546 AGRICULTURAL ECONOMICS 



aggregate volume of business of these companies for the year follow- 

 ing the harvesting of 1912 crop was about $24,000,000, of which about 

 $22,000,000 represents the value of grain marketed, and the other 

 $2,000,000 the value of supplies, such as coal, feed, twine, etc., pur- 

 chased for members. 



Many so-called "farmers' elevators" in Minnesota are not owned 

 by farmers and should not be classed as co-operative companies. 

 Even among the 270 elevators classified herein as co-operative, there 

 are many which certain co-operation enthusiasts would undoubtedly 

 exclude. But hi all of the 270 elevator companies farmers own the 

 majority of stock, and in all but 5.5 per cent of them each stock- 

 holder has but one vote irrespective of the number of shares owned. 

 Furthermore, in five-sixths of the companies the number of shares 

 that may be owned by one person is limited. In other words, the 

 elevators are not only owned by the farmers themselves, but they are 

 controlled democratically by them. 



The patronage or pro rata dividend, that is, the division of profits 

 over and above a fair rate of interest on stock according to the busi- 

 ness brought by each patron, is highly desirable and should be pro- 

 vided for in the by-laws of every farmers' elevator company. It is 

 in this respect that the farmers' elevators of Minnesota fail to satisfy 

 to the fullest extent the generally accepted essentials of co-operation, 

 because only 26 per cent of the companies distribute profits in this 

 way. There is some doubt about the desirability of laying so much 

 importance on the patronage dividend, however, as an absolutely 

 necessary feature of a co-operative organization. If an organization 

 is run on a no-profit basis, as in the case of the great majority of 

 Minnesota creameries, there is nothing to be distributed on a patronage 

 basis. In co-operative stores, on the other hand, the patronage 

 dividend is an absolute essential, because the only safe way to operate 

 a store is to charge current prices as do competitors, a policy which, 

 if the store is well managed, should yield a profit over and above a 

 fair return on capital invested. 



The farmers' elevator occupies a middle ground in this respect; 

 under able management it can often be operated on practically a 

 no-profit basis, but there are certain risks, especially in the handling 

 of such grains as barley and flax, which render it dangerous to shave 

 the margins too close, and the usual method is for elevators to pay cur- 

 rent prices as shown in the daily grain bulletin. If the farmer's grain 

 is graded and docked correctly by the manager, there should normally 



