COOPEEATTVE ORGANIZATION BY-LAWS. 9 



necessary during any one year to repay retiring members. Another 

 -drawback to this method is that it results in an unequal financial 

 interest of the members, as the remaining members will have to 

 contribute to the amount due each withdrawing member, and, as a 

 result the financial interest of the older members will be much 

 greater than that of the newer members. Such an arrangement also 

 would tend to put a premium on withdrawal from membership. 



If each member is required to lend a certain amount to the associa- 

 tion, such loans may be paid in annual installments, by levying an 

 assessment on each member in proportion to the business conducted 

 for him by the association, of sufficient size to provide the proper 

 amount. When this is done each member should be given a state- 

 ment at the end of each fiscal year, showing the amount he has con- 

 tributed in this manner during the year. If arrangements be made 

 to pay at the end of each year one-fifth of the original sums loaned to 

 the association by each member, the entire amount will be paid in 

 five years. The financial interest of all members in the association 

 may be kept approximately equal by continuing the assessments and 

 payments throughout the life of the association, so that, in fact, the 

 loans are placed on a revolving basis. When this plan is followed, the 

 amounts indicated on the yearly statement given to each member, 

 after deducting the proper depreciation charge, will be paid five years 

 from the time the statement is issued. Thus, the statements issued 

 at the end of the first year will be taken up at the end of the sixth 

 year, and so on. If it is desired, provisions can be made for the pay- 

 ment of interest on the money invested in this way. When this is 

 done the assessments must be of sufficient size to take care of the 

 interest as well as the principal. 



As a concrete illustration of this plan, let it be assumed that a 

 cooperative nonstock creamery association, composed of 100 members, 

 requires $5,000 to erect and equip the creamery. Each member lends 

 $50 to the association with the understanding that this amount will 

 be repaid in annual installments so that the entire sum will be paid by 

 the end of the fifth year, and that these loans are to receive 4 per cent 

 interest per annum. A special assessment is levied on each pound of 

 butter fat delivered to the creamery, of sufficient size to provide for 

 the payment of the yearly installments on the loan, the interest, and 

 also an additional amount to take care of depreciation. For this 

 illustration, let it be assumed that 5 per cent per annum provides a 

 sufficient reserve for depreciation. The total amount which will be 

 provided annually by the special assessment then becomes $1,450. 

 Of this amount, $1,000 is for the payment of the principal, $200 is 

 for interest, and the remaining $250 is to provide a reserve fund for 

 depreciation. 



37369°— 18— Bull. 541 2 



