6 BULLETIN 371, U. S. DEPARTMENT OF AGRICULTURE. 
bution as a patronage dividend, and this may be distributed accord- 
ingly, allotting a certain amount per bushel to the transaction in 
grain and a certain percentage of the value of the goods sold to the 
merchandise transaction. It should be the practice of cooperative 
organizations to set aside all reserves and additions to surplus before 
paying either the stock or patronage dividends.! 
Considerable difference of opinion has arisen regarding the proper 
basis for distribution of patronage dividends on transactions in 
grain. It has been held by certain managers and boards of directors 
that the value of grain purchased should be the basis for distribu- 
tion, but investigations by the Office of Markets and Rural Organi- 
zation show that distribution should be made on the basis of quantity 
handled. 
In handling grain the management of an elevator usually deter- 
mines upon a certain net margin between the purchasing and selling 
value which it assumes will yield sufficient revenue to carry on the 
business. Almost without exception this margin is the same on all 
varieties of grain. It must be apparent, therefore, that, since this 
margin yields whatever profit accrues to the elevator, it would not 
be equitable to pay a patron hauling oats at 38 cents a bushel a 
smaller patronage dividend on the same number of bushels than 
might accrue to a patron hauling wheat at $1.10. If the value of 
the grain determined the profit, a value basis could be established 
for determining patronage dividends; but the fact that two patrons 
hauling the same kind of grain at different times of the year under 
conditions of price fluctuation would receive varying amounts of 
money for the same number of bushels of the same commodity 
shows that this is not the proper basis for patronage dividend 
distribution. 
THE PATRONAGE LEDGER? 
In attempting to consider the application of cooperative account- 
ing methods to the county unit or district plan, a transition is made 
from a very simple plan of organization to one of greater com- 
plexity and to a plan which in its accounting requirements makes 
demands for an extension of the idea contained in the patronage 
ledger. Throughout the consideration of accounting requisites for 
cooperative elevators, the patronage ledger will always remain the 
basis to be relied on for data. As the complexity of organization 
increases, however, the patronage ledger takes on a new form and 
develops into a comprehensive filing system. The patronage ledger 
1 Bassett, C. E., Moomaw, Clarence W., and Kerr, W. H.: Cooperative Marketing and 
Financing of Marketing Associations, U. S. Department of Agriculture, Yearbook, 1914, 
See p. 196. 
2 Humphrey, John R., and Kerr, W. H.: A System of Accounts for Farmers’ Cooperative 
Elevators, U. S. Department of Agriculture, Bulletin No. 236. 1915. See p. 10. 
