252 Cooperation in Agriculture 



the supply companies sell materials to members who are 

 not actually stockholders and at the end of the season 

 distribute one-half as much of the net earnings to the mem- 

 bers as they distribute to regular stockholders. 



METHOD OF SELLING SUPPLIES TO THE MEMBERS 



There are two methods of selling supplies to the mem- 

 bers of a cooperative association. In one they are sold 

 at the actual cost of the supplies with an estimated per- 

 centage added to cover the cost of operation, interest, 

 reserve, and depreciation. In the other, the prevailing 

 retail market price is charged for each article, and the 

 profits are divided among the members at the end of the 

 year in proportion to the trade of each after the reserve, 

 the interest on the capital stock, and the depreciation are 

 deducted. In some cases the profits made on supplies 

 are the principal source of the dividends to the stock- 

 holders of a cooperative farmers' organization. 



The charging of the regular retail price is generally to 

 be preferred in the sale of supplies. It protects the local 

 dealers against ruinous price cutting which they must do 

 if the cooperative association sells the supplies at cost ; it 

 protects the wholesale dealers and manufacturers who are 

 more likely to give favorable quotations when they know 

 that their goods will not be sold at less than the prevailing 

 retail prices ; it tends to increase the membership among 

 the non-members who learn of the dividends received 

 by their neighbors; and the dividend at the end of the 

 year has a peculiarly favorable psychological influence 

 on the cooperative members which does not occur when 



