South and East, even in producing regions adjacent to the large wholesale markets.

Complete data as to the extent of coöperative marketing is not available, but the associations listed in map No. XXII by the Department of Agriculture in 1917 conveys a general idea of the regions in which they are most prevalent. The map shows only the 5,424 associations reporting to the Department, which estimated that at that time about 12,300 coöperative farmers associations were performing marketing functions of some description. In 1919 the Bureau of the Census reported that farm products valued at $721,984,000 were sold through farmers organizations and that coöperative purchasers amounted to $84,616,000. These estimates in the light of other available but incomplete data, were probably too low. It is certain that the break in agricultural prices since 1920 has increased the number of coöperative marketing associations in various parts of the United States.

The coöperative movement, in so far as it concerns some degree of marketing farm products, includes grain elevators, creameries and cheese factories, fruits and produce, cotton, leaf tobacco, live stock, milk, eggs, wool, rice and to a smaller extent other farm products; many coöperative stores where a variety of products are purchased and sold; a limited number of associations, other than creameries and cheese factories, which produce or manufacture as well as market products such as fruit and vegetable creameries, vinegar plants and a few meat packing plants. Coöperative organizations connected with the marketing of farm products, although not handling them in every instance, also include coöperative warehouse companies and coöperative loaning or financing associations, some of the latter having been organized even before the enactment of the Federal Farm Loan and the Agricultural Credits Acts made coöperative credit associations a part of the credit machinery created by the Govern

1 Bulletin No. 547. More recently the Department estimated that the directory which it is preparing will contain the names of about 16,000. 2 Prof. B. H. Hibbard in "Marketing Agricultural Products" estimates total sales through farmers' organizations at approximately $2,000,000,

ment. The coöperative movement in a larger sense is not limited to marketing functions. There are many coöperative laundries, farmers' mutual insurance companies, telephone companies, cowtesting associations, live-stock breeders' associations and purchasing associations. Supplies of many kinds are, of course, in many instances purchased through coöperative marketing associations as well as through special purchasing associations. Some of the larger general farmers' organizations which encourage the organization of coöperative enterprises have also at times adopted extensive political, educational and social programs.

Conditions Favorable to Coöperative Marketing.-Although there are instances where coöperative marketing associations have been organized without the spur of necessity or of real or fancied grievances to be overcome, it is certain that dire necessity has often been the occasion for and has greatly stimulated successful coöperation. More specifically, the occasion which has caused farmers to organize effectively has variously been periods of low agricultural prices, wide local or central market price margins and low net farm prices, lack of effective local competition, difficulty in finding markets, especially for perishable products, wide spreads between carload and less-than-carload freight rates, and great distances between producing regions and central markets.

Whether or not a given coöperative marketing association is traceable to necessity or grievances, there are other conditions which make for its successful operation. It is essential that the association have a sufficient volume of business to make it profitable. A coöperative association is similar to a strictly private dealer in this respect. Unless its volume of business is adequate it cannot provide competent management and an adequate business organization to properly keep in touch with market conditions, keep accurate records and accounts, inspect packing and grading and perform other essential parts of the association's business. It may also experience difficulty in financing all of its transactions because of insufficient volume of business or its manager may be so incompetent as to mismanage its financial

affairs and marketing activities. Volume of business alone is, however, not a panacea. There must in addition be a willingness on the part of the association to make a sufficient outlay to assure competent management.

Other conditions which have shown themselves to be favorable to successful coöperation include a reasonable concentration of production geographically so that most of the members reside in one general community. Stability of the agricultural population is highly desirable if not essential, for if the farms in a community are operated mainly by short-time tenants the association's membership is likely to be fluctuating and difficult to hold to an agreed marketing policy. Similarity in views, habits, nationality and other characteristics of the association's members may also at times be a factor in successful coöperation, but they are less important than common economic needs and a reasonable degree of business intelligence. Competent leadership is always essential, and it is desirable that the board of directors consist of farmers in whom the members have confidence and who will devote the time necessary to direct the association's affairs and actively support the efforts of its business manager. Even then the coöperative enterprise will not be successful should disloyalty develop on the part of its members.

Types of Coöperative Marketing Associations.-The term coöperative marketing association has been used in this discussion because that is the term most commonly applied to organizations through which farm products are distributed coöperatively. It does not follow that they may not be incorporated companies or corporations, as indeed most of them are. In general there are two types of so-called associations,-noncoöperative capital stock companies and coöperative organizations. The former are incorporated companies which distribute their profits by means of dividends on capital stock and according to the amount of capital invested. They are organized as are any other business corporations, without limit as to the number of shares of capital stock one person may own or the number of votes one stockholder may have, other than the number of shares owned by him. "In the

3 U. S. Department of Agriculture, Bulletin No. 547, p. 3.

truly coöperative organization the financial interest of each member is limited, each member has the same voting power, and savings are distributed by paying a fair rate of interest on the capital invested, and by distributing any further savings in the form of a patronage dividend, proportioned on the amount of business transacted with the organization."

Coöperative organizations conforming to the principles of true coöperation may be organized either on the capital stock plan or as nonstock companies or associations. They may, moreover, be either incorporated companies or unincorporated associations. The great majority of them are incorporated and many are organized on the capital stock plan.

Thirty-five states have enacted laws especially providing for the formation of coöperative organizations. Some of these statutes expressly authorize the formation of unincorporated associations, but such organizations are more commonly formed under the common-law right of contract.

The prevailing form of organization in the future may be influenced somewhat by recent federal legislation. The Clayton Act of 1914 which sets aside the Sherman Anti-Trust Law under certain conditions, expressly states one of these conditions to be that the exempted farmers' organizations may not have capital stock and another that it shall not be conducted for profit. The Capper-Volstead Act of 1922 authorizes coöperative marketing associations of producers, "corporate or otherwise with or without capital stock," provided they are operated for the mutual benefit of their members and conform to one or both of the following requirements: "First, that no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; or, second that the association does not pay dividends on stock or membership capital in excess of 8 per cent per annum." To come within this act, moreover, a coöperative association may not "deal in products of nonmembers to an amount greater in value than such as are handled by it for members," and any acts on its part to monopolize or restrain trade in interstate or foreign commerce 4 Ibid.