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UNITED STATES DEPARTMENT OF LABOR
W . N. DOAK, Secretary

BUREAU OF LABOR STATISTICS
ETHELBERT STEWART, Commissioner

BULLETIN OF THE UNITED STATES \
XT
r-o-|
BUREAU OF LABOR S T A T IS T IC S / • • • • N O . O O l
MISCELLANEOUS

SERIES

CONSUMERS’,
CREDIT, AND PRODUCTIVE
COOPERATIVE SOCIETIES
1929

FEBRUARY, 1931

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1931

For sale by the Superintendent of Documents, Washington, D .C .

•

Price 25 cents

Acknowledgment
This bulletin was prepared by Florence E. Parker, of the United
States Bureau of Labor Statistics,
m

Contents
Page

Chapter I.— Summary.------------------------------------------------------------------------------Trend of cooperative development___________________________________
Summary statistics for 1929----------------------------------------------------------------Chapter II.— Consumers’ societies________________________________________
Retail societies------- -------------------------------------------------- --------------------------Characteristics of consumed societies___________________________
Types of societies included in study_____________________________
Membership______________________________________________________
Age of societies__________________________________________________
Funds of societies________________________________________________
Amount of business done by cooperative societies_______________
Goods manufactured by consumers’ societies____________________
Operating expenses______________________________________________
Net gain_________________________________________________________
Division of profits_______________________________________________
Development since 1920_________________________________________
Recreational and social activities________________________________
Housing societies---------------- ----------------------------------------------------------------Apartment buildings--------------------------------------------------------------------Residential hotels________________________________________________
Insurance societies____________________________________________________
Chapter III.— Central consumers’ organizations__________________________
Commercial (wholesale societies)_____________________________________
Services rendered by wholesale societies_________________________
Organization of wholesale societies______________________________
Business operations______________________________________________
Operating expenses______________________________________________
Trend of development___________________________________________
Educational (cooperative leagues)____________________________________
Cooperative League of the U. S. A______________________________
District leagues____________________________________ ______________
Other federations___________________________________ _____________
Chapter IV.— Credit and banking societies__________________ _____________
Credit unions_________________________________________________________
Characteristics of credit unions_________________
_____________
Number and age of credit unions reporting______________________
Membership______________________________________________________
Resources________________________________________________________
Requirements for loans__________________________________________
Business done (loans granted) during 1920______________________
Interest on loans_________________________________________________
Operating expenses______________________________________________
Division of profits_______________________________________________
Development since 1925_________________________________________
Federation among credit unions_________________________________
Cooperative banks____________________________________________________
Labor banks______________________________________ ____________________
Mutual savings banks________________________________________________
Building and loan associations________________________________________

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CONTENTS
Page

Chapter V.— Workers’ productive associations................................ ..............._
General characteristics of cooperative workshops.________ __________
Geographical and industrial distribution_________ ____________ _______
Year of establishment________________________________________________
Membership policies__________________________________________________
Employment and wage policies_______________________________________
Capitalization and business___________________________________________
Amount and division of profits_______________________________________
Business methods and management__________________________________
Other benefits_________________________________________________________
Development from 1925 to 1929______________________________________
Chapter VI.— Dissolved societies__________________________________________
Losses due to failure of cooperative societies_________________________
Period of business operation__________________________________________
Chapter VII.— Legislation relating to consumers’ cooperative societies___
General summary_____________________________________________________
Definition of “ cooperative association” _________________________
Kind of business permitted______________________________________
Number who may organize______________________________________
Management_____________________________________________________
Capital stock_____________________________________________________
Liability of members and directors for debts of association_____
Voting.__________________________________________________________
Distribution of earnings_________________________________________
Purchase of stock of other cooperative organizations____________
Annual reports___________________________________________________
Voluntary dissolution____________________________________________
Use of word “ cooperative” in name_____________________________
Names of associations organized under the act__________________
Special provisions________________________________________________
Violations of act_________________________________________________
Synopsis of Jaws_____________________________________ ___ _____________
Alabama_________________________________________________________
Alaska___________________________________________________________
Arkansas_________________________________________________________
California________________________________________________________
Colorado_________________________________________________________
Connecticut______________________________________________________
Florida___________________________________________________________
Illinois_______________________________________ ^___________________
Indiana__________________________________________________________
Iowa_____________________________________________________________
Kansas___________________________________________________________
Kentucky________________________________________________________
Massachusetts___________________________________________________
Michigan_________________________________________________________
Minnesota________________________________________________________
Missouri_________________________________________________________
Montana_________________________________________________________
Nebraska_________________________________________________________
Nevada__________________________________________________________
New Jersey______________________________________________________
New York____________________________ _____ _____________________
North Carolina__________________________________________________

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102
102
102
103
104

CONTENTS

Chapter V II.— Continued.
Synopsis of laws— Continued.
Page
North Dakota___________________________________________________
105
Ohio_____________________________________________________________
105
Oklahoma________________________________________________________
105
Oregon___________________________________________________________
106
Pennsylvania_____________________________________________________
107
South Carolina___________________________________________________
107
South Dakota____________________________________________________
108
Tennessee________________________________________________________
108
108
Vermont_________________________________________________________
109
Virginia_____________ _____________________________________________
Washington______________________________________________________
109
Wisconsin________________________________________________________
110
111
Wyoming________________________________________________________
Chapter V III.— Legislation relating to credit and banking societies______
112
Provisions of credit union laws_______________________________________
113
Number of incorporators________________________________________
113
Field of membership_____________________________________________
113
Powers of credit unions__________________________________________
113
Management_____________________________________________________
114
Meetings_________________________________________________________
115
Funds____________________________________________________________
116
Loans____________________________________________________________
117
Reserve (guaranty) fund________________________________________
119
Reports__________________________________________________________
120
Voluntary dissolution____________________________________________
120
Use of name “ credit union” __________________________ __________
120
Provisions of cooperative bank laws__________________________________
121
Synopsis of banking and credit laws__________________________________
122
Alabama_________________________________________________________
122
Arizona__________________________________________________________
123
California________________________________________________________
123
Florida___________________________________________________________
124
Georgia__________________________________________________________
125
Illinois___________________________________________________________
125
Indiana__________________________________________________________
126
Iowa_____________________________________________________________
127
Kansas___________________________________________________________
128
Kentucky____________________________________ _____ ______________
128
Louisiana____________________________________________ ___________
129
Maryland________________________________________________________
130
Massachusetts___________________________________________________
131
Michigan_________________________________________________________
132
133
Minnesota--------------------- ------------ -------------------------------------------------Mississippi__________________ _______- ...........- .......... ........................134
Missouri_______________________ ________ _________________________
135
Montana_______________________ __________ _____ ___ _________ _
135
Nebraska_________________________________________________________
136
New H a m p s h ir e _____________ ________ ________________________
137
138
New Jersey_______________________ ______________________________
New Y o rk .______________________________________________ ________
138
North Carolina__________________________________________________
139
Oregon........................................................................... - ..............................
140

VIII

CONTENTS

Chapter V III.— Continued.
Synopsis of banking and credit laws— Continued.
llhode Island____________________________________________________
South Carolina___________________________________________________
Tennessee_______________________________________ ________________
Texas____________________________________________________________
Utah_____________________________________________________________
Virginia__________________________________________________________
West Virginia____________________________________________________
Wisconsin________________________________________________________
Chapter I X .— Legislation relating to workers’ productive associations. _
Appendix.— Essentials of cooperative housing................................................ ..

page

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BULLETIN OF THE

U. S. BUREAU OF LABOR STATISTICS
NO. 531

WASHINGTON

FEBRUARY, 1931

CONSUMERS’, CREDIT, AND PRODUCTIVE COOPERATIVE SOCIETIES
IN 1929
Chapter I.—Summary
HE bureau presents herewith the results of its third general
study of the cooperative movement in the United States, previous
studies having been made for the years 1920 and 1925.1 The figures
in this report generally cover the year 1929, but data were also
obtained for the years intervening since the last previous study as
regards amount of business, net profits, patronage dividends, and
interest on share capital.
The societies include all types of cooperative effort except farmers,
marketing associations.2
The reports received cover a total of 1,545 societies. While these
form only 60 per cent of the 2,571 cooperative organizations known
to be in existence, the reporting associations include practically all
of the large societies. The reporting societies have a combined mem
bership of 553,954 and employ nearly 5,000 workers in the cooperative
enterprises. Paid-in share capital of $34,446,864 was reported, and
reserves aggregating $7,339,272. The business done through the
cooperative societies reporting to the Bureau of Labor Statistics for
1929 amounted to some $142,000,000.
Based upon the reports received, the whole cooperative membership
in the United States may be conservatively set at 750,000 and the
amount of business done through these cooperative channels in 1929
at some $225,000,000.

Trend of Cooperative Development
T h e Bureau of Labor Statistics has been an observer of the coopera
tive movement for more than 10 years, during which time many
changes have taken place, some of which are noted below.
Consumers’ societies.—During the latter years of the war period
many consumers’ societies were formed, a large part of which were
short lived, due to inexperience, inability to meet the rapidly falling
prices in 1920-21, and the general depression which followed. Since
the immediate postwar period comparatively few store societies have
1 Published as U. 8. Bureau of Labor Statistics Buis. Nos. 313 and 437, respectively.
2 For data on farmers’ marketing associations see reports of the U. S. Department of Agriculture.

COOPERATIVE SOCIETIES IN 1929

been formed. The societies already in existence have very generally
found pretty hard sledding. Some have succumbed, while others
have had to devote their energies to regaining the ground lost during
the period 1920 to 1923. The whole period since 1920 has been
accompanied by general economic and employment conditions which
have made things difficult for cooperative as well as private business.
The farmers7 societies have suffered from the depressed condition of
agriculture, while the industrial workers’ societies have had to con
tend with the decreased purchasing power of the members due to
employment conditions.
A few instances will serve to illustrate some of the conditions which
the societies have had to meet. Thus, one society in a mining town
lost about one-third of its membership when the mines shut down
and, after a protracted period of unemployment, many of the mem
bers moved away in search of work. Another society—a miners'
organization which had become one of the largest and most successful
store societies in the United States—suffered because of the miners'
strike and the long period of depression in the mining industry, during
which time the unemployment and decreased purchasing power of the
members so affected the cooperative business that its sales fell to
little more than half of what they had been. Fortunately, during its
prosperous years it had accumulated reserves of more than $90,000,
and these enabled the society to bear its losses. Employment
in the mines has now improved and the society is again forging to the
place it previously held among the cooperative societies of the coun
try. The manager of another society, in a town in which the textile
industry plays a large part, reports the loss of nearly half of the mem
bership when the largest textile mill closed down and moved South.
A third society whose sales have decreased steadily each year since
1925, attributes this to three factors: (1) The decline in prices, (2)
unemployment among the railroad workers (who form the majority
of the membership), with consequently decreased purchasing power,
and (3) the competition of the chain stores. The mortality of the
societies in the coal-mining regions has been heavy, due to lack of
work for the members. Those, however, which have survived are
beginning to show improved sales, due to better employment condi
tions in the mining industry.
Political factors have caused dissension in some cases, with a conse
quent loss of membership and business. Instances of discord over
communism were reported as early as 1921, and in 1929 and the
beginning of 1930 the situation became acute in some regions. The
ultimate effect on the cooperative movement remains to be seen.
Decreasing membership is a disquieting factor disclosed by the
reports of many consumers' societies. Of 225 societies concerning
whose membership the bureau has data for both 1925 and 1929, the
number having losses exceeded those having gains. Thus, 110
showed a loss, 103 a gain, and there was no change in 12. The gains
made by the 103 societies exceeded the losses by the 110 societies,
however, to such an extent that the membership of the whole group of
225 societies showed a 5.5 per cent increase between 1925 and 1929.
Share capital and reserves per society and per member have declined
since 1925, the decline in reserves being due probably to the fact
that it has been necessary to use them in order to tide the society over
the period of hard times.

CHAPTER I .— SUMMARY

Figures for identical societies reporting for all 10 years, 1920 to 1929,
show that average sales per society, which fell considerably from
1920 to 1921 and continued low in 1922, began to increase in 1923, and
continued to rise, with slight fluctuations, up to 1928. A slight drop
took place in 1929. Taking into consideration the retail prices during
the period, average sales per society in 1928 were nearly twice what
they were in 1920 (the year of highest prices) and in 1929 were 86 per
cent higher than in 1920.
A slight improvement in the practice of cooperative principles is
noted, except as regards the housing societies in which a definite
retrograde movement is evident. The practice of credit sales con
tinues to be very widespread and constitutes a real menace to the
safety of the cooperative movement.
In general it may be said that while a considerable proportion of the
societies are still in a precarious condition and living a hand-to-mouth
existence, the majority of the societies which have been able to survive
the difficult past 10-year period are the more stable societies, some of
which present an enviable record of good management and steady
progress under what must sometimes have seemed almost insuperable
conditions.
The most rapidly expanding section of the consumers' movement at
present is that of the cooperative oil associations (gasoline filling
stations) which are having much success and are meeting increasing
recognition as a means of substantial savings, especially in farming
sections using motor-driven machinery.
Cooperative wholesaling is more than holding its own. The three
consumers’ wholesales which have been in existence during the
whole 10-year period are showing expansion, and a new wholesale
society has been formed and is doing well in the East. The first step
toward such a wholesale has been taken in the Central States area,
with the undertaking of joint buying of staple commodities by the
local societies and the packing of quality goods under the cooperative
label.
The average money sales of the wholesale societies which furnished
reports for each year since 1920 show a marked increase in 1929 as
compared to 1920, while if wholesale prices during the period are
taken into consideration, the “ real” sales in 1929 were more than
twice those of 1920.
The course of the “ real” sales of the cooperative retail and whole
sale societies is shown on the chart on page 4.
Credit unions.— The credit unions continue to be the fastest growing
of all the sections of the cooperative movement, and the most uni
formly successful. Involuntary liquidations are very infrequent in
this branch of the movement.
The averages per society of number of members, share capital,
reserves, and deposits all show a decrease in 1929 as compared with
1925, but this is due to the inclusion of a very large number of new
(and therefore small) societies, which brought down the average for
the societies which had been established and were included in the 1925
study.
Workers1productive societies—1These represent what seems to be a
diminishing phase of cooperative effort m this country, in point of
numbers. Practically no new societies of this type are being formed,

COOPERATIVE SOCIETIES IN 1929

IMDEX NUMBERS OF'REAL' SALES
OF COOPERATIVE RETAIL AMD
WHOLESALE SOCIETIES. I9£0-I9£9.

CHAPTER I.— SUMMARY

as far as the knowledge of this bureau goes, while several of the
societies covered in the 1925 report have gone out of business.
The societies which remain, however, show greater share capital
per society and larger surplus and reserve funds than in 1925, while the
sales per society have increased 47 per cent as compared with that
year.
Summary Statistics for 1929
T a b l e 1, which follows, shows summary data for the various types
of societies in 1929. In order to round out the cooperative picture,
similar data for certain types of organizations—mutual savings banks,
labor banks, and building and loan associations—which are coopera
tive in some respects, are also given.

T able 1.—SU M M A R Y D A T A SHOWING STATUS OF COOPERATIVE SOCIETIES OF SPECIFIED TYPE S IN 1929
Total
num
ber of
soci
eties

Num
ber of
soci
eties
report
ing

Consumers' societies:
Retail societies—
Distributive departments of marketing as
sociations ,
- ............ . ,,.
,
Store societies............ .................................. .....
Gasoline filling stations......... ..........................
Bakeries................... ........................................
Creameries________________ ____ _ ______
Restaurants_______________ _ __ _ ____ _
Boarding houses___________ . .
______
Laundries_________________ _
. ______
Funeral associations______________ _______

362
900
198
14
2
8
24
a
5

52
422
146
8
2
6
16
2
2

11,787
309
123,317 * 2,222
4565
55,313
2,743
133
435
4,864
4,107
266
84
1,971
266
26
(10)
6

i $1,043,885
34,653,197
* 1,182,214
52,260
944,975
72,343
*29,126
9,090
(10)

$334,402
2,875,296
604,940
69,198
261,076
149,989
19,474

Total retail societies........... ..........................

1,516

656

204,368 n 4,046

12 7,987,090

6
3
3
45

6
2
3
25

132
5

483,312
(10)

Type of society

Number
of mem
bers

Num
ber of Share capital
em
ployees

Amount
returned
in patron
age divi
dends

Interest
paid on
share
capital

$33,051
693.777
6 674,628
459

$31,296
173,217
7 71,996
431
56,950
3.119
76
502

$238,073
511,985

« 1,408,879 * 337,587

1,580,113

26,864
15206

101,156

84,165,286 !13,290,312 « 1,634,379 7364,657

1,681,269

Amount of
business, 1929

Net gain,
1929

10,000

$10,058,195
37,697,560
10,782,049
965,915
3,434,527
1,211,236
427,293
35,422
53,172

$159,673
1,305,671
1,326,791
16,105
132,931
39,146
1,381
®1,217

4,324,375

64,665,369

2,980,481

135,308
(10)
(io)
(10)

10,371, 583
757,274
i« 8,371,060

297, 111
12,720
(10)

Reserves

05
Value of
goods
manu
factured

Cooperative

___

1,577

696

Credit unions____________________________________
Workers’ productive societies___ __________________

974
20

838
11

Grand total___-................... .................. .............

2,571

1,545

1,000
13 140 }
1,019
13 146 1

1,102,825
5

264.908
1,405

j
j

17 287,641 » 4,195

129,573,227

(10)
657

17 553,954 H4.852

225,500
<“ )

IN 1929

Total consumers’ societies________ .

1 /
\
3 /
\

(10)
(10)

4,459,683

24,065,407 j| 2,079,450 !
808,230 i
800,139 j
12

34,446,864

7,339,272 |

48,635

222,163
(10)

142,061,305 j! 3,443,682 *1,683,014

7 586,820

i* 54,048,353 1
3,847,606

(10)

153,370

SOCIETIES

Regional___________________________- _____

13 351
13 45
78,819
2,435

830,055

COOPERATIVE

Wholesale societies, handling—
Household supplies..........................................
Gasoline and motor oils
_
___ .
Insurance societies__________ ______ ___________
Housing societies_____
_
_ ____
Educational organizations—
National_________________________________

6,964

1,681,269

Semicooperative
Mutual savings banks____________________________
611
14
Labor banksi2....... ........................................... ............
Building and loan associations.............. . . ................ . . 12,342
Total................- --------------- ------------ -------------

12,967

611 w 11,748,085
14
12,342 12, 111, 209

(10)
(10)
(10)

(i°)
4,112.500 233,105.336
(10)
(10)

23,859,294

(10)

4,112,500 2* 3,105,336 ®9,061,416,392

12,967

9,001,599,000
21 59,817,392
(i°)

(10)

I.— SUMMARY

(10$

CHAPTER

1 Not including 3 nonstock associations.
2 And 6 part-time employees.
3 Not including 14 nonstock associations.
4 And 1 part-time employee.
6 Not including 2 nonstock associations.
6 Not including 1 society which paid 5 per cent, 1 which paid 8 per cent, and 1 which paid 18 per cent but did not state amount.
7 Not including 2 societies which paid 8 per cent but did not state amount.
8 Not including 5 nonstock associations.
# Loss.
w No data.
11And 7 part-time employees.
12 Not including 24 nonstock associations.
mNumber of affiliated societies.
u One society paid a dividend at rate of 15 per cent of gross sales, but did not state amount; no data for the other society.
15 Not including 1 society which paid 8 per cent but did not state amount.
16 New policies written.
17 Individuals; does not include the 682 societies affiliated to wholesales and educational bodies.
18 Loans made during year.
19 Number of depositors.
20 Deposits.
21 Average rate of interest ranges from 3 to 4% per cent; amount paid not reported
22 Figures as of June 30,1930.
*3 Surplus and undivided profits.

(21)
(ION

COOPERATIVE SOCIETIES IN 1929

Table 2 shows the distribution of the societies reporting, by States.
As it shows, the States of greatest cooperative development are
Massachusetts, Minnesota, and New York.
T able 2.—N U M BER OF COOPERATIVE SOCIETIES FURNISHING REPORTS, 1929, B Y

STATES

State

Alaska......................
Alabama...................
Arizona...... ..............
Arkansas....... ..........
California. ...............
Colorado...................
Connecticut..............
District of Columbia.
Florida.................
Georgia.....................
Idaho........... ............
Illinois. ................. .
Indiana___________
Io w a .............. ........
Kansas....................
Kentucky....... .........
Louisiana. ...............
Maine............ ...........
Maryland.............. .
Massachusetts..........
Michigan..................
Minnesota................
Missouri__________
Montana.................
Nebraska__________

■Work
Con
ers’
sum Credit pro
ers’ socie duc Total
socie ties
tive
ties
socie
ties

;:9
3
76
23
72
50
12

3
24
41
132

299
20
43
43

5
324

175
69
3
73

State

W ork
Con
ers’
sum Credit pro
ers’ socie duc Total
socie ties
tive
ties
socie
ties

New Hampshire..
New Jersey_____
New Mexico........
New York______
North Carolina...
North Dakota___
Ohio....................
Oklahoma.-........
Oregon.................
Pennsylvania___
Rhode Island___
South Carolina...
South Dakota___
Tennessee......... .
Texas__________
U ta h ...________
Vermont_______
Virginia....... .......
Washington_____
West Virginia___
Wisconsin______
Wyoming_______
Total..

