalism because it had been founded and then operated by Jesuits who served the parish of Immaculee-Conception. As was noted in chapter i, by setting up the Groupe Pie X the Jesuits brought to the parish one of the Ligues du Sacre-Coeur. In the 19105 the work of the Ligues was facilitated by establishment of the Ecole sociale populaire, which spread information about the activities of the Ligues and with which Guerin was closely associated.20 Continuing up to the 19405, the Jesuits were staunch supporters of the point of view that Guerin championed, namely that the survival of a French-speaking and Catholic Quebec required institutions that would protect it from a hostile world.

109 Dealing with Outsiders

Such protection was deemed particularly crucial in the aftermath of the First World War, which had accelerated the pace of urbanization and Industrialization and had led to such "unfortunate" social developments as granting the vote to women in federal elections. Accordingly, the 19205 saw the heyday of the Action franchise movement of Abbe Groulx, which was strongly committed to formation of a Catholic trade union movement (the CTCC), a Catholic farmers' organization (the Union catholique des cultivateurs or UCC, founded in 1924), and, of course, a firmly Catholic savings and loan society in the caisses populaires.21 In this context, caisses leaders were much more conscientious during the 19205 than they had been during the Desjardins era to provide their institution with all the trappings of a truly confessional organization. At Levis, for instance, there was a request that "each meeting begin and finish with the recitation of a prayer in order to bring the blessings of heaven upon the association."22 Guerin insisted that a crucifix be hung in each caisse office, and the Jesuits of Immaculee-Conception sent him to Rome so that he could return with one for the CPIC.2' The isolationist commitment of leaders such as Guerin did not weaken during the 19305 and 19405, even though opposition to this conception gradually emerged. In the 19305, for instance, convinced that outsiders had been responsible for the Depression, these leaders aided in drafting the Programme de restauration sociale in 1933. The men who prepared this document were the principal leaders of the Catholic social action movement and the Ecole sociale populaire during the first decades of the century. Among those responsible were Albert Rioux, president of the UCC, Alfred Charpentier of the CTCC, and, of course, Wilfrid Guerin, manager of the CPIC and an officer of both the provincial association and the Montreal regional federation of caisses populaires.1* Building on what they had been advocating for almost three decades, these men promoted a world view based on reconciliation of the various groups in French-Canadian society rather than conflict between them. Such a society would be built by conveying influence to the church and to the institutions that it had spawned, such as the caisses, which were capable of minimizing conflict, both through linking the petite bourgeoisie to the masses and through barring outsiders from membership. The Programme was also designed to foster a conflict-free society by supporting corporatism, which had a significant following in Quebec throughout the 19205 and 19305. Although there were nearly as many definitions of this concept as there were supporters, the general outlines of corporatist thought suggest a model for the state and society that the traditional leaders of the caisses could accept. In a corporatist state, workers and employers in each sector of the economy would co-operate on such issues as wages and working conditions. These professional corporations would then work together at the level of the state to establish policies for the larger society. In Quebec, as in other Catholic nations such as Italy and Portugal, such co-operation could come about only if the population were "instilled with a strong national

no Challenge from a New Class

spirit." Accordingly, this vision for the province saw a Quebec consisting of "Catholics and French Canadians of long standing."2* Linteau, Durocher, Robert, and Ricard have described the model proposed in 1933 as that of "a hierarchical society which was ill disposed towards outsiders and which was committed to the defense of a particular ethnic, linguistic and religious identity for the province .... This model represented the point of view of the traditional elites, the clergy and the petite bourgeoisie."26 Such a conception both for Quebec society and for the caisses was already facing serious challenges, however, not long after the appearance of the Programme. Jean Hamelin and Nicole Gagnon have observed that the social and economic changes in the province already visible by the end of the 19305, and reinforced by the start of the war, relegated "the programme de restauration sociale to some dusty old closet."2? Nevertheless, neither the growth of the non-French-Canadian population nor the emergence of a more outwardlooking elite could deter Guerin and his colleagues from promoting the caisses as institutions for the defence of French-Catholic interests. The attitude of these men was made clear in 1942, when the Montreal federation received an application for affiliation from a caisse being organized in the predominantly English-speaking community of Sheerboro, in Pontiac County. The federation refused the request on two separate occasions, noting the "mixed character" of the caisse as justification.28 When a similar request for affiliation was received two years later from an almost exclusively English-speaking credit union, Guerin once more recommended rejection, so that a truly French and Catholic institution could be established in the same community.29 In the Sheerboro case, one of Guerin's colleagues in the regional federation complained about the inconvenience of corresponding with the caisse in English and of translating documents into English to facilitate the cooperative's affairs. Such an unyielding attitude stands in stark contrast with that presented by Vaillancourt, who, true to his centralizing instincts, stressed during the Sheerboro incident the importance of taking in all caisses, regardless of the composition of their membership, to build a powerful and united movement.'0 Vaillancourt displayed the same sort of attitude when he received correspondence about starting up a caisse on the Magdalen Islands, whose population was neither ethnically nor linguistically homogeneous. To one correspondent who inquired about the problems that might arise from the mingling of Catholics and Protestants within a caisse, Vaillancourt provided no support for Guerin's vision, encouraging enrolment of Protestants, since confessionalism had not been part of the plan put onto paper by Desjardins.'1 As for the translation into English of literature regarding the caisses, Vaillancourt enthusiastically agreed to co-operate.'2 He and his allies consistently argued that the caisses had no choice but to deal with the outside world, so much so that Poirier and Guerin were left with little option but to secede from the movement by 1945.

in Dealing with Outsiders OPENING UP THE CAISSES Prior to the 19305 and 19405 there was relatively little pressure on the institutions established by the petite bourgeoisie to adjust to a more pluralistic society. Before the start of the twentieth century Quebec was largely, but not exclusively, composed of two large population blocs that had little to do with one another." Both French-speaking Catholics and English-speaking Protestants had institutions for their own exclusive use, and in the absence of significant demand from outsiders for access there was little to need to consider change. This fairly static demographic situation was dramatically transformed, however, with the start of the new century, as large numbers of immigrants who did not fit into either camp began to arrive in the province. Up to the end of the Second World War, two groups began to alter the balance within the province, particularly in Montreal. The Jewish immigrants from central and eastern Europe fit into neither of the religiously based educational systems, and a protracted court case ensued regarding their educational rights.w The Italians had a natural affinity for the province's Catholic institutions, but the prevailing philosophy of the petite bourgeoisie, which stressed the indivisibility of linguistic and religious concerns, left them no more welcome than the Jews. Accordingly, they were discouraged from attending FrenchCatholic schools." The changing structure of Quebec's population produced, albeit very slowly, a growing willingness to redefine the province's institutions to make room for the newcomers. Redefinition was promoted particularly by leaders who were not members of the petite bourgeoisie and who worshipped what Hamelin and Gagnon have described as "the cult of efficiency."'6 This process was visible, for instance, as early as 1929 in the affairs of the CTCC. In that year, there was a public admission that nineteenth-century Quebec could not be re-created when CTCC-affiliated unions in Montreal were allowed to accept non-Catholics as full-fledged members, as long as they adhered to all the principles of Catholic unionism. Previously the Catholic unions, like the caisses, had enrolled non-Catholics, but usually as non-voting auxiliary members; now non-Catholics could secure full membership by simply claiming to support certain principles. Given an increasingly diverse labour force, the CTCC had either to adjust or be overtaken by the international unions. In recognition of this fact, there were further changes within the Catholic labour movement in the 19405. During the Second World War, new federal regulations authorized the union supported by the majority of workers in a bargaining unit to represent all such labourers in the negotiation of a contract. Jacques Rouillard has written: "The unions affiliated with the CTCC were forced by the government to represent non-Catholics even though these people could not be granted full membership. "37 To end such a patently absurd situation, in 1943 all CTCC affiliates

ii2 Challenge from a New Class

secured the right, which had previously applied only to Montreal, to accept non-Catholics as regular members. Deconfessionalization was completed in 1960, when the Confederation des travailleurs catholiques du Canada was renamed the Confederation des syndicats nationaux. The transformation of the Catholic trade unions was prompted by the changing structure of the population, but it was facilitated by the rise to power of the new leadership of the CTCC, which also favoured increased central direction. Men such as Picard and Marchand believed that CTCC affiliates could include outsiders and that the provincial organization could cultivate ties with the Canadian Labour Congress (CLC) without sacrificing FrenchCanadian interests. With creation of the CLC in 1956, as an umbrella organization for most unionized workers in English Canada, the new leaders of the Catholic unions saw the opportunity to strengthen the trade union movement through a single, nation-wide organization. Fearing contact with outsiders, the more traditional leaders ultimately blocked the CTCC's affiliation with the CLC. They chose to ignore Marchand's insistence, in the midst of negotiations with the English-speaking labour leaders, that " 'we must maintain as many of the CTCC's characteristics as we can.' "*8 There was no abandonment of French-Canadian interests in this new approach, but rather 'pragmatic recognition of how institutions needed to evolve with circumstances. Since Vaillancourt's role within the caisses was similar to Picard and Marchand's within the CTCC, it is understandable that he advocated a similar course of dialogue with outsiders for the co-operatives that he led. He was joined in this battle by Pere Levesque, who also sought ties between the caisses and outsiders. Levesque wrote in his memoirs: "If a co-operative is going to be open to all and capable of attaining its economic goals, it must establish ties with other regions, other provinces, and other people who are of different religious beliefs. Co-operatives must avoid establishing annoying barriers based upon religious differences."39 Caisse leaders such as Vaillancourt, however, faced a major obstacle in removing the trappings of Catholicism, which were less visible than in the operations of the CTCC. There was no word "Catholic" in the name of these co-operatives, and chaplains had no formal power. Even article seven, regarding admission of those who were neither Catholic nor French-Canadian, seems to have been ignored as often as it was observed, if Vaillancourt's attitude toward the provision is any indication. Nevertheless, there were those within the movement, such as Guerin and Poirier, who at every turn challenged any action that took the caisses from the course that they believed should be followed by a truly Catholic institution. Vaillancourt had to battle these leaders in two well-publicized controversies that helped prompt the schism of 1945. The first of these controversies was provoked, quite appropriately, by Pere Levesque, who in 1940 formed a body to bring together all of Quebec's co-

ii3 Dealing with Outsiders

operatives within a single organization. While such an association might appear innocent enough, its manifesto was perceived in anything but a generous fashion by men such as Guerin, who must have bristled at the notion that the Conseil superieur de la cooperation was dedicated to "the non-confessionalism and political.and ethnic neutrality of co-operatives."*0 The use of the term nonconfessional was Levesque's attempt to avoid the hostility of the likes of Guerin. These traditional leaders despised the so-called neutral organizations, which made no effort to advance values of any kind. Non-confessional institutions, by contrast, did not have the external trappings of Catholicism but did encourage their members to maintain Christian values in their own lives.4' Echoing the same arguments that were made to justify the transformation of the CTCC, Levesque saw that abandoning the confessional nature of cooperatives was essential "in the face of numerous religions within our civil society."*1 This position was similarly expressed in the 19505 by Pierre Elliott Trudeau, in his introduction to The Asbestos Strike. Trudeau observed that the "last straw [for the success of co-operatives] was the Jesuits' strong campaign to make [them] denominational. Such a policy did nothing to further the adoption of co-operatives in urban areas with their variety of language and religion."4' Such arguments made no impression, however, on supporters of confessionalism, who failed to see a serious distinction between neutrality and non-confessionalism. Indeed, Hamelin and Gagnon have described the distinction as "purely academic .... Pere Levesque was simply playing with words."44 Accordingly, the traditionalists challenged Levesque's position in a lengthy debate that raged throughout the 19405 regarding such fundamental questions as the role of the church and the place of outsiders in Quebec society.4* During this debate, the Ecole sociale populaire, always a strong supporter of confessional structures, consistently argued that Frenchspeaking Catholics must avoid "mixed associations" in order to protect "their faith, their language, and their national traditions."4* Confessional institutions had to be maintained to combat the notion of "the equal value of all religions."47 This basic difference of opinion was transformed into an internal struggle within the caisses when Levesque and Vaillancourt tried to secure the affiliation of the provincial federation with the Conseil superieur. Vaillancourt took part in setting up the Conseil, even though neither the provincial association nor the Quebec regional federation had authorized him to do so. He participated in his capacity as founder of the Cooperative des producteurs de sucre d'erable, but once connected with Levesque's organization he did all that he could to involve the provincial federation. Displaying the same openness that was evident in his acceptance of outsiders into the caisses, Vaillancourt wanted to make the achievements of these co-operatives known more widely by bringing them into contact with all sorts of people in the Conseil superieur: "Outsiders do not know enough about us, and the establishment of new con-

ii4 Challenge from a New Class

tacts is always useful." Involvement of the caisses could help produce a stronger centralized force to promote the role of co-operatives in the post-war world: "In the economic world of tomorrow, things will be very different. If we do not work closely with other leaders, our co-operatives will be obliterated. "*s In the fall of 1941, at Vaillancourt's invitation, Levesque came to a meeting of the directors of the provincial federation to seek their support. Believing that the affiliation of the federation with the Conseil superieur was a forgone conclusion, Levesque spoke mostly about the various ways in which the financial contributions of the caisses might be calculated. With the conflicts started by his efforts to deconfessionalize Quebec's institutions, he should have known that linking the caisses to the Conseil superieur would provoke opposition. Quite appropriately, this counter-attack was led by Eugene Poirier, who was bothered by "the attitude of the Conseil regarding racial neutrality and nonconfessionalism. "49 Such opposition delayed the vote on affiliation until the spring of 1942, at which time Poirier minced no words about the dangers of mingling with outsiders. He recounted certain aspects of the history of the Montreal City and District Savings Bank, which had been formed in 1846 to encourage thrift among the city's workers. "Monseigneur Bourget [the bishop of Montreal] wanted to assure a French Canadian majority on the board of directors. At the same time he did not want to ignore representatives of the English-Catholic and Protestant populations. This policy of collaboration with outsiders has led to the situtation that we have today. The current president is Englishspeaking as is the general manager. We do not even have a French Canadian majority on the board of directors. Each time that we associate with outsiders we are exploited by them. We need to avoid such entanglements by occupying ourselves solely with the immediate concerns of the caisses."50 Poirier's position was echoed by Guerin, but the two representatives from Montreal, whose city had seen the arrival of many outsiders, were outvoted by the majority, which was prepared to follow Vaillancourt's lead. Poirier and Guerin did not concede defeat, however, and they returned to Montreal to seek support from their regional federation. They received this approval in part because the Montreal association was worried about adherence to actions of the Conseil that might reflect the desires of other co-operatives but not necessarily those of the caisses. Such a possibility was particularly troublesome since some of those other co-operatives were dominated by the very outsiders whom the traditionalists had hoped to ward off by establishing the caisses in the first place. While Vaillancourt was an advocate of concerted action by the co-operatives of the province, his opponents only grudgingly accepted the authority of the provincial association. The Montreal federation supported Poirier and Guerin's position because the caisses had succeeded up to the 19405 only through their "responsiveness to the ethnic, social and

ii5 Dealing with Outsiders

economic needs of the French Canadian population." Their affairs could only be compromised by associating with "other religions and other ethnic groups."'1 This view was even reflected in the unwillingness of the Montreal federation to extend credit to co-operatives that "recruit[ed] their members without consideration of language and religion."'2 The Montreal federation demanded that the provincial body rescind its decision to affiliate with the Conseil superieur. If it chose to go ahead, the Montrealers darkly suggested some serious consequences which would be "clearly undesirable."« Poirier and Guerin threatened to resign from the board of the provincial association. Such pressure swayed several of the men who had earlier supported Vaillancourt's position but who now felt that the loss of the two leaders from Montreal would create "a greater problem for the federation than its failure to affiliate with the Conseil superieur de la cooperation."''* Throughout the controversy, Vaillancourt stuck to his position, recognizing the utility of contact with those of different backgrounds and seeing the value of central direction for Quebec's co-operative movement, even if few others shared his vision. Vaillancourt, the member of the new middle class, was insistent on extending the contacts of the caisses. By contrast, his petit bourgeois colleagues were not prepared to trigger a crisis by sustaining a position with which they had been uncomfortable from the start. The provincial federation reversed its support for affiliation, and while the Quebec, Trois-Rivieres, and Sherbrooke regional associations joined the Conseil superieur prior to 1945, the provincial body did not follow suit until 1957." Testifying before the federal royal commission that considered the taxation of co-operatives in 1945, Pere Levesque explained that the provincial association was not affiliated with the Conseil superieur only because of "some trivial problems."'6 Presumably he was putting forward a brave face to enhance the authority of the Conseil; otherwise his statement indicates that he missed the depth of the philosophical differences, closely related to the issues of confessionalism and nationalism, that stood in the way of forging ties between the provincial federation and the Conseil. While Vaillancourt led the movement to the brink of a showdown over the issue of the Conseil superieur in 1942, consequences were even more serious in a controversy the following year over affiliation of the caisses with other Canadian credit unions. The previous chapter discussed Vaillancourt's failure to consult the regional associations on this issue, which led the Montreal federation to consider formal separation from the movement. This dispute, much like that involving the Conseil superieur, did not pertain simply to centralization, as it also touched on contact with credit unions that were neither religiously nor linguistically "pure." When Vaillancourt gave tacit approval for a convention of the leaders of Canada's caisses populaires and credit unions at Levis in the fall of 1943, he probably should have been prepared for some negative reactions following

n6 Challenge from a New Class

his experience over the Conseil superieur. However, if he was concerned that his actions might threaten the continued unity of the movement, there is little evidence of such apprehension on his part. Certainly he did not expect opposition on the grounds that he was jeopardizing the confessional and national character of the caisses. Nevertheless, opposition quickly surfaced from predictable quarters. When word leaked out that such a convention was in the air, Poirier wrote angrily to Vaillancourt: "Outsiders have contributed nothing to our movement. Why should we join a larger association in which there will be nothing to gain? We will be forced to make compromises which will prevent us from serving our own people."" Indicating the same difference of vision that had distinguished him from Poirier over the Conseil superieur, Vaillancourt responded that there were advantages in discussing common problems with those engaged in similar activities: "We have a distinct mentality, a distinct culture, and we have some distinctive needs. Everything about us is different, but there are certain occasions upon which it is useful to form a common front. For instance, what harm can come from lobbying together with English Canadian credit union leaders against certain proposed changes to the Bank Act?"?8 The Montreal federation proceeded to condemn any involvement with organizations that "admitted all religions and all ethnic groups," but Vaillancourt went ahead with planning the conference,59 even though one of his closest advisers warned that failure to resolve the conflict between Montreal and Levis would result in some Montreal-based caisses leaving the movement.60 At the convention itself Vaillancourt committed himself to continuing contacts with the credit unions but prudendy avoided concretely linking his FrenchCatholic movement to one dominated by outsiders. Moreover, aware that he was under close scrutiny regarding his nationalist credentials, Vaillancourt went out of his way to make speeches that had an unmistakably nationalistic slant. A permanent pan-Canadian organization, he commented, was ill-advised: "There are two races in Canada, the Anglo-Saxons and the Latins. These two nationalities, with entirely different cultures, will never see things in the same light."6' Reflecting his secular values, Vaillancourt made no reference to the confessional nature of the caisses preventing closer links with the credit unions. In the aftermath of the convention, the Montreal federation repudiated Vaillancourt's involvement, stressing once more the importance of avoiding entanglements with other nationalities and religions; at the same time it openly considered establishing a separate federation of caisses populaires.62 Vaillancourt did all that he could to undo the damage that had been done, but to no avail. He had the provincial body reassert its resolve not to be sucked into any unprofitable association with the credit unions and tried to reaffirm his own nationalist credentials. He told the other directors that he resented D

H7 Dealing with Outsiders

being called "a traitor to my race. For thirty-five years I have worked for the economic betterment of my people."6' Such gestures had little impact on Poirier, who resigned from the presidency of the provincial federation in December 1943 partly because of the issue of centralization discussed in the previous chapter, but also because of Vaillancourt's willingness to associate the movement with outsiders. Poirier no doubt felt that his rejection of Vaillancourt's leadership was confirmed by the latter's acceptance in the early 19405 of a seat in the Senate and an appointment to the federal government's Wartime Prices and Trade Board. In the midst of the conscription crisis of the Second World War, which only reinforced Poirier's belief that French-Catholic Quebecers could not trust outsiders, Vaillancourt's actions were tantamount to treason. Poirier concluded that Vaillancourt simply did not understand that "the minority can never get a fair hearing from the majority, especially when the majority wants to assimilate the minority."64 In opposing Vaillancourt's efforts to associate the caisses with the Conseil superieur and the English-Canadian credit unions, as in resisting Picard and Marchand's efforts to link the Catholic trade unions with the Canadian Labour Congress, the traditional leaders achieved a certain degree of success. These men had long opposed the establishment of central control: they feared, quite correctly as it would turn out, that creation of a single voice for either the caisses populaires or the Catholic trade unions would facilitate closer ties with organizations run by English-speaking non-Catholics. Such links, they claimed, would compromise the ability of their institutions to advance French-Catholic interests. The petit bourgeois leaders could not halt the movement toward centralization within either the caisses or the CTCC, but they were able to slow down, if not completely halt, the forging of ties by the provincial organizations with outsiders. CONCLUSION

