SOME ECONOMIC INTERESTS 129 



of the books, papers, and policies of the exchange by its mem- 

 bers and, in addition, a careful supervision of the accounts at 

 stated intervals. 



Another essential to successful cooperation is that the business 

 be done as far as possible on a cash basis. Extension of credit 

 has been a rock on which a good many otherwise successful or- 

 ganizations have been wrecked beyond repair. The temptation 

 to extend credit to members or to outside interests is very great, 

 and though sometimes a credit business may be carried on very 

 successfully, in general it is decidedly safer to make all business 

 cash business. A corollary to this is that sufficient cash should 

 be provided to carry on the work of the exchange effectively. 



Finally, every cooperative association should be organized on 

 strictly cooperative principles. A number of cooperative so- 

 cieties, both in this country and abroad, are merely joint stock 

 companies, and some of them are operating more or less suc- 

 cessfully. Nevertheless, there are some principles which are es- 

 sential to the true spirit of cooperative endeavor and which, in 

 the long run, give better financial and social results than others. 



THE FUNDAMENTAL PRINCIPLES OF COOPERATION 



The essential difference between a cooperative society and a 

 joint stock company is this: A joint stock company is a com- 

 bination of capital or shares. Capital is invested in the busi- 

 ness and all the profits are supposed to accrue from the use of 

 capital, consequently all profits are returned as dividends to the 

 shareholders. It makes no difference whether the dividend be 2 

 per cent, or 20 per cent, or 200 per cent., it is distributed among 

 the men who hold the shares. 



Again, the men who hold the capital stock in a joint stock 

 company are the men who do the voting. They do not vote 

 as men, they vote as shares ; the man who has ten shares has ten 

 votes; he who has but two shares has two votes; the thought 

 being that the more shares a man has the more powerful he 

 should be in determining the policy of the company. 



Now the principle of a cooperative society is fundamentally 

 different. A cooperative society recognizes the need of capital 

 but it also recognizes the fact that a reputable concern may ob- 

 tain capital anywhere at the ruling rate of interest. The ruling 



