8. Growth of consumers' cooperative societies.— The constuners' societies have generally had a more satisfactory experience. The problem bere is simpler —the elimination of the costs and profits of market ing. Instead of the difficulties increasing with an in crease in membership, they actually decrease. A con crete example -will make this plain. In most coopera tive stores delivery is not included in the purchase price ; the buyer is compelled to take away his own goods. If, however, the membership increases, auto trucks can be used, and thus the expense of local trans portation can be reduced. In other words, producers' societies distribute profits, while consumers' societies distribute costs. There is no inducement to the forrner to admit new members; there is every reason for the latter to invite recruits.
9. Management of cooperative societies.—The members of a cooperative society generally elect a board of directors and they choose the officers. The directors and officers, however, are in most instances less independent than are the corresponding officers of an ordinary business concern. And yet, after all, the success of the concern usually depends on the ability of the managing officer. Experience has proved that management is one of the most dangerous stumbling blocks in the way of success. Either the manager is dictatorial and loses the loyalty of the co operators, or he is incompetent and unable to cope with the outsiders with whom be has to deal. A man of the first type allows the society to be disrupted by causes that work from within ; the other kind of man ager is too often responsible for its being disorganized by outside causes.
10. Division of profits.—A fair example of the methods of distributing dividends is that prescribed by the New York statute. It is typical of the methods used in this country and abroad in both producers' and consumers' societies.
The directors, subject to revision by the stockholders at any general or special meeting, shall apportion the net earn ings by first paying dividends on the paid-up capital stock at a rate not exceeding six per centutn per annum. They shall set aside not less than ten per centum of the net earn ings for a reserve fund until the reserve fund shall equal thirty per centum of the paid-up capital stock. They shall also annually set aside five per centuni of the net earnings for an educational fund to be used in teaching cooperation. The remainder of the net earnings shall be distributed by uniform dividend to members of the first class and members of the second class. 'Members of the first class shall include
stockholders and employes. Members of the second class shall include non-stockholders who shall during any fiscal year do business with the corporation, amounting to not less than one hundred dollars. Dividends shall be paid on pur chases amounting to one hundred dollars and over, from or by members, and on the amount earned by each employe dur ing the fiscal year. Members of the first class and employes shall be entitled to dividends at double the rate of dividends to which members of the second class shall be entitled. Divi dends to non-shareholders may be credited on account of such non-shareholders, in the purchase of capital stock of the corporation. In productive corporations, including cream eries, canneries, elevators, factories, and the like, dividends shall be calculated on raw material delivered, instead of on goods purchased. If the corporation be both a selling and a productive concern, the dividends may be on both raw material delivered and on goods purchaSed.
The net earnings of such corporation shall be distributed at such times as the by-laws shall prescribe, but such dis tribution shall be made at least once every twelve months.1 11. The principles of consumers' societies.—In 1844 twenty-eight flannel-weavers in Rochdale, England, owned a cooperative grocery store. So successful has this enterprise been that its organization and conduct have generally been studied by new establishments of the same type. The rules of organization underlying the Rochdale system may be stated as follows : 1. Open membership with shares of low denomination— usually at $1 or $5 each, and pay-able by instalments, so as to be within the reach of all.
2. Limitation of the amount of shares to be held by any one member, to prevent wide inequality in financial status of members.
3. Democratic government, each member to have but one vote, irrespective of the number of shares that he or she may hold.
4. Sale of pure goods and the giving of fair measure at prevailing market price, to avoid arousing needlessly the de structive hostility of local merchants.
5. Cash sales, to avoid loss' thru delayed payments and uncollectable accounts, to reduce bookkeeping costs, and to insure purchase of goods on the most advantageous terms.