MARKETS AND EUEAL OEGANIZATION. 365 



number of organizations only about one-sixth are truly cooperative, 

 most of the organizations being governed and profits paid on the 

 basis of capital invested. Many of these capitalistic associations 

 are now being reorganized under new cooperative laws, and this 

 office has drawn plans for reorganizing 12 of them on the basis 

 of no capital stock, nonprofit, and the payment of patronage divi- 

 dends, with a one-vote membership control. It has also been found 

 that most of these organizations are held together by a loosely drawn 

 membership agreement, with penalty clauses that are clearly illegal. 

 A membership agreement which bases all sales upon a legally drawn 

 power of attorney has been prepared so as to give more stability to 

 farmers' selling organizations. 



STUDY OF COOPERATION IN THE ITNITED STATES. 



The survey of cooperation in the United States shows that it is 

 far more prevalent than is generally believed, though not upon as 

 strong a business basis as is needed. It is estimated that the farmers' 

 cooperative marketing and purchasing organizations will transact 

 this year a total business amounting to more than $1,400,000,000. 

 The conclusion seems warranted that in communities where coopera- 

 tion is practically applied to the farmers' business the results ob- 

 tained are far more satisfactory than those secured by individual 

 methods. 



An effort has been made to strengthen existing organizations and 

 to guide new associations as far as practicable so that they may 

 serve their members more effectively and avoid the many difficulties 

 and failures which have resulted in the past from lack of experience 

 and foresight. 



STATE COOPERATIVE LAWS. 



The laws of the various States relating to the formation and man- 

 agement of farmers' cooperative associations are being collected in 

 collaboration with the Office of the Solicitor, and a digest of them is 

 being prepared. A study of these laws shows that there is a great 

 diversity among the laws of the various States under which farmers' 

 marketing organizations can be chartered. In fact, a majority of 

 States make it necessary to organize under the regular corporation 

 law, which makes no provision for the distribution of profits on the 

 basis of the amount of sales and purchases made by the farmer with 

 the organization. Drafts of proposed new laws to encourage co- 

 operation in Oregon, Montana, Colorado, Wyoming, and Oklahoma 

 have been prepared by State authorities and forwarded to this office 

 for suggestions regarding improvement. In the case of 12 new asso- 

 ciations, the necessity of conforming to State and Federal laws com- 

 pelled the preparation of complete forms of by-laws. This work was 

 done for associations in the State of Florida, Virginia, Michigan, 

 Tennessee, Maryland, and Pennsylvania. 



First-hand knowledge of the individual problems of cooperative 

 organizations is essential for giving the most helpful service. Per- 

 sonal visits have been made to existing and prospective organizations 

 of farmers in Maine, Michigan, Oregon, Utah, Washington, Idaho, 

 Colorado, Kentucky, Louisiana, Virginia, West Virginia, Maryland, 



