A SUETEY OF TYPICAL COOPEEATIVE STORES. 13 



The practice is unfair in that the man who pays cash usually 

 secures goods at practically the same price as the man who uses 6 

 months' credit. This unfairness has led to the practice among a 

 few of the most successful stores of charging interest on all bills 

 running over 30 days. In many cases it was found that inexperienced 

 managers, in their enthusiasm to expand the business, had involved 

 the association in serious difficulty by a too wide and promiscuous 

 gi^anting of credit to customers. In some instances it was found that 

 the accounts receivable amounted to more than the entire subscribed 

 capital stock. 



On the other hand, one of the advantages claimed for the coopera- 

 tive farmers' store is that it serves as a credit institution, tiding 

 the members over until harvest or until " pay day." Indeed, one of 

 the most successful stores preferred to do a credit business, and 

 reported that 98 per cent of its trade was on this basis. The reasons 

 given for its preference were greater simplicity and uniformity in 

 its accounting system and the larger volume of trade resulting from 

 the credit business. The reports of 36 stores showed that, on the 

 average, half of the sales were on credit and the other half cash. 



For 24 stores the average annual loss due to the granting of credit 

 is 1.17 per cent. This is much higher than the average for stores 

 under private management, as indicated by the results of the Harvard 

 survey, which found the common loss for bad debts to be one-half 

 of 1 per cent.^ Moreover, there is reason to believe that this does 

 not tell the whole story. As a matter of fact, the estimate placed by 

 the manager of an unsuccessful cooperative store upon the uncollec- 

 tible proportion of the accounts and bills receivable, which he is 

 carrying upon his books, is very unreliable. In one case, which is 

 probably typical of many others, the amount was estimated at $14.5 

 for the year, when, in reality, the amount which was afterwards 

 found to be uncollectible was nearer $2,000. This loss, of course, 

 falls upon all who pay for their goods. 



Entirely apart from the loss involved, the^ credit system is un just- 

 Either those enjoying credit should pay interest, or customers pay- 

 ing cash should receive a cash discount. The reports of those who 

 have tried to do business on a cash basis indicate that the credit sys- 

 tem has become so rooted in American business as to be practically 

 ineradicable. Many of those questioned characterized it as " a neces- 

 sary evil." 



PURCHASING. 



Table IV, showing the practice regarding purchasing, is largely 

 self-explanatory. One important fact, however, is not brought out 



* Harvard University. Bureau of Business Besearch. Bui. 5 : Expenses In Operating 

 Retail Grocery Stores. 1915. Sup. 7. 



