Cooperation in the Purchase of Supplies 253 



the equivalent of the dividend is distributed over the pur- 

 chases throughout the year. In fact, without the dividend 

 at the end of the year, the member may not know whether 

 the benefit that the association is supposed to confer is a 

 tangible thing or not. There are certain dangers in the 

 dividend system that need to be frankly recognized. 

 Members of a cooperative association are likely to acquire 

 the dividend habit and to be greatly dissatisfied when 

 dividends are not paid. There is then a temptation on 

 the part of the incompetent managers who are afraid of 

 losing their positions when a dividend is not declared to 

 purchase a lower grade of supplies and to raise the price 

 here and there in order to create a dividend. When the 

 dividends are fairly handled the dividend represents the 

 actual savings to the members who deal through a coop- 

 erative association. 



The system of selling supplies to the members at cost 

 is not often practiced by cooperative associations. Many 

 of the manufacturers and wholesale dealers refuse to quote 

 favorable terms to associations that sell in this manner, 

 because it eventually reduces the retail price which the 

 local dealers charge to the level of the wholesale cost price 

 of the association. As soon as this condition is brought 

 about, the members of the association gain no financial 

 benefit, and the association is likely to lose the support of 

 its members. In the handling of fertilizers that cost 

 forty dollars a ton at retail, but for which the retail dealer 

 pays thirty seven and a half dollars a ton, the fertilizer 

 manufacturers may refuse to sell at wholesale cost to a 

 cooperative association that sells the fertilizers to its 

 members at that price because the comparison of prices 