The movement toward separation by the caisses loyal to the views of Poirier and Guerin was sped along by the issues of nationalism and confessionalism. The two notaries worked during the 19205 and 19305 to clarify the status of the caisses as French-Canadian and Catholic institutions, and during the early 19405 they consistently rejected any entanglements hostile to their conception of the role of these co-operatives. They opposed being tied to both the Conseil superieur and the English-Canadian credit unions, and when they perceived the provincial federation as yet another dangerous institution they freed themselves from it as well. By contrast, they sympathized with the establishment in 1946 of a nation-wide association of French-Canadian co-operatives. The Ecole sociale populaire welcomed this francophone organization in a nottoo-veiled reference to the debates regarding the association of the caisses with

n8 Challenge from a New Class

outsiders. This new association proved that people such as Vaillancourt and Levesque had been wrong when they insisted that "the co-operative movement can only succeed by joining together all co-operative members without concern for their identities.... Fortunately, in our country all French-speakers are also Catholic. By uniting all French-speaking co-operative members we are also bringing together people who are united by their Catholicism."6* The position expressed by the Ecole sociale populaire and sustained by Poirier and Guerin was a reaction to changes in Quebec, particularly in Montreal during the first decades of the twentieth century. Most of those who supported national and confessional exclusivity were from Montreal, where the injection of new blood and new values was most visible. In essence, these men were fighting to prevent the "Montrealisation" of the province. It was crucial to them that the virus of pluralism be stopped there before it spread. Like Abbe Groulx, they believed that there was a battle under way for the "very soul of French Canadians," and no action, even the division of the caisse populaire movement, was inappropriate if it was required to win the war.66 There was an understandable Montreal focus to the opposition to outsiders, in striking contrast to the situation in the CTCC, whose Montreal-based unions were the first to drop their discriminatory practices toward non-Catholics. These differences can be fairly easily explained, however, in terms of the competitive position of the two institutions. The Catholic trade unions were in the midst of a bitter struggle with the international unions for the allegiance of workers; the CTCC, particularly in Montreal, could ill afford to alienate any worker on the basis of national or religious background. In contrast, the caisses were not really in open competition with other financial institutions, such as the banks, which did not offer the same services; nor were there other credit unions to which the French-Catholic population could turn. In fact, the caisses were still very weakly established in Montreal at the end of the Second World War, and could well afford to alienate outsiders, since there was such a large French-speaking and Catholic market waiting to be tapped.6' Even beyond Montreal, in regions such as the Eastern Townships that had a significant English-speaking Protestant population, the caisses had not yet made a significant dent in the French-Catholic market. The historian of the regional association for that part of the province has noted that "the clause restricting membership to Catholics prevented many residents from joining the caisses in the region."68 Nevertheless, the denial of full membership to non-Catholics failed to become an important issue prior to 1945 because many French-Catholic communities still awaited establishment of caisses. In the absence of market pressures, the view of the traditional leaders was still officially sanctioned as the war came to a close. Even if such men as Poirier and Guerin had felt the need to go off on their own, Vaillancourt could not convince his colleagues on the board of directors to affiliate with the Conseil

ii9 Dealing with Outsiders superieur, nor did he have any success in purging article seven from the internal regulations. Many co-operatives undoubtedly ignored their own rules about membership, but article seven remained on the books of most caisses until the i96os.69 Vaillancourt was dearly less successful in imposing his views regarding nationalism and confessionalism than he was in terms of centralization, but these issues still formed a major part of the conflict between the traditional leaders and their more outward-looking successors. For Poirier, Guerin, and their colleagues, the isolation of the French-Catholic population from the outside world was crucial to the very survival of their people, but it also served more personal interests: a decentralized structure and proper distance from outsiders helped to perpetuate their sway over French-Canadian society. As for men such as Vaillancourt, Letourneau, and Filion, whose experience in large bureaucratic organizations had brought them into contact with people of diverse backgrounds, they firmly believed that institutions such as the Catholic unions or the caisses could survive only by opening up to the larger world. In the process, of course, leadership would most likely pass to men of Vaillancourt's class, who were well suited to manage a centralized structure and deal with outsiders. The protagonists in this debate advanced positions that served the interests of their class. Nevertheless, they were also debating important matters of principle regarding the role of the church and the place of outsiders in a society whose population was becoming increasingly diverse.

CHAPTER SIX

The Role of the State

Many leaders of the caisses populaires strongly felt that their co-operatives were necessary to reduce the growing reliance of the population on the state. Chanoine Grondin noted in 1910, "There is a mania among the people to see the state become involved in everything."1 Grondin was concerned that the initiative of the individual might be sapped by dependence on the state and uncertain about the place of the petite bourgeoisie in society. Just as these traditional leaders had a personal stake in keeping the caisses French and Catholic, so too did they see the growing influence of the state as a threat to their position in society. With industrialization and urbanization, the needy became less dependent on leaders of the local community, such as the clergy. Uprooted from rural Quebec and thrown into the cities, people looked instead to impersonal institutions, such as trade unions and the state, for assistance, in the process reducing the influence of French Canada's traditional elite. These leaders, who were bothered by the rise of monopoly capitalism because it removed power from the community, arrived at a similar critique of the growing role of government. These men hoped that the problems associated with expansion of state activities could be avoided, however, through such institutions as the caisses populaires. They understood, for instance, that the church's involvement in a wide range of social services in the late nineteenth and early twentieth centuries aided the needy, eliminated the justification for state intervention, and reinvigorated the role of Catholicism.2 Similarly, formation of the caisses by members of the petite bourgeoisie, lay and clerical alike, had clear social and political objectives. By allowing the poor to look to the caisses instead of the state, Desjardins sought to "tie the ruling classes to the people."' Failing to form these links to the masses, le fondateur could foresee only "either the most frightening revolution or the establishment of a socialist state, hardly an encouraging prospect."4 While men such as Desjardins were deeply bothered by the growing conviction that "the state should do everything," this did not prevent him, or

i2i The Role of the State his colleagues and successors, from seeking the assistance of government to achieve their goals.* In fact, within a year of the opening of the first caisse at Levis, Desjardins had demanded and received a grant from the Quebec government for the distribution of 8,000 copies of the regulations of the cooperative to encourage still others.6 In the years to come the state would be asked both to pass legislation and to provide direct grants to facilitate the operations of the caisses. The co-operative leaders of Quebec who made these requests saw no contradiction in using the state to preclude further intervention by the state. In this regard they were joined by their counterparts across the Western world who generally rejected an expanded role for government except when it came to assisting their co-operatives. In late-nineteenth-century France, state support for credit unions was sought by the rural elite, which wanted to prop up the family farm to prevent the depopulation of the countryside and the loss of its role in society.? Similarly, the leading advocates of credit unions in Italy enlisted the support of the state to forestall the "spread of socialist ideas" and to "divert towards productive channels the energies of the 'potentially' subversive poor."8 In associating themselves with the state Desjardins and his followers insisted that it provide aid without assuming control. As Cyrille Vaillancourt put it, Desjardins accepted government assistance only on the assurance that there would be no "direct state intervention in the affairs of the Caisses."9 What concerned the founder most profoundly was the prospect of seeing his cooperatives "under the trusteeship of political parties. Political patronage is always disagreeable, and it has the potential of killing our beautiful movement."10 This attitude paralleled that of the clergy when the provincial government sought to involve itself in 1921 in the financing of certain of the social services operated by the church. The bishops had no real objection to receiving financial assistance via the Public Charities Act. In fact, given the economic dislocations after the First World War and the pressures on the services of the church, the bishops welcomed the support. What bothered them, however, was the Bureau of Public Charities, set up to oversee institutions such as hospitals and orphanages that would receive state support. Reflecting Desjardins's concerns, church leaders feared that political manoeuvring would destroy the autonomy of their institutions, an objection allayed by later amendments to the act that prohibited undue pressure from the state." Although hardly enthusiastic supporters of the expanded role of government, the members of Quebec's petite bourgeoisie had no objection to state aid per se. In fact, they understood that this support could preclude an even larger role for the state by facilitating the activities of autonomous agencies such as the church and the caisses. They feared, however, that some day the state might go beyond providing subsidies to involve itself directly in day-today operations. When that day arrived, or so men such as the founders of the caisses believed, the corrupting power of politicians would diminish the influence of the petite bougeoisie.

122 Challenge from a New Class

In separating the unseemly world of politics from the less objectionable execution of the activities of government, these men were in the mainstream of Quebec political culture as described by the historian Ralph Heintzman.12 In a masterful discussion of the substantial literature regarding the role of the state in Quebec history, Heintzman has convincingly shown that there was no overwhelming rejection of an active role for the state and little evidence of the anti-etatisme described by Michel Brunet, among others.1' Long before the Quiet Revolution, Quebec had already seen "the emergence of a modern state," a point made also by observers other than Heintzman.14 But while most quarters recognized some legitimate state functions, this sentiment was combined, as Heintzman has shown, with "a profound cynicism about politics and politicians, and deep anxiety about the corroding influence of politics on many areas of national life."'5 Cut off from most opportunities for advancement in the economy, Frenchspeaking Quebecers, more so than their English-speaking counterparts across Canada, looked at political office as a means for personal aggrandizement. Accordingly, there was a strong feeling that affairs of state should be managed by agencies free of the day-to-day influence of politicians. In this manner, education in Quebec was administered by the state largely through an autonomous board of appointees instead of a politically dominated ministry. Only with the prosperity that came after the Second World War did Quebecers begin to feel that the men drawn to public office were motivated by something other than self-gratification at the public trough. With greater opportunities for gain in the private sector came a growing perception that the men attracted to public office were interested not in getting rich but rather in advancing the concerns of the larger population. There was what Heintzman described as a "newfound confidence in politics," which manifested itself by the 19605 in the politicization of various activities, such as education, previously operated by autonomous agencies.'6 The leaders of the caisses, beginning with Desjardins and continuing through to men such as Eugene Poirier and Wilfrid Guerin, fit perfectly into the mould described by Heintzman. While the state could facilitate the work of their co-operatives, they rejected any contamination of their efforts by politicians. Poirier embodied the emphasis on independent boards and commissions when he served as first president of the Office du credit agricole, established in 1936 to distribute long-term credit to farmers.1? Cyrille Vaillancourt, arch-enemy of the Poiriers and Guerins, could also fit into Heintzman's scheme, but as the sort of man who would usher in the Quiet Revolution because of his acceptance of and faith in the political process. As we have seen in the two previous chapters, Vaillancourt was not a member of the petite bourgeoisie. Given his largely secular views and his willingness to see the deconfessionalization of the province's institutions, he was not bothered by any decline in the power of the church that might come with an expanded role for the state. Moreover, Vaillancourt was a member

123 The Role of the State of a middle class that worked comfortably in a bureaucratic setting. He had been a civil servant prior to working for the caisses and from this vantage point accepted political direction as something that did not have to taint all that it touched.18 Vaillancourt stopped working for the government in 1934, but he assumed new ties to the state by means of appointments to Quebec's legislative council (upper house) in 1943 and to the Canadian Senate in the following year. Members of the traditional elite of French Canada, who were cynical about the corrupting influence of politics, saw these appointments as threatening the autonomy of the caisses. The editor of Le Devoir remarked that Vaillancourt's ties to the state would result in the sale of the movement "to the English and to the Godbout government. Vaillancourt is a traitor who is antipatriotic, anti-French, anti-everything that can be imagined."'9 Vaillancourt was confident that he could be part of the governmental apparatus without threatening to give the state "control over the caisses populaires."20 The differences between these two groups of leaders, members of different social classes, regarding the proper role for the state reflect the types of attitudes described by Heintzman. Even more significant, they provide a final set of factors contributing to the schism of the 19405. Prior to that conflict, however, leaders of the caisses struggled during four decades, both among themselves and against outsiders, to establish a satisfactory relationship with the state. FAILURE IN OTTAWA Since the coming of the Quiet Revolution and the growing confidence in the role of the state in Quebec, the provincial government has drafted legislation regarding operations of the caisses populaires, keenly aware that these co-operatives provide the National Assembly's only significant opportunity to legislate for financial institutions.2' Many trust and insurance companies and all the chartered banks operate under federal jurisdiction. The caisses populaires would have as well, had Desjardins had his way. During the years immediately following the opening of the caisse at Levis, Desjardins moved slowly in setting up other co-operatives, since there was no legislation clearly determining responsibility for the lost savings of members in the case of failure. Under these circumstances, if the CPL had failed, outraged depositors might have taken Desjardins to court; worse yet, he might well have been held responsible for their losses. At one point, in the absence of legislative protection, Desjardins even considered winding up operations at Levis, "not for lack of success, but because of that very success [which puts] on my shoulders too large a responsibility from a financial point of view."22 To avoid personal disaster, Desjardins sought legislation to govern the caisses, looking first to the federal level, as he hoped that the caisses might spread beyond Quebec.2' Although no legislation regarding the caisses was tabled in the House of

124 Challenge from a New Class

Commons until 1906, Desjardins was busy lobbying the Liberal government on the importance of this institution even before the first co-operative at Levis had opened. He argued to the federal minister of justice that the affairs of the soon-to-be-created caisses constituted "a matter with which the federal parliament should deal as its legislation extends all over the Dominion."24 Once the Levis caisse was off the ground, Desjardins began to push in earnest for legislation, working closely, as he would over the next decade, with F.D. Monk, a member of Parliament who was a Conservative, like himself. In 1902 Monk advised Desjardins that he should prepare a private member's bill. Monk did little to make Desjardins overconfident: "There will be objections. The government will require some time to consider the bill, but at least we will have taken the first step. The public will become interested in the question, and in a future session of parliament it will be possible to compromise with our opponents to allow the passage of legislation that is clearly needed."2' As it turned out, Monk was far too confident in his predictions, and federal legislation was never passed, but not because of any lack of energy on Desjardins's part. Up to the defeat of the Liberals in 1911, Desjardins regularly directed letter-writing campaigns to the prime minister, Sir Wilfrid Laurier, and his finance minister, W.S. Fielding, but to no avail.26 His efforts failed to convince Laurier, Fielding, and officials of the finance department that the caisses would be reliable recipients of savings. In this regard Desjardins was running up against Ottawa's desire, expressed only in internal memos, to avoid a repeat of the situation in 1899, when the prime minister and minister of finance were flooded with requests for compensation from depositors of the Banque Ville Marie. These Quebecers lost considerable sums after the government had failed to exercise any sort of control over a bank whose affairs had long been dubious.2? In public, however, the Ville Marie fiasco was never mentioned. Instead, the official justification for federal inaction over the first years of the century was the conviction, as Laurier put it, that "the ordinary people would not be able to do better by depositing their savings in these caisses than by depositing them in the existing savings banks run by the post office."28 This comparison infuriated Desjardins, who saw post office savings banks as "simple collectors of savings which send the funds on to Ottawa to help pay for the expenses of the government. In addition, the caisses postales do not accept savings of less than a dollar, while the caisses populaires will accept even a penny."2' Desjardins was not able even to secure an appointment with the prime minister, prompting Archbishop Begin to remark: "The czars of Russia could not have been less forthcoming."?0 His problems were no doubt related to the lobbying campaign waged by the Retail Merchants' Association against the private member's bill that Monk finally tabled in the House of Commons in 1906. Bill 2, as it was known, might well have become law but for the

125 The Role of the State fact that Desjardins and Monk sought legislation to facilitate establishment not only of financial co-operatives, but of industrial and commercial ones as well. The prospect of co-operative stores across the country mobilized the retail merchants, who were already suffering from the growing influence of department stores and the mail-order business. In one of many letters sent by the merchants' association to Laurier, the prime minister was told in no uncertain terms that the bill "is a direct blow to the retail merchants. We are naturally opposed to it, and with the influence that we have all over the country, its passage would mean certain defeat to the government at the next polls."*' Such electoral concerns no doubt prevented Laurier from immediately committing himself to support the legislation, which was sent off for consideration by a special committee late in 1906. The prime minister no doubt hoped that the legislation would never resurface, so that he would not be forced to alienate either Desjardins's enthusiastic and numerous supporters or the politically powerful lobby of the merchants. Much to Laurier's dismay, however, the hearings of the committee provided a perfect platform for Desjardins to advance his cause. As a result, not only did the committee wholeheartedly support the bill, but so did numerous newspapers, most notably in Quebec. Here Laurier became concerned about his political prospects, already dimmed by disillusionment over the terms that he had agreed to for Catholic education when Saskatchewan and Alberta became provinces in 1905.^ An election was in the offing for the new year when Bill 2 returned to the House of Commons at the end of 1907. With electoral gain on his mind, Laurier promoted the bill as a government measure. In March 1908, just as the legislation was about to receive unanimous consent from the House, Laurier wrote to the lobbyist for the merchants' association: "This question has caused me no end of difficulties. I have received demands from all parts of the country, both for and against the bill. After considering these various points of view, I have decided to support the measure endorsed by the committee which studied it last year."« Laurier clearly became a convert to the co-operative cause in the face of the elections of 1908. There is no other way to explain his about-face after years of opposition to Desjardins's efforts to secure federal legislation. One representative of the merchants' association may well have understood the shallowness of the prime minister's commitment when he wrote to Laurier shortly after the Commons had sent the bill to the Senate. He hoped that the prime minister "would use [his] influence to have the co-operative bill cancelled or buried in the Senate."* Between March and July 1908, Bill 2 was considered by the Senate, which was subjected to considerable pressure from the merchants but no discernible pressure from Laurier, who became curiously uninterested in the subject, having secured the political gain from supporting it in the House. Debate in the Senate focused on whether the federal government had the

u6 Challenge from a New Class

right to legislate on a matter that was portrayed as falling within the provincial domain. The jurisdictional issue was little more than a smoke-screen, however, to conceal the senators' concern with the defence of business interests. When the final vote was taken, the legislation was defeated by a margin of one, nineteen opposing the measure and eighteen supporting it. Of the twentysix Liberals, only nine voted in favour of Bill ^. Even among the four Quebec Liberals who were presumably closely tied to Laurier, only two supported the measure. Had even one of the other two been convinced to go along, then the caisses populaires would have operated under federal supervision." In spite of this setback, Desjardins organized further letter-writing campaigns to Laurier to secure this long-sought-after legislation. At the end of 1908 and the start of 1909 no fewer than twenty-three caisses sent identical resolutions to the prime minister, and this effort was followed by another campaign one year later that involved a similar number of caisses.*6 With the 1908 election out of the way, however, Laurier did not show the least interest in supporting any measure to encourage the establishment of co-operatives. As for the retail merchants, they were no less opposed to the revised version of Bill 2 that was presented to the House in 1909, even though it had been pruned of the offending provisions relating to industrial and commercial co-operatives. Monk and Desjardins hoped that a bill that applied only to financial cooperatives would have been of little concern to the merchants, but they were mistaken. Up to the First World War, first Laurier and then the Conservative prime minister, Robert Borden, tacitly accepted the merchants' argument that co-operatives were "dangerously socialistic [and] a kindergarten for all that is bad in these socialistic doctrines."'7 Given his unambiguous opposition to anything even vaguely tinged with socialism, Desjardins must have found such objections ironic. While the Retail Merchants' Association continued to lobby against legislation regarding the caisses even after the provisions that bothered it most directly had been removed, a different sort of response came from the businessmen of the Chambre de Commerce du District de Montreal. In 1906, when the legislation still included references to co-operatives of all types, this body representing French-speaking businessmen took a position in support of co-operatives. Aware of the manner in which the caisses had operated and susceptible to the economic nationalism of Desjardins's message, these Quebecers understood, unlike the predominantly English-speaking leaders of the merchants' association, that such co-operatives offered no real competition. In fact, the Levis experience had indicated that merchants could benefit directly from the credit provided by caisses, the administrations of which usually included local businessmen. The support of French-speaking businessmen for Desjardins's efforts in Ottawa gets in the way of any simple explanation of the defeat of federal legislation as the victory of business interests over those of the poor. The

i2y The Role of the State

facts of the case never prevented Desjardins, however, from portraying the battle in such a manner. When he was turned down in 1913 in a request to the federal minister of railways for a pass on the Intercolonical Railway to facilitate his promotional efforts, he saw the refusal as a further slap in the face from Ottawa. Frustrated, he felt that the federal government had given him nothing "for [his] work and sacrifices for fifteen years on behalf of ... the poorer classes."*8 Desjardins was overstating the point; as we have seen, his initiatives also had something to do with the concerns of Quebec's petite bourgeoisie. He did not lose out to major business interests, since the most powerful financiers and industrialists failed to take the co-operatives seriously enough to fight against federal legislation; nor did he succumb to the efforts of the lobbyists of small businessmen from across Canada. The French-speaking members of this group sufficiently supported Desjardins, and so his efforts to secure provincial legislation were easily crowned with success. INSPECTIONS, SUBSIDIES, AND THE QUEBEC GOVERNMENT With the end of efforts to secure federal legislation, there was scarcely any contact between the caisses and Ottawa after the First World War. The only exception came in occasional campaigns by the caisses to save themselves from federal taxation. Following introduction in 1917 of taxation on both die incomes of individuals and the profits of corporations, the status of co-operatives such as the caisses was unclear. In the late 19205, federal officials decided that since there was no explicit exemption for such institutions then they should be taxed. Accordingly, substantial tax bills were sent, which included both penalties and interest for a period stretching back to 1917.39 In response, the regional associations moved into action to explain that cooperatives did not earn profits in the same manner as did capitalist enterprises. To avoid ruinous competition with such businesses, a co-operative charged a price for its services that approached that offered by its competitors. Cooperative leaders refused to refer to the funds thus accumulated as profits. Rather, they made reference to "surplus earnings," which were returned to members in the form of boni and ristournes. While the banks passed on their profits to investors, the caisses returned them to their clients. Accordingly, the caisse leaders argued that it made little sense to tax the "surplus earnings," which rested in their vaults only relatively briefly before being returned to members.*0 The minister of revenue accepted these distinctions, and a federal law was passed in 1930 exempting "any banking institution organized under co-operative provincial legislation" from taxation.4' This exemption was challenged in the 19405, when small businessmen once again complained of unfair competition, but following a royal commission held in 1945 the caisses were allowed to continue to operate, free of the burden of taxes on their "profits."

