416 PROVISION OF BORROWING FACILITIES. 



(3) That in the head-quarter stations of districts and in large 

 towns where the people are mainly wage-earners and artificial con- 

 ditions have made living expensive, distributive societies should be 

 developed. 



At the same time the Committee wish to record their opinion 

 that minute official supervision and assistance in the matter of stores 

 is neither possible nor desirable. These societies must stand on their 

 own strength. Beyond seeing that their rules make adequate provi- 

 sion for the safe and honest conduct of business and carrying out 

 the annual audit, the Registrar ought not to interfere except in very 

 special circumstances. To safeguard co-operative principles and to 

 obviate possible dangers the Committee consider that adherence to 

 the following rules should be strictly insisted upon : 



(a) Credit should be forbidden, and cash dealings only allowed. 

 If a member requires credit he should get it from his cash society. 



(1) To preserve the co-operative nature of a society and to prevent 

 any tendency to profit-seeking and traffic in shares the dividend on 

 shares should be limited by rule, shares should be made withdrawable 

 only, and to their number no limit should be placed either by rules or 

 by practice. 



(<?) To guard against fraud and irregular practices, provision 

 should be made for effective control by the Committee of manage- 

 ment ; stock-taking should be frequent ; and all officers dealing with 

 goods or money should be required to give security in a certain 

 amount. 



(d) Speculation in any form should be forbidden. For instance, 

 a society should not be allowed to purchase large quantities of grain 

 at a cheap rate with the object of placing it on a distant market and 

 getting the benefit of the higher price. It should be insisted upon 

 that the sole function of a distributive store is to gauge the wants 

 of the immediate locality and to confine itself to supplying their needs. 



(e) As far as possible the Stores should follow the methocis of 

 European distributive societies, viz., they should sell at the market 

 price of the nearest large town (thereby minimising competition with 

 the legitimate trader), and after defraying expenses of management 

 and placing 25 per cent, of the profits in the reserve, they should 

 divide the balance between members and non-members according to 

 the amount of their purchases, non-members receiving a lower rate 

 than members. 



