HOUSE COMMITTEE 

 MAKES CO-OP REPORT 



HOUSE of Representatives Committee 

 on Small Business gave the anti- 

 cooperative propaganda of some groups 

 an emphatic setback April 9, when after 

 a year's study, including a number of 

 public hearings, it declared that coopera- 

 tives do not endanger other forms of 

 business enterprise. 



Its interim report was signed by all 

 members of the committee, including five 

 Democrats and four Republicans. Con- 

 gressman Evan Howell of Illinois was 

 one of the committee members. 



Representative excerpts from the con- 

 clusions of the report (the full text of 

 which is available to those interested) 

 follow: 



"Agricultural cooperatives were orig- 

 inally formed as a possible means of pro- 

 viding assistance to the independent small 

 farmer who was at a marked disadvan- 

 tage in his bargaining position, being 

 forced to accept low prices for his prod- 

 ucts and to pay high prices for all of 

 the articles which he required for his 

 production .... the abnormal condi- 

 tions that led to the original cooperative 

 movement may be intensified. 



"Tax-exempt farmer cooperatives ap- 

 parently do have an advantage over com- 

 petitive businesses operating in the same 

 fields to the extent that amounts of in- 

 come available for the payment of divi- 

 dends on capital stock and accumulated 

 in reserve .... escape Federal income 

 taxation .... The cooperative reserves 

 apparently constitute a substitute for the 

 capital markets normally available to 

 other business enterprises, since the capi- 

 tal for an exempt cooperative comes prin- 

 cipally from farmers, and they have a 

 very limited capacity for supplying capi- 

 tal at any one time. Apparently only 

 about 54% of the farm cooperatives have 

 elected to and have taken the requisite 

 aflFirmative action necessary for qualifica- 

 tion as an exempt cooperative .... the 

 aggregate amount of income available 

 for the payment of dividends on capital 

 stock and/or retained in one allocated 

 reserve is relatively small. No appre- 

 ciable revenue would accrue to the gov- 

 ernment if income tax were levied on 

 these amounts. It does not appear that 

 the tax exemption available to exempt 

 farmer cooperatives has any true bearing 

 upon any competitive advantage which 

 the cooperative might have in its normal 

 operations." 



"Agricultural cooperatives which are 

 non-exempt from Federal income tax and 



all consumer cooperatives apparently en- 

 joy no privileges or advantages under the 

 tax laws which are not available to all 

 other types of competitive businesses op- 

 erating in the same lines of endeavor. It 

 seems readily apparent that non-coopera- 

 tive business agencies, if they were will- 

 ing to render services at cost, would not 

 be subject to any income tax." 



"The Bureau of Internal Revenue has 

 ruled, and the courts have upheld, the 

 principle that the cooperative entity serves 

 only as an agent for and on behalf of 

 its members, and that at no time does its 

 income belong to other than its members 

 .... it does not appear to be reasonable 

 or equitable to attempt to levy a tax on 

 a cooperative for income which does not 

 belong to it." 



"There is substantial evidence to show 

 that the cooperative movement operates as 

 a very successful means of combating 

 monopolistic concentrations, and, as such, 

 is a very healthy addition to the Amer- 

 ican economy." 



"There is no evidence to show that 

 cooperatives have been granted a type 

 of preferential financial treatment by the 

 Federal Government that has not like- 

 wise been made available to and accepted 

 by other forms of business enterprise." 



"The theory that the cooperative move- 

 ment is seriously endangering other eco- 

 nomic forms of business operation can 

 be utterly disregarded." 



BROWN NAMED DISTRICT 



IPS FIELD MANAGER 



DeWitt Brown, recently discharged 

 from service and former manager of 

 the Douglas County Service Company, 

 has been employed 

 as district field 

 manager for Illi- 

 nois Farm Supply 

 Company for the 

 Effingham t e r r i - 

 tory. 



Born, reared and 

 schooled in Shelby 

 county. Brown first 

 was employed as 

 b o o k k e eper for 

 DeWitt Brown Shelby - Effingham 



S e r V i ce Company 

 in 1936. Later he served Clark, Egyp- 

 tian and Macoupin Service companies 

 in the same capacity. In July of 1942 

 he was employed as manager of the 

 Douglas Service Company. He was 

 called into service in July of last year. 



PLANT 105,000 TREES 



To prevent wind erosion on the sand 

 lands of western Mason county, 105,000 

 pine trees have been planted by farmers 

 and schools in that area, according to 

 O. A. Potts of Pekin, district agent of 

 the Soil Conservation Service. 



Be sure that hay is well cured before it is 

 stored in hav mows. Damp hay will heat 

 and start a fire. 



A CREED FOR COOPERATIVE MEMBERS 



1. I will keep myself informed on the affairs, problems, and methods of my 

 cooperative so as to be an intelligent and constructive member. 



2. I will exert my influence to see that my cooperative has the best possible 

 directors and officers in terms of general competence and integrity. 



3. I will faithfully support my cooperative with my patronage, and encourage 

 my friends to use it, because in volume there is strength. 



4. I will help build and maintain my cooperative by contributing my share 

 of essential capital. 



5. I will insist that full information be provided me on the operations and 

 financial condition of my cooperative, based on accurate accounting and 

 proper auditing. 



6. I will not expect miracles from my cooperative, but I will insist on re- 

 ceiving from it honest values and efficient services. 



7. I will refrain from asking my cooperative to give me favors in the form 

 of credit or other special services. 



8. I will take pride in my cooperative and use my influence to see that it 

 assumes its fair share of community responsibilities. 



9. I will stand by my cooperative in its days of adversity and help protect it 

 from weaknesses which come with prosperity. 



10. I will always remember that my cooperative is ME, and others like ME, 

 and that its behavior is a reflection of MY behavior. 



— By Joseph G. Knapp, Principal Agricultural Economist, Farm Credit 

 Administration. 



JUNE, 1946 



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