The Origins of the Mondragon Cooperative in 1943: Father Arizmendi

Father Arizmendi

Mondragon was founded by a priest by the name of José Maria Arizmendiarrieta. Quite a mouthful, so the surname is commonly shortened to Arizmendi. Father Arizmendi was born in 1915 and as a young man became a dedicated priest. When the Spanish Civil War began, he was only 21. He worked for an anti-Franco Basque newspaper. In 1937 he was thrown into jail. After his release, the Church assigned him to Mondragon in 1941, which was a somewhat isolated town of 7000 tucked away in a verdant valley in the shadow of the Pyrenees Mountains.

Franco had had difficulties defeating the Basques, who sided with the Republicans against the fascists in the civil war. The social-democratic deposed government promised the Basques independence if the government won the war. After Franco’s victory, the Basques were treated as an occupied nation. Their language was forbidden.

The bombing of Guernica is one example of the viciousness with which the Franco forces attacked the Basque country. Mondragon itself had been devastated by the Civil War. These conditions created a strong bond of solidarity among the Basques, and this is the environment that Father Arizmendi stepped into. His first step in 1943 after having preached the basic principle that the common good comes before the individual good, was to found an engineering school called the “Professional School,” which trained young people. To fund the school, money was raised from the locals.

In the 1950s Father Arizmendi selected five of the most committed students to form a manufacturing company called ULGOR, an acronym based on the first letter of each of their names. Again, funds were raised from townspeople. The factory opened with 24 people. It produced paraffin-burning (later kerosene) stoves for cooking and heating. One year later there were 117 worker-owners, a ULGOR had purchased two foundries. ULGOR later turned into FAGOR Electrodomesticos, the industrial basis of the corporation.

Arizmendi saw the need for a funding source so a savings bank, Caja Laboral (Labor Bank) was formed in 1959 to provide capital for new cooperatives that were established during the first 15 years.

In 1966 LAGUN-ARO, a social welfare institute, was established. In 1969 the EROSKI chain of retail stores, which are consumer cooperatives, was founded out of the merger of ten local consumer cooperatives. All of these still exist.

Could this experiment be replicated elsewhere? Cooperatives do exist in the U.S. and around the world. However, each one is unique in origin, structure, and culture. The culture of the Basque region was particularly ripe for cooperatives. There were at least several conditions that made it so:

  • the persecution of the Basques by Franco, already mentioned, which built solidarity out of common oppression
  • farming and village life has historically been based on consensual principles
  • the Basque language is unique; their religion is in common, giving them a sense of family.

Fertile soil for cooperatives. The “culture” of a region is important to inspiring the will to learn and to share. Not every locality manifests this culture. The Mondragon corporation itself has established educational and training centers in many parts of the world to foster the development of cooperatives.

The Mondragon Cooperative Corporation today employs nearly 100,000 people around the world in 256 organizations in four areas: finance, industry, retail, and education. Its sales in 2009 came to 13.9 billion Euros. Over its 50-year history, only a few cooperatives have failed, and in the economic downturn of 2008, Mondragon worker-employees only slightly reduced salaries and only laid off new-hires, who weren’t yet members (because they had less than six months working there).

Father Arizmendi put forth ten principles when he formed Mondragon, which are still front and center today, over 50 years later. These will be the focus of my next blog entry.



About Kitty Kroger

Kitty Kroger is a retired high school teacher of E.S.L. She has published her first novel, "Dancing with Mao and Miguel," which takes place in the 70s and deals with political, social, and personal concerns of that decade. In addition to writing, she is also involved in trying to make the world a better place, concerning herself with issues such as climate change and attacks on refugees and immigrants. She enjoys photography, including street photos (find her work on and Instagram), writes poetry, and plays in a piano ensemble. She also publishes a blog called "Voices of the Sixties and Seventies" (
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2 Responses to The Origins of the Mondragon Cooperative in 1943: Father Arizmendi

  1. Eneko says:

    First of all, to know a bit of the beginning of Mondragon, you should know a little bit more about this little city. Before Arizmendiarrieta, there was an important local school, founded by Pedro de Viteri, an important philanthropist, where poor people learned,reading, maths and also technical drawing. This was very helpful for the Union Cerrajera Mondragonesa, the most important local industry of the beginning of the 20th century, heir of our traditional blacksmiths. The end of the school arrived with the spanish civil war, but Union Cerrajera, inspired on it, did another technical school called Escuela de Aprendices, where the five founders of the first cooperative of Mondragon learnt and met Arizmendiarrieta. Union Cerrajera was a Joint-stock company with it’s own supermarket, called Economato, its own insurance, called Hetruc. When Arizmendiarrieta arrived to Mondragon, he wanted all those innovations for all the people. He wanted to change Union Cerrajera from a joint stock company to a cooperative company. But it was not possible, so he helped five enterprisings to create a new factory were all the workers were owners.
    Then he promoted the technical school, nowadays Mondragon Unibertsitatea, a supermarket, called Eroski, an insurance, called Lagun Aro, and also a savings bank, called Caja Laboral. He copied the good things of Union Cerrajera and he promoted the education as mainstay of Mondragon’s society.

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