6
13

125

173
23
14
17
5
9
14
12

16
14
11

26
35
9
58
3
692

1,541

Chapter II.— Consumers’ Societies
Retail Societies 1
HE present section covers 656 cooperative societies—604 con
sumers' distributive or service associations and the store depart
T
ments of 52 cooperative marketing associations. As the housing and
insurance societies do not readily lend themselves to the same tabu
lation as the store and service societies they have been treated in a
separate section.
The data obtained show that the societies reporting operate 845
establishments of various kinds and employ 4,046 full-time workers.
The combined membership at the end of 1929 was 204,368, of which
60 per cent belonged to the store societies and some 27 per cent to
the cooperative oil associations. About 70 per cent of the whole
number of societies and 60 per cent of the membership are found in
the North Central States. The data show that there are 34 societies
in the United States having 1,000 members or more and 14 which have
2,000 or more.
The consumers7 societies have an aggregate capital stock of $7,987,090 and reserves of $4,324,375. Their business for 1929 amounted
to $64,665,369, on which they realized net earnings of $2,980,481.
Patronage dividends and interest on the members’ share capital,
for 1929, amounted to $1,746,466; and for the four years covered by
the bureau’s study (1926-1929) to $5,102,504.
Characteristics of Consumers* Societies
T h e consumers’ society in its organization varies little from
country to country. The following fundamentals laid down by the
Kochdale weavers have been adopted as guiding principles wherever
the movement has spread.
1. Unrestricted membership, with capital shares of low denomination
which may be paid f or in installments. This is an important feature.
Since the cooperative movement is above all a movement of the
working classes, it is essential that the financial undertaking be made
easy and within the workingman’s means.
2. Limitation of the number of shares to be held by any one member.
Members of means are not excluded, but in order that democracy
may prevail, it is well that there should be no wide inequality in
the members’ financial standing in the society.
8. Democracy in government, with officers elected by and responsible
to the members, and each member entitled to one vote only, irrespective
of the number of shares he holds. This feature immediately eliminates
any tendency toward control of the society by the more well-to-do
members, as in the stock company.
4.
Sale of goods at prevailing market prices. This is done for two
reasons: Under the “ cost-plus” system—sale at cost, plus a small
percentage estimated as sufficient to cover expense of management,
handling, etc.—it is next to impossible to foretell accurately what
1 The Bureau wishes to acknowledge with gratitude the valuable service rendered by Mr. Eskel Ronn,
manager of the Cooperative Central Exchange, Superior, Wis., in obtaining data from a number of societies*

18672°— 31-------2

COOPERATIVE SOCIETIES IN 1929

the expense will be, and miscalculation leads to the failure qf the
store, since there is in the very nature of the plan no reserve to fall
back on. Again, price cutting at once attracts the attention and
arouses the hostility of the private dealer; it is also unnecessary, since
the purpose of price cutting can be accomplished through the return
of the patronage dividend.
5. Cash sales to avoid the loss attendant upon the extension of credit
and to enable the society to make the best me of its capital.
6. Return of dividends to each member, not on the stock held, but in
proportion to the amount of his patronage with the store. The dividend
is the member’s share of the savings or “ profits/’ that is, of the sum
remaining after the deduction from the trading surplus of the amounts
to be set aside for educational purposes, reserve, and depreciation
fund. The dividend is computed not upon the share capital but upon
the total sales, and is distributed in accordance with the amount pur
chased by each member. It is evident that the member’s patronage,
not the money he has invested in the store, determines the amount
he receives in dividend. This feature is peculiar to the cooperative
movement.
Types of Societies Included in Study
R e p o r t s were received from 52 associations whose principal business
is the marketing of the members’ crops; in addition to the marketing
business, however, these associations have a store department which
supplies the members with groceries, work clothing, general farm sup
plies, etc. There are many farmers’ marketing organizations which
have a retail department dealing exclusively in supplies used for the
business (i. e., production) of the farm. Such goods can not, how
ever, be considered as consumers’ goods, and organizations dealing
only in supplies used for the business of the farm were therefore ex
cluded. The present study covers only organizations which handle
consumers’ goods (groceries, clothing, house furnishings, general
merchandise, etc.). In the case of the distributive departments of the
farmers’ marketing associations, the figures relate in all cases only to
the retail, not the marketing, business.
The other societies were classified according to their main business
activity. Thus, an organization which operates one or more general
stores may also operate a bakery, but if the merchandise business
is the principal line, the society is here classed with the general stores;
notations are made, however, where several lines of activity are
carried on.
As the following table shows, the 422 store societies operate 506
stores and 38 other establishments. Altogether the 656 associations
covered in the table run 561 stores, 198 gasoline stations, 20 bakeries,
17 boarding houses, 13 restaurants or cafeterias, 4 food shops, 8
dairies or milk-distributing plants, 3 laundries, 3 feed mills, 1 tailor
shop, 2 coffee roasteries, 1 dance hall, 2 pool or billiard parlors, 1 plant
for smoked meats, 1 tea room, 1 public dock, 3 fuel yards, 1 cheese
factory, 1 establishment for cleaning beans, 1 blacksmith shop and
garage for repairing automobiles, 1 steam bath, and 2 funeral parlors.

CHAPTER II.— CONSUMERS’ SOCIETIES
T able 3 .— LINES OP BUSINESS OF CONSUMERS’ COOPERATIVE

SOCIETIES, AND

N U M BE R OP W ORKERS E M PLOYED

Type of society

Estab
lish
Number ments
of socie operated
ties
main
reporting inline
of
business

Distributive departments of marketing associations..

Retail store societies dealing in—
General merchandise_________________________
Groceries____________________________________
Groceries and meat___________________________
Dry goods___________________________________
Coal............................ ................ ............................
Students’ supplies____________________________

299
60
48
1
2
12

Total....................................................................
Gasoline filling stations__________________ ________
Bakeries________________________________________
Creameries______________________________________
Restaurants__________________________ __________
Boarding houses_________________________________
Laundries_______________________________________
Funeral associations_____________________________
Grand total_________________ ______________

Employees
Other
estab
lish
ments

153

Number
of socie Number
ties
reporting
51

309
31,351
198
479
1
5
3 188

345
4 59
«81
1
2
18

13
5
18
2

290
55
47
1
2
12

422

506

407

6 2,222

146
8
2
6
16
2
2

7198
8
3
11
16
2
2

111
8
2
6
16
2
2

8 565
133
435
266
84
26
6

656

799

605

8 4,046

1 Stores operated; 15 of these societies, in addition to merchandise, sell coal and 5 gasoline.
2 In addition to general merchandise, 17 societies also handle coal, 11 handle gasoline, 3 operate bakeries,
I runs a boarding house, 1 distributes milk, 2 do trucking, and 38 do some marketing for members.
3 And 3 part-time employees.
« In addition to groceries, 5 societies handle coal, 5 handle gasoline, 2 operate bakeries, 1 runs a laundry,
and 3 do some marketing for members.
1 In addition to groceries and meat, 1 society handles coal, 1 gasoline, 5 operate bakeries, 2 operate res
taurants, and 4 distribute milk.
• And 6 part-time employees.
7 In addition to gasoline and motor oils, 3 societies handle coal and 1 handles farm machinery.
8 And 1 part-time employee.
9 And 7 part-time employees.

In addition to the usual lines of goods handled by the store societies,
6 associations carry athletic goods, 4 jewelry, 1 certain lines of drugs,
II clothing (3 men's clothing only and 1 work clothing only), 25
shoes, 4 furniture and house furnishings, 1 victrolas, 2 radios, 10
feed, 7 fertilizer, 22 farm machinery or implements, 5 general farm
supplies, 32 hardware, 5 building materials, 2 paints, 1 ice, 1 elec
tricity, 2 automobile tires, and 2 automobile parts. Forty-one
societies also do some marketing of members' produce (cream, eggs,
potatoes, forest products, etc.) as a side line to the store business.
Of the store departments of the farmers' marketing associations, 2
also handle work clothing, 2 shoes, 1 radios, 1 building materials, 4
feed, 4 farm implements or machinery, and 1 general farm supplies.
In some instances the cooperative group has branched out into
several lines of activity. Thus, one society has five stores, a bakery,
a coal yard, a milk-distributing plant, and a coffee-roasting estab
lishment. Another society which has a general store also has a
gasoline station and a fuel yard. A third has three grocery and meat
stores, a dairy, and a bakery, and has recently started the manu
facture of ice cream. A society in New York has six stores, a res
taurant, a bakery, and a billiard parlor. A New England society
which operates two grocery stores and meat markets, also sells
milk, coal, paint, and furniture, and runs a coffee-roasting plant, a
bakery, and a restaurant and delicatessen store. Other societies

COOPERATIVE SOCIETIES IN 1929

have preferred to expand their activities in a single line, as, for in
stance, one Michigan society which has nine grocery and meat
stores and a bakery; an Ohio society which has seven grocery and
meat stores and smokes its own meats; and a New York society
with eight stores and a dairy.
At the end of 1929 two consumers’ associations each had a credit
union whose membership was drawn from the members and employees
of the cooperative society.2 Since the^ beginning of 1930 a credit
society has been formed in a third association.
The part that a cooperative association can play in the life of the
community is well described in an article which appeared in the
March, 1928, issue of Cooperation (New York), relating to the Rock
Cooperative Co., Rock, Mich.:
A cooperative society can do wonderful things in a small town. The one in
Rock, Mich., proves it. Here is a cooperative so completely supported by its
farmer members that it can do for them almost everything that the private
merchant, the law court or the bank tries to do in the average community where
those institutions flourish. The Rock Cooperative Co., in addition to all its
ordinary business dealings with its consumer members, will get the doctor for
the family when a new baby is expected; perform the marriage ceremony for the
same child twenty years later (the manager is a justice of the peace); organize the
forest gang and buy the timber land by means of which the man makes his living;
and when old age has laid its heavy hand upon the worn-out worker, forcing him
back into bed, again call the doctor, later bring to the house the coffin, and see
that the erstwhile cooperator is given a decent burial.
Rock is a small farming community of about 1,000 souls. Three-quarters of
the families are Finnish. There are only two merchants in the town, the cooper
ative (to which almost every family belongs) and one Swedish competitor. More
than one-half of all the business transacted goes through the books of the cooper
ative company.
There are 375 member-shareholders,8 which means an average of more than one
per family. Not only does the organization own a very substantial part of the
vacant land in the center of the village; it owns nine buildings as well: The
central store, the warehouse next door (over which is a dwelling), a barn, a bath
house, another warehouse, a cheese factory (operated by private capital), a new
warehouse for feed, the post office building, and two dwelling houses (one of
them newly built, of stucco).
Groceries, clothing, household utensils, hardware, feed, farm machinery, the
equipment and raw materials with which farmers work— these may be found in
most well-stocked country stores. The Rock Co. also runs a gasoline station
and even buys new cars for the farmers who can afford such expensive contrap
tions. It rents out several of its buildings and realizes a substantial income from
this source. It buys eggs and cream from the farmers and markets them in other
cities farther south. It takes savings deposits from its members and writes
checks for those who want to send money away; thus acting as a banking house
for people who have no access to a bank. The manager, in his capacity of justice
of the peace, writes deeds, executes other legal business, settles local disagree
ments.
Perhaps the most unusual and interesting service rendered by this all-purpose
institution is that of organizing and operating its “ forest products” department.
Several years ago the leaders of the association noted that farming was not in a
sufficiently prosperous condition really to support these people adequately. Was
there not some other industry which could be developed? What other natural
resources ready for exploitation were there, anyway? Timber.
For the past 13 years the sale of forest products has been a regular source of
income for the cooperative, and a regular source of employment for very many
of the men. The society employs an expert timberman, Oscar Niemi, who works
with the gangs of cutters. When a gang has found a tract of land it wants to
purchase, it comes to the cooperative. Oscar Niemi is sent out to look the tract
over, appraise it, bring his figures back to the cooperative. If all goes well, the
2 Data for these are included in the report on credit societies, p. 54.
3 422 at the end of 1929.

CHAPTER II.— CONSUMERS’ SOCIETIES

company negotiates with the owners in behalf of the men, perhaps even takes
title to the land itself. Niemi is put in charge of the camp and its operation.
Only the very best of equipment is used in these camps; the men have not only
good blankets, but even linen on their beds, the finest of food— in short, such
accommodations that the average woodsman in other parts of the State will not
believe that these conditions are possible for gangs working in the timber. The
wood itself, when hauled out, is sold for the men by the cooperative on a com
mission basis. Thus are the farmers in and about Rock, Mich., able to farm
the forest land which lies all about them.

In another small place, with about 8,000 people, there are three
cooperative societies—one large organization ana two small ones—
with a combined membership of about 775, or about one cooperator
to every 90 inhabitants. On the basis of the family of five, this
means that nearly half of the population is supplied through cooper
ative channels. The largest of the societies carries groceries, meat,
coal, paints, and furniture, and operates a bakery, a restaurant and
delicatessen, and an ice-cream stand.
In another town, in a mining region with a population of about
15,000, the membership of the cooperative numbers 1,040.
Membership
I n t h e formation of a credit society it is desirable that the members
know each other and therefore the degree of dependability of each.
This is necessary for the financial stability of the society, since a large
>art of the business of every credit union is in “ character” loans, i. e.,
oans with only the personal integrity of the borrower as “ security.”
For this reason, therefore, limitations are quite commonly set by
the credit union law of the State or by the by-laws of the society,
restricting the membership to a certain definite group having some
common bond of association, occupation, etc.
In the consumers' movement the aim is to reach as large a section
of the community as possible and limitations on membership are
rather uncommon. There are, however, a few consumers’ societies
which do set some limitation on membership, as for instance, several
societies whose membership is confined to railway workers. Another
society is confined to the managers of the fraternities, sororities, and
clubs of a certain university. In at least one instance the society is
beginning to recognize that such membership restrictions place a
definite limit upon the society’s possibilities of expansion.
National groupings are far more common than occupational group
ings, though usually they are the result not of a definite policy but
rather of the natural tendency of persons of a given nationality to
gravitate together. Thus, one finds in the cooperative movement
societies composed entirely or almost entirely of Russians, Italians,
Finns, or Czechoslovaks. The Finns of the United States have
developed a group of societies which occupies an important position
in the cooperative movement, as regards idealism coupled with finan
cial success. The tendency, however, is to get away from this strictly
nationality status and to try to appeal to all groups in the population
of the community. Some societies have succeeded remarkably well
in this aim. One such organization now has in membership such
diverse nationalities as English, Finnish, Italian, and Scotch, and a
scattering of French. Another, besides the native American members,
includes Scandinavians, Slovenes, Italians, Poles, Austrians, and
Finns.

{

COOPERATIVE SOCIETIES IN 1929

At the end of 1929 the 609 societies which furnished membership
data for the present study had more than 200,000 members. The
store societies (which form the largest single group of societies) ac
counted for more than 60 per cent of this membership, but the gaso
line filling stations which formed less than 20 per cent of the total
number of societies accounted for 27 per cent of the membership.
The creamery societies had the largest average membership, but this
was due to the inclusion in this group of the society which is the largest
cooperative distributive organization in the United States. The next
largest average was that of the restaurants, but here again the average
was raised decidedly by another very large society. The details are
shown in Table 4:
T able 4.—MEM BERSHIP OF VARIOUS TYPES OF CONSUMERS’ SOCIETIES A T EN D OF

1929

Type of society

Number of
societies
reporting

Members
Number

Average per
society

Distributive departments of marketing associations.......
Retail store societies________________________________
Gasoline filling stations______________________________
Bakeries___________________________________________
Creameries_________________________________________
Restaurants________________________________________
Boarding houses____________________________________
Laundries. ________________________________________

52
407
118
7
2
6
15
2

11,787
123,317
55,313
2,743
4,864
4,107
1,971
266

227
303
469
392
2,432
685
131
133

T o ta l........................................................................

609

204,368

336

One of the disturbing facts brought out by study of the membership
data collected by the bureau has been the large number of societies
which have suffered a decline in membership since 1925. A contin
uous influx of new blood is necessary in a cooperative organization if
the society is to make progress and not “ go to sleep on its feet.” A
number of societies, recognizing this fact, have held membership cam
paigns in which an organized attempt has been made to acquaint the
public with the aims and benefits of the cooperative movement and
to attract as many as possible to join the organization.4
An officer of one society recently stated that the membership of his
organization has expanded so rapidly that the desirability is being
considered of limiting the acceptance of new members until the society
has been able to make real cooperators of those it now has. This
society has had the policy of making purchase dividends to nonmem
bers apply on the purchase of shares in the organization, so that event
ually the nonmember patron automatically becomes a shareholder in,
and thus a member of the society. The result has evidently been
such an influx of new members not at all imbued or so insufficiently
imbued with the principles of cooperation that the society feels it
must take steps toward their assimilation into the cooperative group.
It is evident that such a dividend policy might easily produce a
situation dangerous to the well-being of the society. It must be
remembered that each new member becomes at once the possessor of
equal rights with every other member, and is entitled to a vote on
every matter brought up before the society. A voluntary applicant
4 The seventh congress of the Cooperative League, held in Superior, Wis., October 20-22,1930, gave official
recognition to the importance of such membership campaigns oy designating October as the month which
hereafter will be utilized for concerted action by all consumers to secure new members.

CHAPTER II.— CONSUMERS' SOCIETIES

for membership in the cooperative body, who pays down the price of
his share or shares of stock and his membership fee, may be presumed
to be favorable to the cooperative idea or at least interested in it.
To a nonmember patron, however, the cooperative store may be only
a store, to which he gives his patronage because of the convenience of
its location, the services it renders, the quality of goods, or any other
of a dozen reasons none of which may be in the least connected with
or indicative of an interest in cooperation as such. The admission of
such persons, then, might even cause a reversal of cooperative to
capitalist policies, if the noncooperative new members so vote and are
in sufficient numbers to carry their point.
Too much emphasis can not be placed upon continuous and inten
sive educational work, and such educational work seems to be the
only safe policy for societies admitting new members on the basis
above described.
One of the important tasks of the cooperative society is to arouse
the interest of the wives of members and those women who are share
holders in their own right. Regardless of the number of male share
holders, the cooperative store will be unable to make much progress
if the wives do their trading elsewhere. The housewife being the per
son who makes the family purchases, it is vital that she be alive to
the significance of the movement and not look upon the cooperative
store as “ just another store.” A determined effort is being made in
the Cooperative Central Exchange district to enlist the interest of the
women, and to this end local women's guilds are being formed. Al
though this work started in 1929, most of the guilds have been formed
since the beginning of 1930. Conferences have been held in the vari
ous localities and a central executive committee has been established.
Some of the guilds have already taken part in organized membership
drives, in arranging educational affairs and entertainments, and are
becoming a real factor in the cooperative organization. At the end
of 1930, 41 such guilds, with 718 members, were functioning in the
Exchange territory.
While these women’s guilds are a new development in the United
States, the women’s cooperative guilds are a recognized feature of the
consumers’ cooperative movements in the countries of Europe. The
national guilds have an international organization whose purpose is
to act as a liaison body and keep the national movements in touch
with each other. Eventually the guilds of the United States will prob
ably also affiliate with it.
In the Exchange district an attempt is also being made to interest
the young people through the formation of local units of the Coopera
tive Youth League.
The data given in Table 4 are shown, by States and geographic
divisions, in Table 5. It is seen that Massachusetts, Minnesota,
Illinois, and New York, in the order named, are the most important
States as regards cooperative membership of retail store societies;
Minnesota, Illinois, and Iowa as regards membership of gasoline
stations; and New York and Minnesota as regards restaurants and
boarding houses. As regards total membership of consumers’ socie
ties, the leading States are Minnesota, Illinois, and Massachusetts.
Seven States have more than 10,000 members each in consumers’
cooperative societies. The North Central divisions together account
for slightly more than 70 per cent of the societies and 60 per cent of the

COOPERATIVE SOCIETIES IN 1929

total membership, the New England and Middle Atlantic States for
about 15 per cent of the societies and 22 per cent of the membership.
T able 5.— M EM BERSHIP OF VARIOUS TYPES OF CONSUMERS’ SOCIETIES AT END

OF 1929, B Y STATES AND GEOGRAPHIC DIVISIONS

Store societies

Gasoline
stations

Restaurants
and board Other societies
ing houses

Total

State and geographic division Num
Num
Num
Num
Num
ber
ber Mem ber Mem ber
Mem
Mem ber
re
re
re
re
re
Total
bers
port
port bers port bers port bers port
ing
ing
ing
ing
ing
State
Alaska...................
Arizona.................
Arkansas...............
California..............
Colorado...............
Connecticut______
Idaho....................
Illinois...................
Indiana.................
Iowa......................
Kansas..................
Kentucky..............
Maine...................
Maryland— .........
Massachusetts-----Michigan.............. .
Minnesota............
Missouri.................
Montana...............
Nebraska.............. .
New Hampshire...
New Jersey---------New Mexico..........
New York..............
North Carolina---North Dakota-----Ohio...................... .
Oklahoma............. .
Oregon....................
Pennsylvania____
Rhode Island.........
South Dakota........
Tennessee...............
Texas ............ .........
Virginia..................
Washington______
West Virginia____
Wisconsin.......... .
Wyoming............ ..
Total................ ........
Geograph ic division 1
New England..............—
Middle Atlantic.........—
East North Central..........
West North Central-------South Atlantic...................
East South Central...........
West South Central..........
Mountain...........................
Pacific................................
Total .
Alaska_____

1
1

120
2,000

538
8,549
50
3,218
327
10,814

407

1,431
406

"'"eoo'

5
1 3,255

1,312

470
304

850
771
390
849

1,044

n
12

5
3
13
3
15
2

7
171

55,313

6,078

13,500
40,912

3,255
1,778
1,045

120

54
4

123,317 | 118

123,197

210

4,782
697
450
491

7, 907

308

406

549
1,045

2,478

12
7
27

52
73
1,094
2,729

559
58

23,952
15,666
28,733
26,239
5,521
908
3,010
3,136
16,032

43
35
92
169
15

20,688

10,338
135
1,207
156
4,426
1,893
344
849
170
2,316
4,364
3,057
830
5,762
499

1 1 ,0 2 2

10,019
378

1,880
3,458
738
3,127
192
16,599
9,188
13,985
2,208
2C0
2,652
664
3,435

5
5
4
5
3
41
2
35
38
4
15
2
22
40
119
22

2,493
167
63

118

55,313

6,078

22
3
48

538
8,549
385
3,239
327
22,447
131
12,993
6,565
738
3,127
192
18,030
9,947
40,500
3,311
710
11,050
664
3,435
600
14,905
135
1,677
4,123
927
4,816
1,893
344
2,742
170
2,909
4,364
3,228
830
11,041

666

19,660

609

204,368

1,452
1,312
3,678
10,642

49
38
143
297
15
6
17
13
30

25,404
20,233
47,689
78,838
5,521
908
4,374
4,688
16,593

1,364
651
561

901

120

2,000

19,660

204,248
120

1 In all cases in this report, the census classification as to geographical districts has been used. This classi,
fication is as follows: New England division includes Maine, New Hampshire, Vermont, MassachusettsRhode Island, and Connecticut. Middle Atlantic division includes New York, New Jersey, and Penn
sylvania. East North Central division includes Ohio, Indiana, Illinois, Michigan, and Wisconsin. West
North Central division includes Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska,
and Kansas. South Atlantic division includes Delaware, Maryland, District of Columbia, Virginia,
West Virginia, North Carolina, South Carolina, Georgia, and Florida. East South Central division
includes Kentucky, Tennessee, Alabama, and Mississippi. West South Central division includes Arkan
sas, Louisiana, Oklahoma, and Texas. Mountain division includes Montana, Idaho, Wyoming, Colorado,
New Mexico, Arizona, Utah, and Nevada. Pacific division includes Washington, Oregon, and California.

