COOPERATIVE PURCHASING AND MARKETING ORGANIZATIONS. 57 



to accumulate a surplus large enough to meet the early advances, 

 and as the money is required only for a short time, if accumulated it 

 would be idle a large part of the year. 



Heretofore perishable products have not been considered as good 

 collateral by bankers in making loans to business enterprises, but per- 

 ishable products marketed through an efficient organization are now 

 considered good security by many bankers in making loans to such 

 cooperative marketing associations. The amount of money required 

 in handling perishable products will vary according to the size of the 

 business and the methods of conducting it. Some organizations 

 which conduct merely a consignment business and do not make 

 advances to the growers need but a small amount with which to 

 meet general running expenses. In many cases this is provided by 

 money received from the issuance of capital stock, membership fees, 

 or the accumulation of a surplus a sufficient part of which is in such 

 shape that it can easily be converted into cash. Many organizations 

 have developed a large f. o. b. business, making drafts against ship- 

 ments, making arrangements with the bank to honor them, and 

 placing them to the credit of the association. This provides funds 

 for immediate use and materially decreases the amount of outside 

 help needed in financing. In cases where pools are made, advances 

 to the members are often necessary as the pool may not be entirely 

 closed until months after the first receipts come in. If it is possible 

 to secure sufficient funds to make the early advances, the returns 

 from shipments as received will take care of other amounts advanced 

 to the growers. In some of the successful produce associations lo- 

 cated in the Atlantic States, the organization buys the members' 

 product outright, paying for it at the time of delivery. Under this 

 plan of operation large sums are necessary. 



Security for loans obtained. — Of the organizations reporting on the 

 amounts borrowed as shown by Table V, 38 gave association notes 

 as security. Forty-six gave personal security, that is, company 

 notes indorsed by the directors or individual members who were con- 

 sidered financially responsible. Three reported having given no 

 security, as bankers advanced funds on overdraft as required. Two 

 found it necessary to give mortgages on the packing plants. One 

 association has obtained about $300,000 from bankers on ware- 

 house receipts covering nuts in storage. One secured a large loan 

 from bankers on warehouse receipts for apples which were in storage. 



These figures show that over half the organizations are able to 

 borrow the funds necessary to make advances to members and to 

 meet the expenses of the early marketing season, without security 

 other than that which the organization can give, but a surprisingly 

 large number, or 26 out of 72 organizations, are so organized that it 



