DECLINE AND DISINTEGRATION
OF THE CCUB
Summary: There is no doubt that Peter Verigin's death marked the beginning of the end for the Christian Community of Universal Brotherhood. Trying to expand when they should have been conserving, the management took out loans and put the corporation into jeopardy by allowing the entire holdings as collateral. A combination of reduced markets due to the depression, shrinking membership and losses through unsuccessful investments as well as continuing arson saw the community sink into the vortex of economic collapse.
In some ways, the CCUB was a victim of its own success. Despite the sociological and economic strains of the thirties as the depression approached, the C.C.U.B. continued its various enterprises and was bent on expansion. They were able to do this because their community and economic system was largely insularily self contained, and depended little on outside commercial inter-action providing that their produce remained in demand.
However, the accumulated debt with interest was a mistake and in 1938, the outside brutal commercial world intervened when the Sun Life Assurance Company, Great West Mortgage, Canadian Imperial Bank and National Trust moved to foreclose on the enterprise over their inability to pay interest on the expansion loan on time. Unfortunately, the entire holdings were guarantors for the loan. The organization was unable to repay the total interest amount, although the majority of the debt was retired and general holdings had actually increased throughout this period.
Despite mitigating factors, bankruptcy procedures were enacted in l937 followed by foreclosure proceedings in 1938.
Community accountant William A. Soukoroff gave additional reasons for the CCUB collapse: heavy mortgage rates coupled with declining revenues, declining membership, and enormous losses due to the activities of radical Sons of Freedom as well as unknown predators who committed arson on CCUB operations and further undermined communal property.
Facing foreclosure, the community appealed to the Farm Credit Corporation of Canada for assistance. This entity was created to assist farmers to stay on the land in the depression hard times so they would have a place to live and be able to feed themselves and others; food was a priority.
In this case, the corporation inexplicably denied any assistance to the jeopardized C.C.U.B. In the case of the soon to be dispossessed 'toil and peaceful life' workers, the wand of compassion was not extended by the grim, heartless, bureaucrats and the government of Canada had the last cynical victory over the bothersome 'Douks' by refusing any assistance and allowing the foreclosure to proceed, dispossessing the roughly 10,000 tireless toilers of all ownership in 1938, the rationale was that they were a corporation and not farmers.
Brought to its knees through foreclosure action, this one time exceptionally successful communal enterprise was the largest in North America at the time of collapse. After the devastating foreclosure action by Sun Life Assurance, the Canadian Imperial Bank and Crown Life, the B. C. government, ostensibly to allow villagers to remain at home [imagine several thousand souls on the street at the height of the depression!] negotiated a settlement by paying $280,000 on the debt, and thus became owners of the entire C. C. U. B. holdings. They allowed the Doukhobors to stay in their homes, but now they were tenants, and had to pay rent.
Details: In the interim awaiting the arrival of Peter Petrovich Verigin to assume leadership, the executive board of the CCUB borrowed $350,000 in order to consolidate the Company's accounts from the Bank of Commerce; secured by bonds held by the National Trust Company. After Peter Petrovich Verigin assumed office as President, it went further into debt, and finally into complete bankruptcy in 1937.
Much has been spoken and written about Peter Petrovich Verigin's unrealistic mismanagement. According to Harry Hawthorn, this could not have been the sole or even major cause of the CCUB's demise. According to his anthropological eye: ‘ . . . it rested in the conflicts inherent among the Doukhobors themselves and in their inability to maintain their distinct culture and economic organization intact in the Canadian environment. Under erratic and inefficient leadership, the CCUB became torn increasingly by factionalism. Even in the general prosperity of the later 1920's its membership was declining steadily in numbers and morale, and its source of income was shrinking. The severe depression and unemployment of the 1930's merely accelerated the process.
Growing numbers of Independents, whose main careers lay outside the CCUB, found the restrictions of community life irksome. They ceased to contribute to communal undertakings, moved out of the villages and established separate residences on their own farms or in nearby cities and towns.
Included among them were some of the ablest members of the Doukhobor community - one skilled administrator, for instance, who had managed the Community's lumbering operations left to build up a prosperous lumber business of his own. In a sense the very scope to which the CCUB had grown by the 1920's was its own undoing. Ambitious undertakings such as lumber and saw milling plants, the jam factory at Brilliant and the cooperative stores at Brilliant and Grand Forks, required special skill and training that were not fostered in the traditional Doukhobor culture’.
