A SURVEY OF TYPICAL COOPERATIVE STORES. 13 
The practice is unfair in that the man who pays cash usually 
secures goods at practically the same- price as the man who uses 6 
months' credit. This unfairness has led to the practice among a 
few of the most successful stores of charging interest on all bills 
running over 30 days. In many ca^es it was f oimd that inexperienced 
managers, in their enthusiasm to expand the business, had involved 
the association in serious difficulty by a too wide and promiscuous 
granting of credit to customers. In some instances it was found that 
the accounts receivable amounted to more than the entire subscribed 
capital stock. 
On the other hand, one of the advantages claimed for the coopera- 
tive farmers' store is that it serves as a credit institution, tiding 
the members over until harvest or until " pay day." Indeed, one of 
the most successful stores preferred to do a credit business, and 
reported that 98 per cent of its trade was on this basis. The reasons 
given for its preference were greater simplicity and uniformity in 
its accounting system and the larger volume of trade resulting from 
the credit business. The reports of 36 stores showed that, on the 
average, half of the sales were on credit and the other half cash. 
For 24 stores the average annual loss due to the granting of credit 
is 1.17 per cent. This is much higher than the average for stores 
under private management, as indicated by the results of the Harvard 
survey, which found the common loss for bad debts to be one-half 
of 1 per cent. 1 Moreover, there is reason to believe that this does 
not tell the whole story. As a matter of fact, the estimate placed by 
the manager of an unsuccessful cooperative store upon the uncollec- 
tible proportion of the accounts and bills receivable, which he is 
carrying upon his books, is very unreliable. In one case, which is 
probably typical of many others, the amount was estimated at $14-/> 
for the year, when, in reality, the amount which was afterwards 
found to be uncollectible was nearer $2,000. This loss, of course, 
falls upon all who pay for their goods. 
Entirely apart from the loss involved, the credit system is unjust. 
Either those enjoying credit should pay interest, or customers pay- 
ing cash should receive a cash discount. The reports of those who 
have tried to do business on a cash basis indicate that the credit sys- 
tem has become so rooted in American business as to be practically 
ineradicable. Many of those questioned characterized it as " a neces- 
sary evil." 
PURCHASING. 
Table IV, showing the practice regarding purchasing, is largely 
self-explanatory. One important fact, however, is not brought out 
1 Harvard University. Bureau of Business Research. Bui. 5 : Expense^ in Operating 
Retail Grocery Stores. 1915. Sup. 7. 
