CIRCULAR No. 100 



OCTOBER, 1929 



UNITED STATES DEPARTMENT OF AGRICULTURE 



WASHINGTON, D. C. 



BUSINESS ANALYSIS OF THE TOBACCO GROWERS' 

 COOPERATIVE ASSOCIATION 



By John J. Scanlan, 1 Agricultural Economist, 



Division of Cooperative Marketing, Bureau of Agricultural Economics, 



and J. M. Tinley, Collaborator 



CONTENTS 



Page 



Introduction.. . 1 



Purpose of this study 2 



Procedure of the study 2 



The tobacco of the tri-State area 3 



Production by quantity and type..., 3 



Manufactured products 6 



Foreign trade 7 



Formation of the Tobacco Growers' Coopera- 

 tive Association 9 



Factors leading to organization 9 



Developments during organization period 



and membership campaign 12 



Formation of organization committee 12 



Membership campaign 13 



The internal organization 19 



Directors 19 



Departments 20 



Subsidiary warehousing corporations 21 



Type of organization 22 



Members' responsibility for failure of the 



association... 23 



Conditions of farm population in the 



tri-State area 24 



The association's receipts of tobacco 36 



Management policies and their relation to 



failure of association 42 



Experience and attitude of directors 43 



Membership policies—- 44 



Legal status of the association 45 



Advances and payments to members 51 



Operating policies and practices 55 



Costs of operation 81 



Page 

 Management policies and their relation to 

 failure of association— Continued. 



Price and sales policy 88 



Member and nonmember prices 102 



Opposition to the association 112 



Progress during operation of the association.. 114 



Changes in policies 114 



Attempts at reorganization 116 



Receivership granted 115 



Causes contributing to failure.. 117 



Results of the association 119 



Benefits derived from operation of the 



association 119 



Harmful effects of the association 120 



Future organization 120 



Growers' interest in cooperative market- 

 ing 121 



Manufacturers' interest in cooperative 



marketing 122 



A suggested plan for the successful coop- 



perative marketing of tobacco 123 



Summary 125 



Appendix 125 



Articles of incorporation of Tobacco 



Growers' Cooperative Association 125 



Tobacco Growers' Cooperative Associa- 

 tion agreement 128 



Member's agreement with the associa- 

 tion 133 



Modified order for receivers 137 



Literature cited 151 



INTRODUCTION 



This study of the Tobacco Growers' Cooperative Association (the 

 tri-State association) of Virginia, North Carolina, and South Caro- 

 lina was undertaken at the request of agricultural leaders and busi- 

 ness interests of the States in which the association operated and of 

 its receivers. The study was begun in August, 1927, as a part of the 

 program of economic research in farmers' cooperative business or- 

 ganizations conducted by the Division of Cooperative Marketing 



1 Credit is due J. M. Macon and S. Gatling of the office of the receivers of the Tobacco Growers' Coop- 

 erative Association for assistance in helping to find and compile data from the association files and records; 

 to F. B. Wilkinson of the tobacco section of the Bureau of Agricultural Economics for information in regard 

 to tobacco grades and classification; to H. M. Bain for contributing material dealing with the legal phases; 

 to various members of the Bureau of Agricultural Economics and especially of the Division of Cooperative 

 Marketing for valuable suggestions and cooperation; and to Julia A. Hampton for much assistance in 

 compiling statistical material in the preparation of this circular. 



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