128 Challenge from a New Class

This one issue aside, the dealings of the caisses with the state took place on the provincial level. Seeing the treatment that he was receiving from Ottawa, Desjardins's friends were urging him throughout 1905 to seek from Quebec City what Ottawa seemed unprepared to provide - namely, a legal framework for the operation of the caisses. When Laurier would not even deign to meet Desjardins, Archbishop Begin told the founder of the caisses, "You will have an easier time at Quebec."^ In a similar vein, Desjardins's old ally from Britain, Henry Wolff, noted: "A law for all of Canada would obviously be better than a provincial one. But when it is impossible to secure what you want, you have to settle for what is possible. Once there is a co-operative law for Quebec, the Dominion will have to follow sooner or later."43 Although his efforts in Ottawa had been bedevilled by the opposition of business interests, Desjardins followed this advice, apparently undeterred by the close ties of Premier Lomer Gouin to powerful business concerns - Gouin later became the first French-speaking director of the Bank of Montreal since the 18405.44 While the provincial government had shown itself no more forthcoming than the federal government when Desjardins first tried to have a bill passed there in 1901, his second effort in 1906 passed easily. Based largely on the provisions that had been put in place at Levis, the bill to govern "co-operative syndicates for consumption, production and credit" was introduced to the Legislative Assembly on 28 February and had already received royal assent ten days later, with no evidence of any opposition from business interests.4* With passage of this legislation, the caisses and the province entered upon a long and not always easy relationship. As we have already seen, the leaders of the caisses, at least up to the time of Vaillancourt, looked to the provincial government for aid without interference. As for the province, it tried from time to time to assert control, since it felt some responsibility for these institutions that operated under the shelter of its legislation. The sort of tensions that would frequently sour relations first came to light in the early 19105 over the issue of inspection. The legislation of 1906 had made no provision for professional inspection. While the volunteer members of the commission de surveillance were responsible for overseeing the books, and although a financial report had to be submitted to the municipality where the caisse was situated at the end of each fiscal year, there were no provisions for an examination of the affairs of the caisse by outsiders with appropriate credentials. This point had been legitimately raised by the opponents of federal legislation governing co-operatives. The deputy minister of finance complained to Monk in 1907 that the latter's legislation lacked "effective safeguards."46 Such concern was taken seriously in Ottawa following the substantial losses absorbed by Quebecers in the late 18905 because of the collapse of the Banque du Peuple and the Banque Ville Marie. This concern was given even greater relevance

129 The Role of the State

by the loss of further savings with the fall of the Banque de St-Jean in April 1908, at the same time that Bill 2 was under consideration by the Senate. A second Quebec bank, the Banque de St-Hyacinthe, also closed its doors in 1908, prior to the conclusion of the Senate's deliberations, and while the savings of all depositors were eventually returned the process was not completed for several years.47 Despite the vulnerability of the savings that Quebecers had left with the banks, there was no movement toward more formal inspection until the early 19105. The first sign of uneasiness over the system then in place came from the directors of the Caisse populaire de St-Jean Baptiste in Quebec City, who, no doubt concerned about the burdens placed on their shoulders, openly defied Desjardins by calling publicly for inspection supervised by the provincial government. The founder of the caisses mocked this proposal, wondering why someone "would be infallible simply because he carried credentials from the state." Thanks to the supervision of the affairs of the caisses by their members, the provincial law of 1906 "had established stable institutions without limiting their autonomy." Using the term autonomy rather loosely Desjardins denounced the directors at St-Jean Baptiste for having jeopardized "the independence of the fifty-two caisses, compromising their autonomy and opening the way for the imposition of unbearable burdens by the state."48 It never occurred to Desjardins that he was limiting the autonomy of this caisse by trying to muffle its leaders. While the leaders of this one caisse were isolated in their demands for government inspection, there was evidence of greater interest when the Legislative Assembly met in 1915 to consider some minor modifications to the 1906 legislation. Much to Desjardins's surprise, a number of MLAs, including his own representative from Levis, came out "for the imposition of control" by the government. Caught off guard, Gouin followed Desjardins's line of argument by noting that direct government intervention would do more harm than good. The premier was forced to concede, however, that, at the very least, it would be useful for the caisses to provide information regarding their affairs to the government for susbsequent publication, in the same way that the chartered banks were required to submit information for publication to Ottawa.49 Opposed to any intrusion by the state, Desjardins uncharacteristically cited a banker, Sir Edmund Walker, president of the Canadian Bank of Commerce, who had recently argued that the state had no right to "stick its nose" in the affairs of a private enterprise.J° The banks largely supervised their own affairs, via the Canadian Bankers' Association, which was empowered by the federal government to fulfil such a role. Desjardins asked only for the same self-regulating powers from Quebec for the caisses. He was ultimately unable to block the amendment to the co-operative legislation that required the caisses to provide information regarding their affairs to the government for publication.JI Historians have reason to be grateful

130

Challenge from a New Class

that Desjardins failed in this regard, since the information published annually by the Quebec government provides an invaluable portrait of the financial affairs of the caisses. As to whether such disclosure would dissuade caisses from dubious practices, Desjardins noted correctly that the information that the banks provided to the federal government frequently did not reveal their "real status."*2 Such was certainly the case in the years leading up to the failure of the Banque Ville Marie, when the institution regularly and knowingly made false reports to the government. In the absence of any means to determine the validity of the bank's report, Ottawa could do little more than watch the Ville Marie collapse in 1899." Similarly, the Quebec government was powerless after 1915 to confirm the accuracy of the reports it received or to act on any irregularity that might have come to its attention. By the 19205, following the collapse of the Home Bank and the near-collapse of the Banque Nationale, the federal government began to take its supervisory responsibilities more seriously. It created the post of inspector general of banks to increase, albeit to a limited extent, its overseeing of the banks. The provincial government was painfully aware that Quebecers would have lost considerable savings in the Banque Nationale affair but for its financial support for acquisition of the Nationale by the Banque d'Hochelaga.^ The province was prepared to impose state supervision over the caisses until these co-operatives agreed to legislation in 1925 that instructed each one to accept external inspection by an agent of one of the newly established regional federations." Since the early 19205 most caisses had voluntarily submitted to such inspections by their federations, but the province had worried that these co-operatives could still refuse to have their books examined. In 1922 this uneasiness led the minister of agriculture to pester Chanoine Grondin at hearings held by a committee of the Legislative Assembly. The minister asked, "Do you think it would be a good thing if there was a law giving your inspector the necessary civil authority to force a manager of a co-operative people's bank to show his books and the balance in the bank?" Getting nowhere with the witness, the minister stressed that the inspector would not be an appointee of the state. Nevertheless, the longtime organizer for the caisses responded: "That would not be desirable. The caisses populaires are free and independent associations. "*6 Following the crisis of the chartered banks in the 19205, however, such a defiant position could no longer be maintained. The leaders of the caisses were forced to accept a role for the state, with the understanding that there would be no direct interference by politicians. This was a classic example of Quebec's political culture as described by Heintzman, with its overriding fear of "the danger of getting caught up in political manoeuvering and of being corrupted by patronage."" The directors of the caisse managed by Wilfrid Guerin observed that these co-operatives had cause to celebrate: they

iji The Role of the State would continue to operate after 1925 "free of the interference of the state, independent of government-run inspection."58 This spirit of independence also extended in some cases to refusal to recognize the authority of the regional federations, so that inspectors were occasionally unable to carry out their obligations. As a result, certain formerly steadfast opponents of state intervention, such as Eugene Poirier, came to recognize by 1928 that only further compromises would prevent the state from simply moving in on its own. These men modified their point of view following the well-publicized refusal by one caisse on two separate occasions to permit an inspector from the regional association to examine its books. They were now prepared to accept a system in which regional associations would continue to name inspectors who would function as official agents of the province. The majority of the directors of the Montreal federation favoured such a scheme because "the current system of inspections has failed in a number of cases .... Government-appointed inspectors would have more authority in their dealings with difficult managers."*9 At the annual assembly in early 1929, there was a tie vote on the issue of government inspection, and the issue died until revived by the stock market crash only a few months later. Even the loss of the savings of some caisse members could not, however, convince the government to involve itself directly in the inspection process. As soon as rumours surfaced in early 1930 that a state-run system was on the horizon, the government was deluged with identical letters from caisses which stressed that each was "concerned about its autonomy." Government inspection would fail, "since it would not prevent financial mismanagement and would, instead, create confusion as to who was responsible for overseeing the affairs of the caisses .... [This confusion] threatens to reduce the interest of the members in monitoring the affairs of their co-operatives."60 Lobbying by caisse leaders once more prevented imposition of compulsory inspection by officials of the state. Rather, to deal with the occasional inability of the regional associations to deal with difficult co-operatives, these federations would be able to ask the "Provincial Treasurer ... to audit the operations of the Syndicate mentioned in the request." While there had previously been no means of forcing a caisse to allow entry to an inspector, there would now be a fine and possibly imprisonment for anyone obstructing the process.6' Pleased with what it perceived as a victory, the Montreal federation gloated that "the government did not impose a system of mandatory state-run inspections because of the opposition that was mobilized against the idea."62 As the Depression dragged on, however, and more savings were lost, still further government action was required to bolster confidence in a financial institution that had depended largely on the volunteer labour of priests to carry out its inspections.6i Although the traditional leaders of the caisses panicked once more about imminent government control, Taschereau's primary concern, as was shown in chapter 4, was ensuring a more professional team

132 Challenge from a New Class

of inspectors under the supervision of a single central authority.64 Throughout 1931 and early 1932 negotiations continued between various cabinet ministers and leaders of the caisses, who were encouraged when the minister of agriculture came out strongly against "government control of the caisses populaires Desjardins."6* Convinced that the government meant them no harm, the caisse leaders, who constantly feared contamination of their movement by the political process, were prepared to negotiate in good faith. A contract was signed by which inspection and promotional activities would be managed by a provincial federation which would receive an annual grant of $20,000 from the provincial government over the next decade. The signing of this contract marked the beginning of a new stage in the relationship between the state and the caisses. Up to this time the leaders of the co-operatives had managed to maintain a comfortable distance from the influence of the state. It was extremely difficult for any government to force its will on the caisses prior to 1932, but with their new-found dependence on government grants the leaders could no longer keep themselves so easily away from the day-to-day workings of government. Reflecting this new reality, the archives of the provincial federation bulge with references to lobbying the government for a better deal. One such campaign took place in 1935 after the federation had been forced to lay off all its inspectors for two months, faced with "the necessity of balancing the budget and the refusal by the government to increase the grant."66 To cope with this short-fall, Vaillancourt insisted strenuously that the government increase the federation's subsidy. In the process, he found the provincial secretary, Athanase David, sceptical about the value of any adjustment. David argued that in an age of monopoly capitalism it was unrealistic to believe that collecting the minimal savings of the poor could much improve the position of Frenchspeakers in the economy. As the minister bluntly put it: "It does absolutely nothing!"6? Vaillancourt responded, "We have sunk so low that it is unrealistic to reach great heights in one leap. Our caisses populaires are not only going to collect the savings of ordinary Quebecers, but they are going to generate a desire to succeed in the economy .... That is why I demand an increased grant for the sake of our race."68 In this case the lobbying bore no fruit. Nevertheless, the new relationship was such that a change in the leadership of the provincial federation followed in 1936 when the Liberals, who had been in power in Quebec since 1897, were defeated by the Union nationale under Maurice Duplessis. In an earlier time, this changing of the guard might have been largely ignored by caisse leaders, but such innocence was no longer appropriate in the midst of lobbying efforts. Consequently, Cyrille Vaillancourt, president of the federation since its founding, yielded his position to the man who would emerge in the 19405 as his arch-rival, Eugene Poirier. Vaillancourt observed in his letter of resignation: "Under the present circumstances we need another president who can secure

133 The Role of the State

more for the federation from the government."^ This was no act of generosity; rather, it was one of political realism. Vaillancourt was a close friend of the outgoing premier, Adelard Godbout, while Poirier was just as closely allied with Duplessis. To facilitate a better deal from the state, Vaillancourt, who continued to direct the affairs of the federation as its manager, stepped aside to make room for a Duplessiste. From all appearances this manoeuvre paid off handsomely. The annual grant, initially set at $20,000, was gradually increased to Syo.ooo during 1937 and 1938. To continue this success it would have been logical for Poirier to have returned the presidency to Vaillancourt following the return to power of Godbout and the Liberals in 1939. If Vaillancourt expected Poirier to return the favour, he was sorely disappointed, since the latter retained the presidency until the events of the 19405 took the caisses to the brink of a schism. Some have argued, in fact, that the animosity generated over Poirier's failure to observe what Vaillancourt saw as a gentlemen's agreement helped to provoke the split between the Montreal federation and the provincial association. This view of relations between Vaillancourt and Poirier forms part of a larger explanation of the schism as a partisan political conflict. In this view the animosity that began in 1939 continued into the 19405, when Vaillancourt was allegedly considering taking on the leadership of the provincial Liberals from Godbout, much to Duplessis's consternation. According to this scenario Poirier provoked the conflicts of the 19405 to embarrass Vaillancourt and deter him from entering active politics.70 Gerard Fihon, a participant in the events of 1945 that led to the schism, has noted: "While there were other factors involved, the primary cause for the schism of 1945 was the struggle between the provincial Liberal party and the Union nationale."7' Partisan concerns no doubt played a role in poisoning relations between Vaillancourt and Poirier, but not necessarily in the manner described by Filion. While Filion admitted that "there were unionistes in the Quebec City camp, and Liberals in the Montreal one," most of the protagonists were divided by political allegiance.''2 Nevertheless, conflict between the two warring clans was not necessarily restricted to the level of political manoeuvring as Filion suggested. Important issues of policy were increasingly dividing the two political parties by the 19405, and these divergences tended to parallel the ideological differences discussed in the last two chapters. By and large, the Union nationale was the party of rural Quebec, committed to the petit bourgeois view of the world. One group of historians has observed: "The party of Maurice Duplessis found its base of support ... among the traditional elites, the local notables and the clergy."7' The Liberals were beginning to champion the new middle class and would eventually introduce the Quiet Revolution. Focusing on the two parties' manoeuvring for power diverts attention from the ideological differences that divided Vaillancourt and Poirier. They disagreed bitterly over centralization of power within the movement and over the role of the caisses

134 Challenge from a New Class as protectors of French-Catholic Quebecers from a hostile world. In addition, these men differed in their views of the role of the state. In refusing to return the leadership of the provincial federation to Vaillancourt, Poirier indicated his adherence to the school of thought described by Heintzman that accepted a limited role for the state in social and economic affairs as long as partisan politics did not intervene. In refusing to yield the presidency in 1939, he was remaining true to a long-standing tradition within the caisses to keep its management free of partisan control. Vaillancourt was a member of a different social class than Poirier and the precursor of a generation that would accept partisanship as an unavoidable and not necessarily tawdry part of the machinery of the state. By stepping aside in 1936, he indicated his acceptance of the premise that the direct involvement of the state in the affairs of the caisses was not necessarily bad, a viewpoint that later allowed him to negotiate a role for these co-operatives as agents of the state. A G E N T S OF THE STATE In the political culture of Quebec as described by Ralph Heintzman there was considerable interest in farming out the functions of the state to agencies, such as the Council of Public Instruction in the educational realm, that were immune from political contamination. In this spirit the caisses populaires were perceived by certain government leaders by the 19205 as yet another apolitical body that might carry out the initiatives of the state, in this case providing credit to farmers. For leaders of these co-operatives, the problem to resolve was whether willing service as agents of the state would threaten the independence that most of them cherished so dearly. The idea of establishing a system of credit agricole, or long-term agricultural credit, emerged following the First World War. With the end of hostilities, agricultural prices collapsed while farmers remained saddled with considerable debt from wartime expansion of their operations. By the mid-i92os nearly two-thirds of Quebec's farmers lacked sufficient capital to run their affairs properly.74 In response to this generalized rural crisis, which struck farmers across North America, farmers' organizations were set up to advance their grievances, one of which was the Fermiers-Unis, which was founded in 1920. The Fermiers-Unis, like the United Farmers organizations formed elsewhere in Canada, was no mere lobbying agency. It also involved itself directly in the political arena, running candidates in the 1921 federal election, though with little success. Nevertheless, Quebec's minister of agriculture, JosephEdouard Caron, perceived the Fermiers-Unis as a nuisance. According to historian Robert Mignier, Caron wanted nothing to do with an organization that he saw as forming "the nucleus of a farmers' party that might threaten the influence of the bourgeoisie in rural Quebec."" As part of a campaign to take the steam out of the Fermiers-Unis, Caron called for a commission of

135 The Role of the State inquiry in 1922 to study agricultural credit. By providing the appearance that it had decided to champion one of the major demands of the Fermiers-Unis, the government hoped to dissuade Quebecers from supporting what it perceived to be a radical organization. The hearings called for by Caron were publicly advertised as designed to consider a state-run system to provide credit to farmers. In practice, however, the inquiry had as much to do with the role of the caisses as it did with credit agricole. In the circular that he sent to prospective witnesses, the deputy minister of agriculture stated: "It has been decided to inquire on the operations of the caisses populaires, as they exist today, on their usefulness to meet farmers' needs where they are organized and to study the opportunity of establishing an agricultural credit under the supervision of the government."76 Most of the people who testified were associated with the caisses, and all were asked by the minister of agriculture whether they preferred a system of agricultural credit distributed by the state or expansion of the facilities already provided by the caisses. Not surprising, the latter option was favoured by all witnesses with ties to the caisses, although not always to the pleasure of the minister. When Chanoine Grondin responded in such a manner, Caron angrily asked: "Would you prefer that the Government do nothing and continue to await the expansion of the people's banks rather than organize an agricultural credit3" To this, Desjardins's longtime colleague answered, "I would prefer that the government do nothing."77 Caron attempted to interest another witness in a system whereby the government would provide aid to farmers with the caisses serving as intermediaries, but he received a response that was no more encouraging than Grondin's.78 This totally unyielding attitude began to change, however, by the early 19305, as caisse leaders started to recognize the utility of working with the government, as long as their autonomy was preserved. By 1932 they were accepting grants from the government and had even embraced the principle of staterun inspections for recalcitrant caisses. In this spirit, they were prepared to participate in a government-financed plan of aid to farmers, as long as they received promises of freedom from political interference. Accordingly, Wilfrid Guerin, a staunch opponent of close ties with the state, drew up a plan in 1931 by which the caisses would make mortgage loans to members. The caisses would then take these securities to an apolitical "commission provinciale du credit agricole," which would accept them in return for negotiable government bonds. In this manner the farmer would receive his credit, and the cooperatives would maintain both liquidity and autonomy.7' Throughout the early 19305 the leaders of the caisses continued to support plans that echoed the spirit of Guerin's. Invariably, however, the government proved unwilling to be separated from the recipient of its largesse by both an agricultural credit commission and a caisse populaire. Fed up with what they saw as an intractable government, the directors of the provincial federa-