CHAPTER II.— CONSUMERS' SOCIETIES

The following table shows the distribution of the 609 societies
reporting as to size. As is seen, 30 per cent of the societies have
fewer than 100 members each, and nearly 60 per cent have fewer
than 200 members. On the other hand, one-eighth of the number
have 500 members or more, while 5.6 per cent have 1,000 or more.
T able 6.— DISTRIBU TION OF CONSUMERS' SOCIETIES ACCORDING TO M E M BERSH IP

OF SOCIETY

Number of societies having classified number of members
Type of society

500
300
50
100
200
750
and
and
and
and
and
Under and
under
under
under
under
under
under
50
300
500
100
750
1,000
200

1,000 Total
and
over

|
Distributive departments of market
ing associations____ . . . ______ _____
Retail store societies________________
Gasoline filling stations_____________
Bakeries..... ..................................... .
Creameries..........................................
Restaurants..........................................
Boardinghouses
.................... ......
Laundries...
_ ______ __________
Total__________ ____ ____ ____
Per cent-.--------------------------------------

3
48
1

6
1
59
9.7

15
97
10

15
133
22
2

2
2

1
3

126
20.7

176
28.9

7
64
25
2
1j
1|
1
101
16.6

7
34
24
1
1
1
3

2
9
18

2
2
8
1

1
20
10
1
1
1

52
407
118
7
2
6
15
2

71
11.7

29
4.7

13
2.1

34
5.6

609
100.0

All but one of the students’ cooperative societies reporting mem
bership have more than 1,500 members each. Apart from these, the
10 largest consumers’ distributive societies in the United States, in
point of membership, are as follows:
Members

Franklin Cooperative Creamery Association, Minneapolis, Minn--------------- 4, 474
Range Cooperative Oil Association, Virginia, Minn_____________ _______ 5 3, 387
Consumers’ Cooperative Services, New York, N. Y ____________________ ___ 3, 255
Cooperative Trading Association, Brooklyn, N. Y _____________________ ___ 2, 451
Macon County Supply Co., Decatur, 111___________________________________ 2, 000
La Salle County Farm Supply Co., Ottawa, 111________________________ ___ 1, 700
Cooperative Trading Association, Waukegan, 111_______________________ ___ 1, 527
Tamarack Cooperative Association, Calumet, Mich____________________ ___ 1, 522
Cooperative Managers1 Association, Corvallis, Oreg------------------------------------1, 426
Cloquet Cooperative Society, Cloquet, Minn___________________________ ___ 1, 301

Age of Societies
T h e average age of the various types of societies reporting is shown
in the statement below:
Yrs. Mos.

Store societies_____________________________________________
Gasoline filling stations___________________________________
Bakeries_______________________________________________—
Creameries________________________________________________
Restaurants___________________________________ __________
Boarding houses__________________________________________
Laundries_________________ — *------------------------------------------Funeral associations______________________________________
* Membership of societies which own the oil association.

10
3
12
6
9
11
13
11

4
1
11
4
2
10
1
9

COOPERATIVE SOCIETIES IN 1929

Table 7 gives the distribution of the principal types of societies
according to the year in which established:
T able 7 .—DISTRIBU TION OF CONSUMERS' SOCIETIES BY T YPE AN D Y E A R OR PERIO D

IN W HICH ESTABLISHED

Number of societies established in specified
year or period
Year or period

Distrib
utive de Retail
store
part
societies
ments

2
2
4
5
7
28
75

1916-..............................................................................
1917.................................................................................
1918.................................. .............................................
1919 _
......................................................................
1920................................................................................

4
5
3
5
6

Total, 1916-1920...................................................

Other
types

Total

2
3
7
7
9
28
95

20
25
37
57
66

1
5
2
3
9

25
35
42
65
82

205

249

1921-................................... ..........................................
1922...............................................................................
1923-..............................................................................
1924.. . ......................................................................
1925-..............................................................................

3
2
2

2
2

1
4
1

33
13
15
3
5

oco

1881-1885........................................................................
1886-1890 ........................................................ ............
1891-1895 .............. .............................—.......................
1896-1900......... ...................................................... ......
1901-1905........................ ...............................................
1906-1910-............................. ........................................
1911-1915................... - ...................................................

Gasoline
filling
stations

39
21
18
13
15

Total, 1921-1925...................................................

106

8
7
1
2

28
27
25
22

1926................................................................................
1927................................................................................
1928.................................................................................
1929........... ...... ..............................................................

1
3
2
1

36
35
2f
2h

Total, 1926-1929...................................................

102

122

Grand total..........................................................

415

127

628

The situation shown in this table is typical of the development of the
cooperative movement in this country. A slight increase in coop
erative development became noticeable at the beginning of this
century, gradually growing in volume and reaching its high points dur
ing the war years of high prices. Then followed a period of depres
sion and falling prices when cooperative as well as other business
found it difficmt to survive, and when unemployment and lack of
funds among the workers acted as obstacles to the formation of new
societies. The table reveals the expansion of the cooperative gasoline
stations during the past few years when comparatively few store so
cieties have been formed.
Funds of Societies
T h e consumers’ societies reporting as to share capital have an
aggregate amount of $7,987,090, an average of $13,607 per society,
and $45 per member. Reserves amount to $4,324,375, or $7,379 per
society. The data for the various types of societies are shown in
Table 8.

CHAPTER II.— CONSUMERS’ SOCIETIES

T a b u : 8 .— C APITA L A N D RESERVES OF VARIOUS T Y P E S OF CONSUMERS’ SOCIETIES

Share capital
Num
ber of
societies Amount
report
ing

Type of society

Distributive departments of marketing associa
tions_______________________________________
Retail store societies................................................
Gasoline filling stations...........................................
Bakeries____ ____ ____________________________
Creameries...............................................................
Restaurants__________________________________
Boarding houses......................................................
Laundries_________________ ____ —....................
Funeral associations__________________ ________
Total..............................................................

Aver Aver
per
age per age
society mem
b er1

346 $1,043,885 $22,693
3 383 4,653,197 12,149
4 129 1,182,214
9,164
8
52,260
6,533
2
944,975 472,488
6
72,343 12,057
*11
29,126
2,648
2
4,545
9,090
(6)
(#)
7587

7,987,090

Reserves

13,607

Num
ber of
societies Amount
report
ing

$112
46
21
17
194
18
16
34

49
396
109
8
2
5
16
1

10,000

586

4,324,375

$334,402
2,875,296
604,940
69,198
261,076
149,989
19,474

1 Based on societies reporting both membership and capital.
8Not including 3 societies which are nonstock organizations.
3Not including 14 societies which are nonstock organizations.
' 4 Not including 2 societies which are nonstock organizations.
6 Not including 5 societies which are nonstock organizations.
•No data.
7Not including 24 societies which are nonstock organizations.

Amount of Business Done by Cooperative Societies
D u r i n g 1929 the 416 store societies reporting had sales of nearly
$38,000,000, an average of more than $90,000 each. More than
$10,000,000 worth of business was done by the oil associations. # Al
together the business done by the various types of consumers, societies
amounted to nearly $65,000,000.
Table 9, below, shows the 1929 business done by each of the prin
cipal types of societies, by States and by geographic divisions. It is
seen that the major part of the consumers’ cooperative business is
concentrated in the North Central divisions; these account for nearly
70 per cent of the total, while the Northeastern States, their nearest
competitor for the position, account for 17 per cent.
Minnesota was the leading State in sales in 1929, its cooperative
business amounting to more than twice that of either Illinois or Ne
braska (its nearest rivals in point of business), and more than that of
all the Northeastern States combined.
T able 9.—SALES OF VARIOUS TYPES OF CONSUMERS’ SOCIETIES IN 1929, BY STATES

AND GEOGRAPHIC DIVISIONS
Retail store
societies

State and geographic division

Gasoline, filling
stations

Other types

Total

Num
Num
Num
Num
ber
ber
ber
ber
re Business re Business re Business
re Business
port
port
port
port
ing
ing
ing
ing

StaU
Alftskft_________________________

Arizona_________________ ____
Arkansas______________________
California_____________________
Colorado..____________________
Connecticut...................................

1
1
6
5
1
4

$230,900
46,143
364,602
840,498
19,315
601,716

$37,597

1
1

$123,560
9,637

1
1
6
5
3
5

$230,900
46,143
364,602
840,498
180,472
611,353

COOPERATIVE SOCIETIES IN 1929

T a b le 9 .-—SALES OF VARIOUS TYPES OF CONSUMERS’ SOCIETIES IN 1929, BY STATES

AN D QEOGRAPHIC DIVISIONS—Continued
Retail store
societies

State and geographic division

State—Continued
Idaho—
Illinois—
Indiana.
Iowa___
Kentucky ..........
Maine................ .
Maryland.......... .
Massachusetts. . _
Michigan............
Minnesota....... .
Missouri_______
Montana.............
Nebraska_______
New Hampshire .
New Jersey_____
New Mexico.......
New York......... .
North Carolina..
North Dakota___
Ohio.......... .........
Oklahoma______
Oregon..............—
Pennsylvania___
Rhode Island___
South Dakota___
Tennessee..........
Texas__________
Vermont..............
Virginia........ —
Washington_____
West Virginia___
Wisconsin______
Wyoming..........
Total.

Gasoline filling
stations

Total

Other types

Num
Num
Num
Num
ber
ber
ber
ber
re Business
re Business
re Business
re Business
port
port
port
port
ing
ing
ing
ing

$333,131
2,366,097
89,694
871,419
1,326,441
225,834
1,129, 802
221,019
2,911,822
4,149,424
5,009,332
1,435,657
96,854
1,564,490
250,766

14 $2,035,050
1,344,568
240,162

3,587,117
26,287
2,377,429
250,000

2,611,403
58,940
1,074,612
1,346,402
72,765
391,379
616,249
195,886
411,907
134,000
517,682
39,000
810,146
1,894,580
279,333
1,978,675
179,756
416 37,697,560

$600,064
83,460
579,078
3,365, 595

3
43
3
34
39
4
15

303,376
341,969
3,554,386
658,798
469,000
1,147,001

23
40
130
23
2

240,400

4
5

1,112,641

115,587
73,743
546,668
92,236
2 14,818

1,362,058
16,4 7 4

229,320

14
13
5
4
13
3
15

2
1

7
23
3
47

$333,131
5,001,211
173,154
2,795,065
4.932.198
225,834
1,129,802
221,019
3.215.198
4,491,393
12,150,835
2,120,742
565,861
5,088,92J
250,766
1,240,289
250.000
3,724,044
58,940
1.190.199
1,420,145
619,433
483,615
616,249
195,886
1,988,783
134.000
584,156
39,000
810,146
2,123,900
279,333
3,358,405
579,756

493,434
60,000

886,296
340,000

140

10,782,049

86 16,185,760

642

64,665,369

23
114

2,528,484
7,905,968

313,013
1,353,041
1,985,532
10,666,916

51
40
146
321
14

347,597

613,142
932,560
321, 556

18
13
32

5,442,005
5, 580,582
14,444,308
30,266,742
1,369,438
359,834
1,568,191
1,955,356
3,448,013

140 10,782,049

86 16,185,760

641

Geographic division
New England..........
Middle Atlantic........
East North Central..
Wrest North CentralSouth Atlantic_____
East South Central. _
West South Central. _
Mountain..................
Pacific.......................

45 5,128,992
35 4,227,541
94 9,930,292
172 11,693,858
14 1,369,438
6 359,834
955,049
13
7
675,199
29 3,126,457

Total.
Alaska.........

415 |37,466,660
1
230,900

64,434,469
230,900

The distribution of the consumers’ societies according to amount
of sales in 1929 is shown, for each type of society, in Tahle 10. The
largest group of societies is that with sales of from $50,000 to $100,000,
34.4 per cent falling in that group, while 27.4 per cent had sales of
from $25,000 to $50,000.

CHAPTER II.— CONSUMERS* SOCIETIES

T a b l e 10,— N U M BE R A N D PE R CEN T OF EACH T Y P E OF CONSUM ERS’ SOCIETIES

H AVIN G CLASSIFIED AM OU N T OF SALES IN 1929

Number
Number of societies having classified amount of sales
Type of society

Distributing departments of mar
keting associations____________
Retail store societies____________
Gasoline filling stations. _________
Bakeries
- ___________
______
Creameries
.
Restaurants_________ ____ _____
Boarding houses
___________
.......... ...... .........
Laundries
Funeral associations __________
Total____________ ____ ___

Less $25,000 $50,000 $100,000 $200,000 $300,000 $500,000 Total
end
to
to
to
to
than
to
over
$25,000 $50,000 $100,000 $200,000 $300,000 $500,000

4
50
16

7
113
47
2

13
154
46
4
1

9
1
1

2
3
1
1

176

221

11
64
23

8
18
4
1

4
11
4
1

4
6
1
1

51
416
140
8
2
6
15
2
2

100

642

21.6

15.7
4.3
2.9
12.5

2.9
12.5

2.6

1.4

100.0
100.0

Per cent
Distributing departments of mar
keting associations__________ __
Retail store societies-------- ------ Gasoline filling stations. ........... .
Bakeries......... .............................. .
Creameries_____________________
Restaurants....................................
Boarding houses...........................
Laundries-------- -----------------------Funeral associations.......................
Total-

7.8
12.0

11.4

60.0
50.0
50.0
12 . <

13.7
27.2
33.6
25.0
33.3
20.0

50.0
50.0
27.4

25.5
37.0
32.9
50.0
50.0

"20."6‘
34.4

15.4
16.4
33.3

16. 7~

50.0
16.7

100.0
100.0
100.0
100.0
100.0

100.0
100.0
15.6

5.0

100.0

An interesting feature of the table is that 64 societies, or nearly 10
per cent of the whole number reporting, had sales of $200,000 or more,
and 12 societies had sales of half a million dollars or more. Excluding
the students’ societies, the 10 leading consumers’ societies in the
United States in point of sales in 1929 are listed below:
Sales

Franklin Cooperative Creamery, Minneapolis, Minn_______________ $3, 342, 291
Cooperative Trading Association, Waukegan, 111___________________
797, 567
Soo Cooperative Mercantile Association, Sault Ste. Marie, Mich___
686, 514
612, 226
Consumers’ Cooperative Services, New York, N. Y ________________
Cloquet Cooperative Society, Cloquet, Minn_______________________
546, 567
Cooperative Trading Association, Brooklyn, N. Y __________________
471, 523
North Star Cooperative Store Co., Fairport Harbor, Ohio__________
465, 260
Virginia Work People’s Trading Co., Virginia, Minn_______________
422, 404
Tamarack Cooperative Association, Calumet, Mich________________
388, 185
United Cooperative Society, Fitchburg, Mass_______________________
371, 325

It is seen that the societies with the largest membership are not
necessarily the societies with the largest sales. Only 6 of the 10 socie
ties with the largest number of members occur in the above list.
Table 11 shows, for each type of consumers’ societies, the amount of
business done in each of the four years covered by the study.

COOPERATIVE SOCIETIES IN 1929

T able 11.—AM OU N T OF BUSINESS DONE B Y VARIOUS TYPES OF CONSUMERS*

SOCIETIES, 1926 TO 1929

Type of society

Distributive departments of
marketing associations.........
Retail store societies_________
Gasoline filling stations______
Bakeries....................................
Creameries.................. .............
Restaurants..... ................... .....
Boarding houses....................
Laundries................................
Funeral associations..______
Total...............................

1926

1927

1928

1929

Num
ber of
socie Amount of
ties
business
re
port
ing

Num
ber of
socie Amount of
ties business
re
port
ing

28 $4,468,886
295 27,073,211
1,725,193
21
6
704,187
1 3,398,659
855,983
3
9
266,450
34, 744
2
1
29,526

29 $5,552,868
316 28,475,404
52 3,208,772
6
722,411
1 3,341,740
3
893,390
155,939
2
37,509
1
32,413

36
361
77
7
2
5
12
2
2

$7,304,882
32,917,283
6,049,481
737,127
3,511,542
1,082,550
350,504
37,470
52,908

51 $10,058,195
416 37,697,560
140 10,782,049
8
965,915
2 3,434,527
6
1,211,236
15
427,293
2
35,422
2
53,172

417

504

52,043,747

642

366

38,556,839

42,420,446

64,665,369

Goods Manufactured by Consumers’ Societies
T h a t the consumers’ cooperative movement in the United States
has not yet attempted much in the way of production of its own goods
is shown by the fact that only 16 of the 656 societies reported manu
factures of any kind. In 6 instances bakery products were the goods
manufactured, in 2 cases feed, and in 1 case each ruled paper, tailormade clothing, and butter and ice cream;6 in the remaining 5 cases
the kind of goods produced was not stated. The 16 societies reporting,
however, together produced goods valued at $1,580,113, as is shown
in the table below:
T able 13.—VALUE

OF GOODS M AN UFACTU RED BY CONSUMERS’ COOPERATIVE
SOCIETIES IN 1929

Type of society

Number of
societies

Value of goods
produced

Distributing departments of marketing associations__________________
Retail store societies_______________ ___________ _________ __ ________
Creameries..... ...............................................................................................

2
13
1

$238,073
511,985
830,055

Total....................................................................................................

1,580,113

In some localities the societies have taken a first step toward the
ultimate manufacture of commodities, by having goods of specified
kind and quality packed for them under the cooperative label. This
is being done by two of the wholesales 7 and by a group of societies
in the Central States Cooperative League.
Operating Expenses

A g r a t i f y i n g l y large number of societies furnished detailed state
ments of operating expenses for 1929. Although some were discarded
6 Since the beginning of 1930 another society has begun the manufacture of ice cream.
7 One of these also manufactures bakery products.

CHAPTER II.— CONSUMERS’ SOCIETIES

because they did not cover the whole year or because they were not
in sufficient detail, usable reports were obtained from 180 store
societies, 62 oil associations, and 13 societies of other types—255 in all.
The table following shows, for each of the types of societies, the
low, high, and average rate of operating expense for 1929:
T able 13.—LOW, HIGH, AN D AVERAGE R A TE OP OPERATING EXPENSE IN 1929, OF

VARIOUS TYPES OF CONSUMERS' COOPERATIVE SOCIETIES

High

Low

Type of society
Retail store societies:
General stores__________________________________
Grocery stores____________________ - ____________
Grocery and meat stores_________________________
Coal yards
__________________________________
Students' supply stores__________________________
All store societies_____________________________
Gasoline filling stations_____________________________
Bakeries _________________________________________
Creameries
______________________________________
Restaurants________________________________________
Laundries - _______________________________________
Wholesale societies_________________________________

Average

4.4
5.6
7.7
14.0
11.5

30.7
19.2
26.2
19.7
19.9

11.5
11.7
15.2
18.2
14.9

4.4

30.7

12.3

3.8
21.5
30.3
23.3
103.6

45.8
50.1
32.3
58.9
112.2

15.2
32.2
31.6
53.2
105.9

6.4

9.7

8.8

Table 14 shows for each type of society the per cent of net sales
expended for each item of overhead in 1929. As in the preceding
table, the operating expenses of the three wholesale societies han
dling groceries and other merchandise are also included for purposes
of comparison.
T able 14.— OPERATIN G EXPENSES OF CONSUMERS' COOPERATIVE SOCIETIES IN

1929
Per cent of net sales expended for each item by store societies
Item

General
stores
(116)

Grocery
Grocery and
meat
stores
stores
(32)
(26)

Coal
yards
(2)

Sales expense:
Wages___ _________________________
Advertising. _____________________
Wrappings

7.1
.2
.2

9.7
.2
.3

13.9

Students'
supply
stores
(4)

10.1
.8
(0

Total
(180)

7.8
.2
.2

Total...................................................

