6 BULLETIIsr 371, V. S. DEPAETMENT OF AGEICULTTJEE. 



bution as a patronage dividend, and this may be distributed accord- 

 ingly, allotting a certain amount per bushel to the transaction in 

 grain and a certain percentage of the value of the goods sold to the 

 merchandise transaction. It should be the practice of cooperative 

 organizations to set aside all reserves and additions to surplus before 

 paying either the stock or patronage dividends.^ 



Considerable difference of opinion has arisen regarding the proper 

 basis for distribution of patronage dividends on transactions in 

 grain. It has been held by certain managers and boards of directors 

 that the value of grain purchased should be the basis for distribu- 

 tion, but investigations by the Office of Markets and Eural Organi- 

 zation show that distribution should be made on the basis of quantity 

 handled. 



In handling grain the management of an elevator usually deter- 

 mines upon a certain net margin between the purchasing and selling- 

 value which it assumes will yield sufficient revenue to carry on the 

 business. Almost without exception this margin is the same on all 

 varieties of grain. It must be apparent, therefore, that, since this 

 margin yields whatever profit accrues to the elevator, it would not 

 be equitable to pay a patron hauling oats at 38 cents a bushel a 

 smaller patronage dividend on the same number of bushels than 

 might accrue to a patron hauling wheat at $1.10. If the value of 

 the grain determined the profit, a value basis could be established 

 for determining patronage dividends; but the fact that two patrons 

 hauling the same kind of grain at different times of the year under 

 conditions of price fluctuation would receive varying amounts of 

 money for the same number of bushels of the same commodity 

 shows that this is not the proper basis for patronage dividend 

 distribution. 



THE PATRONAGE LEDGER.^ 



In attempting to consider the application of cooperative account- 

 ing methods to the county unit or district plan, a transition is made 

 from a very simple plan of organization to one of greater com- 

 plexity and to a plan which in its accounting requirements makes 

 demands for an extension of the idea contained in the patronage 

 ledger. Throughout the consideration of accounting requisites for 

 cooperative elevators, the patronage ledger will always remain the 

 basis to be relied on for data. As the complexity of organization 

 increases, however, the patronage ledger takes on a new form and 

 develops into a comprehensive filing system. The patronage ledger 



1 Bassett, C. E., Moomaw, Clarence W., and Kerr, W. H. : Cooperative Marketing and 

 Financing of Marketing Associations, U. S. Department of Agriculture, Yearbook, 1914, 

 See p. 196. 



2 Humphrey, John R.. and Kerr, W. H. : A System of Accounts for Farmers' Cooperative 

 Elevators, U. S. Department of Agriculture, Bulletin No. 236. 1915. See p. 10, 