136 Challenge from a New Class tion reverted to the earlier attitude of caisse leaders and refused to have anything to do with provincial funds. Once again they argued that "if we had caisses populaires in all parts of the province, there would be no question of establishing a state-run system of agricultural credit."80 Following years of fruitless negotiations with the caisses, the government finally introduced a system of state-financed agricultural credit with establishment in 1936 of the Office du credit agricole. This government agency had the mandate to provide farmers with the long-term credit that the caisses could not extend, lest they seriously immobilize their funds. As the manager of the Caisse populaire de St-Andre noted in 1936, "Many farmers ask us for longterm loans which we cannot extend upon any large scale." He suggested that the caisses might administer a system of credit whose funds came from the province. Of course, this suggestion could never be implemented, since it was similar to proposals that the province had rejected at the start of the decade. Instead, the government chose to establish an agency with no explicit link to the caisses; its operations would initially be financed by raising up to $10 million through the sale of bonds. These funds would then be made available to farmers upon the security of mortgages at the rate of 2.5 per cent, considerably lower than the 4 per cent charged by the co-operatives with even the most liberal credit terms.8' While the caisses had no visible role in the legislation setting up the Office, the newly elected Duplessis government provided them with an important role just the same. To avoid possible conflicts with the co-operatives, the government invited Guerin and Poirier to assist in drafting the legislation, with the latter, who was already president of the provincial federation, assuming the same position with the newly formed Office as a favour for his friend "Le Chef." The provincial association was even asked for its approval of the draft legislation. Such consultation was deemed appropriate by the government, even though there were no plans to use the caisses as agents for the distribution of loans. The government had another function in mind for the caisses, namely a central role in financing the operations of the Office du credit agricole. Accordingly, the caisse centrale of the Quebec regional federation collected surplus savings from local co-operatives to provide the Office with a loan of $200,000 to get it off the ground. After granting this loan, the provincial federation bragged, "This is the first time in North America that a government has secured financing directly from a credit union."82 In later years both local and regional caisses provided further funding in the form of bond purchases. In the spring of 1938, for instance, following the encouragement of the provincial federation, the CPIC acquired Office bonds with a face value of $25,000, while the Montreal caisse centrale made an investment of $15,000.^ By the late 19305 the caisses had large quantities of surplus funds that required a safe outlet. In this context, the bonds of the Office du credit agricole proved

i?7 The Role of the State

attractive to the administrators of the co-operatives. As the funds at the disposal of the caisses piled up in the course of the war, one provincial government official even expressed the hope that "one day the caisses populaires would acquire all the bonds emitted by the province."84 Men such as Poirier and Guerin, who had long led the fight against political interference in the affairs of the caisses, were no doubt comforted by the prospect of financing the activities of the state. They opposed the handling of government funds by the caisses because it might have jeopardized the co-operatives' autonomy, but they understood that their funding of the state placed the government in their debt - perhaps the best guarantee against political tampering with their movement. The resolution of the lengthy negotiations regarding the proper role of the caisses in a state-financed system of credit agricole did not close the debate over the propriety of having these co-operatives serve as agents of the government. While Poirier and Guerin in this case concluded a deal that prevented political contamination, Vaillancourt was prepared to take the caisses in an entirely different direction as he worked to expand the activities of the provincial federation in the early 19405. Vaillancourt's surrender of the presidency in 1936 indicated his acceptance of political involvement, and he felt no reluctance in negotiating arrangements with the provincial government that explicitly made these co-operatives agents of the state. In 1941, for instance, he negotiated an agreement with the provincial department of maritime fisheries whereby the caisses would provide certain specified types of loans to Gaspe fishermen, charging them 6 per cent interest. These loans would be made only to caisse members and only with the sort of security that was deemed appropriate by the local commission de credit. The government promised to repay two-thirds of the fisherman's interest payments, reducing the borrower's burden to 2 per cent, and to guarantee the principal "in case of loss due to fire, storm, or destruction and in the event of the death of the borrower. "8j By making the caisses available to carry out government policy Vaillancourt violated the principle that had been so tenaciously maintained during the credit agricole debate. This departure from precedent provoked little negative reaction from the Poirier-Guerin camp, but such was not the case when he arrived at an almost identical arrangement with the government in 1944 to provide aid to colons, Quebecers who were prepared to settle in remote regions of the province. From all appearances, the program was a great success: during its first full year of operation 147 caisses took part, extending loans worth over $250,ooo.86 Nevertheless, coming as it did in the midst of the difficulties between the provincial federation and the Montreal association, the program provoked Vaillancourt's detractors to attack him for having sacrificed the autonomy of the movement. Le Devoir, which supported the position of Poirier and Guerin throughout

i$8 Challenge from a New Class

the debates of the 19405, was particularly critical of Vaillancourt for having accepted such an arrangement. In a front-page editorial Emile Benoist observed that the idea of passing along aid to colons was a good one; what he objected to was the manner in which the aid was to be provided, which he found "simply disgusting .... The proposal of M. Godbout threatens to compromise the integrity of the Caisses Populaires." For Benoist, the caisses stood to lose their independence with the naming of a government official to watch over their books as they related to this program: "The co-operative spirit, if it is to have any effect, must not be undermined by the interference of the state."8' In the face of such public attacks, Vaillancourt received support from an

unexpected source. Chanoine Grondin, who had given the minister of agriculture such a hard time in the 19205 over the involvement of the caisses in the credit agricole scheme, was now prepared to defend Vaillancourt. In the late 19305 Desjardins's long-time colleague confessed that he had been wrong in defending an abstract principle instead of the needy farmers of the province.88 Even after the Office du credit agricole had been in operation for over a decade, he was still repentant: "Twenty-five years ago, I spoke out against state-run agricultural credit .... I was wrong."89

Grondin, now that he had become more pragmatic about working with the state, defended Vaillancourt's involvement in aiding the colons, noting that no one had complained when Vaillancourt involved the caisses with the plan to aid fishermen. As he pointed out in a personal letter to the editor of Le Devoir, "The fishermen are happy. Why then do you publish such vicious

attacks in your newspaper?" As for possible loss of the independence of the caisses, Grondin pointed out that "neither the federation, nor the regional associations, nor the government will be able to force a caisse to lend a single penny that it does not want to extend to a borrower."9° Vaillancourt responded to the attacks of his detractors in an emotional speech before the Legislative Council. To those who had accused him of compromising the independence of the caisses, he responded as had Grondin: "No law can force our caisses populaires to make loans that they do.not want to make."'1 Vaillancourt recognized that the protests to the contracts that he had negotiated with the state ever since the return to power of the Liberals were only pan of a larger battle over the direction of the movement. Accordingly, he begged the indulgence of the Legislative Council so that he could respond "to the personal attacks that have been made against me in certain quarters." . As for allegations that he was a traitor to the co-operative movement for having sat on several boards of directors of capitalist firms, he was unrepentant; he saw his position on the boards of two French-run enterprises as encouragement "for the initiative of our people." To those who focused on his ties to the party in power in Quebec, he replied that it made no difference whether he was "rouge ou bleu, rose ou vert"; his only interest had been in advancing the interests of his "countrymen."91

i39 The Role of the State Vaillancourt tried to exploit nationalist sentiment because he understood that his opponents were bothered not simply by his close ties with the government, but more specifically by his association with the Liberal party, which was in the process of reneging on its promise to French Canadians not to resort to conscription for overseas service during the Second World War. Moreover, as we saw in the previous chapter, Vaillancourt's nationalist credentials had been tarnished during the early 19405 by his willingness to associate the provincial federation with organizations dominated by outsiders. Regardless of Vaillancourt's motives for resorting to nationalistic appeals, they failed to silence his detractors. In the Legislative Council, Thomas Chapais opposed the bill for aid to the colons in a speech in which he cited Poirier as having seen the law as unworkable: "Since the government is not going to guarantee the principal, the caisses are not going to assume the risks involved."« Emile Benoist returned to the attack on page i of Le Devoir, this time regretting that Vaillancourt had failed to see the issue as one of principle and not one of his personal integrity. Benoist described the implications of allowing the caisses to implement the programs of politicians. He envisioned new caisses set up in colonization areas solely to permit people to take advantage of aid from the state. "Caisses populaires are going to be formed for no other reason than to facilitate the distribution of ministerial favours."94 Vaillancourt should have anticipated such attacks. He had embarked on a new course for the caisses in their relationship with the state, and those who had defended a contrary point of view over several decades would not quietly accept what they perceived as the defeat of a principle that they had held so strongly. CONCLUSION By the 19405 a wide ideological gulf separated the two groups of leaders concerning the proper relationship between the caisses and the state, just as it did on the issues of an acceptable level of centralization and an appropriate level of contact with outsiders. Poirier, Guerin, and their allies accepted certain practical arrangements with the Quebec government when it appeared that the only alternative was direct intervention by the state. They agreed to provide financial information to Quebec, to compel all caisses to accept inspection by officials of the regional associations, and to allow for state intervention if a caisse refused to co-operate with such an official. In terms of handling provincial funds, they resolutely refused, unlike Vaillancourt, to allow the caisses to be used as agents for execution of state programs. Their greatest fear was that such involvement would bring the corrupting influence of politics into the affairs of the caisses. These men overcame their misgivings about partisan concerns when it came to accepting subsidies from the government. However, their justification was typical of the view professed by the more traditional leaders - a genuine belief, which never crept into Vaillancourt's thinking, that subsidization by the state

140 Challenge from a New Class

was only a passing phase in the history of the caisses. From the late 19305 through to the beginnings of its hostilities with the provincial federation in the early 19405, some in the Montreal federation supported a special tax on the caisses to avoid aid from the state. This tax was supported by the CPIC, which Guerin managed, and was extolled by Poirier as the means "to free us of all obligations to the state."'* Always fearful of the corrupting influence of politics, these leaders did all that they could to avoid being in the debt of the state. By contrast, Vaillancourt had no doubt that the caisses would be dealing with the state far into the future and that there was no choice but to work closely with politicians. In this spirit, he abandoned the presidency of the provincial federation to Poirier in 1936 to facilitate negotiations with the Union nationale government of the day. By the early 19405, while his opponents were fantasizing about a time when the caisses would be free of state subsidies, Vaillancourt was expressing his confidence that "the current provincial government will continue to respect the independence of the caisses that has been at the root of the relations between the provincial federation and the government. "96 Vaillancourt accepted partisanship as part of the political process and tried to make the best of it. He did not believe that politics inevitably corrupted the functioning of the state, or of the caisses, as did his opponents. As a result, Vaillancourt had no reluctance in supporting a considerable role for the state in the post-war era. He was involved with the federal Wartime Prices and Trade Board and served as a Canadian delegate to the conference in 1943 held at Hot Springs, Virginia, that paved the way for establishment of the United Nations Food and Agriculture Organization. He became increasingly convinced of the state's central role in the post-war economy. He observed, in a speech shortly after his return from Hot Springs: "An economy managed by the state is a social necessity right now ... Such an economy, run methodically and progressively, offers us the best chance for developing our natural resources, industry and commerce. "97 Vaillancourt's conception of the state was consistent with that of the federal Liberal party which had made him a senator. He was sufficiently bothered by the growth of political support for the Co-operative Commonwealth Federation (CCF) within Canada and by the power of the Soviet Union throughout the world to support a central role for the state to prevent a return to the circumstances of the 1930$, which, if repeated, might lead to the collapse of society as it existed. Accordingly, he had no objection to an interventionist role for the state to ease tensions between classes, even under the direction of political leaders ably advised by well-trained bureaucrats. Vaillancourt and his associates thus were early advocates of the modernization of the state's role in Quebec that would eventually manifest itself in the Quiet Revolution.98

141 The Role of the State By contrast, Vaillancourt's opponents offered a very different vision of the ideal role for the state. As we saw in the previous chapter, Quebec's petite bourgeoisie supported corporatism as part of their larger program of isolating French-Catholic society from the outside world. In addition, however, a corporatist state would also facilitate realization of other aspects of their ideal society. For instance, since most decisions would be made by workers and employers at the local, or professional, level, corporatism rejected "the centralizing tendencies of the state," which was so feared by the petit bourgeois founders of the caisses who wanted power to be retained within the community .99 Moreover, to the extent that the state had a role to play, it was one from which partisan politics would be excluded. There was no need for political parties in a state in which decisions were made by individuals acting as members of larger interest groups. Corporatism thus proved attractive to men who accepted a certain role for the state, as long as politicians were kept at arm's length. As Heintzman has noted, "Corporatism was not directed so much against the state ... as it was to rescue the state from politics."100 Throughout Quebec, however, support for corporatism was clearly in decline by the 19405. Mussolini's Fascists had discredited corporatism, and the social transformation of French Canada's leadership had further reduced the ranks of its supporters. Some leaders of the Catholic trade unions had supported corporatism ever since the establishment of the CTCC in the 19205 under the influence of the petite bourgeoisie. The philosophy was even made an official part of the constitution of the Catholic unions in 1942.101 By the end of the war, however, the CTCC had seen the rise of a new group of well-educated leaders who had weak ties to the traditional elite and who were amenable to the development of a modern state. These men, such as Picard and Marchand, accepted a central role for politics and politicians in the workings of government. Accordingly, they saw corporatism as an irrelevant leftover from the past. The caisses populaires experienced a similar social transformation in their leadership with the passing of power from Poirier and Guerin, the counterparts of the founders of Catholic unionism, to men such as Vaillancourt, Letourneau, and Fihon, whose views closely paralleled those of the new leaders of the CTCC. With this change in leadership came a significant shift in the nature of the dealings of the caisses with the state.

CHAPTER SEVEN

Conclusion: A Reflection of Quebec Society

Even though the schism of 1945 and the debates that led up to it were widely reported in the newspapers, the events surrounding this crisis have received limited or superficial attention from historians of the caisses populaires. As we saw in chapter 6, Gerard Filion found such issues as centralization of power in the provincial federation or affiliation of that federation with the Conseil superieur de la cooperation to have been of secondary importance; rather, the struggle was essentially an unfortunate falling out between friends. Filion developed this scenario in his memoirs by noting that Poirier and Vaillancourt were good friends who "dined together whenever they had the chance and who spoke on the telephone almost every day."' If the two had a falling out, it was not over principle but rather over the jockeying for position by political parties. Similarly, Jacques Lamarche, in the most recently published general history of the caisses, focused on the role of personal and political squabbles in the events of 1945.2 Such treatments of the schism are representative of the way in which many histories of the caisses populaires have concentrated on the role of individual leaders in shaping the movement. In such an approach, Alphonse Desjardins dominated the scene during the two decades of his leadership, followed by men such as Poirier, Guerin, and Vaillancourt, who occupied centre stage up to the end of the Second World War. There is no problem per se in focusing on these individuals; indeed, much of this study has been organized around assessing the contributions of these men. But emphasis on personalities can obscure the larger forces that these men represented. This work has been oriented toward using the caisses to illuminate broader social and economic developments within the province. From this perspective, the schism was not simply a petty battle between feuding clans, but the culmination of a struggle for control of the movement between members of two social classes with very different conceptions of Quebec society. The lawyers, doctors, notaries, and clerics of the petite bourgeoisie were the founders of the caisses. Over four decades, these men had made their

i4J A Reflection of Quebec Society

view of the ideal society perfectly clear. They, like their counterparts elsewhere in the Western world, sought to re-create society as they imagined it had existed in the nineteenth century. In this world, there was a close relationship between members of the weakly integrated communities that survived in a certain isolation from one another in a largely rural setting. Within each community, the petite bourgeoisie looked after the needs of the people, who in turn deferred to these men, conveying to them leadership over such institutions as the municipal government and the local school commission. This cosy world was upset in the late nineteenth and early twentieth centuries by the arrival of, first, industrialization and, later, monopoly capitalism. As a result, many people moved away from the communities in which they had long resided and new forces affected the lives of all Quebecers, even those who had stayed put. In the process, the members of the petite bourgeoisie saw their influence decline because of the increased power wielded by a wide array of individuals, including manufacturers, financiers, owners of mail-order houses, union leaders, and government officials. In response, the traditional leaders sponsored creation of a variety of institutions, one of which was the caisse populaire. These men sought to improve the material conditions of poor Quebecers but also wanted to re-create the social relations of an earlier time by closely associating the petite bourgeoisie with workers and farmers. The traditional leaders of French Canada were never entirely successful, however, in achieving their goals. As the first three chapters of this study indicate, no matter how sincerely they may have wanted to aid the poor, they had difficulties in devising policies that served the best interests of needier Quebecers. As a result, in both urban and rural Quebec, the poor were largely conspicuous by their absence from the membership rolls of the caisses. Not until the onset of the Second World War did the poor obtain the means to justify involvement with these institutions. Prior to the late 19305 they were frequently discouraged from joining these co-operatives or from taking full advantage of the credit made available to members by policies that made sense to the petit bourgeois leaders but not to poor farmers and labourers. Between 1900 and 1945, $220 million in credit was made available to Quebecers that would have been considerably more expensive, if it would have existed at all, had it not been for the caisses. Nevertheless, large amounts of funds were tied up in the acquisition of bonds, while most of the credit made available to members went to those who were relatively well-to-do. These members were in their own right among the wealthier elements of the community in the first place. The caisses never re-created the close ties that the petite bourgeoisie imagined it had once had with the masses. Nevertheless, these leaders steadfastly supported the caisses, particularly during the 19305 and 19405, when serious challenges emerged to their remaining influence over French-Canadian society. Even if the poor had not responded as the lawyers, doctors, notaries, and clerics might have hoped, this institution represented certain values that needed

144 Conclusion

to be promoted within French-speaking Quebec if the petite bourgeoisie were going to retain some leadership role. Once the function of the caisses is seen in these terms, it becomes clear why Desjardins's successors, such as Eugene Poirier and Wilfrid Guerin, reacted with horror to the transfer of power to bureaucrats in Levis, to the use of the caisses as agents for communicating with outsiders, and to the cultivation of close ties with the state. This institution had been founded to isolate FrenchCatholic society from forces beyond the individual community and, more generally, to ward off the influences of the modern world. This traditionalist viewpoint was expressed clearly by Poirier in a 1942 speech in which he opposed the granting of credit by the caisses for "the excessive mechanization of our farms .... We must remember that mechanization creates serious problems for the integrity of our parishes. There will then be a trend towards larger farms which, in turn, will reduce the number of landowners in each of our parishes."' To Poirier, modernization inevitably meant the breakdown of the local community and the further compromising of the influence of men of his class. From this ideological perspective, Poirier and Guerin kept in close touch with certain developments in France. They shared with members of the petite bourgeoisie throughout the Western world profound misgivings about the way in which the twentieth century was unfolding. Interested in how their counterparts outside Quebec were coping with similar problems, they naturally looked to France for inspiration. Just as the Action francaise movement of Abbe Groulx was modelled after the group of the same name in France, so did the traditional leaders of the caisses keep tabs on the Catholic social action movement in France and on the system of caisses populaires that had been begun by Louis Durand in the late nineteenth century. Durand's caisses were committed, as were Desjardins's co-operatives, to strengthening ties between classes to avoid social conflict.^ Moreover, they were closely associated with the Catholic church, so that prayers and other aspects of Catholic ritual were an integral part of their operations; there was even evidence of the refusal of membership to those outside the faith. These outsiders had to be kept at a distance as part of the fight against what one of Durand's allies saw as the major dangers of the time, namely, "Jews, freemasons and socialism."J Finally, Durand and his successors militantly opposed close ties with the state. While late-nineteenth-century France saw the rise of one credit union movement closely associated with the state, the Durand caisses were part of what was known as the Credit libre movement, for its desire to maintain a certain distance from government. Durand's followers were emphatic in rejecting a major role for the state which they saw as "an agent of centralization, dominated by freemasons."6 In the early twentieth century the movement begun by Durand softened, as did Poirier and Guerin, its absolute rejection of all ties to the state.? Never-

145 A Reflection of Quebec Society

theless these French credit unions retained most of their distinctive features, which were so attractive to the traditional leaders of the caisses. Accordingly, in 1925, in the midst of one of the periodic battles between the caisses and the state over the issue of government-run inspection, Guerin encouraged the members of the CPIC to affirm the character of their movement, which was "at the same time confessional and free from state interference in exactly the same manner as the Caisses Durand in France."8 The petit bourgeois leaders of the caisses saw themselves as participants in an international struggle against the evils of the twentieth century. They were prepared to fight with all the means at their disposal to protect their conception of Quebec society. In the process they were ready to take on not only outsiders such as English-speakers and Jews but also French-speakers such as Cyrille Vaillancourt and his allies who failed to share their vision. There was considerable bitterness evident in the debates leading up to the schism, because Vaillancourt was advocating a direction for the caisses that reflected a conception of Quebec society incompatible with that proposed by the founders of these co-operatives. Vaillancourt's alternative was only one of two ideological challenges to the traditional nationalism of the petite bourgeoisie during the 19305 and 19405. Both challenges took on increasing importance in Quebec in the decades leading up to the Quiet Revolution and were generally promoted by men whose education and choice of careers distinguished them from the traditional elite of French-Canadian society. These were members of a rising middle class, frequently trained in business or in the social sciences, who pursued a wide range of careers in business, government, the trade unions, or the universities. This disparate group was united by its rejection of much of what the petite bourgeoisie had long advocated for Quebec society. Given its broader training and frequent employment in large organizations, this opposition is understandable. However, in terms of proposals for the future shape of FrenchCanadian society, a significant chasm divided this group in two. On the one hand, there were men such as the historian Michel Brunei whom Michael Behiels has described as neo-nationalist.9 Such leaders rejected the clerical and traditional values of their predecessors, at the same time stressing the need to develop a strong Quebec state to deal with the problems of the modern world, such as outside control of the economy. In seeking to bolster the powers of the province, these men reflected a certain element of the fear of outsiders that informed the petite bourgeoisie's view of the world. The neo-nationalists were prepared to consider even the separation of Quebec from Canada to ward off outside influences. On the other hand, there were the. men described by Behiels as liberals because of their emphasis on the primacy of individual rights over those of any particular group in society. They, like the neo-nationalists, envisioned an important role for the state in a secularized Quebec. However, unlike the

146 Conclusion

neo-nationalists, the liberals did not view the state as a tool for the exclusive defence of French-Canadian interests. Rather, according to Behiels, the state's function was to serve "all of its citizens regardless of their race, language, colour, or religion."10 The liberals were distinguished from both their petit bourgeois predecessors and their neo-nationalist contemporaries by this openness to the outside world, which made them amenable even to close co-operation between the Quebec and federal governments, if the interests of Quebecers could be served. The leading advocates of this approach, such as Pierre Elliott Trudeau and Gerard Pelletier, who advanced it via their journal Cite libre, and Pere Levesque, whose viewpoint was described in chapter 5, received harsh rebukes from opponents who saw the liberal approach as contrary to the best interests of French-speaking Quebecers. However, as Behiels has noted, these liberals "were convinced that French Canadians could best retain their culture and language by pursuing their own individual economic and cultural interests." The liberals envisioned a Quebec "in harmony with, yet distinct from, the rest of North America."11 In his leadership of the caisses throughout the late 19305 and early 19405, Vaillancourt represented this liberal alternative to the clerico-nationalism of the petite bourgeoisie. In supporting the centralization of power in the hands of the provincial federation, in working for closer ties with outsiders, and in developing a comfortable relationship with the state, he and his colleagues advocated an outward-looking orientation for the caisses. In the process, he took these co-operatives to the brink of a major crisis in 1945 that foreshadowed the more public and frequently passionate debates regarding French-Canadian nationalism which would continue up to the Quiet Revolution and even beyond. Those debates, like the ones that took place within the caisses, were largely between members of different classes who espoused conflicting visions for the future of Quebec. The struggles within the caisses were fuelled also by political allegiances and by the long-standing conflict within the FrenchCanadian elite between men based in Montreal and those residing in the Quebec City area. At the centre of the debate, however, were the irreconcilable visions for the province held by the petite bourgeoisie and the liberal leaders of a rising middle class. In focusing on the interaction among the petite bourgeoisie, the poor, and the rising middle class, this study has tried to cast the history of the caisses populaires so as to highlight certain significant changes taking place in Quebec society in the early twentieth century. Previous works dedicated to heaping praise on Desjardins and his movement tended to neglect the world in which the man and his institution functioned. Inserting the history of the caisses into that world makes it possible to secure a clear image of their role within a society that was divided along class lines and was undergoing significant social and economic changes during the first half of the twentieth century.