7.5

10.2

13.9

11.0

8.2

Miscellaneous delivery expense (except
wages)______________________________
Rent ________________________________
Light, heat, power, and water___________
Insurance and taxes____________________
Interest on borrowed money
_________
Office supplies and postage....................
Telephone and telegraph________________
Repairs_______________________________
Depreciation._________________________
Bad debts
_________________________
Miscellaneous....... — .............................

.4
.3
.4
1.0
.3
.1
.1
.1
.5
.2
.7

.6
.7
.3

.7
.6
.5
.7
.3
.1
.1
.2
.5

2.2
.2
.2
1.1

'.8

C)
l.i
.1
.7
.1
.1
.3
.1
.4
.1
.9

.5
.4
.4
.9
.3
.1
.l
.1
.5
.2
.8

Grand total.......................................

11.5

11.7

18.2

14.9

12.3

1Less than one-tenth of 1 per cent.

(1), 0
15.2

(I>.2
.2

COOPERATIVE SOCIETIES IN 1929

T able 1 4 .— O PERATIN G EXPEN SES OF CONSUMERS’ COOPERATIVE SOCIETIES I N

1929—Continued

Per cent of net sales expended for each item by—
Item

Whole
sale
societies
(3)

Gasoline
filling i Bakeries
stations
(6)
(62)

Cream
eries (2)

Restau
rants (3)

Laun
dries (2)

21.2
.2
.4

16. 7
.8
2.4

33.1

67.8
.6

4.1
.6
.5

21.8

19.9

33.2

68.4

5.2

4.2
.7
1.9

.1
.5
.4
.9

.2
.1
.3
.2
,2
.3
.2

Sales expense:
Wages........... ...................... ..................
Advertising_______________________ _
W rappings._______________________

* 10. f>
.2 I

Total................... .......... ..................

10.8 |

Miscellaneous delivery expense (except
.8 1
2. 0
wages)........................... ...................... .
.4
Bent....... .....................................................
.9
.2
Light, heat, power, and water......... ..........
.9
Insurance and taxes_________________
2.3
!i
Interest on borrowed money........ ........... .
.5
.1
Office supplies and postage.........................
.1
....... .....................
Telephone and telegraph
.i
.i
.5
Repairs_____________________ _________
.9
1. 2
Depreciation _________________________
Bad debts_________________ ___________
.1
.6
Miscellaneous............................................. . i
1.4
-9 1
Grand total................. ............ ......... •
1
1 Less than one-tenth of 1 per cent.

15.2 !
!

32.2

!i
.3
.1
.2
2.4
.6
.8

(l)
9.2
7.9

2.0
3.0
8.9
3.2
.6
.2
.4
2.9
4.8

1.0

11.4

.3
.2
1.8

31.6

53.2

105.9

8.8

2Includes drivers’ commissions.

The retail store societies are classified below, according to the ex
pense ratio in 1929:
N um ber of

societies

Under 5 per cent______________________________________________
5 and under 7.5 per cent_____________________________ _________
7.5 and under 10 per cent_____________________________________
10 and under 12 per cent______________________________________
12 and under 15 per cent______________________________________
15 and under 17.5 per cent____________________________________
17.5 and under 20 per cent____________________________________
20 and under 25 per cent______________________________________
25 and under 30 per cent__________________________________ _
30 and under 35 per cent______________________________________

1
14
35
37
39
32
19
1
1
1

Total___________________________________________________

180

The following table shows the operating expenses of each type of
consumers' society in 1929 as compared with 1925, when the bureau's
last previous study was made. It is seen that the expenses have
decreased slightly except in the general stores and the restaurants.
The great increase in the expenses of the restaurants appears to be
due in the main to heavier expenditure for wages and repairs and to a
greater marking off for depreciation.

CHAPTER I I . — CONSUMERS’ SOCIETIES

T able Jo.—COM PARISON OF OPERATING EXPENSES OF CONSUMERS’ SOCIETIES

FOR 1925 AND 1929

Rate of operating expense in Type of society
1925

1929

General stores.................
Grocery stores.................
Grocery and meat stores.
Coal yards......................
Gasoline filling stations _
Bakeries..........................
Creameries......................
Restaurants—.................

Net Gain
O f 603 societies reporting as to net gain or loss on the 1929 op
erations, 30 had losses aggregating $78,234, while 537 made gains
amounting to $3,058,715 and 36 “ came out even.” The advanta
geous position occupied by the cooperative gasoline and oil associations
is markedly brought out by Table 16 below, for it shows that the profits
of 140 stations were nearly as great as those of the more than twice as
many store societies. The net gain made by the gasoline stations was
at the rate of 12 per cent of the sales, a figure not even remotely ap
proached by any of the other consumers’ societies. Figured on the
basis of return on share capital, the earnings of all groups were good
and in two cases remarkable.
T able 1 6 .— PROFITS AND LOSSES OF VARIOUS TYPES OF CONSUMERS' SOCIETIES

IN 1929, AND R A TE BASED ON C A PITA L AN D SALES

Gain

Loss

Type of society

Num
ber of
societies
having
neither Num
gain ber of
nor
socie Amount
loss
ties
hav
ing

Distributing departments of
marketing associations..........
Retail store societies.................
Gasoline filling stations.......
Bakeries................................
Creameries...........................
Restaurants..........................
Boarding bouses...................
Laundries_____ __________
Total..

<24

$11,233
62,264

1,705
1,815
1,217
36

*30

78,234

Total net gain

Num
Num-:
ber of
socie Amount
S
Amount
ties
ties
hav
ing

42
336
140
7

2
5
6

537

$170,906 *44
$159,673
1,367,935 * 359 1,305,671
1,326,791
140 1,326,791
7
16,105
16,105
*>
132,931
132,931
40,851
6
39,146
H 1,381
3,196
« I « 1,217
3,058,715

567 I 2,980,481

1 Based on sales of societies which reported either profit or loss.
* Based on share capital of societies which reported either profit or loss.
* Not including 2 societies which reported a loss but did not state amount.
< Not including 7 societies which reported a loss but did not state amount.
5 Not including 1 society which reported a loss but did not state amount.
* Loss.
7Not including 10 societies which reported a loss but did not state amount.

18672°— 31------- 3

Rate (per
cent) of
total net
gain, based
on—

Share
capi
tal*

1.7
3.8

12 .0

1.8
3.9
3.2

14.1
26.8
107.1
31.9
14.1
54.1
5.5

COOPERATIVE SOCIETIES IN 1929

The net gains on the 1929 business made by the principal types of
consumers’ societies are shown, by States, in the table following:
T a b le 1 7 .—N ET EARNINGS OF CONSUMERS’ SOCIETIES IN 1929, B Y STATES

Distributive
departments
of marketing
associations
State

Arkansas.............
California............
Colorado..............
Connecticut........
Idaho...................
Illinois.................
Indiana...............
Iowa....................
Kansas.................
Kentucky............
Maine.................
Maryland............
Massachusetts__
Michigan............
Minnesota...........
Missouri..............
Montana.............
Nebraska............
New HampshireNew Jersey.........
New Mexico.......
New York...........
North Carolina. _
North Dakota___
Ohio....................
Oklahoma...........
Oregon.................
Pennsylvania___
Rhode Island___
South Dakota___
Texas............... .
Virginia............
Washington___
West Virginia..
Wisconsin_____
Wyoming_____
Total................

Store societies

Gasoline filling
stations

Other
societies

Num
Num
Num
Num
ber
ber
ber
ber
re Amount re Amount
Amount
re Amount re
port
port
port
port
ing
ing
ing
ing
$3,
32,
$13,138

$1,632

1,309
31,410
10,978
56,640

94
,
1,

16,
2 33,
10
24,

220

4
13

5,908
3,991
16,773
3 9,823
11,453

18
2 29
2 69
14

2 20

4
5
18
2

6,662
2 6,815

3
12
2

19,035

(4) ' T f
10,342
’ 19,"368

10
2

20
3
25

252,693
133,391
35,242

0)
$8,121
200

212
2185,
2168,
32,
11,
2 34,
7,

52,
2,
30,
23,
2,
26,
15,

472,766
1,976
38

8,142
3 374
130,405

267,967
4,000

1,442
39,051

"14,646
2,775
41,080

3?,

515,

82,215
7,677

6 48 « 159,673 7 381

1,305,671

140 1,326,791

3 691

Total

Num
ber
re Amount
port
ing
5
5
3
24
3
41
3
33
2 33
4
13
21
23
238
2 127
22
2
263
4
6
1
22
2
13
13
24
4
12
2
16
2
54
44
22
3
43
2

$3,941
32,031
14,770
2 38,921
8,180
356,864
644
160,569
2125,562
10,009
24,904
2 685
220,192
2 191,234
2 776,057
51,340
1,869
2 313,690
7,363
90,462
4,000
91,480
2,000
44,910
29,041
2 9,205
28,930
15,781
7,167
64,170
2,000
5 31,428
5 15,332
48,969
6,970
138, 767
11,044

2 188,346 8602 8 2,980', 481

i One society reported a loss but did not state amount.
* Not including one society which reported a loss but did not state amount.
3 Loss.
4 Two societies reported a loss but did not state amount.
6 Not including 2 societies which reported a loss but did not state amount.
6 Not including 3 societies which reported a loss but did not state amount.
7 Not including 7 societies which reported a loss but did not state amount.
3 Not including 10 societies which reported a loss but did not state amount.

Table 18 shows, for each of the four years covered, the net earnings
of each type of consumers’ society.

CHAPTER II.— CONSUMERS’ SOCIETIES

T ab le 18.—NET EARNINGS OF EACH T Y P E OF CONSUMERS' SOCIETY, 1926 TO 1929

1926

Type of society

Distributing departments of
marketing associations.........
Retail store societies.................
Gasoline filling stations...........
Bakeries....................................
Creameries...............................
Restaurants..............................
Boarding houses.......................
Laundries.................................
Total....... ...... ................

1927

1928

1929

Num
Num
Num
Num
ber of
ber of
ber of
ber of
socie Net gain® socie Net gain® socie Net gain® socie Net gain®
ties
ties
ties
ties
report
report
report
report
ing i
ing i
ing i
ing i

2$66,827
i 976,667
258,088
2 14,510
57,710
32,719
4,755
1,019

234 2$128,427
* 293 <1,084,420
55
375,523
25
2 17,268
1
67,499
3
31,028
8
883
2
1,724

2 37 2$142,311
^335 <1,178,674
77
476, 111
210,319
25
2
97,050
5
50,033
12
3,403
21
2 648

3 49 3$159,673
*379 *1,305,671
140 1,326,791
8
16,105
2
132,931
6
39,146
16
1,381
21
6 1,217

*346 si, 412,295

*401 *1,706,772

7474 71,958,549

8 601 82,980,481

2 31
<269
26
25
1
3
9
2

° After subtracting losses of those societies which sustained a loss.
1Including also those societies which reported having neither gain nor loss.
2 Not including 1 society which reported a loss but did not state amount.
3Not including 2 societies which reported a loss but did not state amount.
* Not including 7 societies which reported a loss but did not state amount.
5 Not including 9 societies which reported a loss but did not state amount.
6 Loss.
7Not including 10 societies which reported a loss but did not state amount.
8 Not including 12 societies which reported a loss but did not state amount.

Division of Profits
F r o m the net profits on the year’s business, provision is made for
reserves, educational fund, etc., a regular fixed rate is paid in interest
on share capital, and the remainder is usually returned to the mem
bers as patronage rebates or is used for some social purpose, for the
good of the society as a whole. Of the 544 consumers’ societies report
ing on the subject of dividends, only 285 actually returned dividends
on the 1929 business. There were various reasons for this. In the first
place, 40 societies operated at a loss and 36 societies just “ broke
even” ; none of these therefore had any profits to divide. In 4 cases the
store was consumed by fire, presumably causing a loss, 1 society
applied its 1929 profits to the payment of a mortgage on the store
building, 1 is using its profits for the formation of a fund for the erec
tion of its own building, and a third is using them to pay for the
building it occupies. # One society reports that it has just paid off the
deficits incurred during the years 1920 to 1923 and will hereafter be
in a position to use its earnings for the payment of patronage rebates,
5 other societies are still paying off deficits, while still another had its
reserves wiped out as a result of the failure of a local bank in which its
funds were deposited and is using its profits to build up another
reserve fund.
As stated, 285 societies paid patronage rebates on the 1929 business,
in a sum amounting to $1,408,879. To these may also be added 12
other societies which operate on a cost-plus basis, and whose members
therefore have already had what amounts to a rebate—in the form
of lower prices.
Interest paid on share capital in 1929 amounted to $337,587, making
a total return for the year of $1,746,466. During the four years
covered by the bureau’s study, these consumers7 societies have
returned to their members, in dividends and interest, the sum of
$5,102,504. The details are shown in the table following.

COOPERATIVE SOCIETIES IN 1929

T a b le 19*—PATRONAGE REBATES AND

INTEREST ON SHARE CAPITAL PAID BY
CONSUMERS* SOCIETIES, 1926 TO 1929
1926

Type of society

j
i

1927

1928

Num-1
ber of Amount
socie
ties

j
j

Num
ber of
socie
ties

Amount

7
i 113
2 27

$15,861
1 465,335
2210, 111

10
1128
3 54
1

$58,054
» 553,300
3 264,278
300

12
143
* 82
2

$36,699
627,132
i 354,829
301

6,572

6,624

7,818

Num
ber of
socie
ties

1929

Num- ‘
Amount j $ £ & f j Amount
lies |

Patronage rebates
Distributing departments of
marketing associations_____
Retail store societies................
Gasoline filling stations...........
Bakeries. _
_
rJreameriftK .
Restaurants.................. ...........
Boarding houses................. .....
Laundries.................................
Total...............................

13
152
s 117
2

$33,051
693,777
5 674,628
459

6,964

!
6 148

« 697, 879

•194

' 8S2,556

20
157
2 26

25,677
119,951
- 15,063

24
174
2 57

30,611
133,528
2 36,860

1
1
2
1

48,635
1,858
133
509

1
1
2
1

2 211,826 | 2 260

<240 j U, 026,779 • 5 285 •H, 408,879

Interest on capital
Distributing departments of
marketing associations.........
Retail store societies................
Gasoline filling stations--------Bakeries...... ................. ........
Creameries....................... ........ !
Restaurants..... .............. .........
Boarding houses......................
Laundries..... .......................

Total............................. . j 2 208
Grand total.................... l
1

909,705

j
i
j
|

47, 555
2,253
128
503

26
190
82
2
2
1
2
1

24,818
143,375
55, 700
445
57,908
2, 722
78
514

30
« 217
9122
2
2
]
1

31,296
8 173,217
9 71,996
431
56,950
3,119
76
502

* 251,438

306

285,5(50

377

w 337,587

1,133,994 ..... ___! 1,312,339

1, 746,466

1 Not including 1 society which paid 2 per cent but did not state amount.
2 Not including 1 society which paid 8 per cent but did not state amount.
3 Not including 1 society which paid 7 per cent and 1 which paid 2 per cent, but did not state amount.
* Not including 1 society which paid 7 per cent but did not state amount.
5 Not including 1 society which paid 5 per cent, 1 which paid 6 per cent, 1 which paid 8 per cent, and 1
which paid 18 per cent, but did not state amount.
« Not including 1 society which paid 2 per cent and 1 which paid 8 per cent but did not state amount.
* Not including 2 societies which paid 2 per cent and 1 which paid 7 per cent but did not state amount.
8 Not including 7 nonstock associat ions.
8 Not including 2 societies which paid 8 per cent but did not state amount.
10 Not including 7 nonstock associations, and 2 societies which paid 8 per cent but did not state amount.

Some of the returns made by individual store societies are of in
terest. Thus, the Embarrass Cooperative Association, Embarrass,
Minn., during the period 1916 to 1929 returned patronage dividends
amounting to $52,237; the Cloquet Cooperative Society, Cloquet,
Minn., from 1921 to 1929 returned $107,711; the Cooperative Trad
ing Association, Waukegan, 111., from 1926 to 1929 returned interest
and dividends of $93,831; the New Cooperative Co., at Dillonvale,
Ohio, has since 1908 returned dividends amounting to $199,361; the
Soo Cooperative Mercantile Association, Sault Ste. Marie, Mich.,
during the period 1913 to 1929 returned in interest, patronage rebates,
and bonuses to employees8 a total of $259,587; and the Tamarack
Cooperative Association, Calumet, Mich., which has been in business
since 1890, has in that time paid rebates and interest amounting to
$1,953,346.
Although the cooperative oil associations are a comparatively new
branch of the movement, they have made remarkable savings for
their members. Thus, the Cooperative Gas & Oil Co., at Sioux
Center, Iowa, has since 1924 returned in interest and dividends the
s This association each year pays each of its employees a bonus on wages at the same rate as the divi
dend paid to members on purchases.

CHAPTER II.— CONSUMERS’ SOCIETIES

sum of $54,788; in the same period the Lyon County Cooperative
Oil Co., at Marshall, Minn., has paid $96,713; the Freeborn County
Cooperative Oil Co., at Albert Lea, Minn., has since 1925 returned
$127,664; and the Central Cooperative Oil Association, at Owatonna,
Minn., has since 1922 returned a total of $198,456.
Development Since 1920
Membership

table below shows the membership, by States and geographic
divisions, at the end of 1920, 1925, and 1929. As the cooperative
oil associations form a new phase of cooperation which has developed
almost entirely since 1925, these societies are shown separately in 1929
in order to show (1) the development of the “ other” societies, the
figures for the latter group being more nearly comparable with the
data for 1920 and 1925, and (2) to show^ the influence of this new co
operative element—the cooperative gasoline filling stations.
As the table shows, the total number of members reported fell
from 260,060 for 1920 to 139,301 for 1925, but showed an increase
during the next four years, the membership of the consumers' societies
not including the cooperative oil associations rising to 149,055 and
including them to 204,368. The average membership per society,
however (considering only the group of “ other” consumers' societies),
shows a rise from 1920 to 1925 and a slight decrease from 1925 to 1929.
If the cooperative oil associations are included in the 1929 figures, the
average is raised to a level above that of 1925.
The table shows that certain States (Alabama, Florida, Louisiana,
Mississippi, and South Carolina) have dropped out of the cooperative
picture altogether since the preceding studies, while in 14 States the
membership reported has dropped to less than half the 1920 figure.
In California, one of the States in which a serious decrease has taken
place, the initial drop occurred between 1920 and 1925, and was due
largely to the Pacific Cooperative League fiasco, but since 1925 the
movement there has about held its own. The greatest increases have
occurred in Illinois, Iowa, Minnesota, Oregon, and Virginia, but in the
first three of these the increase was due in the main to the rapid growth
of the cooperative oil movement.
T

T able 3 0 .-T 0 T A L M EM BERSHIP OF CONSUMERS’ SOCIETIES, 1920, 1925, AN D 1929

1929
State or geographic division

StaU
Alaska__________________________________________
Alabama________________________________________
Arizona__________________________________ ______
Arkansas____________ ___________________________
California__ ______ . ____ _______________________
Colorado...... ................................................ - ..............
Connecticut- ........................ ........................... - ........
Florida___•_......... ........................................................
Idaho.................................................................... ......
Illinois................................................................... .......
Indiana..........................................................................
I o w a .............................................................................
Kansas. ....................................................................... .
Kentucky....... ...................... .....................................
Louisiana......................................................................
Maine............................................. ............................

1920

396
293
963
18,863
3,125
4,533
148
909
14,051
1,699
4,252
29,550
1,353
297
2.390

1925

Gasoline
filling
stations

Other All types
types of of socie
ties
societies

309
150

120

235
9,044
160
3,176

2,000
538
8,549
84
3,239

2,000
538
8,549
385
3,239

327
11,425
131
2,974
6,187
738

327
22,447
131
12,993
6,565
738

3.127

274
9,559
643
3,051
5.245
461
1.204

301

11,022
I6,~ol9”
378

COOPERATIVE SOCIETIES IN 1929

T able 20,—TOTAL M EM BERSHIP OF CONSUMERS’ SOCIETIES, 1920, 1925, AN D 1929—
Continued
1929
1920

State or geographic division

State—Continued
Maryland.................................. ........
Massachusetts.............................. .
Michigan...........................................
Minnesota.............................. ...........
Mississippi________ _____________
Missouri............. ...............................
Montana...........................................
Nebraska__________ _____________
New Hampshire...............................
New Jersey..... ................ ............ .
New Mexico..___________ _______ _
New York..... ....................................
North Carolina..________________
North Dakota....................................
Ohio.................................................
Oklahoma..........................................
Oregon...............................................
Pennsylvania______ _____ ________
Rhode Island____________________
South Carolina.................................
South Dakota.......................... ........
Tennessee_______________________
Texas____ ____________ T_________
Vermont_________ _______________
Virginia_____________ ___________
Washington......................................
West Virginia____________________
Wisconsin_______________________
Wyoming...........................................
Total— ..................................
Average per society_______________

1925

2,397
18,974
21,676
9,443
8,873
16,633
23,889
100
4,047
458
3,594
195
17,931
3,028
53
285
2,077
4,732
689
11,209
” 6,577
210
124
3,689
1,400
6,546
13,494
2.429
727
2,114
3,030
8,038
1,498
264
1,107
427
3,270
1,166
814
46
3,036
857
140
543
215
5,740
3,551
1.430
1,049
49,503
8,116
255
540
260,060 2 139,301
310

Geographic division
New England........... .......................
Middle Atlantic........ .....................
East North Central..........................
West North Central....... .................
South Atlantic___________________
East South Central..... ................ .
West South Central.........................
Mountain..........................................
Pacific.
Tsa.
Total.

