50 CIRCULAR 100, U. S. DEPARTMENT OP AGRICULTURE 



posed of, and 737 were pending. Furthermore, 4,425 cases involving 

 contract violation were settled out of court through the warehouse 

 department during the first three years. In addition, 151 suits were 

 brought by members and others against the association, most of 

 which were decided in favor of the association. 



The board of directors, in March, 1924, approved a policy of 

 diplomatic persuasion and sympathetic leadership, instead of enforc- 

 ing contracts by law and threats. Members of the board began to 

 realize that the management should be open, frank, democratic, and 

 grower-controlled, rather than secretive, centralized, and autocratic. 

 The board, therefore, adopted a policy of publicity in regard to the 

 conduct of all the affairs of the association except when secrecy was 

 absolutely necessary to protect the business of the organization. By 

 an extensive program of field service work, it hoped to keep in close 

 contact with, and in the full confidence of, the individual members 

 through individual calls, local meetings arranged by field men, and 

 through warehousemen, graders, and local workers who would op- 

 erate on a definitely planned and directed program of work. 25 



The board of directors in May, 1925, recognizing the fact that 

 pending suits might deter the delivery of the 1925 crop, adopted the 

 resolution that it would not withhold or deduct any sum of money 

 from the proceeds of the 1925 tobacco for any claim or alleged breach 

 of contract occurring prior to the opening of the 1925 delivery 

 season. 



But many facts and policies tended to cause the members to lose 

 confidence in their organization. Attempts to compel landlords to 

 deliver the unsigned tenants' share of the tobacco to the pool or to 

 pay liquidated damages of 5 cents per pound for nondelivery; the 

 policy of paying the creditor instead of the member for the lien 

 against the latter's crop ; putting the claim of the association ahead 

 of recorded mortgages; promising settlements from time to time 

 that were never made; the arbitrary change in grade standards on 

 several markets during the 1923 receiving season; the lack of tact 

 and knowledge on the part of warehousemen and graders ; the failure 

 to make payments at expected times. Local instances of extrava- 

 gance and charges of dishonesty among the officials caused many of 

 the less intelligent members especially to mistrust the cooperative. 

 The association's policy of secrecy and the weakness and limitations 

 of the field-service department resulted in lack of appreciation on the 

 part of the members of the problems that confronted the officials and 

 the board of directors. 



Pressure of necessity and of creditors forced many would-be loyal 

 members reluctantly to violate their contracts and to sell their to- 

 bacco under the auction system, although the prices prevailing on the 

 auction floor were undoubtedly due, to some extent, to the existence 

 of the farmers' organization. A member who had once broken his 

 contract was very unlikely again to sell his product through the 

 cooperative. He was more likely to become a critic of the organiza- 

 tion and to justify his own disloyalty by attacking it. 



In an effort to gain legal control over a major portion of the crop, 

 all types of members were generally accepted regardless of their 

 ability to fulfill their obligations. To induce the necessary number 



38 Minutes of board of directors, Mar. 18, 1924. 