Much has been spoken and written about Peter Petrovich Verigin's unrealistic mismanagement. According to Harry Hawthorn, this could not have been the sole or even major cause of the CCUB's demise. According to his anthropological eye: ‘ . . . it rested in the conflicts inherent among the Doukhobors themselves and in their inability to maintain their distinct culture and economic organization intact in the Canadian environment. Under erratic and inefficient leadership, the CCUB became torn increasingly by factionalism. Even in the general prosperity of the later 1920's its membership was declining steadily in numbers and morale, and its source of income was shrinking. The severe depression and unemployment of the 1930's merely accelerated the process.
Growing numbers of Independents, whose main careers lay outside the CCUB, found the restrictions of community life irksome. They ceased to contribute to communal undertakings, moved out of the villages and established separate residences on their own farms or in nearby cities and towns.
Included among them were some of the ablest members of the Doukhobor community - one skilled administrator, for instance, who had managed the Community's lumbering operations left to build up a prosperous lumber business of his own. In a sense the very scope to which the CCUB had grown by the 1920's was its own undoing. Ambitious undertakings such as lumber and saw milling plants, the jam factory at Brilliant and the cooperative stores at Brilliant and Grand Forks, required special skill and training that were not fostered in the traditional Doukhobor culture’.
ECONOMIC HISTORY: According to Hawthorn: The CCUB thus developed a special elite of skilled business executives and administrators who did not have the status within the Doukhobor community that such qualifications usually command.
At the other extreme, the Sons of Freedom were winning converts and growing in numbers and influence. They became increasingly hostile towards the CCUB leadership during the 1920's and 1930's, and helped to undermine the morale of the whole organization. Their growth was fostered by discouragement over the financial setbacks of the CCUB after years of frugality and effort on the part of the members, and by rising opposition to continued payments of principal and interest at high rates on loans from banks and mortgage companies.
Increasing numbers of the Sons of Freedom refused to pay their annual assessments, and community property estimated in 1937 as worth $437,143.12 was burned or destroyed by them. The CCUB leadership attempted to meet the problem of the Sons of Freedom by exerting pressure or outright force to uproot them from the main villages and isolate them in one separate community, that of Krestova. That was the immediate circumstance that provoked the outbreaks of 1932, culminating in the mass imprisonment of the Sons of Freedom on Piers Island.
The whole burden of carrying on the CCUB, and particularly its large overhead of fixed annual payments of principal and interest on its debts, thus fell upon a shrinking membership.
At the height of its operations the organization had had close to 8,000 members. By 1928 the number had fallen to 5,485. Ten years later there were only 3,103, of whom scarcely more than 2,000 were fully paid-up members. This trend forced higher individual assessments on each remaining member as time went on. The industrial undertakings of the CCUB were operating at a loss from 1928 on, and the Saskatchewan branches fell behind in their assessments.
Depression and unemployment during the 1930's reduced the outside incomes and at the same time placed additional burdens on the Community for relief and social welfare on behalf of its destitute members. In 1937, the CCUB went bankrupt. Foreclosure proceedings were instituted in 1938.
At the other extreme, the Sons of Freedom were winning converts and growing in numbers and influence. They became increasingly hostile towards the CCUB leadership during the 1920's and 1930's, and helped to undermine the morale of the whole organization. Their growth was fostered by discouragement over the financial setbacks of the CCUB after years of frugality and effort on the part of the members, and by rising opposition to continued payments of principal and interest at high rates on loans from banks and mortgage companies.
Increasing numbers of the Sons of Freedom refused to pay their annual assessments, and community property estimated in 1937 as worth $437,143.12 was burned or destroyed by them. The CCUB leadership attempted to meet the problem of the Sons of Freedom by exerting pressure or outright force to uproot them from the main villages and isolate them in one separate community, that of Krestova. That was the immediate circumstance that provoked the outbreaks of 1932, culminating in the mass imprisonment of the Sons of Freedom on Piers Island.
The whole burden of carrying on the CCUB, and particularly its large overhead of fixed annual payments of principal and interest on its debts, thus fell upon a shrinking membership.
At the height of its operations the organization had had close to 8,000 members. By 1928 the number had fallen to 5,485. Ten years later there were only 3,103, of whom scarcely more than 2,000 were fully paid-up members. This trend forced higher individual assessments on each remaining member as time went on. The industrial undertakings of the CCUB were operating at a loss from 1928 on, and the Saskatchewan branches fell behind in their assessments.