27,197
21,324
81,242
79,372
5,155
2,560
7,525
8,572
26,717

26,605
12,807
40,685
38,237
1,388
657
1,819
1,169
15,625

260,060

139,301

Gasoline
filling
stations

20,688

Other All types
types of of socie
ties

192
18,030
9,947
19,812

192
18,030
9,947
40,500

2,905
710
3,143
664
3,435
14,905
135
1,207
4,123
927
4,816
1,893
344

3,311
710
11,050
664
3,435
600
14,905
135
1,677
4,123
927
4,816
1,893
344

1,698
170
2,909

2,742
170
2,909

4,364
3,228
830
8,563

4,364
3,228
830
11,041
666

406
7,907
600
'470*

1,044

2,478

666

3 55,313 4 149,055
469
304

13,500
40,912

901

25,404
20,233
47,689
78,838
5,521
908
4,374
4,688
16,593
120
204,368

25,404
20,233
34,189
37,926
5,521
908
4, 374
3,787
16,593
120

3118 societies.

2 450 societies.

55,313

* 491 societies.

149,055

* 609 societies.

The table below shows the average membership of each type of
society:
T able 21.—AVERAGE M EM BERSHIP PER SOCIETY OF CONSUMERS’ SOCIETIES IN

1920, 1925, AND 1929

Average membership per society
Type of society
19201
Distributing departments of marketing associations____
Retail store societies________________________________
Gasoline filling stations______________________________
Bakeries____________ - _____________________________
Creameries
_
.
___________
Restaurants
_
__________________
Boarding houses __________ _________________________
Laundries____ _
____________ ____ __
Other societies.....................................................................
Total___ ___________________ __________________
1 Not classified by type of society in 1920.

1929

1925
293
516
537

269

547
143
132
931
310

227
303
469
392
2,432
685
131
133
336

CHAPTER II.— CONSUMERS’ SOCIETIES

The above figures are based upon numbers of reporting societies,
which varied from year to year. In order to check the accuracy of
the trend shown by them, the reports of only those societies were taken
which made returns in each of the three studies. A slightly different
picture is thus revealed. The average membership of these 116
identical societies rose from 247 in 1920 to 264 in 1925 and finally to
270 in 1929.
Taking the 225 societies reporting for both 1925 and 1929, 110
reported losses in membership, 103 reported a gain in membership,
and the members reported by 12 societies were the same for both
years. The aggregate gains reported, however, exceeded the losses
by 3,021, representing an expansion of 5.5 per cent, for the 225
societies as a group.
The table below shows the distribution of the societies each year,
by size. For 1929 the data are given, first, for the group not including
the gasoline filling stations (this being more comparable with the
earlier years) and then including them. It is seen that there has
been practically no change in the proportion of societies in the three
lowest groups, except that the inclusion of the gasoline stations
lowers the total somewhat. However, the proportion of societies
with 1,000 members or more has risen from 2.9 per cent in 1920 to
4.4 per cent in 1925 and to 4.9 per cent in 1929 (to 5.6 per cent, if
the gasoline stations are included).
T able 22.—DISTRIBU TION OF CONSUMERS’ SOCIETIES IN 1920, 1925, A N D 1929, B Y SIZE

Per cent of societies having classified number
of members
1929

Number of members
1920

1926

Without
gasoline
stations

With
gasoline
stations

Under 100....................................................................... .
100 and under 200.................................................. ..........
200 and under 300........................ ....................................
300 and under 600....... ............................................ .........
600 and under 1,000. .................................................... .
1,000 and over............................................................... .

33.1
36.6
13.7
10.1
3.5
2.9

36.8
32.8
12.4
8.0
5.5
4.4

35.4
31.4
15.5
9.6
3.3
4.9

30.4
28.9
16.6
11.7
6.8
5.6

T otal.......................................................................

100.0

Funds

Table 23 shows the comparative data as to snare capital and reserves.
In order to make the 1929 data comparable with those for previous
years, the averages are also given for the group excluding the co
operative oil associations. The figures show a drop in the average
for both capital and reserves since 1925.

COOPERATIVE SOCIETIES IN 1929

T abus 3 3 .—TOTAL AN D AVERAGE SHARE C APITAL AND RESERVES OF CONSUMERS’

SOCIETIES, 1920, 1925, AND 1929

Share capital
Year

Total
amount

1920 - .....................................................................................................
1925 - ......................................... ........................................... .....................
1929 :

Reserves

Aver
Average age
per
per
mem
society ber 1

Total
amount

Aver
age per
society

$ 11, 290,973
6 , 499,574

$ 17,056

$59
68

$ 1, 614,483
2 , 407,676

$ 5 ,142

16,455

6 , 804,876
7 , 987,090

14.858
13,607

55
45

3 . 719,435
4 , 324,375

7 .798
7,379

Without gasoline filling stations________________
With gasoline filling stations....................... _.......... j

9 ,4 4 2

1 Based on societies which reported both share capital and membership.

The averages of share capital per society and per member and
average amount of reserves per society, for each type of society, are
shown in the table following, for the two years 1925 and 1929. (In
the 1920 study the societies were not classified on the basis of kind
of business done.) It is seen that, in every group for which there
are comparable data for the two years, the average share capital per
society has declined since 1925; the same is true as regards share
capital per member, except for the bakeries and restaurants in which
slight gains were made. As regards average reserves, a decline
occurred in every group except gasoline filling stations and bakeries.
T able 34.—AVERAGE SHARE C APITAL AND RESERVES OF VARIOUS TYPES OF CON

SUMERS’ SOCIETIES, 1925 AND 1929
!
T vdp of sofietv
l H>e oi souetj

Share capital
Average per
society
1925

1929

j Average per
member
1925

1929 .

Reserves: Aver
age amount per
society

1925

1929

Distributive departments of marketing associations. . . 1_______ $22,693 ;......... $112 1_______ ! $6,845
$9,266 !
7,261
Retail store societies.................. ................. ................... $14,518
12,149 ! $63
46
Gasoline filling stations___________ _______ ______ _
11.318 1
3.553
5,550
! 9,164 ; 23
21
Bakeries............................ ...................... ......................
4,369
8,650
7,547 i1 6,533 ; 15
17
Creameries.................... ........................ .........................................!|472,488 i......... 194 .............. 130,538
Restaurants-......................... ......................................... 18,648 I! 12,057 ; 16
29,998
18 35,369
16
1.554..| 1,217
Boardinghouses ___________ _____________ _______
2,690 I 2,648 i 16
...............
i................
Laundries............... .......... .......... ......... ........................
8,540 ! 4,545 ; 35
34
Other societies................................................................ 205,370 !.............. o)
41,227 j 10,000
T o ta l--......................... ............ ...........................

16,455 : 13,607

9,442 ;

7,379

i Data not available.

Amount of Business

Table 25 presents the average sales per society, by States, in 1920,
1925, and 1929. Here again a division is made for 1929 so as to
present figures comparable with previous years. It is seen that wrhile
a few rather serious decreases occurred, in the majority of States the
average sales per society have increased since 1925. The average for
all States shows a rather remarkable increase in 1929 as compared
with 1925, the amount even exceeding the average for 1920, the year
of peak prices.

CHAPTER II.— CONSUMERS' SOCIETIES

T able 25.—AVERAGE AM OUNT OF BUSINESS PER SOCIETY, 1920, 1925, AND 1929, BV
STATES
1029

1929

State

Alaska__
Alabama.
Arizona...
Arkansas___
California. _
Colorado___
Connecticut.
Florida...
Idaho.......
Illinois. __
Indiana...
Iowa____
Kansas...
Kentucky. __
Louisiana__
Maine..........
Maryland.._
M assachu
setts..........
Michigan___
Minnesota.
Mississippi _
Missouri.......
Montana..
Nebraska___
New Hamp
shire..........
New Jersey-

1920

1925

Without With
gasoline gasoline
stations stations

$60,000 $111,519 $230,900
72,000
75,121
” 46,143
40,363
57,172
60,767
226,292 139,921 168,100
71,988
75,502
71,438
85,890
76,820 122,271
142.000
101,730
69,311 111,044
88,256 109,180 102,281
76,387
52,248
57,718
118,751
80,583
68,362
93,157
74,862 134,058
97,108
56,459
58,173
44,313
93,755
84,554
75,320
31,764
110,510

$230,900
‘ ‘ 46,’ 143
60,767
168,100
60,157
122,271
111,044
116,307
57,718
82,208
126,467
56,459
75,320
110,510

160,331
115,688
109,823
28.000
97,589
70,981
102,707

129,311
123,211
64,861

139,791
112,285
105,725

139,791
112,285
93,468

37,044
42,578
84,033

99,736
282,927
100,426

92,206
282,927
77,105

8,500
52,789

68,278
165,649

62,692
248,058

1920

State

1925

Without With
gasoline gasoline
stations stations

New Mexico.. $131,667
New York... 72,252 $118,743 $169,275
North Caro
lina........... 86,653
60,900
29,470
North Da
kota......... . 99,376
83,518
89,551
Ohio............. 97,517 121,342 109,242
Oklahoma... 91,662 205,184 123,887
Oregon......... 33,546
66,111 120,904
P e n n s y l
vania......... 39,924
47,404
35,817
Rhode Island 65,652
65,295
73,000
South Caro
lina............ 51,660
South Da
kota..........
70,807
69,018 136,459
13,166
Tennessee.— 134,500
67.000
Texas______
77,416 134,112
83,451
Vermont----- 21,600
39.000
Virginia........ 67,586 ‘ 95,"419 115, 735
Washington. 101,270 128,565
92,343
W est V ir
ginia.......... 65, 734
74,847
93, 111
W isconsin... 159,549 187,179
75,394
Wyoming__ 60,800 181,000 259,878
Total.. 103,751

100,964

107,337

$250,000
169,275
29,470
85,014
109,242
123,887
120,904
47,404
65,295

132,586
67.000
83,451
39.000
115, 735
92,343
93, 111
71,455
193,252
100,725

Data for each year, 1920 to 1929,by type of society, follow:
T a b le 2 6 .—AVERAGE AM OUNT OF BUSINESS DONE B Y VARIOUS TYPES OF C O N

SUMERS’ SOCIETIES EACH YEA R , 1920 TO 1929

Average amount of business
Type of society
1920
Distributive departments of marketing asso
ciations.......... ........... .................... .......... .........
$94,218
Retail store societies....... ................... ................... | 111,629
Gasoline filling' stations
Bakeries............... ................................................ j
95,239
Creameries. . _ _____ _____ ________ J ____
Restaurants.......................................... ................ !
37,569
Boarding houses.................................................
48,350
Laundries............ ...................................................
16,042
Other societies.......................................................
77,575
Total............................................................

103,751

1921

1922

0)
$94,294

$87,422
55,407
84,272
1,670,694
75,637
25,808
13,208
43,518

84,500
844,063
48,009
27,187
13,990
50,412
94,128

;

1
'

90,831

i
i

1923

(

1924

0)
$90,418
87,454
85,647
3,106,991
112,165
30,532
15,877
30,326

0)
$91,371
47,684
94,019
3,301,592
115,755
22,873
21,063
28,388

97,999

97,098

Average amount of business
Type of society
H25
Distributive departments of marketing asso
ciations............. - ............................................ __j |
0)
Retail store societies...............................................
$ 95,647
Gasoline filling stations.................................
!
82,497
Bakeries................................................... .............. | 132,193
Creameries..............................................................| 3 , 533,175
Restaurants........................................................... i 135,822
Boarding houses....... ............ ...............................
15,085
Laundries............................................................ .
18,893
Other societies.................. ................................... .
28,754
Total............................................................
1 Not classified separately in this year.

100,964

1926

1927

1928

1929

$ 159,603

$ 191,478

$ 202,913

91,7 74
8 2,1 52
117,365
3 , 398,659
285,328
29,6 06
17,3 72
29,5 26

90,1 12
61,707
120,402
3 , 341,740
297,797
22,277
18,755
32,413

91,1 84
7 8,565
105,304
1, 755,771
2 16,510
2 9,209
18,735
2 6,454

$197,219
90,619
77,015
120,739
1,717,264
201,873
28,486
17,711
26,586

105,347

101,728

103,261

100,725

COOPERATIVE SOCIETIES IN 1929

The average sales per member have very generally shown a decrease
since 1925, and for the whole group since 1920. When retail prices
are considered, however, showing what may be called the “ real”
sales per member, the figures show an increase from 1920 to 1925
but a decrease from 1925 to 1929, although the 1929 figure is
higher than 1920.
T able 37.—AVERAGE SALES PER M E M B E R , 1920, 1925, AND 1929

Average sales per member
Type of society

Distributive departments of marketing associations
Retail store societies....... ................... .............................
Gasoline filling stations....................................................
Bakeries__________________ ____ __ _________________
Creameries_________________________________________
Restaurants
_____________________________________
Boarding houses_______________________________ ____
Laundries_________________________________________
Other societies....................................................................
Total.........................................................................
“ Real” sales2______________________________________
i Not classified separately in this year.

1920

1925

0)
0)
0)
0)

(0
0)
<*)
(0

$378
378

1929

$334
195
246
248
144
572
352
455

$859
303
171
265
706
295
178
133
307
399

2 On basis of retail prices.

In one or two instances the figures in the table are obviously too
high, as the annual family consumption of the goods carried by the
society would not reach the figure given, the average being raised by
the inclusion of the sales to nonmembers. In some cases such sales
form a considerable portion of the society’s business. Thus, a large
society in a big Eastern city does nearly three-fourths of its business
with nonmembers; on the other hand, another large city society does
only about one-fourth of its business with nonmembers.
“ Real” Sales of Identical Societies

As the foregoing figures are based on varying numbers of societies,
they may present a misleading picture. The reports of 95 societies
which furnished reports for all 10 years are taken to form the basis
of the comparison below. This may be taken as a representative
group, for although it undoubtedly contains the more stable societies
it also contains societies of all sizes and types.
The table below shows that the average money sales of these
identical associations have risen almost steadily from 1921 to 1929,
with one or two minor setbacks. The increase in the actual average
sales over the 10-year period was 43.3 per cent; taking into con
sideration the retail prices, however, the “ real” sales show an increase
of 86.1 per cent.

CHAPTER II.— CONSUMERS’ SOCIETIES

TABLE 28.—A C TU A L A N D “ R E A L ” SALES OF ID E N T IC A L R E T A IL SOCIETIES REP O R TIN G FOR EACH Y E A R , 1920 to 1929
Average sales of identical retail
societies
Index
numbers
of retail
prices

Year

“ Real’ ’ sales 1
Actual
amount

Index
numbers

Amount

1920.....................................................................................
1921....................................................................................
1922.................................................- ..................................
1923.................... ........................................................
1924.....................................................................................

100.0
75.4
69.6
71.9
71.7

$115,437
105,642
109,638
135,886
145,494

$115,437
140,109
157,526
188,993
202,921

100.0
121.4
136.5
163.7
175.8

1926.....................................................................................
1926......................................................................... - .........
1927.....................................................................................
1928.....................................................................................
1929.....................................................................................

77.4
79.0
76.4
75.9
77.0

158,593
162,077
161,253
167,417
165,452

204,901
205,161
211,064
220,576
214,873

177.5
177.7
182.8
191.1
186.1

» On basis of retail prices.

Cooperative Policies

It is one of the cardinal principles of the cooperative movement
that voting shall be on a membership and not a financial basis, each
member having but one vote, regardless of the size of his investment
in the association, and no proxy voting being allowed. In some
States, however, voting is regulated by the law, either cooperative or
corporation, under which the society operates, the society having no
choice in the matter.9
Altogether, 600 societies reported as to the voting practice in
their meetings. Of these, 530 adhere to the 1-man, 1-vote policy,
while two others use this method except in the election of officers, on
which occasion the vote is by shares; in 67 societies all voting is by
shares (in 1 society, one vote for every five shares), while in another
society the vote is by shares except in the election of officers.
The table below shows the extent to which the 1-man, 1-vote
principle was disclosed in the three studies, 1920, 1925, and 1929, as
well as the practice as to proxy voting:
T able 39.—VOTIN G PRAC TIC E OF CONSUMERS’ SOCIETIES, 1920, 1926, A N D 1929

Per cent of societies in
each class

Per cent of societies in
each class
Item

Item
1920

1925

1920

1929

1925

1929

Basis of voting:
1 man, 1 vote.............
Vote by shares...........

89.8
10.2

87.9
12.1

88.7
11.3

Vote by proxy:
Prohibited.................
Allowed.....................

66.4
33.6

61.0
39.0

64.6
35.4

Total.......................

100.0

Total......................

100.0

The above figures indicate a slight improvement as regards the
practice of the fundamental cooperative principles.
9 For a review and synopsis of the cooperative laws, see p. 83.

COOHBKAT1VE SOCIETIES IK 1929
Extension of Credit

Of 607 societies which reported as to their credit policy, 506, or
83.4 per cent, allow credit. Ten of these limit the period of credit—
in 1 case to 60 days, in 7 cases to 30 days, in 1 case to 15 days, and in
1 case to 1 week. In 51 cases the amount of credit is limited (in
2 of these to one-half of the share capital owned by the debtor).
One general merchandise society allows credit on fuel only.
The table below shows for each of the three years, 1920, 1925, and
1929, the proportion of societies, reporting on credit policy, which
grant credit to the members.
T able 30 .—PER CENT OB' SOCIETIES GRAN TIN G C R E D IT. 1920, 1925, AND 1929

Per cent of total reporting
Item
1920

1929

1925

Societies granting credit....................................................
Societies doing cash business only ..................................

73.2
26.8

83.6
16.4

83.4
16.6

Total reporting_______________________________

100.0

It is seen that in spite of the efforts being made by the cooperative
wholesale organizations and the educational leagues to further the
adoption of the cash policy, the per cent of societies granting credit
in 1929 was greater than in 1925.
Recreational and Social Activities
T h e value of social events in fostering the cohesiveness of the
cooperative group is recognized by the more progressive societies,
and some of these have a definite program of such events. In the
city and town societies the recreational features are usually held
during the winter, but organizations in country districts, especially
in northern sections of the country, find it difficult to get their widely
scattered members together because of cold and snow, and they
therefore have most of their social affairs during the summer.
Although some of the societies confine their social gatherings to
the annual meeting of the members, others hold concerts, entertain
ments of various sorts, dances, plays, etc.
The women’s guilds which have been formed in a number of
societies in the northern and central States, and which are mainly
educational in purpose, are also doing work along social lines and
are drawing the feminine members together, besides participating
in general membership events.
In several instances a number of societies situated in one locality
have held joint recreational affairs. Thus, the Cleveland societies
are working along this line, and the societies in the vicinity of Mar
quette, Mich., have combined to form a recreational association and
nave, through it, purchased a tract of land which is being developed
as a camp and is to serve for general recreation purposes. The
women’s cooperative guilds of Superior and Wentworth, Wis., in
the summer of 1930 sponsored a children’s camp in which 66 chil
dren were given the advantages of a vacation besides learning some
thing of the principles of cooperation. The Workingmen’s Cooper

CHAPTER II. — CONSUMERS’ SOCIETIES

ative Co., of Cleveland, Ohio, has purchased some of the camp land
held by the Czechoslovak Gymnastic Labor Union near that city.
The United Workers’ Cooperative, of New York City, as one of its
functions, has for a number of years operated a large summer camp
near Beacon, N. Y.
Housing Societies
Apartment Buildings

F THE 43 cooperative housing societies operating apartment
buildings, reports have been received from 23, all located in Man
O
hattan, Bronx, or Brooklyn.
Qf the 23 societies reporting, 1 was organized in 1916, 6 wrere
started in 1920, 2 in 1921, 3 in 1922, 3 in 1923, 2 in 1924, 1 in 1925,1 in
1926, 2 in 1927, 1 in 1928, and 1 in 1929. Few’ projects have been
undertaken recently, practically the only newr development which has
come to the attention of the bureau being the buildings undertaken
by the Amalgamated Clothing Workers on the East Side in New York
City. Since the beginning of 1930, Consumers’ Cooperative Services,
a cafeteria organization in New York City, has constructed a building
for its members.10
Types of Buildings Provided

The dwellings provided by all of the societies are apartments
exclusively, usually those of the 4-story, walk-up type, the 16dwelling building having four apartments per floor. Another, and more
attractive type, is the court building, with a simple archway leading
from the street to a grassy court, from which one or more entrances
(according to the size of the building) lead into the various wings.
Not all of the societies erected a new building for their needs; in a
few cases an old building was purchased and remodeled. The projects
of the Amalgamated Clothing Workers and United Workers are of the
multiple-building, colony type.11
All but one of the cooperative apartment buildings in Brooklyn
wThich reported are 4-story buildings; the other is a 5-story structure,
the first floor of which is given over to stores. In New York City
one society has a 3-story building, two have 4-story buildings, five
have 5-story buildings, and two have 6-story structures.
Only three apartment buildings have elevators, two of these being
the 6-story buildings.
The buildings of the 22 societies reporting on this point contain
2,312 apartments, of which 4 are 1-room apartments, 6 contain 2
rooms each, 128 contain 3 rooms, 42 have 3% rooms each, 188 are of
4 rooms, and 264 contain more than 4 rooms. (In figuring the number
of rooms, in only one case is the bathroom counted as a room, but all
the societies reporting count the kitchen as a room. Only four build
ings contain kitchenette apartments; in one of these the kitchenette
is counted as half a room, while in the others it is not counted.)
10 For a detailed account of this project see Monthly Labor Review, May, 1930, pp. Ill, 112.
11 These have been described in detail in previous publications—Bulletin No. 465 of this bureau (pp. 115132), and Monthly Labor Review, issues of August, 1928 (pp. 1-18), and March, 1930 (p. 144).

