4 BULLETIN 860, U. S. DEPARTMENT OF AGRICULTURE. 



tive in purpose, if not in form or effect. Of the whole number per- 

 haps one-third now are cooperative in the sense that earnings over 

 and above operating expenses and a reasonable rate of interest on 

 capital are distributed on the basis of patronage furnished. It is 

 this feature of patronage refund and limitation of dividends upon 

 capital stock to an interest charge which slowty but surely is estab- 

 lishing- a class of farmers' elevators that are properly designated as 

 cooperative. The term " farmers' elevator " is properly applied to 

 all forms of elevator organizations owned and controlled in the main 

 by farmers, but it is doubtful whether the term " cooperative eleva- 

 tor " will long be considered applicable to those organizations which 

 have not adopted the patronage dividend or refund system in the 

 distribution of earnings. 



THE COOPERATIVE FORM. 



The form of organization which under existing conditions and law 

 will most effectively promote and protect the fundamental and now 

 generally recognized cooperative principles is the form in which 

 farmers' elevator organizations are interested. For shipping asso- 

 ciations which do not buy outright the products of their members 

 and which act only in the capacity of selling agent, the nonstock 

 form x is perhaps best suited to conserve cooperative principles. In 

 the case of farmers' elevators, however, which require considerable 

 fixed capital, and which buy and sell grain and other products and 

 supplies on a profit above cost basis, it is doubtful whether anything 

 but a capital stock form of organization can be employed to advan- 

 tage at present. Most of the grain States now have cooperative 

 laws which authorize patronage dividends and other cooperative 

 features. These laws are not uniform in all of the States, nor do 

 they meet every requirement, but organization under them offers 

 the best form at present, and will secure the benefits of any future 

 amendments and changes in the law which are not inconsistent with 

 present provisions. Among the cooperative principles not yet pro- 

 vided for in the cooperative laws of some of the States the follow- 

 ing may be mentioned : 



( 1 ) Limitation of voting power to one vote per member, regardless 

 of the number of shares or the amount of capital stock owned. 



(2) Limitations upon the number of shares or amount of capital 

 stock that any single member may own. 



(3) Restrictions upon the power to sell or dispose of shares of 

 stock except to persons acceptable for membership in the association. 



It may be that in states where each stockholder is entitled to one 

 vote for each share of stock owned, what amounts to a one-man, one- 

 vote rule may be secured by issuing only one share of stock to each 



1 For description see U. S. Department of Agriculture Bulletin 541, Cooperative Or- 

 ganization By-laws, by C. E. Bassett and O. B. Jesness, 1918. 



