In Denmark, on the other hand, all the dairies work with unlimited liability. The original funds for the equipment of the dairy are borrowed from a private bank and repaid by instalments. The working capital is provided by a pre mium of (say) 15s. per cow owned, on which no interest is paid. When the original loan is paid off, a new loan is taken out from the bank at the same rate of interest, and is charged upon the working expenses of the society, including both original and new members. The money- thus obtained is handed over to the original members, and then all alike proceed to pay off the new loans, and so on thru an indefinite series of loans and repayments.
The object of the d6ice is this: old members, who had borne the expense of the original loan, would naturally not admit new members to joint ownership in a property to which the latter had contributed nothing, while new members would not always be ,prepared to pay down at once into the reserve fund a sum equal to the individual outlay of original members. However, a new member is at any time admitted, if be is prepared to pay down, besides his premium per cow, a subscription corresponding to the amount which, at the time lie happens to join, is paid ofF on the debt of the cream ery. The loans are obtained at an average rate of 1-1 per cent from the municipal savings banks or from private pro vincial banks.1 14. Example of a cooperative manufacturing so Taunton, Massachusetts, there is a society, the North Dighton Cooperative Stove Company, which was founded in 1886, and which proves by its history that the cooperative workers' societies tend to degenerate into joint stock- companies, some of the members of which happen to be employes. Its capital stock consists of 115 shares of a par value of $100 each, distributed among 22 stockholders, of whom 17 are workers in the factory. No stockholder can hold more than ten shares.
There is a rule that the company shall have the first option to buy shares from members intending to sell.
This restriction tends to eliminate the cooperative idea, since the company gradually gets its own shares and distributes them among its stockholders, the. number of which gradually decreases. The by-laws permit each member to vote according to the number of shares he holds, but in actual practice each member casts one vote. The company has a large accumulated surplus and is paying a high rate of income on the shares.
15. Advantages and disadvantages of cooperation. —Cooperation encourages thrift in the individual and tends to eliminate social waste. It is undoubtedly most useful in the agricultural industries since here it tends to overcome the inherent defects of rural or ganization. It has been shown frequently that farm ing does not lend itself to large-scale production. The advantages of large-scale marketing and financing, however, are obtained by the various agricultural co operative societies, and the individual farmer must deal with the problems of production.
The chief defect of cooperation is that it does not offer sufficient incentive to business leadership to de velop good management. The tendency is to make the business subordinate to all the needs of the mem bers, instead of emphasizing the progress of the busi ness as the central idea. Thus incompetents may be promoted while capable non-members are held back. Cooperation, in other words, opens the door to nepo tism in its most extended form. Indeed, in the manu facturing societies it is a general rule that the sons of the members shall always have the advantage as apprentices. Another disadvantage of cooperation is the impossibility, under the system, to amass large sums of capital and thus to get all the benefits of large-scale production. Probably cooperation will not have a large growth outside of the ag,ricultural communities ; there it is looked upon as a business ex pedient and not as an instrument of social reform.