COOPERATIVE SOCIETIES IN 1929

As the table following shows, the 23 societies reporting have a com
bined membership of 2,306 and paid-in share capital of $1,102,825.
They control property whose original cost aggregated $10,845,386,
but is now assessed at $6,681,088. The cost of the individual build
ings or projects ranged from $16,000 for a 4-story building of eight
apartments to $3,450,000 for a group project housing more than 1,000
families.
T able 31.—M EM BERSHIP, CAPITAL, AND VALUE OF LAND AND BUILDINGS OP HOUS

ING SOCIETIES IN 1929
Num Num
ber of ber of
societies mem
report bers
ing

Location

New York:
Manhattan and Bronx...................
Brooklyn....... .............................. —
Total.............................................
18 societies.
29 societies.

Land and buildings
Share capital
Original cost

Present assess
ed value

11
12

1,974
332 |

1 $550,139
3 552,686

$9,358,166
31,487,220

2$5,207,794
3 1,473,294

2,306 j

4 1, 102,825

* 10,845,386

« 6,681,088

3 11 societies.
* 19 societies.

5 22 societies.
« 20 societies.

The table below shows the classification of the societies according
to the original cost of the building and land.
T able 32.—DISTRIBUTION OF HOUSING

SOCIETIES ACCORDING
COST OF BUILDING AND LAND

Original cost

Manhat
tan and
Bronx

Under $25,000.............................................
$25,000 and under $50,000..... .................. .
$50,000 and under $100,000____________
$100,000 and under $500,000........................
$500,000 and under $1,000,000....................
$1,000,000 and over____________________

2
1
4
1
3

Total.................................................

ORIGINAL

Brook
lyn
2
1
5
2
1
11

Cost to Tenant-Member

When the individual becomes a member of a housing society he
subscribes for a certain amount of capital stock in the society,
estimated as covering the cost of the apartment or dwelling he will
occupy. This total cost is arrived at after consideration of a number
of factors; the total cost of land, building and other expenses connected
therewith are taken as a basis and the cost of each dwelling is deter
mined according to the number of rooms, floor space, location, and
other points of advantage or disadvantage. The cost figure so
arrived at for each individual apartment is the price winch the
prospective tenant must pay, and the amount for which he must
subscribe stock in the society. This stock may be paid for either as a
whole or in installments, according to the requirements of the by-laws.

CHAPTER II.— CONSUMERS’ SOCIETIES

In the societies reporting, the average cost per room was as follows:
Number
of societies

___
___

$170______
$190______
$250_______
$275-400 »_
$340______
$350_______
$400_______
$457_______
$500_______
$587_______

1
1

___

____

___
___
___
___
___

Number
of societies

$ 7 0 0 ..
$ 7 2 5 ...
$ 8 3 5 -..
$1,080.

1
1 $1,200.
1 $1,487.
1 $1,646.
1
Total_______________ _______

___
1
It is seen that in 60 per cent of the societies the average cost per
room is $500 or less, and in only 20 per cent does the cost exceed
$1,000 per room.
When the apartment is taken, the member is required to make a
down payment of varying amount, and the rest is included as part
of the monthly “ rent,” which also covers maintenance costs, interest,
etc. Generally, any redecorating must be done at the tenant’s ex
pense. The initial payment required is shown in the statement
below:
Number of
societies

$500_________________ _______________
$580, or $670_____________________
___
$665______________________________
___

$ 1,000___________________________
___
$l,000-$2,400_____________________
$1,100, $1,300, $1,600, or $2,000. .

$1,200______________________

$1,250_________________________
$1,400 or $2,000_____________ _
$1,500____________________________
$ 1 ,7 0 0 ................................................

1
1
1
1
1
1
1
1
1
1

Number of
societies

$2,000___

___

Per room:
$125..
$150..
$250..
$300..
$350..
$375_.
Total_______________ _______

room is shown below:
Number of
societies

$ 4 .0 0 $ 5 .0 0 $ 6.00-

$ 6 .4 0 „
$ 6 .7 5 $ 7 .0 0 $ 8 .00 -

$ 8 .6 0 $ 9 .0 0 -

$ 10.00.

___
___

1
1

___

___
___
___

1
1
1
1
1
1

Number of
societies

$10.50_____________________
$10.70_____________________
$11.00_____________________
$11.50_____________________
$11.97_____________________ _____
$12.50_____________________ ______
$14.00 or $14.50___________ _____

1
1
2
1
1
3

Total- ______________ ............

Cooperative Practice

Of the societies reporting, only four give title to the tenant purchas
ing an apartment, while in the rest of the cases the society retains the
title, the tenant being given merely a lease (in one case only a monthto-month lease). However, 12 societies allow the tenant to sublet his
apartment, though one of these prohibits his receiving any profit from
the transaction. In one building, 7 of the 17 apartments were rented
to nonmembers, at the time the report was made. Fourteen societies
allow the member to sell his apartment for what he can get, but in two
2 According to location of apartment.

COOPERATIVE SOCIETIES IN 1929

cases the society must be given first chance to buy it, and in one case
the purchaser must be acceptable to the society. Two other societies
allow the sale of apartments by the tenant-members but in one case
the society sets the sale price and in the other the member is prohibited
from making a profit on the sale. In five cases, if the member wishes
to give up the apartment he must turn it over to the society, as he
does not own the apartment, but merely has a lease.
To one comparing this situation with that existing in 1925, it is
evident that many of the societies are backsliding as regards coopera
tive practice. Six societies have even adopted the practice of vote
by shares, instead of one vote per member.13
Residential Hotels
T h e r e are in Washington, D. C., two cooperative residential hotels.
One of these was organized in 1922 by a group of women, some of
whom had been residents of the Government Hotels.14 The group and
funds grew slowly but surely and in 1928 its apartment hotel was ready
for occupancy.
The hotel is situated in one section of the Government office district.
It is an 8-story building with 357 bedrooms. The first floor contains
the office, lobby, writing room, small rooms for playing cards or enter
taining guests, a small room with kitchenette attached for parties,
and 20 rooms for transient guests. Male guests are admitted only to
the first floor. The other floors have 48 bedrooms each, of which 44
have running water but no bath, 3 have private baths, and 1 has no
water. There are two general lavatories on each floor, with bathtub
and showers.
The tenant member must purchase a specified minimum of stock,
which entitles her to the possession of a room. Monthly basic rents—
for stockholders who take their meals in the hotel— are $25 and $40,
according to whether the room has running water only, or private
bath. Stockholders not taking meals at the hotel pay $2.50 per
month over the basic rent, nonstockholders $7.50 more. Room rates
for transients are higher. The rate for meals is $25 per month for
breakfast and dinner.
Elevator service is provided and there is a small assembly hall. A
portico, which can be entered only from the inside hall, runs across
part of the building. In the basement a room is set aside which is
equipped with stationary tubs, ironing boards, etc., for the use of the
guests who wish to do their own laundry work. On the roof of one of
the two wings to the building there is a roof garden.
The second hotel project may be said to have grown out of the first,
although the personnel of the cooperative group was different. This
association was formed in 1928 and moved into its building Decem
ber 1,1929, after a good many difficulties. This is a 7-story building
having 168 rooms with private bath and 56 suites of 2 rooms each,
which share one bathroom.
Each member must purchase five shares of preferred stock and one
share of common stock. There is no limit to the number of shares of
preferred stock that may be held by any one person but no stock
13Appendix A, p. 149, gives the essential practices for genuinely cooperative housing societies, as laid
down by the Cooperative League of the TJ. S. A.
14 Erected by the United States Government to provide living quarters for woman employees of the Gov
ernment during the war.

CHAPTER I I . - CONSUMERS’ SOCIETIES

holder may own more than one share of common stock and it is only
the latter that carries the voting privilege. Thus it works out that
each member has only one vote.
The cost to the member is $500 per room, of which $50 must be
paid down and the balance may be paid in installments of $10 per
month. Monthly basic rents range from $25 to $36.50; nonstock
holders pay $5 over the basic rate.
The hotel has some 280 tenants of whom 129 are stockholders.
As this hotel is situated just off the Union Station plaza and in the
neighborhood of the House and Senate office buildings, it attracts
many of the young women employed in that vicinity.
Elevator service, cafeteria, and a laundry room for the use of the
guests are among the conveniences provided. There are an elabor
ate lobby, small writing nooks, and parlors for the entertainment of
guests, as well as a ballroom. Meals are charged for at the rate of
$25 per month for breakfast and dinner.
The hotel is managed by a board of five directors, elected by the
members.
Insurance Societies
HE bureau has data for the three consumers’ cooperative insur
ance societies,15 and for two mutual benefit societies which may
T
also be classed, in a general way, under this head. The three insurance
societies are the New Era Life Association, with headquarters at
Grand Rapids, Mich., The Workingmen’s Cooperative Association of
New York City, and the Workmen’s Furniture Fire Insurance
Society, also in New York City.
The New Era Life Association has been doing business since 1897,
and as its name implies, writes only life insurance. It is the official
life insurance society of the consumers’ cooperative movement in the
United States. It is a fraternal insurance association, and the mem
bership exercises its control through votes and also through a system
of initiative, referendum, and “ imperative mandate.” It is governed
by a “ senate” of 13 members, but changes in fundamental methods
and organization may be made only by majority vote of the more
than 24,000 members.
The Workingmen’s Cooperative Association writes life, health, and
accident insurance on the assessment plan.
The Workmen’s Furniture Fire Insurance Society was formed in
1872 and now has more than 50,000 members. It writes fire insur
ance only on household furniture, and then only up to a maximum of
$2,000. It operates on the assessment plan, and the rates average
10 cents per $100. It is a nonstock organization; the capital con
sists of a guaranty fund which is formed from the membership fee of
$1 per $100 of insurance, payable at the time of entrance into the
society. If a member withdraws, his fee is returned to him. This
association has more than 50 branches in various parts of the United
States and is the official furniture fire insurance society of the con
sumers’ cooperative movement.
is There ars many farmers’ mutual insurance societies, but they are not included here.

18672°— 31------- i

COOPERATIVE SOCIETIES IN 1020

The statement below shows summary data for these three societies:
Number of members................. .......... ..................... ...... .......... ...................
78, 819
Premium income, 1929_______________ _______ ______________________
$899, 903
New business written—
192 6
11,248,546
192 7
8, 921, 280
192 8
8, 208, 325
192 9
8, 371, 060
Insurance in force, end of 1929______________________________________ 93, 047, 976

The Consumers’ Mutual Aid Guild, located at Bloomington, 111.,
is, as its name indicates, a mutual benefit association, which provides
benefits for death and permanent total disability. It was estab
lished in 1927 and operates on the assessment plan, under the
insurance laws of Illinois. The association charges a membership
fee of $5. Any person between the ages of 16 and 55 is eligible for
membership, provided he is able-bodied and not afflicted with any
chronic malignant disease. The members are to be organized into
groups of 1,000 each. Of the membership fee, $1 goes into the death
benefit fund, which can be used only for the payment of death bene
fits. Each member pays $1.50 every six months, to cover operating
expenses. If a member dies, his family receives the full amount in
the death benefit fund, which of course varies according to the number
of members. Thus, if there are 200 members the benefit is $200; if
300 members, $300, etc. After each death the members are again
assessed $1 each, thus constituting a new benefit fund. It is stated
that in practically all cases the benefit has been paid on the day the
proof of death was received by the association. The guild now has
500 members. The largest consumers’ society in Illinois has an
nounced that it has arranged to give free membership in the guild to
any of its members who are eligible and wish to join.
The Brotherhood of the Commonwealth is a fraternal annuity
organization, established under the “ benevolent orders” law of the
State of New York, and has its headquarters in New York City.
It was established in 1904. Any person of good repute is eligible for
membership in the organization, on payment of $10 initiation fee.
The whole plan is operated on the so-called “ tontine” basis.
Members are divided into age classes, on the basis of the year of
birth. Thus, for instance, all persons born in 1890 are in one age
class, all born in 1891 in another age class, etc.
The minimum “ benefit dues” are $5 a year, but as much more
can be paid in as the member desires or as his circumstances in any
year will permit, and his income increases proportionately. Eighty
per cent of the amount paid in as dues is invested in safe, incomeproducing securities; this amount constitutes the “ benefit fund.”
The other 20 per cent of dues is used to cover expenses.
The benefits received by the members are of two kinds: (1) Divi
dends, declared from the money earned by the investment of the
dues; and (2) money inherited from the other members of the par
ticular age class. (Dues thus inherited also draw dividends.) It is
this second benefit which constitutes the “ tontine” feature. It
operates as follows: Whenever a member of a particular age class
fails to pay dues for three consecutive years or dies, the remaining
members of that class inherit the funds paid in by the dead or lapsed

CHAPTER II.— CONSUMERS’ SOCIETIES

member in proportion to the amount which each paid that year in
dues. It is evident, therefore, that as the members die or lapse,
with the passage of years, the inheritance and income of the dwind
ling number of survivors becomes greater and greater; in other words,
the older a member lives to be, the greater his income. Thus, the
last survivor in any class receives the entire income from the funds
of that class, up to an amount not exceeding 100 times the amount
paid in dues by him. When the last member dies, that age class is
closed and the funds of that class revert to the general fund and the
earnings therefrom are distributed to the members of the other
age classes.
The plan provides that whenever, at the beginning of any year,
the benefit fund is more than one hundred times the total dues of
participating members, the excess shall be transferred to a special
dividend fund and a special dividend, the rate of which is to be deter
mined by the executive committee, shall be paid to the members
of the 10 oldest year classes.
Provision can be made for certain designated relatives sharing in
the fund after the death of a member, provided the relative is not
more than 20 years younger than the member and is also a member
of the organization. In such case the relative receives the earnings
only on the deceased member’s dues and not on his inheritances
from the other members.
The brotherhood is governed by a supreme council composed of
representatives from local councils, the latter being entitled to one
representative for each 15 members. There is also an executive
committee composed of the eight officers of the organization (presi
dent, two vice presidents, recording secretary, executive secretary
and treasurer, and three trustees) and seven members elected by
the supreme council from among the representatives from the local
councils. All except the trustees serve for one year; the term of the
latter is three years, one trustee being elected each year. Only the
treasurer receives any compensation for services.
At the end of 1930, the brotherhood had a membership of 1,200,
of whom 781 paid dues amounting to $2,862.

Chapter III.—Central Consumers’ Organizations
Commercial (Wholesale Societies)
EDERATED cooperation, like local cooperation, has had a
checkered career in the United States. During the boom period
of cooperative effort during the war, attempts toward federation of
the local societies were made and in 1920 at least 13 district whole
sales and a number of organization bureaus were operating. The
latter, especially, were very busy, and one of these during this period
reported that it had organized on the average a store every two
weeks for the preceding six months.
An attempt was made at that time to establish a country-wide
wholesale society, which was called the National Cooperative Associa
tion. Whether, even had all the societies in operation joined the
wholesale, there would have been a sufficient purchasing powder to
support a nation-wide wholesale is conjectural. The wholesale, how
ever, was started before it had enough patronage to support it. Gen
eral support was slow in coining, and in order to obtain the patronage
that should have been supplied by local constituent societies the na
tional society resorted to the organization of retail branches.
It also established wholesale branches at Chicago, Hoboken, N. J.,
and Seattle, Wash. The desire for rapid expansion led to the adoption
of expensive stock sales methods, and this with other mistakes of
unwise buying at a time of falling prices, too great overhead expense,
and poor management, soon involved the wholesale in difficulties
throughout the country. The Hoboken branch went into receivership
late in 1920, and the Chicago branch early in 1921. The Tri-State
Cooperative Wholesale Association (Pittsburgh) which had affiliated
with the national wholesale at the time of the latter’s organization
went down in the general crash. In an endeavor to save the situation
in Seattle, the aid of the Pacific Cooperative League (San Francisco)
was enlisted. This was unsuccessful and the wholesale at Seattle
had to be closed also. The Pacific Cooperative League, which had
become financially involved in Seattle, was presently rent by dissen
sion and charges both of mismanagement and fraud, and finally went
into receivership in the spring of 1922. The Cooperative Wholesale
Society of America, at St. Paul, which had remained independent
throughout, also failed, leaving of all the district wholesales only the
Central States Cooperative Wholesale Society (East St. Louis, 111.),
the Cooperative Central Exchange (Superior, Wis.), and the New
England Cooperative Wholesale Association (Boston). The last
mentioned was the central association for a group of Finnish cooper
ative stores which in 1919 had amalgamated to form one society, the
United Cooperative Society of Boston. This latter society was dis
solved into its constituent societies in 1922, and the wholesale was
also given up.
The so-called “ American Rochdale plan” of cooperation, practiced
in Illinois, by which a large measure of control was vested in the whole
sale association, the Central States Cooperative Wholesale Society,
proved not to be feasible and was gradually modified as the depres
sion set in. The wholesale was reorganized and gradually the local

CHAPTER III.— CENTRAL CONSUMERS ORGANIZATIONS

organizations were made into autonomous societies on the Rochdale
basis. Even reorganizations failed to save the situation and it was
found necessary in 1925 to dissolve the wholesale.
Thus, by 1925, the cooperative wholesale movement had received a
severe setback. Of the wholesale societies established before or during
the World War only four remained in operation at the end of 1925—
the Cooperative Central Exchange (Superior, Wis.), the Farmers’
Union Jobbing Association (Kansas City),1 the Farmers’ Union State
Exchange (Omaha), and the Associated Grange Wholesale 2 (Seattle).
In a number of instances failure was due to trying to run before
learning to walk— the undertaking of wholesaling without being
familiar with the particular problems in that field and before the local
societies were in sufficient numbers educated to the patronage of the
wholesale. In other cases difficulties of transportation of commodities
over the long distances between the wholesale and the local stores
made the business an unprofitable one, and this condition was intensi
fied with the dropping out of many of the stores which failed during
the depression period.
During the past few years, however, a gradual revival of interest
in cooperative wholesaling has taken place. In 1923 the Ohio Farm
Bureau Federation established the Ohio Farm Bureau Service Cor
poration; in 1925 the Farmers’ Union of Iowa established the Farm
ers’ Union Service Association. The development of local associations
selling gasoline, motor oils, and other petroleum products has led to
the establishment of several wholesale purchasing organizations for
that branch of the movement, among them the Illinois Farm Supply
Co., the Union Oil Co. (Cooperative), the Minnesota Co-op Oil Co.,3
and the Nebraska Farmers’ Union Oil Association.
After the failure of the Central States Cooperative Wholesale
Society, a few of the Illinois societies which were situated in the
same section of the State began in a small way the pooling of their
orders for certain staple commodities such as sugar, coffee, and flour,
and this has been continued in increasing volume ever since. Some
of the societies in the Eastern States also tried this plan, with such
success that in the spring of 1929 they felt that they had an assured
patronage of sufficient amount to justify the formation of a wholesale
society. This new organization, the Eastern States Cooperative
Wholesale, has thus far done only a jobbing business; no warehousing
is done, but this will undoubtedly be undertaken as soon as conditions
warrant.
At a recent board meeting of the Cooperative League of the U. S. A.
the question of the advisability of forming a national whole
sale society was discussed. Although the meeting agreed that it
would be a long time before central warehousing would be practicable,
certain advantages of federation were pointed out. Among these
would be the elimination of the duplication involved in the packing
of goods (often by identical manufacturers) for the different district
wholesales, each of which has its own cooperative labels; the possi
bility of valuable research work by a national wholesale; and the
central organization of insurance, publicity, etc. The matter was
brought up for further discussion at the 1930 cooperative congress.
i At that time this organization handled groceries and clothing, in addition to general farm supplies. It
is understood, however, that the consumers’ lines have been discontinued.
- Now the Grange Cooperative Wholesale.
3Name changed in 1930 to Midland Cooeprative Oil Co.

COOPERATIVE SOCIETIES IN 1929

Services Rendered by Wholesale Societies
T h e table following shows the lines handled by the different whole
sale societies reporting. No warehousing is done by the Grange
Wholesale or the Eastern Wholesale, but the other consumers’ organi
zations carry large stocks of goods.
As the table shows, cooperative production by wholesale societies
in this country is extremely limited.
T able 3 3 .— LINES OF BUSINESS OF COOPERATIVE WHOLESALES, A N D OTHER SERV

ICES R E N D E R ED

State and city
Iowa: Des Moines.

Name of whole-

Goods handled

Farmers* Union
Service Associa
tion.