APPENDIX

Came Members and Their Communities

The literature pertaining to the history of the caisses populaires abounds with references to the way in which these institutions responded to the needs of ordinary Quebecers. Such assertions have invariably been made, however, without serious examination of the backgrounds of members. Moreover, previous authors have failed to consider the social composition of the membership of any one caisse in light of the make-up of the community in which it operated. Since one of the goals of this study is to establish the role of the caisse populaire within its community, I have tried to establish profiles of members of the five caisses selected for detailed analysis and of the population of the larger communities in which these co-operatives functioned. Carrying out this exercise was not always a simple task, however, and this appendix is designed to explain some of the methodological problems encountered. Although each of the five caisses organized its records in a distinctive fashion, there was no great difficulty in compiling membership lists for the various dates that were retained for analysis. In terms of the Caisse populaire de Levis (CPL), however, the sheer size of the membership in the province's largest caisse, together with the manner in which the records were organized, led to analysis of only a sample of the entire population. Due to the way in which the relevant ledgers were compiled, it proved easy to focus on those members whose last names began with the first three letters of the alphabet. There was no obvious reason why this method should have produced an unrepresentative sample. Since the two most common names in the district served by the caisse were Begin and Carrier, this sample yielded approximately 30 per cent of all members in each of the years chosen for study (see Table Ai). The size of the sample no doubt contributed to its representativeness, which was borne out by several comparisons between the sample and the entire membership. For instance, in 1933, 64 per cent of all members owned only one share, while a comparable proportion, 66 per cent, owned but one share

148 Appendix TABLE AI CPL: Total Members and Members in Sample A

B

Year

Membership

Members in Sample

B as % of A

1913 1926 1927 1936 1945

1,160 999 1,697 2,154 3,850

330 313 527 598 1,099

28 31 31 28 28

in the 1936 sample.' Having selected the members of the CPL to study, I had next to find out more about these Levisiens. Tax evaluation records, which proved useful for the other caisses, were not available for Levis. Consequently, city directories were primarily employed to determine occupations of members. These directories generally listed the occupations of male heads of households. Accordingly, many caisse members could not be found, but federal electoral lists, available for elections held between 1935 and 1945, helped locate some. This source has not been used to any great degree by historians. This neglect is unfortunate because the electoral lists, available on microfilm from the National Archives of Canada, provide an ideal way of reconstructing the occupational structure of a community, since they disclose the occupations of all eligible voters. By and large, however, most of the information regarding CPL members was derived from city directories, which may have overrepresented wealthier members. This source, by only counting those with established addresses, tended to underrepresent male boarders or transients. In any event, this problem was confronted by developing a profile of the community as a whole from the same source. I drew samples from city directories for the relevant years, selecting residents whose last names began with the first three letters of the alphabet, in order to develop a sample comparable to that drawn from membership lists. There is no evidence that this system resulted in gross overrepresentation of particular occupations. The 1941 census indicated, for instance, that 15 per cent of all males in Levis were professionals or small businessmen as opposed to the figure of 18 per cent derived from the sample drawn from city directories. Even if these directories did introduce a certain bias into the distribution of the occupations of CPL members, the same bias was evident in the distribution of the local population. Slightly different problems were encountered in dealing with the other urban caisse under examination in this study. The size of the membership of the Caisse populaire de I'lmmaculee-Conception (CPIC) called for selection of samples for the various years retained for analysis, but the way in which the relevant ledgers were compiled precluded such a possibility. For the analysis

149 Caisse Members and Their Communities of the population of the east-end Montreal district in which the CPIC operated, however, it was essential to employ samples. In 1945, for instance, there were roughly 60,000 Catholics residing in the area served by the caisse. Because of the size of this population, samples were drawn using the City of Montreal's water tax evaluation rolls, which listed the head of each household in the city. Unlike city directories, which tended to overrepresent homeowners, these rolls also consistently recorded the names of tenants, since the idea was to find out who was liable to pay the city for the use of water. Every tenth name inscribed on the evaluation roll for the district served by the CPIC was retained to establish a population for comparison with the membership lists of the caisse. The accuracy of this sample was established by comparing certain characteristics of the 1945 sample with the information that can be compiled from the 1951 census, the first to have employed census tracts, extremely small urban areas that can be used to study the population of particular quartiers. More specifically, by piecing together various tracts I could determine certain aspects of the population of the area served by the caisse. For instance, 7 per cent of the men both in the sample drawn from the tax rolls and in the area established via the census tracts were professionals. As for labourers, 38 per cent of the men in the sample and 41 per cent of those residing in the relevant census tracts fit into this category. Occupational information, for both members of the caisse and residents of the district, came from various sources. As for Levis, city directories and federal electoral lists were employed. Occupational data were also taken from tax evaluation rolls, which included still other types of information. Since the rolls were designed to establish both the property tax owed by landowners and the water tax owed by owners and tenants, information was presented to distinguish one group from the other. This provided a convenient way of determining rates of homeownership among members and all residents. Moreover, to establish the water tax owed by each person listed, information was entered in the rolls indicating the rental value of the property occupied. For renters, the enumerators listed simply the amount annually paid to the landlord. For owners, as Stephen Hertzog has noted, "the enumerators merely estimated the rental value on the basis of the space occupied. This meant that the enumerators had a tremendous amount of arbitrary power in the determination of the assessment. Where enumerators were more conscientious and had a good knowledge of the local real estate market, this was not a serious problem for historical research." There were potential problems, however, "where enumerators were less knowledgeable or less diligent."2 As with occupational data drawn largely from city directories, any distortions caused by use of these rental values should have influenced equally the profile of CPIC members and that of residents of the area. Because I used the same source to describe the two populations, any inaccuracy should have had

150 Appendix

roughly the same effect in each case. The three rural caisses offered different problems from the two urban ones. In each instance, there was no difficulty in compiling lists of members, particularly since the numbers involved were relatively small. However, in the absence of city directories it was not always easy to establish the occupational structure of either the membership of the caisses or the population of the districts that they served. This problem was overcome to a certain degree by information available from the federal electoral lists for the 19305 and 19405. In addition, occupational information was occasionally available from local tax evaluation rolls, which I used to establish profiles of the communities within which the caisses at Maria, St-Theophile du Lac, and St-Remi operated. These rolls were particularly useful in distinguishing the average member of a rural caisse from the typical member of the community, through their listing of the tax evaluation of all local property owners. In this rural context, property ownership was more widespread among heads of households than it was in the cities. Accordingly, this provided yet another means of distinguishing the person who joined a caisse populaire from the typical resident of the community.

Notes

ABBREVIATIONS AAQ ANQ Confederation

Archives de 1'archeveche de Quebec Archives nationales du Quebec Confederation des caisses populaires et d'economie Desjardins du Quebec CPIC Caisse populaire de I'lmmaculee-Conception CPL Caisse populaire de Levis Federation de Gaspe Federation des caisses populaires Desjardins de la Peninsule et des lies Federation de Montreal Federation des caisses populaires Desjardins de Montreal et de 1'Ouest-du-Quebec Federation des Trois-Rivieres> Federation des caisses populaires Desjardins du centre du Quebec NAC National Archives of Canada PREFACE 1 See Louise Dechene, Habitants et marchands (Paris: Plon 1974); Allan Greer, Peasant, Lord and Merchant (Toronto: University of Toronto Press 1985); Brian Young, In Its Corporate Capacity (Montreal: McGill-Queen's University Press 1986); Paul-Andre Linteau, Maisonneuve (Montreal: Boreal 1981). 2 This nationalist preoccupation was particularly evident in the lengthy debate over the impact of the conquest. See, for instance, Michel Brunet, La presence anglaise et les Canadiens (Montreal: Bellarmin 1964), and Fernand Ouellet, Histoire ecomrmique et sociak du Quebec, 1760-1850 (Montreal: Fides 1966). For a more general discussion of historiographical issues, see

152 Notes to Pages x-xvi Serge Gagnon, Quebec and Its Historians-. The Twentieth Century (Montreal: Harvest House 1985). 3 Quebec, Statistiques fmaruieres des institutions de depot, first quarter, 1987. 4 This figure may be slightly inflated by excluding non-francophones. As we will see throughout this study, however, until fairly recently the caisses had internal regulations that discouraged the participation of those who were neither French-speaking nor Catholic.

5 See Rudin, Banking en franfais; Labrecque, Epargne et credit. 6 Confederation, Desjardins papers, "Memoire sur ['organisation de 1'agriculture." This and all subsequent quotations that were originally in French have been translated into English by the author. 7 Vaillancourt et Faucher, Alphonse Desjardins, n. 8 Vachon, Alphonse Desjardins. 9 Roby, Les caisses popvlaires, 108. 10 The hagiographical approach toward Desjardins has also been evident in works written by authors outside Quebec. In this regard, see Boyle, The Poor Man's Prayer.

11 See, for instance, Smereka, Au-dela des divergences, and Labonte, Les maillons de la chaine. 12 Bauer, "The Caisse Populaire Movement." 13 Sacouman, "Underdevelopment and Structural Origins," 67.

14 Moody and Fite, Credit Union Movement. 15 Gueslin, Origines du credit agricole, 19. 16 Ibid., 150. 17 Fairbairn, "Social Bases of Co-operation," 7. I am grateful to Professor Fairbairn for having made several unpublished manuscripts available to me. 18 In this regard, Sacouman's work differs markedly from that of MacPherson, who claims that "in large part the prominent role played by Maritimers [in co-operatives] can be explained by the personalities of the co-operators" (MacPherson, "Patterns," 67). 19 Sacouman, "Underdevelopment and Structural Origins." 20 An exceptional reference to the class interests of the leaders of the caisses can be found in the debate between Jorge Niosi and Pierre Fournier regarding the situation in the late 19708 and early 19808. See Niosi, "Rise of French Canadian Capitalism," in Gagnon, Quebec: State and Society, 196; Fournier, "The New Parameters of the Quebec Bourgeoisie," in Gagnon, Quebec, 206. 21 Having earlier studied chartered banks, I came in the course of this project to appreciate their highly centralized structure, which resulted in deposit of all documentation in one place.* 22 The appendix discusses the methodological problems encountered in collecting this information.

153 Notes to Pages 3-9 C H A P T E R ONE 1 Le Soleil, 20 January 1915. 2 Confederation, interview. Numerous interviews have recently been conducted with former leaders of the caisses. I was given access to the transcripts of these interviews, with the understanding that the identity of the interviewee would not be revealed. 3 Fairbairn, "Social Bases of Co-operation," 6. 4 La Verite, 13 November 1909. 5 Bernard Bernier, "La penetration du capitalisme dans ['agriculture," in Seguin, ed., Agriculture et colonisation au Quebec. 6 Benoit Tremblay, "Analyse socio-economique," 221. 7 La Verite, 29 January 1910. 8 Ibid, 22 December 1905. 9 CPL, general assembly, 19 December 1901. 10 Linteau, Durocher, and Robert, Quebec: A History, 406. 11 AAQ, 6iCD, F.X. Gosselin (cure of Levis) to Archbishop Begin, n August 1907. 12 Confederation, Desjardins papers, Desjardins to Michel Levesque, n August 1920. 13 Ibid., 10002-43, Desjardins to Rev H. Guy, 17 July 1920. 14 Roby, Les quebecois et les investissements americaim; Trofimenkoff, Action frangaise. 15 AAQ, 7OCF, Desjardins to Cardinal Begin, 21 November 1913. 16 Andre Vachon, Histoire du notarial canadien, 138. 17 Confederation, Desjardins papers, "Memoire sur 1'organisation de ['agriculture." 18 La Verite, 24 September 1910. 19 Hamelin et Gagnon, Histoire du catholicisme quebecois, I, 192-7. 20 Confederation, 10021-206, Abbe Edmond Hebert to Abbe J.R.I. Trudel, 13 September 1922. 21 Mignier, "Le monde agricole quebecois," 310. 22 Ibid., 299. 23 CPL, general assembly, 19 December 1911. 24 Richard Hofstadter, The Age of Reform (New York: Vintage Books 1955); Robert Wiebe, The Search for Order (New York: Hill and Wang 1967); Paul Starr, The Social Tranformation of American Medicine (New York: Basic Books 1982). 25 Richard Allen, The Social Passion (Toronto: University of Toronto Press 1971). 26 Gueslin, Les origines du credit agricole. 27 Canada, Parliament, House of Commons, Debates, 8th Parl., 2nd sess., i (1897): 550.

154 Notes to Pages 10-17 28 29 30 31 32 33 34 35

36 37 38 39

40 41 42 43

44 45

46 47 48 49 50 51 52 53 54 55 56 57

Confederation, Desjardins papers, Desjardins to Wolff, 27 October 1900. Ibid., Desjardins to Pere J.-A. Archambault, 1911. Guy Belanger, "Le role de Dorimene Desjardins." La Verite, 15 January 1910. Quebec, Legislative Assembly, Sessional Papers, 1901, no. 49, "Constitution of Caisse populaire de Levis." Confederation, Desjardins papers, Desjardins to J.B. Horth, n February 1919. Rudin, Banking en franfais. See this work for a fuller discussion of the nature of banking services in Quebec at the turn of the century. At the outset 25 per cent of the net profits was placed in the reserve fund, and another 5 per cent in the provident fund. Quebec, Sessional Papers, "Constitution of Caisse populaire de Levis." AAQ, 70CF, Desjardins to Cardinal Begin, 21 November 1913. CPL, annual assembly, 17 December 1916. Confederation, Desjardins papers, "Memoire sur 1'organisation de 1'agriculture." Canada, Parliament, House of Commons, Journals, 1906-7, App. 3, "Report of the special committee to whom was referred Bill No. 2," testimony by Desjardins, p. 172. Ibid., 115. Rudin, Banking en franfais, 7. Ibid., chap. i. Cited in Centenaire de Levis. As the poet Louis Frechette wrote in an ode to Levis, "Tu surgis ... et Quebec, ta rivale, a pali" ("Levis, you are growing, and Quebec, your rival, is fading"). GIRAM, Evolution des axes commerciaux, 19. In spite of Desjardins's commitment to restrict the operations of a caisse to a single parish, this idea was ignored as often as it was observed. In the first caisse, the territory to be served included both the parish encompassing the city of Levis and a neighbouring, largely rural parish as well. CPL, preliminary meeting, 21 September 1900. Ibid., various preliminary meetings, 21 September to 25 October 1900. Ibid., general meeting, 6 December 1900. Ibid. Ibid., general meeting of members, 6 December 1900. See appendix. The issue of legislation is discussed at length in chapter 6. AAQ, 7oCF, I, Desjardins to Archbishop Begin, 20 December 1904. La Verite, 21 November 1908. Confederation, interview. Confederation, Desjardins papers, Desjardins to Pere Georges Melanc.on, 30 May 1917. Hamelin et Gagnon, Histoire I, 195.

155 Notes to Pages 17-25 58 59 60 61 62 63 64 65 66 67 68 69 70 71

72 73 74 75 76

77 78 79 80 81 82 83 84 85 86 87 88

Ibid., 221. Confederation, Desjardins papers, J.T. Savaria to Desjardins, 2 June 1911. Hamelin et Gagnon, Histoire, I, 229. ESP, no. i, 1911, 5-6. Confederation, Desjardins papers, Desjardins to Grondin, 12 April 1910. Francois Jacques, "Le clerge quebecois," 85. Hamelin et Gagnon, Histoire, I, 278. Confederation, Desjardins papers, Begin to Pope Pius X, 26 January 1913. Caisse populaire de Maria, conseil d'administration, 12 February 1911; AAQ, 7oCF, I, Desjardins to Begin, 7 November 1916. Confederation, 10040-8, memo from Desjardins, n.d., but from context it appears to be pre-i9o6. Confederation, Desjardins papers, Desjardins to Omer Heroux, u July 1918. La Virile, 9 August 1913. See appendix for further details. Throughout the text the term average is employed to suggest mean values. The same need to combine farming with forestry activities, albeit in the Saguenay-Lac St-Jean area, is described by Normand Seguin in La conquete du sol. La Verite, 16 October 1909. Confederation, Desjardins papers, Desjardins to S.T. Lupien, 18 February 1918. See appendix. Rudin, Banking en franfais, 13, 84. In 1941, only 14 per cent of farms at St-Remi were smaller than fifty acres, as opposed to 30 per cent in Maria and 36 per cent in St-Theophile; Census of Canada, 1941. In 1931, the average farm in St-Remi had nearly ten dairy cattle, as opposed to seven at Maria and four at St-Theophile. Census of Canada, 1941. Mignier, "Le monde agricole." See appendix. Archives of Parish of Immaculee-Conception, Groupe Pie X, 24 May, 21 June 1908. CPIC, preliminary assembly, 30 December 1908 Archives of Parish of Immaculee Conception, Prones, 31 January 1909. See appendix. Benoit Tremblay, "Analyse socio-economique," 203. Hertzog, "A Stake in the System"; Hanna and Olson, "Metiers, loyers, et bouts de rue." See the appendix for an extended discussion of this source. See, for instance, Terry Copp, Anatomy of Poverty (Toronto: McClelland and Stewart 1974), and Bettina Bradbury, "The Family Economy and Work

156 Notes to Pages 25-32

89 90 91 92 93

94

in an Industrializing City," Canadian Historical Association, Historical Papers (1979): 71-96. Copp, Anatomy, 94. See appendix. See Collectif Clio, Histoire des femmes au Quebec (Montreal: Les Quinze 1982). La Verite, 25 December 1909. Canada, Parliament, House of Commons, Journals, 1906-7, App. 3, "Report of the special committee to whom was referred Bill No. 2," testimony by Desjardins, p. 115. La Verite, 4 April 1908. C H A P T E R TWO

1 Ecole sociale populaire, no. 12, 1911, 38. 2 The percentage of Catholics within a given area belonging to a caisse has been derived by employing Canada ecclesiastique, the yearbook of the Catholic church in Canada, which provides annual statistics regarding the number of Catholics in each parish, data that are not available from the census. As will be noted in greater detail in chapter 5, there were significant obstacles thrown in the way of non-Catholics considering membership. Accordingly, calculating the percentage of Catholics within a given area with membership in a caisse provides an accurate reflection of the co-operative's importance in the community. 3 Confederation, Cure de 1'Ange-Gardien to Vaillancourt, 25 April 1934, 10260-12. 4 Rudin, Banking en franfais. The $30 million figure for savings held by the Banque Nationale was the lowest total during the early 19205. In 1921 the figure was as high as $50 million. 5 Gerald Bernier et Robert Boily, Le Quebec en cbiffres (Montreal: ACFAS 1986), 229. 6 Federation des Trois-Rivieres, general assembly, 7 October 1942. 7 Confederation, 10290-226, inspector's report, 16 March 1943. 8 See chapter 4 for a fuller discussion of the establishment of the provincial federation. 9 Confederation, Vaillancourt inquiry, responses from parishes of St-Damase (10259-178), Limoilou (10260-012), and St-Julien de Wolfestown (10259-247). 10 Confederation, Desjardins papers, speech by Desjardins, "La cooperation d'epargne et de credit," 1904. 11 Membership increased by roughly 360,000 between 1932 and 1946; 275,000, or 76 per cent, of these new members belonged to caisses that were formed during this period.

