COOPERATIVE MARKETING OF COTTON Al 
row at as low interest rates as any business organization doing a like 
business, and certainly at rates materially lower than could be ob- 
tained by individual producers. 
DISTRIBUTIONS 
Inasmuch as the loan value of association cotton seems to have 
been fixed by lending banks at approximately 65 per cent of the 
market price, it is important to plan distributions to members so as 
to maintain at all times a 35 per cent unencumbered margin in unsold 
cotton. This means that payments should not at any time exceed the 
amount that can be borrowed on unsold cotton, plus approximately 
35 per cent of the proceeds derived from sales. With some exceptions 
this policy has been followed in making advances and in determining 
the dates and amounts of subsequent distributions. 
The usual advance to members immediately on delivery is about 
60 per cent of the value of unclassed cotton. The desirability of 
making advances according to the class of the cotton, rather than on a 
bale or weight basis, is recognized, but can not be done under the 
present operating plan without delaying payment. ‘The associations, 
therefore, make the same percentage advance on all cotton delivered, 
and in subsequent distributions, made after the cotton is classed, 
adjust the advance on the basis of grade, staple, and weight. 
Distributions are made from time to time during the season as 
sales are made and cash accumulates. When consistent with con- 
servative management the general practice is to make the first dis- 
tribution in December, a second in February, and a final settlement 
between April and July. The Mississippi staple association makes 
monthly distribution. 
AGRICULTURAL CREDIT CORPORATIONS 
The volume of cotton handled by the associations each year has 
been considerably less than the volume represented by signed con- 
tracts. Although a number of factors must be taken into considera- 
tion in accounting for this wide difference, the most important is the 
unusual extent to which cotton production is based upon credit. 
The most important development in the efforts of the association 
to solve the problem of handling mortgaged cotton has been the 
organization of agricultural credit corporations under the agricul- 
tural credits act of 1923. Through these corporations they endeavor 
to facilitate delivery by supplying funds to pay off mortgages, or to 
prevent mortgaging to other interests by supplying production credit 
to its members on more favorable terms. Loans are made by the cor- 
porations, not by the associations. In some instances the corpora- 
tions have the same officers as the associations, occupy the same offices, 
and are, in fact, subsidiary or accessory organizations, although in 
no case are the associations liable for the corporations’ acts or debts 
beyond their investments in capital stock. 
In 1925 one or more agricultural-credit corporations had been 
organized by eight associations and were being organized by three 
others. Some of those in operation were formed to supply produc- 
_ tion credit, others to finance the delivery of mortgaged cotton. An 
example of the first type is the North Carolina Agricultural Credit 
Corporation, which was organized November 4, 1923. Its issued 
stock is owned by banks and individuals. Local banks act as its 
agents in making loans to association members for production pur- 