Depression and unemployment during the 1930's reduced the outside incomes and at the same time placed additional burdens on the Community for relief and social welfare on behalf of its destitute members. In 1937, the CCUB went bankrupt. Foreclosure proceedings were instituted in 1938.
Bankruptcy and Foreclosure: 1937-1945: By the time the CCUB became bankrupt it had paid off the major part of its obligations. It s main financial outlays from 1928 to 1938 were as follows:
Principal paid on loans and mortgages:
1928/38 704,243.75
Total interest paid 1928/38 543,661.21
Total taxes paid 1928/38 301,949.29
Erection of buildings 1928/33 221,671.29
Total 2,153,511.66
Between 1928 and 1938, the CCUB had paid out a total of $2,153,511.66 in principal and interest on loans and mortgages, on taxes, erection of new buildings and clearing and purchase of lands.
In addition to these outlays, up to 1937 the Community had paid $202,264. 55 for construction of roads, bridges and ferries, and had lost a total of $437,143.12 from fires of unknown origin.
The principal owing by the CCUB on loans, mortgages and other debts at the time of foreclosure in 1938 was as follows:
General 168,283.12
Sun Life Assurance Company- Vancouver 192,297.51
Regina 80,902.70
Great West Life Assurance Company, Winnipeg 56,717.66
Department of Lands Winnipeg 20,852.28
*Other creditors 75,663.42
Total 594,716.69
*These do not include individual members of the CCUB who had (and presumably still have) judgments totaling $205,026.02 against the CCUB but who did not collect their claims in the receivership operations described below.
Canadian Bank of Commerce [handled by National Trust Company].
Principal paid on loans and mortgages:
1928/38 704,243.75
Total interest paid 1928/38 543,661.21
Total taxes paid 1928/38 301,949.29
Erection of buildings 1928/33 221,671.29
Total 2,153,511.66
Between 1928 and 1938, the CCUB had paid out a total of $2,153,511.66 in principal and interest on loans and mortgages, on taxes, erection of new buildings and clearing and purchase of lands.
In addition to these outlays, up to 1937 the Community had paid $202,264. 55 for construction of roads, bridges and ferries, and had lost a total of $437,143.12 from fires of unknown origin.
The principal owing by the CCUB on loans, mortgages and other debts at the time of foreclosure in 1938 was as follows:
General 168,283.12
Sun Life Assurance Company- Vancouver 192,297.51
Regina 80,902.70
Great West Life Assurance Company, Winnipeg 56,717.66
Department of Lands Winnipeg 20,852.28
*Other creditors 75,663.42
Total 594,716.69
*These do not include individual members of the CCUB who had (and presumably still have) judgments totaling $205,026.02 against the CCUB but who did not collect their claims in the receivership operations described below.
Canadian Bank of Commerce [handled by National Trust Company].
ECONOMIC HISTORY: The $80,902.70 owing to the Sun Life Assurance Company in Regina and the $56,717.66 owing to the Great West Life Assurance Company in Winnipeg were paid off through the sale of certain CCUB Ltd. lands in Saskatchewan to individuals (Doukhobors and others) on agreements for sale. Foreclosure action was taken in British Columbia against the CCUB by the National Trust Company (on behalf of the Canadian Bank of Commerce) and by the Sun Life Assurance Company, for the indebtedness of $168,283.12 and $192,297.51, respectively.
The Sun Life Assurance Company's claims, including accrued interest, taxes, insurance and other costs, were settled by a payment from the Provincial Government of $207,500 (see below). The National Trust Company received $89,000 from the Provincial Government, and the Receiver appointed under court orders disposed of most of the remaining assets of the CCUB to collect the balance owing to its client. Its receivership was taken over in 1945 by the Toronto General Trust Company in Saskatchewan to dispose of the remaining claims from other creditors.
The main foreclosure proceedings, undertaken by the Receiver appointed by the National Trust Company and later by the Toronto General Trust Company, involved the disposition of CCUB Ltd. assets in all four western provinces.
Only a fraction of the original value of the assets was realized. They were sold by the Receiver, for the most part at knock-down prices. The costs of carrying out the receivership operations over the seven-year period 1938-1945 were very heavy.
In the end, a small surplus of only $142,111.07 [nest egg for CCUB Trust Fund] was left for the remaining creditors or "legal heirs" of the CCUB Ltd., after the millions of dollars and untold time, effort and hardship which its Doukhobor members had invested in the enterprise.
