CHAPTER III 



LEGAL FEATURES OF COOPERATIVE ORGANI- 

 ZATIONS IN AGRICULTURE 



A COOPERATIVE organization is one that conducts its 

 operations for the benefit of its members. The voting 

 power of the members is equal or proportional to the 

 amount of business transacted through the association. 

 The distribution of its earnings is based upon the amount 

 of business transacted for each member, upon the amount 

 of property bought from or sold to the members, or in 

 proportion to other service rendered by each member. 

 Its operations are conducted at cost ; all the surplus earn- 

 ings are distributed pro rata to those who have used the 

 facilities of the organization in the conduct of their busi- 

 ness operations, after operating expenses, depreciation 

 on property, a reserve, and the usual rate of interest on 

 the capital invested in the property have been deducted. 

 A cooperative organization differs fundamentally from 

 the usual stock corporation formed for profit in that that 

 capital invested in the latter is the basis of administration, 

 control, and of the distribution of surplus earnings. In 

 the former, the basis of control is the membership. The 

 stock corporation for profit performs its function in order 

 that the capital invested by the stockholders may earn 

 a dividend. As organized in the United States, a coopera- 



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