General merchandise, flour,
feed, coal, salt, farm ma
chinery, hardware, petro
leum products.
Petroleum products and
bulk station equipment.

Minnesota: Minneapolis. Minnesota Co-op
Oil Co.
Missouri: Kansas City.
Nebraska: Omaha........

Union Oil Co. (Co
operative).
Farmers’ Union
State Exchange.

New York: New York.. Eastern Coopera
tive Wholesale.
Ohio: Columbus.......
Ohio Farm Bu
reau Service Co.
Washington: Seattle___ Grange Coopera

Goods man Other services
ufactured

Petroleum products.............. Lubricating
oil.
Groceries, clothing, coal (car Feed___
lots), machinery, fencing,
paint, produce, tires, pe
troleum products.
Groceries, flour, feed, coal...
Potatoes, coal, fertilizer,
feed, seed, twine, salt, oil,
tires.
Groceries, hardware, feed__

Auditing and

tive Wholesale.

Wisconsin: Superior..

Cooperative Cen
tral Exchangs.

1 Used by 15-20 societies.

Auditing and
bookkeep
ing.*

boo k k e e p -

Groceries, flour, feed, paint,
nails, fencing, roofing.

2 Used by 9 societies.

Bakery
goods.

ing.2
E d u c a tio n a l
department;
auditing .3

3 Used by 90 societies.

Most of the wholesale societies leave the educational work to the
district leagues organized for that particular purpose. The Coop
erative Central Exchange, however, has an active educational de
partment with a full-time director. For the past 10 years it has
conducted an annual course lasting from 6 to 8 weeks, primarily for
the purpose of training employees and managers for cooperative
societies. Local societies may obtain fidelity bonds at a greatly
reduced rate, for those of their employees who handle money, through
the bond service of the exchange. As noted in the table, this organi
zation also has a department which furnishes auditing service to
some 90 societies, and is able to advise these local associations of danger
points and weaknesses revealed by its examination of their business.
It thus greatly assists in keeping its member societies in a stable
and healthy condition.
Recently it has inaugurated a new service—that of giving technical
advice. Feeling that “ if the cooperatives are to maintain a basis for
further expansion, successful competition with private business, and
economic benefit to their members,” their standard of efficiency
must be raised considerably, it appointed one of its experienced
employees as technical adviser. The adviser visits each store of the
organization, making a study of it and of local conditions, giving
special attention to such points as the type of community, the na
tionalities and the industries therein; the location of the store with

CHAPTER III.— CENTRAL CONSUMERS ORGANIZATIONS

regard to the membership, the transient trade, the business center,
industry, etc.; the condition of the grounds and store and other
buildings, and the facilities provided; the store equipment and its
arrangement in relation to attractiveness and efficiency; the delivery
equipment, the cleanliness and general appearance of the store; and
the merchandise handled, and its suitability, and the inventory.
Recommendations, based upon experience, are made on each point.
Auditing and bookkeeping services are also furnished to their
member societies by the Minnesota Co-op Oil Co. and the Grange
Cooperative Wholesale.
Organization of Wholesale Societies

In m o s t instances these central commercial organizations are
owned by the constituent local societies which hold the capital stock
of the wholesale. An exception to this is the Ohio Farm Bureau
Service Co. which is owned by the Ohio Farm Bureau Corporation.
When the Fanners’ Union State Exchange (Omaha) was organized it
was owned by the Farmers’ Union of Nebraska. The Exchange was
reorganized in 1919, however, and put on a basis more nearly conform
ing to the generally accepted cooperative practice, but still accepts
as stockholders individual members of the Farmers’ Union, as well
as local societies.
The policies of cooperative wholesale societies are controlled by the
general meeting of representatives of the member societies. In the
meetings of the Farmers’ Union State Exchange and the Minnesota
Co-op Oil Co. each shareholder has one vote. In the meetings of the
Eastern Cooperative Wholesale and the Cooperative Central Ex
change the member societies’ representation depends on their membersmp. The Cooperative Central Exchange allows each member
society one delegate for each 50 of its members, but in order to
exercise these voting rights it must hold one share of the Exchange
stock for every 50 members.
Business Operations
T a b le 34 shows in detail the status of each of the wholesales report
ing, as of December 31, 1929.
T able 34.—STATUS OF COOPERATIVE WHOLESALE SOCIETIES, AS OF D E C E M B E R 31,

1929

Society

Cooperative Central Exchange......................................
Eastern Cooperative Wholesale______ ______ _____
Farmers’ Union Service Association______ __________
Farmers’ Union State Exchange...... ........... ...... ...........
Grange Cooperative Wholesale......................................
Minnesota Co-op Oil Co.............................. ...............
Ohio Farm Bureau Service Co......... ............................
Union Oil Co. (Cooperative)..........................................
Total......................................................................

1 Nonstock association.

Num
Year of ber of
organ affili
ization ated
societies
1917
1929
1925
1914
1919
1927
1923
1929

Retail Unaf Num
bran filiated ber of Share
ches of custom
employ capital
whole
ees
ers
sale

90
10
180
6
45
65
(2)
396

2
10
1
21
(2)

34
35
118
8
20
(2)

34
2No data.

215

55
2
9
38
3
5
25
<*>

$83,122
1,700
0)
323,450
30,040
0)
45,000
(2)

137

483,312

COOPERATIVE SOCIETIES IN 1920

Tabus 34.—STATC8 OF OOOl’ Elt A TIVK WHOLESALE SOCIETIES, AS OF D E C E M B E R 81,

1929—Contiuued.

I
Patron Interest
! Reserves |Sales, 1929 Net prof age divi on share
it, 1929 dends
!
capital

.Society

J_____ !______

Cooperative Central Exchange....................................... $15,492 j $1,755,627 $35,798
Eastern Cooperative Wholesale......................................
1,365
2,675 i 3 203,756
Farmers’ Union Service Association................. ............ ;____ ____
549,565
822
Farmers’ V nion State Exchange....... .............................; 40,619
2,001.725 50,583
11«, 721
1,074
Orange Cooperative Wholesale.............. ........................ !................
Minnesota Co-op Oil Co..................................................................
448,01H
7,798
Ohio Farm Bureau Service C o.......................................
76,522
5,744,189 207,469
Union Oil Co. (Cooperative)..........................................
(*)
«309,261
4,922
Total.......................................................................I 135,308

11,128,857

309,831

$28,088

$4,710

22,068

19,454

175,344

(«)

(<)

206
2,700

225,500 ; 27,070
i

2 No data.
* Nine months.
* 5 per cent; amount not reported.
5 Ten months.
* 15 per cent of gross profits; amount not reported.
? 8 per cent; amount not reported.

In 1929 the Cooperative Central Exchange manufactured bakery
goods valued at $101,156.
Operating Expenses
T h e operating expenses of the three wholesales handling merchan
dise and one society dealing in gasoline and motor oils, which fur
nished reports for 1929, are shown in the table below. As is seen,
the average for the merchandise societies is 8.8 per cent of sales, and
for the central oil association, 3.2 per cent.
T ab le 3 5 .— OPERATIN G EXPENSES OF COOPERATIVE W HOLESALE SOCIETIES, 1929

j Per cent of sales expended for specified item by—
Item

Merchandise societies (3)

J Low rate

High rate

Average
rate

uasoune
association

1
Sales expense:
W ages...........................................................
Advertising................................... ...............
Wrappings........................................... .........

Total...........................................................
Miscellaneous delivery expense (except wages).
Rent.................................................................—
Light, heat, power, and water............................
Insurance and taxes......................... .................
Interest on borrowed money...............................
Office supplies and postage....................... .........
Telephone and telegraph..................., ................
Repairs................... .............................................
Depreciation..................................... ......... ..........
Bad debts..............................................................
Miscellaneous.......................................................

!
<
i
:
!
1

6.4
1.1
.6

4.1
.6
.5

4.1

6.4

5.2

.1
.3
-1
.1
.2
.2
.1

.2
.4
.3
.3
.2
.3
.3
0

i
i
!

Grand total................................................
i Less than one-tenth of 1 per cent.

3.0
.4
.6

1.6

.2
.1
(0
.3 !
.2 ...................
.2
.3
.1
.2
.1

-1
-7

.4
.3
2.1

0) .3
.2
t.8 |
!

6.4

9.7

8.8 |

1.6
0)

8.
1.3
3.2

CHAPTER III.— CENTRAL CONSUMERS ORGANIZATIONS

Trend of Development
T able 36 shows the development of the various wholesale societies
for years for which the bureau has data.
T able 36.—DEV E LO PM E N T OF COOPERATIVE WHOLESALE SOCIETIES

Society

Year

Cooperative Central Exchange.

1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1926
1927
1928
1929
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1927
1928
1929
1926
1927
1928
1929

Farmers' Union Service Association.

Farmers’ Union State Exchange..

Grange Cooperative Wholesale.

Minnesota Co-op Oil Co............
Ohio Farm Bureau Service Co..

i No data.

Net
profit
$25,574
132,423
313,664
409,591
312,347
337,567
504,177
613,215
835,532
1,048,293
1,255,676
1,517,813
1,755,627
558,469
762,789
649.566
549,565
2,387,972
1.468.133
1.148.133
1,335,662
1,347,605
1,521,312
1,512,024
1,618,288
1,774,143
2,001, 725
53,570
44,254
156,122
135,161
246,096
102,677

105,880
109; 862
116,721
269,863
417,956
448,013
4,639,928
4,573,086
4,470,273
5,744,189

2 5 per cent; amount not reported.

2,063
7,330
6.798
3,499
1,183
5,181
5,973
8,869
11,648
18,335
23,894
35,798
1,808
2,602
921
822

383,000
324,832
9,655
20,647
36,633
34,222
49,096
37,930
50,583

0)
0)
(*)
0)
0)
0)
0)
1,786

1,321
1,074
3.473
3,926
7.798
135,126
112,900
134,244
207,469

Patron Interest
age divi on share
dends
capital

(»)
0)
0)
0)
0
0)
(l)
(l)

$5,506
7,722
13,752
17,296
28,088

0)
(9
0)
0)
0)
0)
(l)
(0
$1,451

1,929
2,632
3,681
4,710

(2)
(2)
(2)

12,136
22,068

0)
0)
0)
(*)
0)
(1}
0)

130,827
98,935
125,921
175,344

(2)
0)
0)
0)
0)
(0
13,543
26,576
26,311
19,568
19,454

0)
0)
(*)
0)
0)
0)
240
206
1,500
2,100
2,352
2,700

3 Loss.

“ Real ” Sales of Identical Societies

Table 37 shows the trend of sales development of the three societies
for which the bureau has data for all 10 years since 1920 giving,
first, the actual average money sales and, second, the “ real” sales,
taking into consideration the trend of wholesale prices.
As it shows, actual average money sales of these societies dropped
considerably from 1920 to 1921, and experienced a further fall in
1922. An improvement took place in 1923, however, which has
continued through 1929, the sales in 1929 reaching a point about 25
per cent above the 1920 level. The column of “ real ” sales shows that,
notwithstanding the great decline in wholesale prices, the real business
of the wholesales showed an increase from 1920 to 1921. A decrease
was experienced in the following year, but this was more than over
come the next year, and a remarkable and continuous rise has taken

COOPERATIVE SOCIETIES IN 1929

place in real sales each successive year, the figure in 1929 being more
than twice the 1920 figure.
T able 3 7 .-T R E N D

OF A CTU AL A N D “ R E A L ” SALES OF ID E N T IC A L W HOLESALE
SOCIETIES, 1920 TO 1929
Average sales of identical wholesale
societies
Year

Index
numbers
of whole
sale prices

“ Real ” sales
Actual
amount

Amount

Index
numbers

1920.....................................................................................
1921— .................................................. - ........................
1922.............................................................- .....................
1923....... ..................................................... ..........- ...........
1924....................................................... .............................

100.0
63.2
62.6
65.2
63.5

$950,273
608,245
547,274
658,233
735,639

$950,273
962,413
874,240
1,009,560
1,158,487

100.0
101.3
92.0
106.2
121.9

1925.............................................................. ......................
1926......................................................- ............................1927.....................................................................................
1928........................................................ - --------------------1929.....................................................................................

67.0
64.8
61.8
63.3
62.5

819,840
888,199
993,281
1,172,082
1,291,358

1,223,642
1,370,677
1,607,251
1,851,630
2,066,173

128.8
144.2
169.1
194.9
217.4

Educational (Cooperative Leagues)
Cooperative League of the U. S. A,

N 1916 a central educational body was formed, with headquarters
in New York City. This society was incorporated in 1922 as The
Cooperative League of the U. S. A. According to an account of the
league published in its 1930 yearbook, “ for three or four years this
league was little more than a propaganda agency subsidized exclu
sively from private funds.” The consumers’ cooperative move
ment in this country was at that time very weak and the few scat
tered societies had little contact with or knowledge of each other.
As a start toward a national cooperative movement the league
called a convention which w'as held in Springfield, 111., in 1918, at
which there was a small representation from the local societies.
Since that time congresses have been held every two years and an
increasing number of societies has become interested in federated
action, so that the league may now be said to be really a federation
of the local societies and to be supported by them. The league
admits into membership only consumers’ societies, and is gradually
inaugurating a set of cooperative standards to which, eventually,
societies will be required to conform in order to obtain admission to
membership.
The latest membership figures available are for 1928, at which
time the league had in affiliation 140 societies (of which 125 were
store or distributive societies, 3 were housing societies, 7 were credit
organizations, 4 were insurance associations, and 1 was a service
society), besides 1,000 individual members.4 The constituent soci
eties had a combined membership of 125,133 and annual sales of
$20,343,150.
The league has five employees.

^Figure is for 1929.

CHAPTER III.— CENTRAL CONSUMERS ORGANIZATIONS

Member societies pay dues to the national organization on the
basis of their membership. They are represented m the meetings of
the central body by elected delegates, stores and housing societies
being entitled to one vote for each 500 members, and insurance and
credit societies one vote for each 3,500 members.
The league carries on general educational work in the theory and
practice of cooperation, writing articles for the general press, furnish
ing speakers for meetings of local societies ana lecturers for the co
operative schools and institutes and for colleges and universities
which offer courses in cooperation or economics. It also furnishes
legal and auditing services for member societies, besides doing some
organization work. It has issued a number of publications on the
various phases of cooperation and on correct cooperative practice
and publishes a monthly magazine.
District Leagues
T h e r e are also three district educational leagues, and others will
be formed as cooperative development warrants. If there is no
district league in a given region, a local society may affiliate directly
with the national league, but if there is a district league, local societies
are expected to affiliate with it, becoming members of the national
body through the medium of the district organization.
Northern States’ Cooperative League

The oldest of the district leagues is the Northern States7 Coopera
tive League, organized in March, 1922, with headquarters in Minne
apolis, Minn. At the end of June, 1929, this league had in affiliation
102 societies and 729 individual members. These societies included
2 credit unions, 1 insurance society, 1 boarding house, and 98 dis
tributive societies (1 wholesale society, 80 stores, 16 buying clubs,
and 1 milk distributing society). These constituent societies have
an aggregate membership of 50,300 and an annual business of about
$13,500,000.
The league, in addition to its general educational work, has given
several training courses for the employees of cooperative societies.
It also furnishes speakers and films for cooperative assemblages,
carries on organization work, and furnishes auditing service. It
acts as an employment exchange for cooperative societies which need
employees, and workers who wish to obtain positions in the coopera
tive movement.
Until recently this league has issued a yearbook covering the devel
opment of the societies in its district, along with articles on the
various phases and problems of the cooperative movement. By
action of the 1928 cooperative congress, however, the yearbook was
made national in scope, although its editing was still left to the North
ern States7 Cooperative League.
The league has three employees.
Eastern States Cooperative League

The Eastern States Cooperative League, with headquarters in
New York City, was formed in 1925. Its membership at the begin
ning of 1930 included 40 individuals and 26 societies (21 distributive
societies, 3 housing organizations, 1 credit society, and 1 insurance

COOPERATIVE SOCIETIES IN 1929

society). These affiliated societies have a combined membership of
about 14,000 and a yearly business of approximately $4,500,000.
The league carries on general educational work, besides holding
training courses for cooperative employees and summer institutes
for the membership generally. It furnishes speakers for meetings,
and supplies its members with pamphlets on cooperative subjects.
It does organization and auditing service for local groups. The
Eastern Cooperative Wholesale Society was the direct outgrowth of
the joint buying carried on by the local societies through the league.
Member societies have one vote for each 300 members in the case
of store societies and housing societies, and one vote for each 3,500
members in the case of insurance and credit societies.
This league has one employee.
Central States Cooperative League

The Central States Cooperative League was formed in April, 1926.
Its headquarters are in Bloomington, 111. It has in membership 250
individuals and 18 societies (17 distributive societies and 1 mutual
benefit organization). The member societies have a combined mem
bership of 6,780 and annual sales of approximately $2,600,000.
This league, in addition to its general educational work, holds a
summer institute, carries on organization work, supplies speakers and
pamphlets, and furnishes auditing service. It also carries on joint
buying of staple articles for its member societies. A printing plant
is operated by the league, which serves both the league and its mem
bers at the cost of time and material used.
The constituent societies have one vote for each 100 members or
major fraction thereof.
The league has three employees.
Other Federations
Mesaba Range Cooperative Federation
T h e societies of the Northern States League district have two in
formal organizations. One of these is the Mesaba Range Cooperative
Federation, a loose organization of some dozen members—mainly
Cooperative Central Exchange societies located in the Mesaba Range
district, in northeastern Minnesota.
This organization was inaugurated to knit the societies together
more closely and to form a medium for the discussion of their common
problems. Some joint buying has also been done by these associa
tions. This federation was also the sponsor and moving spirit in the
formation of the cooperative creamery at Virginia, Minn., which is
owned by the cooperative stores of the district.
One of the activities of the federation has been the arrangement of
an annual picnic participated in by the cooperators of the district.
Marquette District Cooperative League

The Marquette District Cooperative League was organized about
1926, to serve as a clearing house for the problems of the cooperative
societies in the Marquette district of Michigan. Its work lies mainly
in carrying on educational activities and in studying the possibilities
and methods of expansion into new areas and new lines of goods or

CHAPTER III.— CENTRAL CONSUMERS ORGANIZATIONS

services. Among its activities has been the inauguration of a series
of meetings of directors and employees of the societies, at which
matters and problems affecting both parties were discussed.
But perhaps the main accomplishment of the league has been the
formation of the Marquette District Park Association. Only co
operative stores are eligible to membership in the association. The
latter in 1929 purchased a tract of land on the shore of Shag Lake, one
of the many lakes in that region. This lake is about a mile long and is
located about 2% miles from Princeton, Mich. Some of the land has
been cleared, a small kitchen and a dressing room have been built, and
the place will be used for picnics, camping, and recreation generally.

CHAPTER IV*—Credit and Banking Societies
Credit Unions
OR the average wage earner, with no banking connections and
no security to offer, but urgently in need of money, the credit
union appears to offer a very good solution of the credit problem.
Such a person can rarely obtain help from the ordinary banking insti
tutions. Of recent years a small and increasing number of banks
have added “ character loans” to their field, but these banks are as
yet too few and scattered to form a considerable factor. Other credit
organizations, which specialize in small loans, include the remedial
loan societies, the Morris Plan banks, and the personal finance com
panies. All of these charge interest rates higher, and in some instances
very much higher, than those charged by the credit unions.1 In
times of financial stress, many small borrowers know of only two
avenues of relief—charity and the loan shark— and in some cases
may be forced to resort to one or the other, for, as a recent study of
consumers7credit points out, “ in the small-loan field the demand for
credit far outruns the present available supply.” 2
The credit union, however, appears to be a very successful means
of meeting this situation. It is primarily for that small borrower
whose need is greatest. It not only offers a welcome avenue of credit
but has an enviable record of promotion of thrift. Through the
establishment of habits of regular saving—small though the savings
may be—it turns thriftless, creditless, and moneyless persons into
saving, stable members with good standing in the community.
Only members of the credit union are eligible to obtain loans from
it, but once a member, the applicant can obtain whatever sum he
needs, at a low rate of interest. As a borrower from the credit union
he is neither an exploited victim nor an object of charity. The trans
action is on a strictly business basis. All members are on the same
level, with the same rights and powers, and receive the same treat
ment.
The cooperative credit society is thus absolutely democratic. It is
filling a real need, through simple machinery, and is doing this at very
little cost (expense of operation during 1929 averaged only 1.79 per
cent of the total loans granted).
The bureau’s study indicates that credit societies are generally suc
cessful and that losses from failure of borrowers to repay loans are
extremely small.
The effectiveness of these societies as “ poor men’s banks” is indi
cated by the growth of the movement, shown by data collected as

» The recent study by Evans Clark (Financing the Consumer) gives (p. 219) the following annual rates
charged by these agencies: Credit unions, 6 to 18 per cent; personal loan departments of banks, 9 to 23 per
cent; industrial banks,17 to 35 per cent; remedial loan societies, 12 to 36 per cent; personal finance companies,
30 to 42 per cent. The rates given for the credit unions are the maximum rates allowed under the
State credit union law; data collected by the United States Bureau of Labor Statistics indicated that the
most common rates actually charged by credit unions were 5.9, 6, 8, and 12 per cent.
2 Clark, Evans: Financing the Consumer. New York, Harper & Bros., 1930, p. 211.

