22 INFORMATION RELATING TO CO-OPERATION AND ASSOCIATION 



the association's legal head, and also appoints a secretar}^ and a treasurer. 

 In most Tillamook creameries the two latter important officers are not 

 members of the boards. To cover woiking expenses a flat rate per pound 

 is charged for manufacturing cheese, normally i ^j^ cents. In large fac- 

 tories this price is enough to meet all charges, including the making, haul- 

 ing and inspection of the cheeses, entrance charges, insurance, the cost of 

 marketing and the annual addition to the sinking fund, and further provides 

 for the accumulation of a considerable surplus. Since in most cases these 

 factories are not true co-operative associations but rather farmers' stock 

 corporatiors, this surplus is sometimes distributed only to the smaU number 

 of suppliers of milk who are also stockholders. Associations managed on 

 such lines have been known to pay dividends of as much as loo per cent, 

 on their capital stock. Such a proceeding sometimes leads to discontent 

 among suppliers of milk who have not benefited by the distribution of sur- 

 plus. Where factories are conducted on a strictly co-operative basis the 

 plan is to pay a liberal ra.te of interest on the capital inv^ested, the remaining 

 siirplus being distributed among suppliers in proportion to the amount of 

 milk the}^ have contributed during the year. One factory thus distributed 

 a surplus by paying lo per cent, on capital stock and 2 cents for every 

 hundred pounds of milk delivered at the factory. 



Central Marketing. — Before 1904 the factories, owing to their lack of 

 facilities for storage, were obliged to send their cheese to commission houses 

 in the large towns on the Pacific coast. The depression in price which fol- 

 lowed was maintained until the season of lowproduction came in the autumn, 

 when the dealers who had stored the cheese during the summer made^ great 

 profits. The producers however received in such conditions unsatisfactory 

 prices; and consequently the various factories in the count}^ united in or- 

 der to attempt to market their cheese in common, and to provide in common 

 the storage capacity which would enable the excess product of the summer to 

 be kept until the better selling season. The efficiency of the co-operative 

 plan of consolidated bujdng and marketing at once began to have its effect 

 on privatel}' owned factories^ several of which went into bankruptc)^ or 

 sold out between 1904 and 1906. The new plan secured better prices, 

 brought greater returns to the farmers, and stmulated milk production on 

 all the farms which had previously supplied these factories. This gave a 

 great impetus to the co-operative movement : in the spring of 1909 the co- 

 operative selling agency was handling the output of sixteen large factories 

 and three private farm factories. The co-operative plan of selling brought 

 about the establishment of a central office supervised by a secretar^^-sales- 

 man who kept in touch with all the markets and arranged the sale of the 

 entire output of the member factories. The increase in this office's busi- 

 ness caused the adoption of excellent accounting methods, which not only 

 facilitated sales but also improved the quality of output. By having only 

 one salesman to handle 90 per cent, of the county's output the Tillamook 

 factories have been able to get for their cheeses better prices, determined 

 by the prices on Eastern markets. Bad debts have been reduced to the 

 minimum, the entire loss from them in the last ten years amounting to 