157 Notes to Pages 32-41 12 The role of Levis, known as the caisse-mere, as the unofficial head office for all the caisses in Quebec is discussed in chapter 4. 13 Fifty-six per cent of the caisses established before 1930 were formed in communities without bank branches. If the caisses established in Montreal and Quebec City are excluded from the calculation, the figure reaches nearly 66 per cent. 14 Confederation, Desjardins papers, Desjardins to H. Bourassa, 4 December 1914. 15 Confederation, Vaillancourt inquiry, responses from parishes of St-Frederic de Drummondville (10259-223), Papineauville (10260-101). 16 For instance, 22.3 per cent of all land in the province used for growing of crops was devoted to cultivation of oats; this land yielded 23.9 bushels of oats per acre. For parishes with caisses, 23.7 per cent of the land was committed to oats, and the yield was 21.9 bushels per acre. Census of Canada, 1931. 17 Sacouman, "Underdevelopment and Structural Origins," 82. 18 Census of Canada, 1941. 19 Benoit Tremblay, "Analyse socio-economique," 203. 20 Federation de Quebec, preliminary meeting, 16 September 1918. 21 Caisse members as a group occupied dwellings of a greater average value than did the residents of the area served by the caisse. Moreover, there was a significant gap within occupational groupings in 1945. For instance, while the average dwelling occupied by professionals who were members was evaluated at $347, the average for all professionals in the district was only $260. Archives of City of Montreal, Water tax rolls. 22 Lovell's Directory, 1945. 23 Census of Canada, 1941. 24 The source for this information is L'historique du Lac-a-la-Tortue, n.d, n.p. This document was found in the archives of the Municipalite du Lac-a-la-Tortue. 25 Caisse populaire de St-Theophile du Lac, conseil d'administration, 22 May 1941. 26 Confederation, 10002-57, Desjardins papers, Desjardins to M. Brunelle, 14 April 1920. 27 Quebec, Legislative Assembly, Sessional Papers, 1901, no. 49, "Constitution of Caisse populaire de Levis"; Quebec, Statutes, i George V, c. 43. 28 Confederation, 11230-153, Victor Barbeau to Vaillancourt, 20 November 1937; ibid., 10032-84, M. Charron at inspectors' convention, 23 January 1945. 29 CPIC, annual assembly, 22 December 1914. 30 Ibid. 31 Quebec, Sessional Papers, "Constitution of Caisse populaire de Levis"; CPIC, Statuts, 1933.

158 Notes to Pages 42-9 32 CPIC, annual assembly, 25 January 1938. 33 Bauer, "The Caisse Populaire Movement," 70. These calculations pertain to 1950. Other aspects of the credit practices of the caisses are discussed in the next chapter. 34 Mignier, "Le monde agricole," 53. 35 Confederation, 10002-37, Desjardins to Pere H. Guy, 5 May 1915. 36 Ibid., 10891-435, Desjardins to J.A. Bernard (CPIC), 15 January 1912. 37 CPL, general assembly, 25 January 1925. 38 Ibid., miscellaneous correspondence, Roy to Raoul Desjardins, i December 1926. 39 Ibid., minutes of conseil d'administration, 30 December 1926. A similar son of policy was in place at the CPIC, where there was a ten-cent charge on the first share and fifty cents for each share acquired thereafter (CPIC, general assembly, 23 January 1939). 40 See Table 2. 41 Confederation, 10032-85, inspectors' convention, 23 January 1945. 42 CPIC, preliminary assembly, 30 December 1908. 43 Caisse populaire de St-Theophile du Lac, annual assembly, December 1916. 44 Ibid., 19 January 1936. 45 Confederation, 10032-84, inspectors' convention, 23 January 1945. 46 CPL, general asssembly, 15 December 1918. The power to set the maximum number of shares that could be owned by any one member had been ceded by the members to the conseil d'administration in 1903. (CPL, general assembly, 22 December 1903.) 47 Caisse populaire de Maria, general assembly, 20 December 1914. 48 Confederation 11257-10, notes by Louis Arneau (pseudonym for Chanoine Grondin), n.d. 49 See chapter 3 for a fuller discussion of the place of the purchase of bonds in the affairs of the caisses. 50 CPL, minutes of conseil d'administration, 26 January 1932, letter from Hudon to conseil. 51 Ibid., Liste des prets faits, vol. 6, 1931-2. 52 Ibid., minutes of commission de credit, 2 February 1932. 53 Ibid., minutes of commission de credit, 23 March 1937. Because of the importance of this reference, the French original is being included here. The report noted that the caisse had become little more than "une societe de placements mobiliers ... Nous croyons que le Fondateur aurait de la misere a la reconnaitre pour son enfant .... [La Caisse populaire de Levisj a refuse systematiquement les prets aux Societaires dans le but de placer sur obligations qui donnent moms de travail et exigent moins de surveillance." 54 Ibid., 24 February 1926. 55 Ibid., general assembly of members, 25 January 1931, 28 January 1932. 56 Ibid., 27 January 1937.

159 Notes to Pages 49-54 57 Ibid., 19 December 1938. 58 Caisse populaire de Maria, general assembly, 26 July 1942. 59 Confederation, interview. CHAPTER THREE 1 Confederation, 1010-10-07, Abbe Turmel to Congres des caisses populaires, 7 October 1925. 2 For fuller discussion of the proliferation of the branches operated by the chartered banks, see Rudin, Banking enfranfais, 3-21. 3 Confederation, Desjardins papers, Desjardins to H. Mitchell, 30 June 1915. The story of the local businessman, in this case a notary, who absconded with people's savings plays an important part in the novel Trente arpents. In English, see Ringuet, Thirty Acres (Toronto: McClelland and Stewart 1970). 4 Confederation, Desjardins papers, Desjardins to H. Guy, 7 May 1913. 5 These data regarding the savings held by the banks in Quebec have been derived from Labrecque, "Le controle de notre epargne," 13. 6 Confederation, 1010-01-07, Laurent Letourneau to Minister of Agriculture, 13 September 1929. 7 CPL, letter from Noel Lemieux, minutes of commission de credit, 12 March

19378 Confederation, Desjardins papers, Desjardins to H. Bourassa, 4 December 1914. 9 Archives of the Banque Nationale du Canada, 132-6-9, deposits at each office of the Banque Nationale, 30 April 1924. 10 Confederation, Desjardins papers, Desjardins to J.V. Rochette, 21 October 1914 11 Ibid., Desjardins to Jules Dorion, 23 January 1913. 12 Ibid., Lavoie to H. Mitchell, i June 1915; AAQ, 7oCF, Lavoie to Begin, 20 February 1915. 13 AAQ, 7oCF, Lavoie to Begin, 20 February 1914. 14 Confederation, Desjardins Papers, Lavoie to H. Mitchell, i June 1915. 15 Quebec, Legislative Assembly, Sessional Papers, 1922, "Report of the Standing Committee of Agriculture, Immigration and Colonization on the Opportuneness of Creating an Agricultural Credit," testimony of J.H. Fortier, p. 176. 16 AAQ, 7oCF, Grondin to Begin, n.d., 1914. 17 Confederation, Desjardins Papers, H. Mitchell to Lavoie, 30 June 1915. 18 CPIC, Statuts, 1925, 21. Technically, the application went directly to the manager, who in some cases was given authority to decide on the smallest loans, always subject to final approval of the commission de credit. 19 Quebec, Sessional Papers, 1901, No. 49, "Constitution of the Caisse populaire de Levis," 14.

160 Notes to Pages 54-9 20 CPL, commission de credit, 24 February 1926. 21 Ibid., 14 December 1913. Before the pre-1945 period came to a close, the caisses were also providing loans secured by mortgages. Throughout this chapter, however, the loans in question are those secured by promissory notes, unless otherwise indicated. 22 CPIC, general assembly, 1910. 23 Confederation, Desjardins papers, Desjardins to H. Guy, 5 September 1912. 24 NAC, Ministry of Finance Papers, RG 19, v. 3223, f. 13402, memo from Wolff, 31 October 1902. 25 CPL, general assembly of members, 19 December 1901. 26 AAQ, yoCF, Grondin to Begin, n.d., 1914. 27 The information in this chapter pertaining to the loans extended by the CPL between 1913 and 1945 comes from an analysis of all loans granted during selected years from that period. Reliable lists do not exist prior to 1913. Moreover, all comparisons between the sizes of loans at different dates have been facilitated by adjusting the value of loans so that they are expressed in 1925 dollars. There is much information in the Annuaire du Quebec regarding the size of loans granted by the caisses, but this is of little comparative value because of difficulties in adjusting those figures to reflect changes in the buying power of the dollar. 28 These figures all pertain to 1925 dollars, once more to remove the impact of changes in the value of the dollar. 29 Throughout this chapter, data regarding the affairs of all caisses or groups of caisses in the province are derived from the Annuaire du Quebec, the Quebec yearbook, which began publishing statistical data regarding the caisses in igij, or from the various publications of the Quebec government which provided the same service after 1934. 30 CPL, miscellaneous correspondence, letter from Elias Roy to Raoul Desjardins, i December 1926. 31 Ibid., commission de credit, 12 March 1937, letter from Noel Lemieux, member of commission de surveillance. 32 Ibid., commission de credit, 24 February 1926. 33 Bank of Canada, Statistical Summary, Supplement, 1946, 18-19. 34 Bauer, "The Caisse Populaire Movement," 18. 35 Confederation, 10032-1, Inquiry regarding loans by caisses populaires, 1936. 36 Chanoine Philibert Grondin, Catechisme des Caisses populaires Desjardins (Sherbrooke, 1958), 95. 37 Federation des Trois-Rivieres, Desjardins to Donat Brunelle, 12 May 1920. 38 Confederation, 10032-1, Inquiry regarding loans by caisses populaires, 1936. 39 Ibid., 11230-192, Letourneau to All Canadian Conference, 11 September 1943. On the growth of the mortgage loan business, see also Morin, "Les prets des caisses populaires." 40 Confederation, 10032-84, Rosario Tremblay to inspectors' convention, 23 January 1945.

161 Notes to Pages 59-64 41 Ibid., 10034-127, Vaillancourt circular to Quebec City managers, 7 August 42 43 44 45 46 47 48 49

50 51 52 53 54 55 56 57 58 59

60 61

62 63

64

1939CPIC, general assembly, 27 January 1943. Ibid.. 29 January 1945. Confederation, 10032-1, Inquiry regarding loans by caisses populaires, 1936. AAQ, yoCF, Lavoie to Begin, 20 February 1914. Caisse populaire de St-Remi, commission de credit, n April 1927. NAC, RG 19, v. 3223, f. 13402, memo from Wolff, 31 October 1902. La Verite, 21 January 1911. The nineteenth century saw establishment of two savings banks. As a result of federal legislation passed in 1871, these institutions were managed by shareholders, as in a chartered bank, but with very strict rules regarding investment of funds to encourage deposits by workers of the two major cities of Quebec. The City and District Savings Bank was established in Montreal, and the Caisse d'Economie de Notre Dame de Quebec in the capital. NAC, Laurier Papers, correspondence, 138,415-16, letter from directors of Caisse populaire de St Malo de Quebec, 30 March 1908. Confederation, Desjardins papers, Cyrille Tessier to Desjardins, 17 February 1914. Ibid., Desjardins to Cyrille Tessier, 27 March 1914. Ibid., Desjardins to F.X. Cote, 4 December 1916. Ibid., Desjardins to H. Bourassa, 2 January 1914. Ibid., 2 February 1914. Confederation, 10803-452, assets and liabilities, 31 December 1946. CPL, conseil d'administration, 8 January 1902. Ibid. At one point, for instance, the CPIC referred to this practice as making "investments in the form of loans." Apparently, however, it was simply acquiring bonds. CPIC, Statuts, 1925, n. CPL, Liste des prets faits, 1932-3. See, for instance, Caisse populaire de St-Remi, documents de fondation, 4 August 1912. In France there was also evidence of the diversion of funds from needy farmers through acquisition of bonds. See Gueslin, Les engines, 169. Confederation, Desjardins Papers, Desjardins to H. Guy, 14 April 1914. Quebec, Statutes, i George V, c. 43, 1911. By provincial statute the reserve funds had to equal only two times the value of the capital invested in a caisse. Over time, capital made up a small pan of the co-operative's liablities. Accordingly, the requirement to invest 50 per cent of the reserve in bonds played a relatively minor role in the accumulation of securities by the caisses. While the Annuaire du Quebec published data from the 19205 regarding distribution of the annual investments of the caisses in the bond market, data

162 Notes to Pages 64-9

65

66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83

regarding the place of bonds within the portfolios of the caisses became available only in the 19408. Confederation, 10295-154, inspection of GPL, 16 March 1935; 10295-184, inspection of CPL, 17 February 1944. In 1934-5, 90 Per cent °f tne value of the funds invested in bonds went to religious institutions. In 1944 municipalities and school commissions accounted for 32 per cent of the value, and the federal and provincial governments another 18 per cent. Confederation, 10295-153, inspector's report, 16 March 1935. Lachance, "La politique de pret," 298. Caisse populaire de St-Theophile du Lac, conseil d'administration, 18 December 1925. Ibid., 5 June 1938. Ibid., i September 1940, 14 December 1941. Confederation, interview. Ibid., 10259-153, Vaillancourt inquiry, "Convention entre la Caisse populaire de St-Charles de Bellechasse et ...," March 1931. Ibid., 10261-005, Vaillancourt inquiry, Cure to Vaillancourt, i May 1934. The affairs of the caisses centrales are more fully discussed later in this chapter. Revue Desjardins, 31(1965): 185. Confederation, 10007-215, Vaillancourt to Louis-Alexandre Taschereau, 5 December 1935. Federation de Quebec, general assembly, 3 July 1938. Confederation, Desjardins papers, Desjardins to G. Guay, 3 July 1919. Federation de Quebec, general assembly, 10 December 1925. Federation de Montreal, conseil d'administration, 16 March 1932. Confederation, 10008-199, consei' d'administration, 17 November 1939. Quebec, Statutes, 22 George V, 1932, c. 86. During a fourteen-month period in 1934 and 1935 the federation authorized the purchase of bonds worth nearly $1.4 million, all of which went to the types of public bodies specified in the law. Over 80 per cent of these advances were made to religious communities, colleges classiques, municipalities, and hospitals. Confederation, 10008-177, conseil d'administration, 2 July

193584 Revue Desjardins, October 1935, 38, article by Vaillancourt. 85 See, for instance, Confederation, 10009-994, conseil d'administration, ii September 1945; also see Lamarche, Emile Girardin, 88. The schism of 1945 is discussed at length in chapter 4. 86 Federation de Quebec, conseil d'administration, 30 March 1937. 87 Federation de Montreal, general assembly, 19 February 1933. 88 Confederation, Desjardins papers, Desjardins to M. Lamontagne, 6 April 1908. 89 CPL, conseil d'administration, 6 November 1911.

163 Notes to Pages 69-80 90 Ibid., 5 September 1912. 91 Ibid., deposit ledgers. 92 Ibid., miscellaneous correspondence, A. Paquet (manager of Caisse populaire de St-Charles de Bellechasse) to Raoul Desjardins, 31 August 1921. 93 Confederation, 10002-62, Desjardins papers, Desjardins to H. Bourassa (manager of Caisse populaire de St-Joseph de Levis), 3 August 1917. 94 Ibid., 1010-10-07, Desjardins to S.T. Lupien, 16 April 1919. 95 Ibid., Desjardins papers, memorandum from Desjardins, 3 April 1917. 96 Ibid., 10307-213, Desjardins to S.T. Lupien, 20 July 1920. 97 Federation des Trois-Rivieres, general assembly, n December 1923. 98 Confederation, 1010-01-07, Laurent Letourneau to Congres des caisses populaires, 7 October 1925.

99 Action catholique, 22 October 1925. 100 101 102 103 104 105 106 107 108

Federation des Trois-Rivieres, general assembly, 16 December 1925. Federation de Montreal, general assembly, 26 January 1941. CPL, general assembly, 19 December 1901. AAQ, 7oCF, Desjardins to Begin, 24 March 1919. Bauer, "The Caisse Populaire Movement," 70. Ibid., 13. Confederation, 10032-174, conference of inspectors, 16 September 1942. On the movement of bank personnel, see Rudin, "Bankers' Hours." At the start of 1945, the caisses had 46 per cent of their assets tied up in bonds, as opposed to 57 per cent for the banks. In terms of loans to the public, the caisses devoted 34 per cent of their assets, as opposed to 16 per cent for the banks. Bank of Canada, Statistical Summary, Supplement, 1946. C H A P T E R FOUR

1 Fairbairn, "Big Capital, the Big State and Co-operatives," 8, 13. 2 MacPherson, Each for All, 20.

3 Linteau et al., Le Quebec depuis 1930, 278. 4 5 6 1

Behiels, Prelude, 15. Dandurand et Fournier, "Developpement de 1'enseignement superieur," 108. See, for instance, Lamarche, Saga, 235-7, or Filion, Fais ce que peux. This reverence for Desjardins included regular pilgrimages to his grave following meetings of caisse leaders in Levis (Federation de Quebec, annual assembly, 2 July 1944). The cult that surrounded the memory of Desjardins was similarly reflected in comments by one leader: "Le Christ, notre maitre, avait la folie de la croix. M. Desjardins a eu la folie de vouloir sauver les siens"(Confederation, 11230-191, speech by Vaillancourt to allCanadian credit union conference, n September 1943). 8 CPL, conseil d'administration, 19 December 1901. 9 AAQ, 7oCF, I, Desjardins to Begin, i February 1905.

164 Notes to Pages 80-4 10 Ibid., 20 December 1904. 11 Ibid., 13 April 1909. 12 NAC, Laurier Papers, Correspondence, 94,216, Laurier to Mgr Mathieu, i February 1905. 13 Caisse populaire de St-Theophile du Lac, annual assembly, 21 December 1911. 14 Confederation, 1010-10-07, memorandum from Desjardins regarding "le projet de federation des caisses populaires," 3 April 1917. 15 Ibid., committee studying federation project, February 1919. 16 Ibid., circular from Desjardins, 3 July 1920. 17 Ibid., Desjardins papers, Desjardins to Poirier, 22 July 1920. 18 Ibid., 10307-213, Desjardins to S.T. Lupien, 20 July 1920. 19 Ibid., 1010-01-07, memorandum from Desjardins regarding "le projet de federation des caisses populaires," 3 April 1917. 20 On the centralization of co-operatives in the Canadian context, see MacPherson, Each for All. On the situation in the United States, see Moody and Fite, The Credit Union Movement. 21 Confederation, interview. 22 Ibid., 1010-01-07, Desjardins to S.T. Lupien, 16 April 1919. 23 In fact, the only passing reference that I could find to Desjardins's interest in establishment of regional federations, as opposed to a provincial one, came in a 1904 letter to the archbishop of Quebec; AAQ, 7oCF, I, Desjardins to Begin, 20 December 1904. 24 Between 1934 and 1944 another six regional bodies, whose jurisdictions paralleled those of the dioceses of the province, were set up. The creation of new regional federations required the hiving off of territory from existing associations, an action that could lead to tensions. Moreover, the proliferation of regional federations tended to increase the power of the provincial association. No one regional federation found itself with the power to block the intiatives of the province-wide body. Accordingly, there were occasional grumblings against establishment of new regional federations by those opposed to centralization of power. 25 Federation des Trois-Rivieres, general assembly, 5 November 1934. 26 Confederation, 10008-171, Federation de Quebec des Unions Regionales des Caisses populaires, annual meeting, 9 January 1934. While fourteen new caisses were established in 1919, only twenty-nine were founded during the following four years. Moreover, between 1920 and 1923 twelve caisses were liquidated, the same number that had been liquidated in the first nineteen years of the caisses populaires. 27 Federation de Montreal, annual meeting, 5 March 1922. The role of the state is discussed more fully in chapter 6. 28 Federation de Quebec, conseil d'administration, 3 February 1921. 29 Caisse populaire de Maria, conseil d'administration, 23 December 1923, 21 December 1924.