The financial statements covering the disposition of CCUB Ltd. assets, payments of creditors' claims against the Company, and main expenses incurred in the process, may be summed up as follows:
Gross Receipts from Sale of Assets British Columbia
National Trust Company 286,970.03
Sun Life Assurance Company 207,500.00 494,470.03
Gross Receipts from Sale of Assets Alberta
National Trust Company 91,665.00
Sun Life Assurance Company 207,500.00 299,165.00
Saskatchewan and Manitoba
National Trust Company 150,039.24
Toronto General Trust Co 198,811.93
Sun Life Assurance Company 80,902.70
Great West Life Assurance Company 56,717.66 $486,471.53
Total 1,072,606.56
Liabilities Paid, including Accrued Interest
Canadian Bank of Commerce 200,241.05
Sun Life Assurance Company 198,811.93
British Columbia 207,500.00
Saskatchewan 80,902.70
Great West Life Assurance Company 56,717.66
Others (Toronto General Trust Co.) 578,650.90 $624,012.00
Expenses and Write-Offs 306,483.13 $930,495.49
Surplus $142,111.07 [CCUB Trust] *
The Sun Life Assurance Company's claims, including accrued interest, taxes, insurance and other costs, were settled by a payment from the Provincial Government of $207,500 (see below). The National Trust Company received $89,000 from the Provincial Government, and the Receiver appointed under court orders disposed of most of the remaining assets of the CCUB to collect the balance owing to its client. Its receivership was taken over in 1945 by the Toronto General Trust Company in Saskatchewan to dispose of the remaining claims from other creditors.
The main foreclosure proceedings, undertaken by the Receiver appointed by the National Trust Company and later by the Toronto General Trust Company, involved the disposition of CCUB Ltd. assets in all four western provinces.
Only a fraction of the original value of the assets was realized. They were sold by the Receiver, for the most part at knock-down prices. The costs of carrying out the receivership operations over the seven-year period 1938-1945 were very heavy.
In the end, a small surplus of only $142,111.07 [nest egg for CCUB Trust Fund] was left for the remaining creditors or "legal heirs" of the CCUB Ltd., after the millions of dollars and untold time, effort and hardship which its Doukhobor members had invested in the enterprise.
The financial statements covering the disposition of CCUB Ltd. assets, payments of creditors' claims against the Company, and main expenses incurred in the process, may be summed up as follows:
Gross Receipts from Sale of Assets British Columbia
National Trust Company 286,970.03
Sun Life Assurance Company 207,500.00 494,470.03
Gross Receipts from Sale of Assets Alberta
National Trust Company 91,665.00
Sun Life Assurance Company 207,500.00 299,165.00
Saskatchewan and Manitoba
National Trust Company 150,039.24
Toronto General Trust Co 198,811.93
Sun Life Assurance Company 80,902.70
Great West Life Assurance Company 56,717.66 $486,471.53
Total 1,072,606.56
Liabilities Paid, including Accrued Interest
Canadian Bank of Commerce 200,241.05
Sun Life Assurance Company 198,811.93
British Columbia 207,500.00
Saskatchewan 80,902.70
Great West Life Assurance Company 56,717.66
Others (Toronto General Trust Co.) 578,650.90 $624,012.00
Expenses and Write-Offs 306,483.13 $930,495.49
Surplus $142,111.07 [CCUB Trust] *
ECONOMIC HISTORY: Hawthorne: The "Doukhobor problem" apparently was settled satisfactorily in Alberta and Saskatchewan, where the CCUB. Ltd. lands were sold by the insurance and trust companies to individual Doukhobors and others, mostly CCUB members, on individual agreements for sale. In that way the Community members in those provinces were able to retain interest in the properties which they developed.
Hawthorne emphasizes: It was found impossible to dispose of the CCUB Ltd. assets in British Columbia in this fashion. The large industrial and commercial units in this province would have been difficult, if not impossible, to dispose of to former members in individual agreements for sale. According to spokesmen of the mortgage and trust companies, the Community members were afraid to purchase the land because of threats and intimidation from the Sons of Freedom. The latter were fanatically opposed to breaking up the Community lands and properties into individually owned units. The general uncertainty and turmoil of the 1930's - the demonstrations and outrages on the part of the Sons of Freedom, the demoralization of the CCUB leadership in this province, and the discouragement and apathy of the membership due to the decline and ruin of the enterprise - all militated against an orderly settlement of the problem.
Moreover, the executive apparently hoped to retain the CCUB Ltd. as an integrated enterprise on a reduced scale. It was confidently expected that the sale of Community lands and properties in Alberta and Saskatchewan would suffice to pay off the major part, if not all. of the indebtedness to the insurance and trust companies. Then the main tracts of farm land, the jam factory, sawmills and stores of the CCUB in British Columbia could be maintained intact and be reorganized on a sounder financial basis.
