flit RURAL NEW-YORKER 
67 
A Primer of Economics 
By John J. Dillon 
Part VI 
What is co-operation? 
In a broad sense any act or operation 
in which one person helps or assists an¬ 
other i« co-operation. A man on the 
ground passes shingles to the man on the 
roof. One farmer pitches hay up on the 
wagon, and another loads it; neighbors 
assist each other in thrashing grain with 
a machine, or in filling a silo. Members 
of a Grange jointly buy a car of feed, or 
ship a joint carload of apples. In these 
operations no formal organization is 
necessary. If men act together to help 
one another in any way, they co-operate 
to the particular end they have in view. 
Is co-operation ever used specifically 
in a restricted meaning? 
The term co-operation has come to be 
applied specifically to a business in which 
the men who do the labor also furnish 
the capital and carry on the operations 
of production and distribution of wealth 
for their mutual benefit. Co-operative 
enterprises are conducted under this ar¬ 
rangement for buying or selling jointly 
for the members associated, for borrow¬ 
ing money for the use of individual mem¬ 
bers, for conducting stores and other 
purposes. 
Is there danger or confusion from the 
different meaning of the same term? 
There is no danger to people outside of 
the co-operative enterprise because of 
confusion arising from the difference in 
meaning between the term co-operation 
used in its popular sense and in the spe¬ 
cific sense; but failure to appreciate the 
difference often leads to careless organi¬ 
zation which results in failure of its pur¬ 
poses and in consequence embarassment 
and loss to the individual members. 
In what way does the stock business 
corporation differ from the capital stock 
form of the co-operative corporation? 
The law which authorizes co-operative 
stock corporations to be organized and 
to do business is an amendment to the 
business corporation law, and is subject 
to that law in all cases except where 
changed by the amendment. In New 
York State it limits the amount of stock 
any one member may hold; authorizes 
vote by members instead of a stock vote; 
limits the dividend to six per cent; and 
provides for a surplus and a co-operative 
educational fund. After these provisions 
are satisfied the remaining profit, if any, 
is divided between the members in pro¬ 
portion to the amount of their trade in 
buying and selling, through the corpora¬ 
tion. This form of corporation is not 
specifically exempted from the provisions 
of anti-trust laws. It is exempt from 
anti-trust laws in New York State. 
What are the principal features of the 
co-operative membership corporation? 
The features of immediate importance 
in the New York membership co-operative 
law, 'which is one of the best we yet 
have, are the provisions that the charter 
may limit the liability of the association 
and members; that they are not permitted 
to issue capital stock or to do business 
for profit; and that they are under this 
form exempt from Federal anti-trust 
laws. They are exempt from anti-trust 
laws in New York State by virtue of the 
general exception of farm organizations 
in the State law. The membership cer¬ 
tificates are not transferable; each mem¬ 
ber has one vote; no proxy vote is al¬ 
lowed ; vote by registered mail is permis¬ 
sible ; members may be required to sell cer¬ 
tain products through the association, and 
provision is made to permit members to 
withdraw at a certain time each year. 
Why is one form of co-operative cor¬ 
poration business hampered by restrictive 
laws, and the other form compelled to do 
business without profit? 
There is no good reason why co-opera¬ 
tive business should be embarrassed either 
by prosecution under anti-trust laws 
which were enacted for a different purpose, 
or by being denied the incentive and con¬ 
venience of profits. That they are so 
restricted is due to a failure to under¬ 
stand the real needs of the farm and a 
failure to appreciate the possibilities of 
real co-operation, and, further, because 
the laws have been drafted by lawyers 
who are familiar with business corpora¬ 
tion laws, and as a result instead of a 
clear-cut law based on co-operative prin¬ 
ciples and farm needs, we have a hybrid 
of the stock company and a co-operative 
statute. The lawyers in the Legislature 
share responsibility for this with the 
drafting authors of the bills. They try 
to harmonize two principles, which are 
directly opposed to each other, and they 
will not mix. What is needed is 
a comprehensive general co-operative 
law that will authorize the organization 
of a co-operative corporate system as 
much suited to farm needs as the busi¬ 
ness corporation is to capital and general 
business. The system will include co¬ 
operative banking as well as co-operative 
business. 
The immediate cause of the restriction 
on farm organizations is due to the fact 
that both the Federal and State Govern¬ 
ments have anti-monopoly laws to con¬ 
trol the abuses of stock companies, and 
when farmers organized for mutual pro¬ 
tection and service they were in some 
cases prosecuted under the anti-monopoly 
laws, and the efficiency of the organiza¬ 
tions was destroyed. Other industries 
violated the laws with impunity, and few 
of them were prosecuted with success. 
The Federal and State Governments be¬ 
sides have spent considerable sums of 
money and given other encouragement to 
farmers to organize; we therefore had a 
situation where governments encouraged 
and fostered farm co-operation in the or¬ 
ganization stages, but as soon as the or¬ 
ganizations began to do business they said 
farmers were acting through it in viola¬ 
tion of another statute, and the Govern¬ 
ment punished them for the things it en¬ 
couraged and helped them to do. To 
overcome this embarrassment, the Fed¬ 
eral Government enacted the so-called 
Clayton bill into law. Under the terms 
of this law, farm organizations having no 
capital and doing business without profit 
are exempt from Federal anti-monopoly 
laws, and the United States Department 
of Agriculture prepared a general law 
under which, when enacted by the States, 
farm co-operative associations may be or¬ 
ganized and operated without infringing 
the anti-monopoly laws. In the Clayton 
law Congress removed one evil by creat¬ 
ing another. 
The change was an improvement, but 
it fell sadly short of a comprehensive 
law because the legislators do not asso¬ 
ciate co-operation with economics or busi¬ 
ness. They think of it as associated with 
philanthropy and charity, or as a toy 
business. Congress visualized this idea 
in the Clayton act, and the legislation 
has been hailed as a concession to agri¬ 
culture. As a matter of fact, it is no 
.concession at all. It is, on the contrary, 
a restriction and a limitation. It spe¬ 
cifically exempts farm co-operative busi¬ 
ness from anti-monopoly legislation, 
which, as a matter of fact, is not en¬ 
forced in the case of any other business ; 
but it hampers and restricts co-operative 
business to the necessity of doing busi¬ 
ness without capital and without profit. 
The study of the legal minds for the 
past 60 years has been to perfect cor¬ 
porate laws for the combination, organi¬ 
zation and control of capital and business. 
These laws and institutions are not 
adapted to farm needs, and were not in¬ 
tended for their use, but they are adapted 
to the purposes for which they were cre¬ 
ated. Farmers being widely distributed, 
numerous in their industry and individ¬ 
ually contributing limited amounts of 
capital to their collective enterprises, re¬ 
quire a system of their own. It is not 
enough to say that even what we have is 
better than we had before. We cannot 
be satisfied, nay, we cannot hope to realize 
the full measure of our opportunities un¬ 
til we have a complete system free from 
obstructions and adapted to the peculiar 
needs of farm co-operation as a business. 
Absent-minded nrofessor, meeting his 
son: “Hello, George, how’s your father?” 
—Credit Lost. 
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