165 Notes to Pages 84-7 30 31 32 33 34 3536 37 38 39 40

41 42 43

44 45

46 47 48 49

50

Federation des Trois-Rivieres, conseil d'administration, 3 April 1921. Quebec, Statutes, 15 George V, 1925, c. 69. Ibid., 20 George V, 1930, c. 92. Confederation, Desjardins papers, Desjardins to Abbe Grondin, 14 March 1910. The Gaspe federation also began as a "bureau." It changed its name in 1925, presumably in line with provincial statutes. Federation de Montreal, annual meeting, 27 June 1924. Ibid., conseil d'administration, 15 August 1934. Federation des Trois-Rivieres, annual meeting, 16 December 1925. L 'Action catbolique, 22 October 1925. Confederation, Desjardins papers, Mme Desjardins to J.-A.-K. Laflamme (president of Quebec regional federation), 23 April 1924. Federation de Quebec, conseil d'administration, 8 May 1924; letter from Mme Desjardins, 23 April 1924. The version of the letter reproduced in the minutes of the regional federation differs from the original: passages were purged and others were added. Confederation, Desjardins papers, Mme Desjardins to J.-A.-K. Laflamme, 23 April 1924. Federation de Quebec, conseil d'administration, 8 May 1924. CPL, conseil d'administration, 30 December 1926. Although the CPL did not formally join the caisse centrale until 1930, relations between the two institutions were cordial in the late 19205. It is interesting to speculate on Raoul Desjardins's motives. Was he in fact more loyal to his father's conception than leaders of the Quebec federation were prepared to admit? As one longtime leader of the caisses noted, Desjardins's notion had been to establish a provincial federation with only "une autonomie residuelle" for the other elements in the system (Confederation, interview). By strengthening the regional federation via the caisse regionale, Raoul would have been working against his father's conception. Confederation, 1010-01-07, Congres des caisses populaires Desjardins, 8 October 1925. Archives de la Federation des caisses populaires Desjardins de la Peninsule et des lies (hereafter Federation de Gaspe), conseil d'administration, 4 April 1926. Confederation, 11210-38, Laurent Letourneau to Abbe J.I. Trudel, 17 March 1926. Ibid., 10007-207, Vaillancourt to A.P.B. Williams (official of the Quebec finance department), 10 September 1932. Quebec, Statutes, 20 George V, 1930, c. 92. Confederation, 10007-6, resolution of Caisse populaire de Waterville, 9 March 1930; see identical resolution, Caisse populaire de Maria, conseil d'administration, y March 1930. Confederation, 10007-7, Adelard Godbout to Abbe J.E. Poisson, 25 April 1931.

i66 Notes to Pages 87-95 jr 52 53 54 55

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76

77 78 79

Quebec, Statutes, 22 George V, 1932, c. 9. Federation des Trois-Rivieres, conseil d'administration, 3 November 1931. Federation de Montreal, annual meeting, 19 February 1933. Lamarche, Cyrille Vaillancourt, back cover. Ibid., 107. Most of Lamarche's biography is marred by the sort of hagiographical approach that plagues many works about leaders of the caisses populaires. At one point, he notes that the first time that he saw Vaillancourt speak, "Je sais qu'un changement d'attitude nait en moi"(i5). CPL, miscellaneous correspondence, Vaillancourt to Patrick Doyle, 14 February 1930. Federation de Quebec, general assembly, 15 June 1933. Federation des Trois-Rivieres, conseil d'administration, 14 March 1933, 12 February 1936. Confederation, 10008-191, meeting of managers of caisses populaires with assets exceeding $100,000, 8 April 1938. Federation des Trois-Rivieres, conseil d'administration, 17 July 1935. Confederation, 10009-000, conseil d'administration, 17 September 1946. Ibid., 10008-186, general assembly, n August 1937. Ibid., 10007-210, Vaillancourt to Athanase David, 2 March 1934. Bauer, "The Caisse Populaire Movement," 23-4. Confederation, 10296-203, J. Valere Plante to Vaillancourt, 24 December

1937Ibid., Vaillancourt to Plante, 28 December 1937. Ibid. Ibid. Ibid., Vaillancourt to A.W. Rogers (secretary of Canadian Bankers' Association), 14 February 1939. Federation de Gaspe, conseil d'administration, 27 July 1938. Confederation, 10008-173, FQUR, conseil d'administration, 9 August 1934. CPL, conseil d'administration, 14 November 1934. Ibid., 14 December 1937. Confederation, 10296-203, J.V. Plante to Vaillancourt, 24 December 1937. Ibid., Vaillancourt to Plante, 28 December 1937. Ibid., 10007-152, "Arrangement between the Federation of Caisses Populaires and the Chartered Banks," 8 February 1939. The agreement noted: "Cheques drawn on local caisses in the Clearing House area and deposited with banks will be presented daily to the Regional caisse, which will make immediate settlement by debit slip against its account with the presenting bank. The banks will take such cheques at par and settlement is made by the Regional Caisse at par." Federation de Montreal, annual assembly, 26 January 1941. Confederation, 10034-84, Vaillancourt to Gustave Bernier, 12 March 1940. Confederation, interview.

167 Notes to Pages 93-102 80 Confederation, 10265-192, speech by Letourneau to annual assembly of Chicoutimi regional federation, 27 August 1944. 81 Federation des Trois-Rivieres, conseil d'administration, 3 May 1938. 82 Confederation, 10040-191, Letourneau to Guerin, 20 April 1936. 83 Ibid., 10032-86, inspectors' convention, 23 January 1945. 84 Revue Desjardins, October 1944, 157. 85 Ibid. 86 "Members' equity" included reserve funds and undistributed profits of the caisse. 87 Revue Desjardins, October 1944, 157. 88 Federation de Montreal, conseil d'administration, 4 February 1945. 89 Ibid., conseil d'administration, 9 September 1945. 90 Confederation, 11235-332, notes by Vaillancourt regarding SACP, 13 September 1944. 91 Lamarche, Saga, 65. 92 Federation de Montreal, annual meeting, 24 October 1943. 93 CPIC, letter from J.A. St-Laurent to Poirier, 17 December 1943; Confederation, Poirier to St-Laurent, 12 February 1945. 94 Federation des Trois-Rivieres, conseil d'administration, 9 May 1944. 95 Federation de Montreal, 9 October 1945. 96 Le Devoir, 24 February 1982. 97 CPIC, minutes of conseil d'administration, 29 October 1945. 98 Confederation, 11230-146, comments by Andre Lamarche, manager of Caisse populaire de St-Elzear de Laval, 17 November 1945. 99 Ibid., 10037-183, Federation de Montreal des caisses Desjardins, "Raisons qui ont amene en 1946 a la formation de la Federation de Montreal des caisses Desjardins." 100 Filion, Fats ce que peux, 98. 101 Confederation, 10037-213, letter from Perreault to P.-E. Charron, 16 March 1946. 102 Ibid., interview. It is extremely awkward to present this information without the name of the person in question, but as was noted earlier anonymity had to be promised so that I could use these interviews. 103 Ibid. 104 Ibid., 10037-183, Federation de Montreal des caisses Desjardins, "Raisons qui ont amene en 1946." 105 Ibid., 10030-239, memo by Vaillancourt and Letourneau, 14 December 1942. 106 Ibid., interview. 107 Lamarche, Saga, 157. 108 CPL, general assembly, 20 December 1944. 109 Confederation, 10030-238, committee studying establishment of caisse provinciale, 24 November 1942. no Rouillard, Histoire de la CSN, 65-6.

168 Notes to Pages 102-10 in 112 113 114 115

Ibid., 118. Ibid., 172. Gazette du Travail, 1955, 1205, as cited in Rouillard, Histoire de la CSN, 171. Behiels, Prelude, 125-7. Fairbairn, "Big Capital, the Big State and Co-operatives," 13. C H A P T E R FIVE

1 There is no easy way to describe those twentieth-century Quebecers who were not Catholics or had a mother tongue other than French. To the traditional leaders of the caisses, these people were outsiders in a profoundly negative sense. 2 Confederation, 10021-84, Vaillancourt to Samuel Audette, n May 1942. 3 Linteau, Durocher, and Robert, Quebec: A History, 270-2. 4 Moniere, Ideologies, 192. 5 For more detail regarding the causes championed by Abbe Groulx, see Trofimenkoff, Action frangaue, 6 Hamelin et Gagnon, Histoire du catholicisme quebecois, I, 321-3; Rudin, The Forgotten Quebecers, 232-4. 7 Confederation, Desjardins papers, Desjardins to Grondin, 14 March 1910. Desjardins's efforts to secure legislative sanction for the caisses are discussed in chapter 6. As for the fairly widespread connection between credit unions and anti-semitism, see Peal, "Antisemitism by Other Means." 8 Desjardins, "La Caisse Populaire," Ecole sociale populaire, XII (1912). 9 Fairbairn, "Social Bases," n. 10 Confederation, Desjardins papers, "Memoire sur 1'organisation de 1'agriculture," c. 1910. n Levesque, Souvenances, II, 211-12. 12 Hamelin et Gagnon, Histoire, I, 414. 13 Ibid., 430-1. 14 Levesque, Souvenances, II, 212-13. 15 Confederation, Desjardins papers, Desjardins to J.B. Howth, n February 1919. 16 Ibid., 10021-84, Vaillancourt to Samuel Audette, n May 1942. 17 Filion, Fais ce que peux, 169. 18 CPIC, Statute 1933. 19 CPIC, annual assembly, 19 December 1916. 20 Hamelin et Gagnon, Histoire, I, 220-9. 21 Trofimenkoff, Action franfaise. 22 CPL, conseil d'administration, 30 June 1922. 23 CPIC, conseil d'administration, 30 September 1925. 24 Hamelin et Gagnon, Histoire, I, 435. 25 Linteau et al., Le Quebec depuis 1930, no.

169 Notes to Pages 110-15 26 Ibid., iio-ii. A similar point of view is expressed in Andre-J. Belanger, L'apolitisme des ideologies quebe'coises (Quebec: Presses de 1'Universite Laval 1974), 35427 Hamelin et Gagnon, Histoire, II, 26. 28 Confederation, 10008-227-9, FQUR, conseil d'administration, 15 September 1942, 10 November 1942. 29 Federation de Montreal, conseil d'administration, 9 January 1944. 30 Confederation, 10008-227, FQUR, conseil d'administration, 15 September 1942. 31 Ibid., 10022-6, Vaillancourt to Ovide Hubert, 16 December 1937. Vaillancourt also expressed this viewpoint in other correspondence. See, for instance, ibid., 10021-84, Vaillancourt to Samuel Audette, 11 May 1942. 32 Ibid., 10021-219, B.C. Westgate to Vaillancourt, 15 May 1940.

33 Rudin, Forgotten Quebecers. 34 Anctil, Le rendezvous manque, chap. 4. 35 Taddeo and Taras, Le debat linguistique au Quebec. 36 Hamelin et Gagnon, Histoire, II, 135-6. 37 Rouillard, Histoire de la CSN, 178. 38 Cited in Behiels, Prelude, 139. On this issue, see also Rouillard, Histoire de la CSN, 181-3. 39 Levesque, Souvenances, II, 178. 40 Ensemble, May 1940. 41 Hamelin et Gagnon, Histoire, II, 93. 42 Ensemble, December 1945. This article, which provoked a lengthy debate regarding the confessional nature of various Quebec institutions, appeared at roughly the same time that the schism was taking place within the caisses 43 Trudeau, The Asbestos Strike, 21. 44 Hamelin et Gagnon, Histoire, II, 94. 45 Ibid., II, 88-96, provides a clear description of a complicated theological debate.

46 L'Action catbolique, 7 March 1946. 47 Ecole sociale populaire, no. 349, 1943. Levesque's position was defended against the Ecole sociale populaire in Pere P.-M. Gaudrault, Neutralite, nonconfessionalite et I'Ecole sociale populaire (Montreal, 1946). 48 Confederation, 10035-22, FQUR, conseil d'administration, 23 April 1942. 49 ANQ, Conseil de la cooperation du Quebec papers, Conseil superieur de la cooperation, general assembly, 30 November 1941. 50 Confederation, 10008-221, FQUR, conseil d'administration, 23 April 1942. 51 Federation de Montreal, conseil d'administration, 29 April 1942.

52 Fihon, Fais ce que peux, 167. 53 54 55 56

Federation de Montreal, conseil d'administration, 29 April 1942. Confederation, 10008-223, FQUR, conseil d'administration, 19 May 1942. Ibid., 10035-29, conseil d'administration, 17 June 1957. Ensemble, March 1945.

170 Notes to Pages 116-21 57 CPIC, letter from Poirier to Vaillancourt, ij July 1943. 58 Confederation, 11233-131, Vaillancourt to Poirier, 6 July 1943. Given his position on the desirability of forming links to English-dominated credit unions, there is some irony in Vaillancourt's encouraging Acadian caisses populaires in New Brunswick to separate from the provincial association that bound them with English-run credit unions. The issue that finally provoked the split pertained to ties with credit unions beyond New Brunswick; the division took place in 1945, only months before the schism in Quebec. Vaillancourt was on the side of New Brunswick's schismatics, encouraging them to secede, since their national survival would be threatened by remaining within the larger federation. See Daigle, "La creation de la Federation." 5-9 Federation de Montreal, conseil d'administration, 29 June 1943. 60 Confederation, 11230-143, Rosario Tremblay to Vaillancourt, 26 June 1943. 61 Ibid., 11230-191, Vaillancourt memo, n.d., September 1943. 62 Federation de Montreal, annual assembly, 24 October 1943. 63 Confederation, 11233-132, Vaillancourt to conseil d'administration, FQUR, 28 October 1943. 64 Ibid., 11233-141, Poirier to RevJ.A. St-Laurent, 10 January 1944. 65 L 'Action catholique, j March 1946. 66 Trofimenkoff, Action frangaise, 115. 67 The penetration of the caisses into the various pans of the province is discussed in chapter 2. 68 Labonte, Les maillans de la chaine, 62. 69 Establishing a precise date when article seven disappeared from the internal regulations of the caisses is no easy task. Some caisses probably never adopted the clause. Most did, however, and to the extent that they deferred to the provincial federation it was only in 1965 that they were advised that the clause should be removed from the books. Some caisses may have retained this provision beyond 1965, however, to assert their continued autonomy. CHAPTER SIX 1 2 3 4 5

La Write', 24 December 1910. Hamelin et Gagnon, Histoire du catbolicisme quebecois I, chap. 3. La Verite, 13 November 1909. Ibid., 24 September 1910. Confederation, Desjardins papers, "Memoire sur ['organisation de 1'agriculture," n.d. 6 Revue Desjardins, October 1942. 7 Gueslin, Les engines, 150. 8 Earle, The Italian Co-operative Movement, 16-17. Relations between co-operatives and the state are also dealt with in a special issue of Cooperatives et developpement 20, no. i (1988-9).

171 Notes to Pages 121-5 9 Federation de Montreal, annual assembly, 23 January 1938. 10 Confederation, 1010-10-107, circular from Desjardins, 3 July 1920. 11 Linteau, Durocher, and Robert, Quebec-. A History, 438; see also Vigod, Quebec before Dupkssis, 83-7. 12 Heintzman, "The Political Culture of Quebec," 3-59. 13 Brunet, "Trois dominantes de la pensee canadienne-francaise," in Brunet, La presence anglaise, 113-66. 14 Most notably Gow, Histoire de I'administration publique quebecoise, xvi. 15 Heintzman, "The Political Culture of Quebec," 18. 16 Ibid., 51. 17 Establishment of the Office du credit agricole directly involved the caisses and is discussed later in this chapter. Pokier served as president of the Office from 1936 to 1940 and again from 1945 to his death in 1960. 18 In fact, the first meeting of the board of directors of the Quebec regional federation after Vaillancourt's election as its president was held in his "private office in the Quebec parliament"; Federation de Quebec, conseil d'administration, 9 December 1926. 19 Confederation, 10021-229, Grondin to Heroux, 15 February 1944. The negative point of view was Heroux's and was under attack by Grondin in the letter. 20 Revue Desjardins, April 1943, 63. 21 As this manuscript was being prepared in the late fall of 1988, a bill before the National Assembly regarding the caisses prompted considerable debate both within the assembly and among groups of interested Quebecers. 22 NAG, RG 19, v. 3223, f. 13402, Desjardins to Fielding, 5 July 1904. 23 Much of this story regarding Desjardins's quest for legislative sanction for the caisses is contained in Roby, Alpbonse Desjardins, 68-86. This account is largely descriptive and is based almost exclusively on caisses populaires archives, ignoring the important documents available at the NAC. 24 Confederation, Desjardins papers, Desjardins to David Mills, 9 October 1900. 25 Ibid., Monk to Desjardins, 22 January 1902. 26 Desjardins's organization, Action populaire economique, was used in this regard as were the caisses that were established prior to the war. AAQ, yoCF, I, Desjardins to Archbishop Begin, 20 December 1904; NAC, Laurier correspondence, 94,216, Laurier to Mgr Mathieu, i February 1905. 27 Rudin, Banking en franfais, 60-2; NAC, RG 19, v. 3223, f. 13402, memo from Courtney, n.d., 1904. 28 NAC, Laurier Papers, petition to Laurier, 9 January 1905, 94,114; ibid., MG 27 II F2, Garneau Papers, Laurier to Nemese Garneau, 28 January 1905. 29 AAQ, 7oCF, I, Desjardins to Archbishop Begin, i February 1905. 30 Confederation, Desjardins papers, Begin to Desjardins, 7 February 1905. 31 NAC, Laurier Papers, 122,485-9, W. Moyer to Laurier, 15 March 1907. 32 H.B. Neatby, Laurier and a Liberal Quebec (Toronto: McClelland and

172 Notes to Pages 125-32 Stewart 1973). NAC, Laurier Papers, 13,728, Laurier to J.A. Beaudry, 9 March 1908. Ibid., 137,495-6, M. Mayer to Laurier, 13 March 1908. Canada, Parliament, Senate, Journals, 1907-08, 469-70. NAC, Laurier Papers. Ibid., 180,050, E.M. Trowern to Laurier, 14 January 1911. Confederation, Desjardins papers, Desjardins to Borden, 21 March 1913. CP1C, annual assembly, 23 January 1930. NAC, RG 33/25, v. 16, f. 76, submission of FQUR to McDougall Royal Commission, 13 January 1945. 41 Canada, Statutes, 20-21 George V, 1930, c. 24. 42 Confederation, Desjardins papers, Begin to Desjardins, 7 February 1905. 43 Ibid., Wolff to Desjardins, 5 July 1905. 44 Linteau, Durocher, and Robert, Quebec: A History, 402; Rudin, Banking en franfais, 16. 45 Quebec, Statutes, 6 Edward VII, 1906, c. 33. 46 NAC, RG 19, v. 3223, f. 13402, Boville to Monk, n March 1907. 47 Rudin, Banking en franfais, 84-91. 48 La Verite', 4 February 1911. 49 Action sociale, 20 January 1915. 50 Le Soleil, 21 January 1915. 51 Quebec, Statutes, 5 George V, 1915, c. 68. 52 Le Soleil, 21 January 1915. 53 Rudin, Banking en franfais, 61. 54 Ibid., chap. 6. 55 Quebec, Statutes, 15 George v, 1925, c. 69. 56 Quebec, Legislative Assembly, Report of the Standing Committee of Agriculture, Immigration and Colonization, 1922, 94. 57 Confederation, 10021-228, circular to all caisses, n.d., c. 1922. 58 CPIC, annual assembly, 12 January 1925. 59 Federation de Montreal, annual assembly, 10 February 1929. 60 CPL, conseil d'administration, 7 March 1930; Caisse populaire de Maria, conseil d'administration, 5 March 1930; Confederation, 10007-6, Caisse populaire de Waterville, resolution, 9 March 1930. 61 Quebec, Statutes, 20 George V, 1930, c. 92. 62 Federation de Montreal, annual assembly, i February 1931. 63 Confederation, 10007-207, C. Vaillancourt to A.P.B. Williams (official of Quebec's finance ministry), 10 September 1932. 64 Ibid., 10007-7, Adelard Godbout to Abbe J.E. Poisson, 25 April 1931. 65 Federation de Montreal, conseil d'administration, 3 December 1931. 66 Confederation, 10008-177, conseil d'administration, 2 July 1935. 67 Ibid., 10007-212, David to Vaillancourt, i April 1935. 68 Ibid., Vaillancourt to David, 10 April 1935.

33 34 35 36 37 38 39 40

173 Notes to Pages 133-40 69 70 71 72 73 74 75 76 77 78 79 80 81

82 83

84 85 86 87 88 89 90 91 92 93 94 95 96 97

Ibid., 10008-183, FQUR, conseil d'administration, 25 August 1936. Ibid., interviews. Le Devoir, 24 February 1982. Filion, Fats ce que peux, 176. Linteau et al., Le Quebec depuh 1930, 337. Mignier, "Le monde agricole," 53. Ibid., 310. ANQ, Ministere de 1'Agriculture, vol. 26, circular from deputy minister, ii November 1922. Quebec, Legislative Assembly, Report of the Standing Committee of Agriculture, Immigration and Colonization, 1922, 103. Ibid., 156. Confederation, 10039-209, Guenn to minister of agriculture, 24 November 1931. Ibid., 10008-177, FQUR, conseil d'administration, 2 July 1935, letter to provincial secretary. Canada, Parliament, House of Commons, Standing Committee on Banking and Commerce, Minutes of proceedings and evidence respecting small loan companies, testimony of Cyrille Vaillancourt, 10 March 1938, 141. Confederation, 10008-187, FQUR, annual assembly, n August 1937. Ibid., 10008-190, meeting of managers of caisses populaires whose assets exceed $100,000, 8 April 1938; CPIC, conseil d'administration, 2 May 1938; Montreal federation, conseil d'administration, 12 April 1938. Federation des Trois-Rivieres, annual assembly, 28 October 1945, speech by Antonio Elie. Confederation, 10267-143, proceedings of assembly regarding credit maritime, 14 January 1941. Ibid., 10039-230, report on credit du colon, 30 April 1946. Le Devoir, 5 February 1944. Confederation, 10021-211, Grondin to Vaillancourt, 28 March 1936. Ibid., 11257-11, notes by Paul Breval (pseudonym of Chanoine Grondin), c. 1947. Ibid., 10021-229, Grondin to Omer Heroux, 15 February 1944. Ibid., 10039-218, speech by Vaillancourt to Legislative Council, 29 February 1944. Ibid. The original French is employed in the text because the terms rouge and bleu refer to the Liberal and Union nationale panics of the 19405. Le Devoir, i March 1944. Ibid., 3 March 1944. CPIC, conseil d'administration, 21 January 1938; ibid., annual assembly, 23 January 1939. Revue Desjardins, June 1942, 83. Le Devoir, 21 September 1943.

