COOPERATIVE ORGANIZATION BY-LAWS. 5 
savings for its members. If the farmers, through cooperative col- 
lective bargaining, are able to effect economies in the matter of the 
sale and distribution of their products and the purchase of their 
supplies, to that extent each member is benefited by his proportion 
of the savings. If the organization takes out only what is necessary 
to cover the cost of operation and to provide adequate maintenance 
and reserve funds, and prorates the balance among the members and 
other patrons, in accordance with the amount of patronage which 
each has given the organization, it is believed that it is not being con- 
ducted for profit. In that case the so-called "patronage dividend" 
is only a refund to the member or patron of what the year's business 
experience has demonstrated to be an overcharge for services rendered 
the member. In this way the member makes savings only and the 
association never can make profit. 
DEALING WITH NONMEMBERS. 
If an organization handles the products of both members and non- 
members, and prorates any surplus it may accumulate among the 
members only, it is neither strictly mutual nor nonprofit and therefore 
does not measure up to the requirements of section 6. It follows 
that an organization transacting business with nonmember patrons 
must deal with such patrons on the same basis, with respect to its 
charges for services rendered and the distribution of savings effected, 
as it does with its members. 
The test of mutuality and equality is to be found in the fact that 
the association does not charge the nonmember patron for services 
rendered to him more than the actual cost of such service, including 
his prorata part of all overhead expenses. This must be so, or 
otherwise a small group of farmers could organize an agricultural 
association, and, by doing a large business with nonmembers, make 
large profits for themselves. It is thus seen that section 6 makes it 
obligatory for every organization, desiring to secure its benefits, to 
treat all patrons alike, in the matter of charging for services rendered 
and distributing savings made. 
The necessity for mutuality and equality, exacted by section 6, 
makes it highly desirable, if not obligatory, to have all patrons enrolled 
as members, as this removes any doubt which might otherwise exist 
as to whether or not the organization complies with the provisions of 
section 6. This presents a problem of some difficulty, for there may 
be instances where a nonmember desires to deal through an organiza- 
tion without becoming a member. The best way to meet the dif- 
ficulty is k) make it as easy as possible for anyone eligible to mem- 
bership to unite with the organization. Then if such person does not 
want to become a member, it may be advisable for the association to 
refuse to act as his agent. 
