Cooperation in the Purchase of Supplies 251 



growers' associations, or, if the volume of business is large 

 enough, it may be organized as a separate cooperative 

 corporation. The supply companies are usually formed 

 as stock corporations, though sometimes they are organized 

 on a non-profit basis. They may be formed under the 

 ordinary stock corporation laws and still include the es- 

 sential features of a cooperative association by limiting 

 the amount of stock to be held by a member, by requiring 

 that shares of stock shall be non-transferable until after 

 they are first offered for sale to the association, by adopt- 

 ing the "one man, one vote" method of administration, by 

 restricting the dividends to be paid on capital stock to a 

 nominal rate of interest, and by distributing the remaining 

 net profits according to the amount of patronage of each 

 member, after setting aside an amount for depreciation 

 on the property, a fixed interest on the capital stock, and 

 a reasonable reserve fund. 



A supply company occupies a somewhat different posi- 

 tion than a distributing association. The former has to 

 provide capital before it can purchase the supplies for 

 its members. In the latter the capital required is for 

 operating expenses and for buildings and equipment, and 

 these expenses are provided as the business progresses 

 by retaining certain percentages from the sale of the prod- 

 ucts. It is therefore desirable to organize a supply com- 

 pany as a stock corporation with a capital sufficiently 

 large to be used in conducting the business, or to be used 

 as security in providing such capital as is needed, defining 

 the policy of the corporation through its charter and by- 

 laws so that it may be operated for the benefit of the mem- 

 bers and not exclusively for the stockholders. Some of 