Hawthorne goes on to rationalize: This hoped for solution likewise proved to be impractical. In 1938, when foreclosure action began, farm land in Alberta and Saskatchewan was difficult to sell even at extremely low prices. It is doubtful whether it could have brought in enough money at that time to pay off more than a small fraction of the mortgage indebtedness. Moreover, selling the land in individual agreements for sale meant that the moneys would take several years to collect. As it is, some $15,252.32 was still owing from purchasers in Saskatchewan. The Canadian Bank of Commerce was demanding immediate repayment of its loan; and the National Trust Company as its agent, and the appointed Receiver, were required to sell a major part of the Community assets in British Columbia for cash, and at knock-down prices.
In may own research, in interviews with past CCUB Board directors such as Nick Arishenkoff and Cecil Koochin, I was told that the Receiver General anxiously sold off prime assets at fire sales prices, in other events so called watch men were asleep when arson wiped out various assets such as lumber depots and other assets, most notably the Jam Preserving Works.**
In addition to Hawthorn’s speculation, I would venture to say that the BC assets were rolled into dispossession to insure that the CCUB did not continue, even at a reduced scale. This was evident in the foreclosures where the BC government took over assets such as roads, bridges and schools etc. for use by the general public.
Reference 1952 Hawthorn Report, pages 56 - 61
open.library.ubc.ca/collections/arphotos/items/1.0142786
*www.larrysdesk.com/the-ccub-trust-fund.html
** In Search of Utopia: www.larrysdesk.com/videos.html
Also: www.larrysdesk.com/christian-community-of-universal-brotherhood.html
Hawthorne emphasizes: It was found impossible to dispose of the CCUB Ltd. assets in British Columbia in this fashion. The large industrial and commercial units in this province would have been difficult, if not impossible, to dispose of to former members in individual agreements for sale. According to spokesmen of the mortgage and trust companies, the Community members were afraid to purchase the land because of threats and intimidation from the Sons of Freedom. The latter were fanatically opposed to breaking up the Community lands and properties into individually owned units. The general uncertainty and turmoil of the 1930's - the demonstrations and outrages on the part of the Sons of Freedom, the demoralization of the CCUB leadership in this province, and the discouragement and apathy of the membership due to the decline and ruin of the enterprise - all militated against an orderly settlement of the problem.
Moreover, the executive apparently hoped to retain the CCUB Ltd. as an integrated enterprise on a reduced scale. It was confidently expected that the sale of Community lands and properties in Alberta and Saskatchewan would suffice to pay off the major part, if not all. of the indebtedness to the insurance and trust companies. Then the main tracts of farm land, the jam factory, sawmills and stores of the CCUB in British Columbia could be maintained intact and be reorganized on a sounder financial basis.
Hawthorne goes on to rationalize: This hoped for solution likewise proved to be impractical. In 1938, when foreclosure action began, farm land in Alberta and Saskatchewan was difficult to sell even at extremely low prices. It is doubtful whether it could have brought in enough money at that time to pay off more than a small fraction of the mortgage indebtedness. Moreover, selling the land in individual agreements for sale meant that the moneys would take several years to collect. As it is, some $15,252.32 was still owing from purchasers in Saskatchewan. The Canadian Bank of Commerce was demanding immediate repayment of its loan; and the National Trust Company as its agent, and the appointed Receiver, were required to sell a major part of the Community assets in British Columbia for cash, and at knock-down prices.
In may own research, in interviews with past CCUB Board directors such as Nick Arishenkoff and Cecil Koochin, I was told that the Receiver General anxiously sold off prime assets at fire sales prices, in other events so called watch men were asleep when arson wiped out various assets such as lumber depots and other assets, most notably the Jam Preserving Works.**
In addition to Hawthorn’s speculation, I would venture to say that the BC assets were rolled into dispossession to insure that the CCUB did not continue, even at a reduced scale. This was evident in the foreclosures where the BC government took over assets such as roads, bridges and schools etc. for use by the general public.
Reference 1952 Hawthorn Report, pages 56 - 61
open.library.ubc.ca/collections/arphotos/items/1.0142786
*www.larrysdesk.com/the-ccub-trust-fund.html
** In Search of Utopia: www.larrysdesk.com/videos.html
Also: www.larrysdesk.com/christian-community-of-universal-brotherhood.html