COOPERATIVE PURCHASING AND MARKETING ORGANIZATIONS. 3 



but a number of difficulties were soon encountered and failure re- 

 sulted in many instances. This brought about a decline in the 

 movement, so that by 1880 The Grange was practically extinct. 

 Since then, however, it has been revived gradually, so that at present 

 there are a large number of Granges in existence. 



Other organizations of farmers were established about the same 

 time as The Grange, or during its decline. Among the organizations 

 which were established during this period were the National Farmers' 

 Alliance and Industrial Union, the Northwestern National Farmers' 

 Alliance, the National Agricultural Wheel, and the Brothers of 

 Freedom. 



PRESENT FORMS AND TENDENCIES. 



The farmers' purchasing and marketing organizations of the 

 present time may be divided into noncooperative capital stock com- 

 panies and cooperative organizations. The term "noncooperative 

 capital stock company" is used because an organization may be 

 formed with capital stock and still be cooperative. The noncooper- 

 ative capital stock company is an organization which distributes 

 its profits according to the capital invested, by means of dividends 

 on capital stock. In a company of this kind there is no limit to the 

 proportion of the capital stock one person may own and the stock- 

 holders have as many votes as the number of shares they hold. 

 This makes the capital stock the ruling factor in the organization. 

 In a truly cooperative organization the financial interest of each 

 member is limited, each member has the same voting power, and the 

 savings 1 are distributed by paying a fair rate of interest on the 

 capital invested, and by distributing any further savings in the form 

 of a patronage dividend, proportioned on the amount of business 

 transacted with the organization. Many of the truly cooperative 

 organizations of this country are formed on the capital stock plan, 

 but unlike the ordinary capital stock company there is a limit to 

 the number of shares each may own, the voting powers of all the 

 members are the same, and the stock dividend is limited to a fair 

 rate of interest. Nonstock organizations needing capital usually 

 charge a membership fee or else borrow the necessary money. 



It is important to distinguish between stock and nonstock forms 

 of organization because of the bearing which section 6 of the Clayton 

 Act, amending the United States antitrust laws, has on this point. 2 



It is unfortunate that so many of our farmers' organizations are 

 not formed on a strictly cooperative basis, as this fact undoubtedly 

 has hindered the growth and development of the work of such 

 associations. Among the reasons that can be given for the present 



1 In a strictly cooperative organization the gains made in the business are referred to as savings rather 

 than profits. 



2 See page 77. 



