UNITED STATES - CO-OPERATION AND ASSOCIATION 



Thus of the 147 elevators 76 distributed lo per cent, or more of their 

 capital stock in dividends and 36 paid no dividends at all. 



Probably some of the very high dividends represent in part the earn 

 ings of earlier years or are due to' the fact that the capital stock is only a 

 small part of the actual capital of the companies. In some cases the high 

 dividends are justified because for many previous years no dividend or 

 only low and irregular dividends have been declared. However there is 

 little doubt that a high return to capital is put by a good many elevators 

 before the interests of those supplying the grain. 



About 77 elevators reported paying to the latter a dividend, called 

 a " patronage dividend ". The apportionment of patronage dividend ad- 

 mits of many variations. Some elevators limit its distribution to stockhol- 

 ders, while others, apparently more numerous, distribute it to all customers. 

 A variation in this practice, which is however rare, is to pay a patronage di- 

 vidend to stockholders at double the rate at which it is paid to non-stock- 

 holders. In all except possibly one of the cases in which elevators pay a 

 patronage dividend, there is a limit placed on the stock dividend which 

 may be paid. This limit varies from 2 to 15 per cent., but 10 per cent, 

 seems to be the most general figure and is apparently held to represent a 

 just return, in the circumstances, on the capital invested. In general 

 there seems to be no evidence that the claim of stock to dividends is cu- 

 mulative. The patronage dividend is distributed according to several 

 different systems. There is first the straight dividend, distributed ou the 

 basis of the value of the business done, whether it has been buying or sell- 

 ing. Where buying and ;:elling are done on approximately equal mar- 

 gins this method seems to be adequate. Another practice is to pay a pa- 

 tronage dividend as a percentage on the value of business, on grain and flax 

 only ; and where other commodities are distributed at a lower profit than 

 grain and flax this method may be justified. According to yet another 

 method the dividend takes the form of a specific number of cents per bushel 

 of grain, the difference in the value of the different kinds of grain or the pro- 

 fit on them per bushel being sometimes disregarded. Such a dividend may 

 be distributed on other commodities than grain and flax, such as coal, flour 

 and fodder. 



The actual amount of patronage dividends naturally varies very much. 

 The highest rate reported is 5 per cent, on business done ; and unless pecu- 

 liar local conditions necessitate transacting business on a larger margin there 

 is no good reason why this rate should ever be exceeded. Rather than 

 surpass it' farmers should be paid higher prices for their products or be al- 

 lowed to buy commodities more cheaply, so that too much money would 

 not be tied up in the funds of the elevator. 



In general it can be said that in the countries in which the practice of 

 paying a patronage dividend prevails, the percentage of foreign-born citi- 

 zens and citizens having foreign-born parents is considerably above the 

 average ; and it is suggested that these citizens may have become familiar 

 with this practice in pAirope and have continued it. As a rule the larger 



