10 



BULLETIN 394^ U. S. DEPARTMENT OF AGEICULTUEE. 



best size for a share of stock, most managers expressed themselves 

 as in favor of the share of large denomination. It seemed to be the 

 consensus of opinion that the share should not be smaller than $25, 

 but an examination of Table I indicates that much depends upon con- 

 ditions. The character and density of population, the kind of busi- 

 ness conducted, nearness to wholesalers, and many other features 

 have a bearing on the best size for a share of stock. Well-capitalized 

 stores were found with shares of small denomination, while other 

 stores are very insufficiently capitalized on the basis of $100 shares. 

 In general it is considered inadvisable for any store in the United 

 States to begin operations with a share of less than $10, although 

 here again there are exceptions. 





Table I. — The capitalizatiion of typical stores. 







1 



Number 

 reporting. 



Total. 



High. 



Low. 



Average. 





* - 



32 

 40 

 50 

 44 

 40 



$1,454,000 

 825, 89S 

 831,377 



$200,000 



106,200 



106, 200 



100 



SIO, 000 



305 



267 



1 



$45, 437 





20,647 



Paid up 



16,627 



Par value. . . 



53 





764,026 



19,100 











Vote: Forty stores allow 1 vote to each member; 5 stores allow 1 vote to each, share of stock. 

 iThese are the 40 stores reporting subscribed capital, and are given separately for the sake of comparison. 



Most of the stores allow members the privilege of paying for stock 

 in installments. Others, again, sell their stock and receive some 

 form of note or agreement to pay for it at a specified time. Both 

 of these practices appear to have been greatly abused. The former 

 accounts to a large degree for the discrepancy between the paid-up 

 and subscribed caj^ital as given in Table I, and the result of the latter 

 has been that many associations have accepted poorly drawn notes 

 which are not bankable, and which merely burden the books of the 

 association with fictitious assets. 



The following abstract from an auditor's report is illustrative of 

 an abuse which has weakened many of the cooperative stores : 



In view of the fact that a majority of your members have not liquidated their 

 note obligation in payment for shares, I recommend that no patronage dividend 

 be declared or paid covering the year 1914, and that the amount be carried as 

 surplus. * * * Permit me, in conclusion, to express the hope that the mem- 

 bers will pay their notes and thereby place the company w^here it rightfully 

 belongs, and furnish the opportunity for it to grow large and successful. 



A feature which probably has a greater influence on the successful 

 capitalization of a store than the size of the share of stock is the 

 amount of capital which one member raay hold. Some of the earlier 

 cooperative laws fixed the upper limit which one member could hold , 



