For example, it is not infrequent for a society which be gins with the mere sale of raw fruit to establish a fruit-pre serving or jam factory, selling its best fruit directly as raw fruit, and the remainder after conversion into preserves and j ams.1 4. Classification of producers' societies.—The con sumers' societies consist of cooperative wholesalers or retailers. The principles held by both of these classes are about the same, but the producers have or ganized for cooperation in various branches of produc tion. Thus we have credit-unions, agricultural socie ties and cooperative workers' societies. To these might be added the mutual insurance companies and the building-and-loan associations, in the work of which the cooperative movement has been most suc cessful in the United States. In some states like New -York, special laws for the incorporation and the. man agement of credit-unions have been enacted. These laws are generally based on the principles that have been worked out successfully in Europe. Tbe agri cultural societies in California, Iowa and other states are constantly growing in usefulness and importance.
5. Organization of societies.—It is impossible to give any general description of all these societies. Some of them fall into the category of voluntary asso ciations. Others are incorporated under special laws passed especially to suit the business method that the societies adopt. Generally- the organization consists of a fairly large number of members, each of whom can hold only a limited number of shares. The law of _New York on this point is typical of tbe provisions found in statutes of other states and in the constitution of the societies themselves.
The capital stock of any such corporation shall be divided into shares of the par value of five dollars each. A stock holder in any such corporation shall not own shares of a. greater aggregate par value than five thousand dollars, ex cept as hereinafter provided. A stockholder shall be entitled to but one vote, without regard to the amount of stock held by him. Certificates of stock shall Dot be issued to any subscriber until fully paid, but the by-laws of the corporation may allow subscribers to vote as stockholders, if part of the stock subscribed for has been paid for in cash. No stock shall be transferred without the written consent of the cor poration indorsed on the certificate of stock. The corpora tion shall have the first right to purchase at par any stock of a stockholder offered for transfer, or the stock of any deceased or retiring stockholder, or of any stockholder who shall have purchased of or sold to the corporation goods of the value of less than one hundred dollars in any one cor porate year.
6. Who may become members.—It will be noticed that according to the New York law shares are not absolutely assignable. It has been found that cooper ative societies must protect themselves from the intro duction of members whose interests are not identical with the class for whom the society was founded. For example, commission merchants should not be per mitted to join a society of producing farmers.
A truly cooperative society, however, would wel come the application for membership of any person whose interests were similar to those of the members. The membership is usually limited, and the society therefore becomes virtually a joint stock company or a corporation, dividing its profits on some basis other than that of ownership.
7. Reason for slow growth of cooperation for pro has increased very slowly among the production societies. The reason is con cisely stated by Ford in his "Cooperation in New Eng land." Even under the best of circumstances it has proved diffi cult for cooperative factories to succeed. In most indus tries the amount of capital requisite for founding the estab lishment is almost prohibitive. A handful of workingmen seldom can raise at once several thousand dollars in order to buy or build a factory, and to buy machinery and raw materials with which to begin business. But once under way the difficulties increase. The producers of necessary raw material may refuse to sell or may deliver poor goods. . . .
The problem of management may also become very burden some when the score of men who place the manager in his position are always at hand in the shop to criticise his every move. . . . The market demands prompt decisions, which hampered managers cannot give; it further requires that change of managers—which the impetuous majority- of a cooperative society is liable to demand—should not be fre quent. Problems of division of earnings, if profits have been made, prove a stumbling block to many. If all net profits go as interest to stockholders on shares, as is the case in the New England "cooperative" factories, the society is, in so far, a joint stock company. If part reward is given to labor, the standard of division is difficult. Reward in proportion to wages, which is the only method of distribution of profits to labor that has been recorded in New England, often cre ates dissatisfaction among the employes as to the amount, of their wages. Further, true cooperative societies are handicapped in that they cannot easily dismiss help when the market demands restriction of output. Old shareholders are often retained at full wages beyond the period of their use fulness.