COOPERATIVE ORGANIZATION" BY-LAWS. 9 
necessary during any one year to repay retiring members. Another 
drawback to this method is that it results in an unequal financial 
interest of the members, as the remaining members will have to 
contribute to the amount due each withdrawing member, and, as a 
result the financial interest of the older members will be much 
greater than that of the newer members. Such an arrangement also 
would tend to put a premium on withdrawal from membership. 
If each member is required to lend a certain amount to the associa- 
tion, such loans may be paid in annual installments, by levying an 
assessment on each member in proportion to the business conducted 
for him by the association, of sufficient size to provide the proper 
amount. When this is done each member should be given a state- 
ment at the end of each fiscal year, showing the amount he has con- 
tributed in this manner during the year. If arrangements be made 
to pay at the end of each year one-fifth of the original sums loaned to 
the association by each member, the entire amount will be paid in 
five years. The financial interest of all members in the association 
may be kept approximately equal by continuing the assessments and 
payments throughout the life of the association, so that, in fact, the 
loans are placed on a revolving basis. When this plan is followed, the 
amounts indicated on the yearly statement given to each member, 
after deducting the proper depreciation charge, will be paid five years 
from the time the statement is issued. Thus, the statements issued 
at the end of the first year will be taken up at the end of the sixth 
year, and so on. If it is desired, provisions can be made for the pay- 
ment of interest on the money invested in this way. When this is 
done the assessments must be of sufficient size to take care of the 
interest as well as the principal. 
As a concrete illustration of this plan, let it be assumed that a 
cooperative nonstock creamery association, composed of 100 members, 
requires $5,000 to erect and equip the creamery. Each member lends 
$50 to the association with the underst anding that this amount will 
be repaid in annual installments so that the entire sum will be paid by 
the end of the fifth year, and that these loans are to receive 4 per cent 
interest per annum. A special assessment is levied on each pound of 
butter fat delivered to the creamery, of sufficient size to provide for 
the payment of the yearly installments on the loan, the interest, and 
also an additional amount to take care of depreciation. For this 
illustration, let it be assumed that 5 per cent per annum provides a 
sufficient reserve for depreciation. The total amount which will be 
provided annually by the special assessment then becomes $1,450. 
Of this amount, $1,000 is for the payment of the principal, $200 is 
for interest, and the remaining $250 is to provide a reserve fund for 
depreciation. 
37369°— 18— Bull. 541 2 
