A SURVEY OF TTPICAL COOPERATIVE STORES. 29 
sion of credit, too great overhead expense, overexpansion, failure to 
provide a surplus, no allowance for depreciation, inefficient business 
practice and accounting methods, lack of proper auditing, and failure 
to secure the support of wholesale houses because of scattered buying. 
(3) Unfavourable environment. — Where a cooperative association 
has been thrust into a community which is naturally divided against 
itself through racial prejudice, interdenominational strife, excessive 
individualism, or where there is insufficient business to pay the ex- 
penses of a store, there can be little hope of success for the associa- 
tion. 
(4) Lack of proper legal safeguards. — One cause of the failure 
of many different types of cooperative associations is the lack of 
proper legislation. Some of the stores organized in the early days 
under corporation laws have had their stock centered in the hands 
of a small body of members who have controlled the association in 
their own interests, and have distributed among themselves whatever 
surplus accrued as dividends upon capital stock. This means the 
entire failure of the association from the cooperative standpoint. 
On the other hand, cooperative laws have been passed by many States 
that offer no adequate safeguards in the form of preliminary inves- 
tigation and subsequent inspection. On account of the semipublic 
nature of the cooperative business, it is believed that both of these 
safeguards are essential to success. 