174 Notes to Pages 140-9 98 99 too 101

Behiels, Prelude, chap. 6. Moniere, Ideologies, 218. Heintzman,"The Political Culture of Quebec," 31. Jacques Rouillard, "Major Changes in the Confederation des travailleurs catholiques du Canada," in Behiels, ed., Quebec since 1945, 113. See also Guy Belanger, "Le syndicalisme catholique et le corporatisme." CHAPTER SEVEN

1 2 3 4 5 6 7 8 9 10 11

Filion, Fais ce que peux, 168. Lamarche, Saga, 236. Federation de Montreal, annual assembly, 25 January 1942. Gueslin, Les origines, 353. Ibid., 331, 336. On religion in the Durand movement, see also Corvaisier, "Naissance et developpement." Corvaisier, "Naissance et developpement," 256. Gueslin, Histoire des credits agricoles, 1, 244. CPIC, annual assembly, 12 January 1925; see also ibid., 10 January 1928. Behiels, Prelude, 46. Ibid., 120. Ibid., 273, 85. APPENDIX

1 CPL, miscellaneous documents, 14 April 1933. 2 Hertzog, "A Stake in the System," 62. For an interesting study based on use of these rolls, see Hanna and Olson, "Metiers, loyers, et bouts de rue."

Bibliography

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iyy Bibliography - Legislative Assembly. Sessional Papers, 1901, no. 49, "Constitution of Caisse populaire de Levis." - Legislative Assembly. Sessional Papers, 1922, "Report of the Standing Committee of Agriculture, Immigration and Colonization on the Opportuneness of Creating an Agricultural Credit." United States. Congress. Senate. Report of the Commission to Investigate and Study Co-operative Land Mortgage Banks. S. Doc. 214, 6jrd Cong., ist Sess., 1913. Newspapers and Journals Le Devoir, 1940-5 Ecole sociale populaire, 1911-45 Ensemble, 1940-5 Revue Desjardins, 1932-45 La Virile, 1906-13 Other Printed Materials L'Annuaire de Quebec et Levis. Quebec: Boulanger et Marcotte 1905-16. Canada ecdesiastique 1900-45. Cate'chisme des Caisses populaires Desjardins. Sherbrooke: Federation de Quebec des Caisses populaires Desjardins 1958. L'Indicateur de Quebec et Le'vis. Quebec: Boulanger et Marcotte 1900-4. Lovell's Montreal Directory. Montreal: John Lovell and Son 1909-45. Marcotte Adresses de Quebec et Levis. Quebec: Arthur Marcotte 1924-45. Reflexions d'Alpbtmse Desjardins. Levis: Confederation des caisses populaires et d'economie Desjardins du Quebec 1986. SECONDARY SOURCES Books

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Boyle, George. The Poor Man's Prayer. New York: Harper and Brothers 1951. Brunet, Michel. La presence anglaise et les Canadiens. Montreal: Beauchemin 1958. Les caisses populaires Desjardins: solidaires depuis 60 am. Montreal: Federation des

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179 Bibliography - Les caisses populaires: Alpbonse Desjardins, 1900-1920. Levis: Confederation des caisses populaires et d'economic Desjardins du Quebec 1975. - Les quebecois et les investissements americains. Quebec: Les Presses de 1'Universite Laval 1976. Rouillard, Jacques. Histoire de la CSN. Montreal: Boreal 1981. Rudin, Ronald. Banking en franfais. Toronto: University of Toronto Press 1985. - The Forgotten Quebecm. Quebec: Institut quebecois de recherche sur la culture, 1985. Seguin, Normand, ed. Agriculture et colonisation au Quebec. Montreal: Boreal 1980. - La conquete du sol. Montreal: Boreal 1977. Smereka, Au-dela des divergences: Histoire de la Caisse populaire de Paquetteville. Sherbrooke: Editions de 1'Universite de Sherbrooke 1985. Taddeo, Donat, and Raymond Taras. Le debat linguistique au Quebec: la communaute italienne et la langue d'enseignement. Montreal: Les Presses de 1'Universite de Montreal 1987. Tremblay, Rosario. Les caisses populaires Desjardins. Quebec: Conseil superieur de la cooperation 1944. Trofimenkoff, Susan Mann. Action francaise. Toronto: University of Toronto Press 1975. T'rudeau, Pierre Elliott, ed. The Asbestos Strike. Toronto: James Lewis and Samuel 1974. Tucker, Donald. The Evolution of People's Banks. New York 1922. Vachon, Andre. Histoire du notarial canadien. Quebec: Presses de 1'Universite Laval 1962. Vachon, Stanislas. Alpbonse Desjardins: fondateur des caisses populaires. Un modele pour la jeunesse. Charlesbourg, 1962. Vaillancourt, Cyrille, and Albert Faucher. Alphonse Desjardins: pionnier de la cooperation d'epargne et de credit en Amerique. Levis. Editions Le Quotidien 1950. Vigod, Bernard. Quebec before Duplessis. Montreal: McGill-Queen's University Press 1986. Wolff, Henry W. People's Banks: A Record of Social and Economic Success. London: P.S. King and Son 1919. Ankles Beaulieu, Gilles. "La Caisse populaire de I,evis: un projet aventurier?" Revue Desjardins 41 (1975): 41-7. Belanger, Guy. "Le role de Dorimene Desjardins dans la fondation des caisses populaires." Revue Desjardins 52 (1986): 25-6. Boutin-Gregoire, Denise. "Le role des femmes au sein du Mouvement des Caisses populaires Desjardins." Revue Desjardins 41 (1975): 41-3. Crewson, Daryll, and Ralph Matthews. "Class Interests in the Emergence of

180 Bibliography Fruit-Growing Cooperation in Lincoln County, Ontario, 1880-1914." Canadian Papers in Rural History 5 (1986): 23-49. Daigle, Jean. "La creation de la Federation des caisses populates acadiennes: un exemple de nationalisme economique," Egalite, 1987, 15-39. Dandurand, Pierre, and Marcel Fournier. "Developpement de 1'enseignement superieur, classes sociales et luttes nationales au Quebec." Sodologie et societe 12 (1980): 101-31. Desforges, Jean-Guy. "Valeurs cooperatives et defis dans les caisses d'epargne et de credit au Quebec." Cooperatives et developpement 18 (1986-7): 61-78. Filion, Gerard. "Le fin du schisme de 1945: le Mouvement Desjardins refait son unite." Le Devoir, 24 February 1982. Hanna, David, and Sherry Olson. "Metiers, loyers, et bouts de rue: 1'armature de la societe montrealaise, 1881-1901." Cahiers de Geographic du Quebec 27 (1983): 2 55-75Heintzman, Ralph. "The Political Culture of Quebec, 1840-1960." Canadian Journal of Political Science 41 (1983): 3-59. Hubscher, Ronald. "La petite exploitation en France: reproduction et competitivite." Annales E.S.C. 40 (1985): 3-34. Labrecque, Jean."Le controle de notre epargne: 40 ans de poussee des caisses populaires." Revue Desjardins 43 (1977): 12-17. Lachance, Jean-Paul. "La politique de pret des caisses populaires." Actualite economique 22 (1946): 278-300. Lariviere, J.A. "L'epargne et les Canadiens-franc.ais." Etudes economiques 2 (1932): 7-69. MacPherson, Ian. "Patterns in the Maritime Co-operative Movement." Acadiensis

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181 Bibliography Servolin, Claude. "L'absorption de 1'agriculture dans le mode de production capitaliste." In Yves Tavernier, ed. L'univers politique des paysans dans la France contemporaine. Paris: 1982. 41-77. Trepanier, Pierre. "La societe canadienne d'economie sociale de Montreal, 1888-1911: sa fondation, ses buts et ses activites." Canadian Historical Review 62 (1986): 343-367. Unpublished Material Bauer, Milton. "The Caisse Populaire Movement in Quebec, 1932-50." PHD dissertation, University of Chicago, 1967. Belanger, Guy. "Le syndicalisme catholique et le corporatisme au Quebec, 1931-50." MA thesis, Universite de Montreal, 1983. Corvaisier, Francis. "Naissance et developpement de I'Union des Caisses Rurales et Ouvriers Franchises." Diplome, Ecole pratique des hautes etudes, 1975. Denis, Dominique. "Le credit agricole mutuel: un outil entre les mains des agriculteurs et a la disposition de 1'Etat." Dissertation for Doctorat de science administrative, Universite de Grenoble, 1971. Fairbairn, Brett. "Big Capital, the Big State and Co-operatives: Historical Perspectives." Unpublished manuscript. - "Social Bases of Co-operation: Historical Examples and Contemporary Questions." Unpublished manuscript. Hertzog, Stephen. "A Stake in the System: Domestic Property Ownership and Social Class in Montreal, 1847-1881." MA thesis, McGill University, 1984. Jacques, Francois. "Le clerge quebecois et son appui aux caisses populaires de 1900 a 1920." MA thesis, Universite Laval, 1975. Mignier, Robert-Maurice. "Le monde agricole quebecois et les premieres annees de 1'UCC." PHD dissertation, Universite de Montreal, 1975. Routhier, Gilles. "La doctrine sociale et le mouvement catholique: L'Ecole sociale populaire (1930-36)." MA thesis, Universite Laval, 1980. Sacouman, RJ. "The Social Origins of Antigonish Cooperative Associations in Eastern Nova Scotia." PHD dissertation, University of Toronto, 1976. Tremblay, Benoit. "Analyse socio-economique de la formation des organisations co-operatives: le cas du Quebec, 1850-1914." PHD dissertation, Ecole des hautes etudes en sciences sociales, 1982.

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Index

Small capital letters indicate the five local institutions examined in this study: Caisse populaire de 1'ImmaculeeConception, de Levis, de Maria, de St-Remi, and de St-Theophile du Lac. Action frangaise, 109, 144 Action population economique, 16, 80 Action sociale catholique, 17 anti-semitism, 5, 84, 106 Bank of Montreal, 12, n8 Banque Canadienne Nationale, 79, 93 Banque de St-Hyacinthe, 30, 129 Banque de St-Jean, 22, 30, 129 Banque d'Hochelaga, 94, 130 Banque du Peuple, n, 22, 30, 128 Banque Jacques-Cartier, 30 Banque Nationale, 30, 52, 61-3, 93, 130 Banque Provinciale, 26, 66 Banque Ville Marie, 11, 30, 124, 128, 130 Begin, Louis-Nazaire, Cardinal, 18, 80-1, 124, 128 Benoist, Emite, 138-9 boni, n, 40-2 Borden, Robert, 126 Bruchesi, Mgr Paul, 18 Bureau central d'inspection et de surveillance des

caisses populaires de Montreal, 84 Bureau of Public Charities, 121

140; secession from Union regionale de Montreal, 98; use of funds, 55-6, 58-9, 136 CAISSE POPULAIRE DE MARIA, xv, 19; directors, 46; Caisse centrale, 63, 69-70, establishment, 20-1; 83, 93 Caisse d'Economie de Notre management, 47; memDame de Quebec, 62, 69 bership, 38, 149-50; and regional federation, 84; Caisse de dotation, n Caisse populaire de Belleuse of funds, 55-6, 60 chasse, 66 Caisse populaire de St-Andre, 136 Caisse populaire de I'AngeGardien, 29 Caisse populaire de CAISSE POPULAIRE DE LEVIS St-Edouard de Gentilly, (GPL), xv, 28; and caisse 57 centrale, 85; as caisse Caisse populaire de mere, 32; directors, 45-6, St-Felicien, 57 49; establishment, 15; Caisse populaire de management, 47, 69, 92; St-Isidore, 67 membership, 35-6, 43-4, Caisse populaire de St-Jean Baptiste, 129 148-50; and taxe d'entree, 42; use of funds, 48, CAISSE POPULAIRE DE ST-REMI, xvi; directors, 55-6o, 64-5 CAISSE POPULAIRE DE 46; establishment, 21-2; L'lMMACULEE-CONCEPTION membership, 38, 149-50 (CPIC), xv, 34; directors, Caisse populaire de 46; establishment, 22-5; St-Sebastien, 66 CAISSE POPULAIRE DE map of area, 24; memST-THEOPHILE DU LAC, bership, 36-8, 108-9, 148-9; and role of state, xv-xvi, 69; directors, 46;

184 Index establishment, 21; management, 45; membership, 38, 149-50; use of funds, 66 Caisse populaire de Ste-Cecile, 81, 98 Caisse provinciale, 91, 101 Caisse scolaire, n caisses populaires (see also names of individual caisses populaires): centralization, 12, 51, 53-4, 63, 67, 73, 78, 84, 99; chequing accounts, 91-2; choice of five caisses as focus of this study, xvxvi; closures, 28-30; and contact with outsiders, n, 106, 109, 115; and credit agricole, 134-7; anc' credit aux colons, 137-8; and credit maritime, 137-8; deposits with banks, 61-3; difficulties in Montreal, 34, 36, 118; and Englishrun banks, 62; expansion, 30, 32, 34, 49; interest rates, 41-2; legislation, 16, 124-8; location of, 33-4; management (see also boni; ristourne; taxe d'entree), 13, 31, 40; map, 20; membership, n, 28, 39, 104, 107-8, 143, 147-50; organization (see also commission de credit; commission de surveillance; conseil d'administration), n; and poor, 59-60; provincial grant, 132-3; to re-create the nineteenth century, 4, 7, 10; state inspection, 83, 86, 128-32; use of funds, 12-13, 53-8, 63-8, 71-3, I3J-7 Canadian Bank of Commerce, 129 Canadian Bankers' Association, 92, 129 Canadian Labour Congress, 112 Caron, Joseph-Edouard, 134-5

Desjardins, Dorimene, n, 85 Carrier et Laine, 14 Catholic church: and caisses Desjardins, Raoul, 43-4, 85 Doyle, Patrick, 49 populaires, 17-19, 65; and Duplessis, Maurice, 132-3 social services, 7 Chambre de Commerce du Durand, Louis, 8, 144-5 District de Montreal, 126 Ecole sociale populaire, Chapais, Thomas, 139 Charpentier, Alfred, 109 17-8, 109, 113, 117-18 chartered banks (see also Federation de Montreal des names of individual caisses Desjardins, 98 banks), 6, 13; and caisses Federation de Quebec populaires, 32-4, 51, 53, des Unions regionales 91-2; and centralization of de Caisses populaires funds, 12; and credit, 57 Desjardins: and bond purComite central de propachases, 67; and centralgande des caisses populaires Desjardins, 86-7 ization, 90, 95, 100; commission de credit, 13, 41, establishment, 86-8; opposition from 46-7, 49 Montreal, 101; structure, commission de surveillance, 88 13, 128 Confederation des travailFermiers-Unis, 8, 134 leurs catholiques du Fielding, W.S., 124 Filion, Gerard, 98, 132, 142; Canada, 8, 102-3, '°6> contact with outsiders, 109, HI-I2, 141 119; as representative of conseil d'administration, 13, new middle class, 99-100 47. 49 Conseil superieur de la cooperation, 113-15 Gagne, Jacob, 20 Corporation des Prets de Godbout, Adelard, 95, 133 Quebec, 94 Gouin, Lomer, 3, 128-9 corporatism, 109, 141 Grondin, Chanoine Cyr, J.A., 49 Philibert, 5, 18, 21, 27, 54, 61, 120, 130, 138 Groulx, Abbe Lionel, David, Athanase, 132 Desjardins, Alphonse, 4; 105-6, 109, 118, 144 and Banque Nationale, 33, Groupe Pie X, 22-3, 108 52, 62; and centralization, Guerin, Wilfrid, 83-4, 89, 63, 68-9, 72, 77, 80-2, 144; and centralization, 129; and concentration of 97-8; and contact with economic power, 5-6; outsiders, 108-10, 114-15, and contact with out118-19; and role of tne siders, 106-8; and ecostate, 122, 131, 135-7, J4°> nomic nationalism, 12, 53, M-5 62; and establishment of caisses populaires, 9-11, Heroux, Omer, 19 17-19, 123; and legislation Home Bank, 130 governing caisses popuLaurendeau, Andre, 100 laires, 124-8; and role of Laurier, Sir Wilfrid, 81, the state, 120-1, 129-30; 124-6, 128 and taxe d'entree, 42; use of caisse populaire funds, Lavoie, Napoleon, 32, 52, 54, 60-1, 68 54, 64-7; and volunteer directors, 45 Lctourneau, Laurent, 93-5;

185 Index and centralization, 97-8, ioi; and contact with outsiders, 119; as representative of new middle class, 99

Levesque, Pere GeorgesHenri, 107, 112-13, 146 Levis, 14-15, 36 Ligue du Sacre Coeur, 17, 19, 22, 108 Luzatti, Luigi, 8 maps, 20, 24 Marchand, Jean, 102-3, 112, 141 Mercier, Honore, 10 middle class, see new middle class Monk, F.D., 124-6 monopoly capitalism, 77-8, 105 Montreal City and District Savings Bank, 114 new middle class: and centralization, 79, 97, 99, 146; and conflict between Montreal and provincial federations, 133-4; anc' contact with outsiders, 104, no, 112, 119, 146; and leadership of Catholic trade unions, 103; and provincial federation, 89; and role of the state, 122, 140-1, 146; view of society, 145-6 Office du credit agricole, 136-7 Pelletier, Gerard, 146 People's Bank of Halifax, 14 Perreault, Jacques, 100 petite bourgeoisie: and centralization, 97, 99; conflict between Montreal and provincial federations, 133-4; contact with outsiders, 104, 108-10, 112-13, 117, 119; and establishment of caisses populaires, 3, 15-16, 26-7, 78, 142-3; and establishment of regional

federations, 83; and management of caisses populaires, 44-5, 50, 73, 82, 143; and role in society, 120; and role of the state, 121-3, I39~4I; yiew °f society, 4, 7-8, 143-5 Picard, Gerard, 102-3, 112, 141 Poirier, Eugene, 81, 84, 144; and centralization, 97-8; and contact with outsiders, 114-19; dealings with state, 122, 131-4, 136-7, 139-40 Post Office Savings Banks, 124 Programme de restauration sociale, 109-10 Public Charities Act, 121 Quebec Bank, 62-3 Quinn, Michael, 9 Raiffeisen, Friedrich Wilhelm, 8 Rayneri, Charles, 8 regional federations (see also names of individual federations): and caisses centrales, 70; and inspection of caisses populaires, 130; management, 86; resistance to their establishment, 84; structure, 83 Retail Merchants' Association, 124, 126 Rioux, Albert, 109 ristourne, 40-2 Roy, Elias, 43 Royal Bank, 12 Schultze-Delitzsch, Hermann, 8 Smith, Theodule, 20 Societe d'assurance des caisses populaires, 94-5, IOI

Taschereau, LouisAlexandre, 87, 131 taxe d'entree, 40, 42-4, 50 Tremblay, Rosario, 44 Trudeau, Pierre Elliott, 146

Union catholique des cultivateurs, 8, 109 Union regionale de Gaspe, 83, 85 Union regionale de Montreal: and contact with outsiders, 97, 114-16; establishment, 83, 85; and inspection, 131; opposition to provincial federation, 68, 95-8, ioi, 116, 133; and role of the state, 140 Union regionale de Quebec: and bond purchases, 68; caisse centrale, 86, conflict with provincial federation, 90; establishment, 83, 85; offices transferred to Levis, ioi; use of funds, 136 Union regionale de Sherbrooke, 115 Union regionale des TroisRivieres: bond purchases, 70; conflict with provincial federation, 90; and contact with outsiders, 115; establishment, 82, 85 Vaillancourt, Cyrille, 31, 33, 59, 66, 145-6; and centralization, 90, 93, 96-8, ioi; and contact with outsiders, 97, 104, 107, no, 113, 115-16, 118-19; early career, 89-90; and establishment of Societe d'assurance des caisses populaires, 94-5; negotiations with chartered banks, 91-2; as representative of new middle class, 99; and role of the state, 122-3, i32-4. J37-41 Walker, Sir Edmund, 129 Wartime Prices and Trade Board, 140 Weyburn Security Bank, 26 Wolff, Henry, 8, 61, 128 Wollemborg, Leone, 8