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

part of the bureau’s general study of the cooperative movement. In
1925, when the bureau’s previous study was made, there were only 284
societies of this type in existence; by the end of 1929 the number had
risen to 974. During the same period the membership has increased
from 107,779 to 264,908. Their resources have more than doubled—
the paid-in share capital has grown from $10,706,099 to $24,065,407
and the reserves from $973,873 to $2,079,450; the savings deposited
with these societies haveincreasedfrom $4,700,768 to $9,017,786. Dur
ing the year 1929 the loans granted by these societies to their members
reached the sum of more than $54,000,000.
Characteristics of Credit Unions
T he following features are characteristic of credit unions:

1. Membership open to 'persons of good character, who have a com
munity of interest with the credit union group. The latter qualification
is added because, in the credit society, it is essential for the financial
soundness of the society that the members shall know each other well
enough to be able to judge of their reliability. Any restrictions, such
as limitation of the field of membership to the employees of a certain
firm, to a named organization, parish, locality, etc., are made with
this end in view.3
2. Low membership fees, and shares of low denomination which may
be paid for in installments. No one need be debarred by poverty from
joining a credit union.
3. Democracy in government, with officers and committees elected by
and responsible to the members. Also, officers, directors, and com
mittee members usually serve without pay. Thus, no one makes any
money out of the necessities of the members.
4. One vote per member, irrespective of the number of shares held.
No proxies.
5. Loans to members only. All members’ applications receive equal
treatment by the committee, no favors being either granted or with
held because of the members’ holdings in the society. In case the
funds on hand are not sufficient to cover all the loans approved,
preference is given to the smaller loans, on the ground that the need
of such borrowers is likely to be greater.
6. Loans to directors, officers, and committee members are generally
prohibited. This is done to obviate diversion of funds or abuse of
office by such persons.
7. Loans made only for productive purposes and urgent needs.4
8. Amount of loan based, not on the member’s investment in the
society, but on his needs and character. Loans may usually be obtained
without security, in amounts up to $50.
9. Loans at low rates of interest, and interest generally payable only
on unpaid balances.
10. Dividends payable on all fully paid shares of stock. Thus, both
borrowers and lenders participate in the earnings.
3 In many instances these restrictions are imposed by the State credit union law. (For provisions of
these laws, see p. 113.)
* But this, in practice, is usually very liberally construed. Under some circumstances a loan might even
be granted to enable the borrower to take a much-needed vacation—such a purpose being considered both
necessary and productive.

COOPERATIVE SOCIETIES IN 1929

Number and Age of Credit Unions Reporting
T h e data regarding the credit societies were gathered by the ques
tionnaire method in all cases except those in the States of Iowa,
Massachusetts, Michigan, Minnesota, Missouri, and New York. In
those States data on substantially the same points as covered by the
present study are collected and published by the State officials in
charge of the banking department, and in such cases the information
was obtained from these officials, in order to avoid duplication of
work.
It should be borne in mind that the data are as of December 31,
1929. The bureau has record of numerous societies started since
January 1, 1930, but such were of course omitted from this study.
As the table below shows, of the 974 credit unions known to have
been in existence at the end of 1929, the bureau has data for 838, or
86 per cent.
The distribution of credit unions, by States, is shown in Table 38.
T a b l e 38.—N U M BER

OF C R E D IT UNIONS IN OPERATION A T END OF 1929 A N D
NU M BER R EPO RTIN G FOR T H A T YEA R , B Y STATES

State

Alabama ..
Arizona. - ...........
Arkansas............ .
California............
Colorado_______
Connecticut____
District of Co
lumbia _____
Florida_________
Georgia........ ........
Illinois...............
Indiana
Iowa___________
Kansas....... .........
Kentucky..........

Num- j
Total ber
re- >
num port
ber
ing
39
2
3
19
2
1

23
1
I
16
1
1

1
1
39
41
32
36
10
10

1
1
39
32
19
36
9
8

State

! Total Num
r e -;
I num- ber
port
i ber
ing 1

Louisiana.... ........
Maine................. i
Maryland............ j
Massachusetts__
Michigan.............
Minnesota...........
Missouri________
Montana_______
Nebraska............
New Hampshire..
New .Tersev..........
New York
North Carolina...
Ohio.....................
Oklahoma............

State

5 ; Oregon_________
1 : Pennsylvania___
3 Rhode Island.......
299 South C arolina. . .
20 Tennessee. _
43 Texas___________
43 Utah___________
1 Virginia
5 W ashington_____
2 West Virginia___
7 Wisconsin........ .
125
21
Total........
2

6
2
3
299
29
43
43
1
7
3
11
125
46
3
3

Total Num
re
num ber
port
ber
ing
3
2
13
5
15
12
5
30
6
9
14

3
1
9
I
12
4
4
18
6
6
9

974

838

The cooperative credit movement continues to grow at a pace far
in excess of that shown by the other phases of the cooperative move
ment. The passage of credit union laws in the various States has
given a great impetus to the movement, but undoubtedly the very
simplicity of the credit union plan has been one of the greatest factors
in this growth.
Of the 756 societies for which data are available as to year of
organization, less than 6 per cent were formed prior to 1916. In the
9-year period 1916 to 1924, 153 credit unions (20 per cent) were
started, mainly in the old credit union States of Massachusetts and
New York. In the five years 1925 to 1929, 559 societies (74 per
cent of the total) were formed. In this last period, however, while
the cooperative credit movement continued to grow in Massachusetts
and New York (but especially the former), much of the development
was due to organization in States in which new credit laws had just
been enacted for the first time. Of the 559 societies formed during
the 5-year period, 283 were in States in which cooperative credit was
a new thing. Details are shown in the following table.

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

T able 3 9 .—DISTRIBU TION OF CRE D IT SOCIETIES ACCORDING TO Y E A R IN W HICH

ESTABLISHED

1900- 1911- 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927
1928 1929 To
1910 1915
tal

State

Ala...........
Ariz_____
Ark_____
Calif.____
Colo...___
flnnn ___
Dist. Of
Col____
Fla...........
G a ..........
Ill............
Ind..........
Iowa____
Kans____
K y ...........
La............
M e..........
M d..........
Mass.......
Mich
M o .........
Mont___
Nebr.......
N. H
N. J ........
N. Y
N. C
Ohio
Oreg........
Pa______
R. I _____
S. C
Tenn____
Tex..........
Utah
Va........ .
Wash.......
W. Va
Wis_____
Total.

4
6

3
8
2
3
9

1
1
1

1
6

1
1
8
3

3
4
4
1

5
6
1
6

9
13
3
14

4
2

116
6

67
4
7

28
7
20

3
15

3
9
14
1
3

1
1
1

,
!

1
2

1
5

1
1

1
12

2
1

6
1

4
1

3
12

1
1
1

2
1

1
3

7
1

1
1
21
32
19
27
9
8
5
1
3
289
20
43
1
5
2
7
123
21
2
3
1
9
1
12
4
4
18
6
6
9

756

4
2

2
1
1
1
2

2
1
1

150

1
1
3

2
5
1
2
4

113

183

23
1
1
16
1
1

1
1
1
1
1
4
1
1

Membership
R e s t r i c t i o n s of some sort upon the membership are very common
among credit unions. In many cases the restriction is imposed by
the credit union law of the State.5 A common provision of the law
is that the membership of a credit union shall be limited to a group
having a common bond of occupation or association, or to persons
residing within a well-defined neighborhood, community, or rural
district. This is done in order that the credit union group may be
composed of persons of like interests. It is desirable, for the sake of
financial safety, that the members in a credit union know each other
and have common interests, and such membership restrictions are
made to insure this homogeneity.
Some interesting data were collected as regards membership. No
information could be had on this point for the credit unions in the
* Of the 82 States which have passed credit union legislation, only 15 (California, Georgia, Indians,
Kentucky, Maryland, Massachusetts, Nebraska, New Hampshire, North Carolina, Oregon, Rhode Island,
Tennessee, Utah, Virginia, and Wisconsin) place no limitation upon the field from which the credit union
membership may be drawn.

18672°—31----- 5

COOPERATIVE SOCIETIES IN 1929

six States for which data were obtained through the State officials.
The reports for 280 credit unions in the other States show the following:
T able 4 0 .—M EM B E R SH IP RESTRICTIONS OF 280 C R E D IT UNIONS

Membership restricted to—

Num
ber of
societies

Membership restricted to—

Num
ber of
societies

Members of specified labor organizations:
Railway clerks...................................
Machinists..........................................
Electrical workers. . . ..........................
Street-railway employees..................

Employees of specified company:
Mining companies................................
Railroads...............................................
Railroads (shop employees).................
Railroads (office employees)............... .
Railway-express companies................ .
Street railways....... .............................
Telephone and telegraph companies...
Power and light companies..... ............
Department stores................................
Mail-order companies......................... .
Newspapers............ ............................. .
Motion-picture studio..........................
Milk company.....................................
Insurance com pany.............................
Manufacturing companies—
Cotton goods........ ................... —
Other.................... ........................
Other companies, business not known.

Total...............................................

Specified occupations:
Railway mail employees...................
Farmers...... .......................................
Telephone workers.............................
Total...............................................

T ota l--............................................. .

103

Federal employees......................................

~108

__ 8

Residents of specified locality.................
Other, miscellaneous restrictions............
No restriction............................................

Grand total.....................................

~280

9
9

Municipal employees:
Teachers................................................
Firem en-..............................................
Other....................................................
Total-................................................

The same data, arranged according to occupational distribution,
as far as known, are shown in the table below:
T able 41 .—OCCUPATIONAL DISTRIBU TION OF C R E D IT UNION M E M B E R SH IP

Membership restricted to—

Mine workers__________________________
Railroad employees_____________________
Railway express employees______________
Street-railway employees ______________
Telephone and telegraph employees.........
Municipal employees:
Teachers................. ...............................
Firemen.
___ _
___ _____ __
Other_________________ _____ ______
Federal employees:
Post-office employees (including railway-mail employees)________ _____
Other...................................................

Number
of socie
ties

Membership restricted to—

4
74
5
4
8
3
4
4

Number
of socie
ties

Mercantile employees__________________
Newspaper employees__________________
Machinists_____ _______ _______________
Farmers................ ................... ..................
Factory employees_____________________
Other industrial employees______________
Miscellaneous employments_____________

6
2
2
2
12
10
4

Total................ .......... ...... ................

256

j
75 |
38 i

The 828 credit unions which gave data as to the number of members
had an aggregate membership of 264,908, an average of 320 members
per society. The data by States are shown in Table 42. It is seen
that, of the States having more than one credit union, the New Hamp
shire societies have the largest average membership, those of Maine and
Rhode Island being next in size.

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

T able 4 2 .—A G G REGATE AN D AVERAGE M EM BERSH IP OF C R E D IT UNIONS, DECEM*

BER 31, 1929, B Y STATES

Members
Num
ber of
socie
Aver
ties re Total
per
porting number age
society

State

Alabama....................
Arizona.................... .
Arkansas.................. .
California................. .
Colorado....................
Connecticut............. .
District of Columbia.
Florida.......................
Georgia......................
Illinois...................... .
Indiana......................
Iowa...........................
Kansas.......................
Kentucky................. .
Louisiana................. .
Maine........................
Maryland................. .
Massachusetts......... .
Michigan...................
Minnesota.................
Missouri................... .

19
27
9
8
5

3
299
20
43
42

2,263
49
26
3,079
459
277
580
226
7,029
8,230
3,864
2,723
537
1,342
1,215
1,286
831
107,044

49
26
192
459
277
580
226
180
257
203
101
243
,286
277
358
198
208
178

8,943
7,470

Members
Num
ber of
socie
Aver
ties re Total
porting number age per

State

Montana............
Nebraska...........
New Hampshire.
New Jersey........
New Y ork.........
North CarolinaOhio...................
Oregon...............
Pennsylvania.. .
Rhode Islan d...
South Carolina..
Tennessee..........
Texas.................
Utah...................
Virginia..............
Washington.......
West Virginia__
Wisconsin..........

5
2
7
125

2
3

1
1

12
4
4
18
6
6

150
737
4,042
2,937

150
147
2,021
420
565
54
138
373
52
1,007
98

1,136
276
1,120
52
9,062
98
2,407
247
443
5,984
895
1,591
1,697

201

111

332
149
265
320

264,908

Total........

Although small groups are considered more nearly ideal for credit
union purposes, some of the most prosperous and successful of the
societies are those with a very large membership. The table below
shows, by States, the number of organizations in each membership
group, for all the States except Massachusetts and Minnesota for
which data for individual societies were not available.
T able 4 3 .— N U M BER OF C R E D IT

UNIONS W IT H EACH CLASSIFIED N U M BER OF
M EM BERS, B Y STATES

[Data for individual societies not available for Massachusetts and Minnesota]
Number of credit unions having specified membership
State

Alabama__________________________
Arizona.................................................
Arkansas..............................................
California.............................................
Colorado...............................................
Connecticut..........................................
District of Columbia...........................
Florida..................................................
Georgia.................................................
Illinois____________________________
Indiana.................................................
Iowa_____________________________
Kansas..................................................
Kentucky....... ........... ..........................
Louisiana.............................................
Maine...................................................
Maryland.............................................
Michigan..............................................
Missouri...............................................
Montana...................................... .......
Nebraska..............................................
New Hampshire..................................
New Jersey..........................................
New York............................................
North Carolina....................................
Ohio.....................................................

500
750
1,000
25
50
100 200
Less and
and
and and and and and
than under
under
under
under
under
under
under
25
500
750 1,000
50
100 200
1
1

9
1
1
2

4
1
1

2
4
2
10
5
1

6
11
4
5
3
4
1

5
4

4
13

1
1
2"

6
6

7
7

4
7
8
6
1
1

5
8
1
3
2
26
3
2

1
6
2

2,000 Total
and
over

1
1
2
2
1
1

1
1
1

23
1
1
16
1
1
1
1
21
32
19
27
9

2
4
3
3
10

1
3
2

-36

1
11

1
1
8 ....... 6~

1
3
20
42
1
5
2
7

120
21
2

COOPERATIVE SOCIETIES IN 1929

T able 4 3 .—N U M B E R OF C R E D IT UNIONS W ITH EACH CLASSIFIED N U M B E R OF

M EM BERS, B Y STATES—Continued

Number of credit unions having specified membership
100
25
50
Less and
and and
than under
under
under
25
200
100
50

State

Orpgnn
_ __ ,
Pennsylvania______________________
Rhode Island______________________
South Carolina____________________
Tennessee_________________________
Texas_____________________________
Utah
Virginia_____________________ _____
Washington_______________________
West Virginia_____________________
Wisconsin , ., ^ .
„
Total__________ _________ ____

1
1

1
1
2
1
4
3

1,000
750
200 500
and
and
and and
under
under
under under
500
750 1,000 2,000
1

3
1
6
1
1
103

2
2

6
1
1
6

2
3
2
1
1

105

2,000 Total
and
over

1
2

1
2
36

3
1
9
1
12
4
4
18
6
6
9
463

Resources
E a c h new member is required to pay a membership fee, ranging in
the various societies from 10 to 25 cents, and to subscribe for a certain
amount of share capital, usually one share.
The shares are always of small denomination—$5, $10, and $25
are the most common values—and the member is allowed to pay for
his share in installments of as little as 10 or 25 cents a week. Thus it
is evident that no one is debarred from membership by reason of
poverty.
In order to equalize to some extent the members' holdings in the
society, many organizations place a limit on the amount of stock
held by any one member. In some organizations no member may
own more than 5 per cent of the total share capital. In others placing
a definite limit on the member’s capital investment, the maximum
amount allowed per member ranges from $100 to $5,000. While the
societies studied have an aggregate paid-in share capital of more
than $24,000,000, Table 44 shows that the amount of capital per
member averages $92.
T able 4 4 .— AVERAG E PAID-IN SHARE C APITAL PER M E M B E R OF C R E D IT UNIONS,

BY STATES

State

Alabama.... .......................
Arizona.............................
Arkansas......... ..................
California..........................
Colorado_______________
Connecticut____________
District of Columbia____
Florida...............................
Georgia— .........................
Illinois...............................
Indiana..............................
Iowa____________
Kansas...............................
Kentucky..........................

Average
capital
per
mem
ber^

State

$45 Louisiana.......................
131 Maine...... ..................... .
61 Maryland......................
36 M assachusetts .......... .
102 Michigan _ ..................
133 Minnesota ......................
24 Montana.......................
144 Nebraska.... ...................
47 ' New Hampshire. _____
52 : New Jersey___________
66 New York. _____ _____
40 North Carolina
12 Ohio................................
63

Average
capital
per
mem
ber i
$30
33
34
96
60
37
20
21
11
34
143
32
19

i Based on societies which reported both membership and capital.

State

Average
capital
per
mem
ber1

Oregon....... .....................
Pennsylvania_________
Rhode Island__________
South Carolina____ __
Tennessee _ ________
Texas _______________
Utah................................
Virginia_______________
Washington
__
West Virginia_________
Wisconsin ____ _____

$42
3
63
50
87
19
35
35
66
36
98

Total...... ...............

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

The matter of receipt of deposits is usually fixed by the State law.
The laws of all but seven States 6 specifically allow credit unions to
receive savings deposits from the members, and those of seven States
(Georgia, Kentucky, North Carolina, South Carolina, Tennessee,
Virginia, and West Virginia) also allow them to receive deposits from
nonmembers.
Deposits may be made in amounts as small as 25 cents. These
deposits, in the societies reporting, total more than $9,000,000.
In addition a certain amount must be set aside as a reserve or
“ guaranty fund” each year. The societies reporting have reserves
of more than $2,000,000.
Table 45 shows the amount of capital, reserves, and deposits at the
end of 1929.
T able 45.—SHARE CAPITAL, RESERVES, AND DEPOSITS OF C R E D IT UNIONS IN 1929,

B Y STATES

Share capital
State

Alabama_________________
Arizona__________________
Arkansas________________
California___ ____________
Colorado
- Connecticut........ .............. .
District of Columbia______
Florida. _
„ _ „
Georgia______________ ____
Illinois,_____ __________
Indiana_________ ________
Iowa.................... ..............
Kansas................ ........... .
Kentucky________________
Louisiana_____________ _
Maine___________ _______
Maryland_______________
Massachusetts___________
Michigan.............................
Minnesota____ ,___ _____ _
Missouri_________________
Montana.____ ___________
Nebraska________________
New Hampshire__________
New Jersey___________ _
New York____ ___________
North Carolina___________
Ohio.,___________________
Oregon__________________
Pennsylvania____________
Rhode Island____________
South Carolina........ ...........
Tennessee____ ,__________
Texas___ ________________
Utah....................................
Virginia_______ ________
Washington______________
West Virginia____________
Wisconsin.......... ..................
Total..........................

Num
ber of
socie
ties re
porting

Amount

23
$100,798
1
6,302
1
1,588
111,958
16
1
46,970
1
36,719
1
13,891
1
32,500
333,106
39
430,841
31
256,836
19
119,047
36
6,465
9
84,700
8
5
36,994
1
42,148
28,168
3
299 10,261,960
237,258
20
327,450
43
(•)
<•)
1
3,000
5
15,725
2
43,776
4
20,500
125 10,091,638
21
36,048
2
5,278
3
47,296
1
180
9
567,319
1
4,851
209,122
12
4
4,775
4
15,701
207,669
18
6
58,700
57,992
6
160,138
8
790 24,065,407

Guaranty fund
Num
ber of
socie Amount
ties re
porting
22
1
1
12

$2,222
28
47
2,616

1
1

619
270

39
14,826
31
11,651
11,451
16
36
1,325
4
48
7
3,729
4
1,627
1
13,253
2
148
299
741,772
9
5,331
43
11,062
43
5,285
1
2,500
5
449
1
28,334
6
4,990
125 1,094,931
19
4,355
2
58
3
875
1
13
9
80,134
1
460
11
6,133
4
165
4
265
14
10,470
1,751
6
5
1,587
14,670
9
798 2,079,450

Deposits
Num Num
ber of ber of
de
socie
ties re posi
ceiving tors

Amount
of
deposits

Aver
age
per de
positor®

102
11
20
338

$4,071
1,232
90
8,001

$40
112
5
24

7
1
1
5
1

118

39
»2
12
36
b2
3
b2
1

2,055
» 745
983
(e)
»7
34
6447
524

52,816
ft 38,933
41,051
1,402
ft 101
5,184
ft 1,395
15,536

32
ft 52
42

299
15
43
C)
1
*5
1
4
125
17

32,455
1,072
2,823
(e)
105
d 232
4,000
2,625
6,137
671

V14
152
>3
30

4,296,253
132
40,078
37
206,991
73
(c)
5,000 ........ 48
d 20,093
<*87
1,504,790
376
83
217,877
686,138
112
77,105
115

7
1
4
1
1
10

7,341
1
36
2
12
1,435

1,443,138
2
1,565
9
138
18,778

197
2
43
5
12
13

4
d3
654

15
d 710
64, 944

3,970
d 325,835
9,017,786

265
d 459
143

“ Based on societies reporting both deposits and number of depositors.
b Covers only sums paid in on purchase of shares.
« No data.
d Probably covers sums paid in on purchase of shares, as State law does not authorize the receipt of
savings deposits.
^Nebraska and Wisconsin have no provision on the subject. The law of California is indefinite, author
izing the credit union to ‘ ‘ receive money and accumulate funds to be loaned.” The laws of Illinois, Kansas,
Louisiana, and Missouri classify as “ deposits” the sums being paid in by members on the purchase of
shares.

COOPERATIVE SOCIETIES IN 1929

Requirements for Loans

Only a member of the credit union can be a borrower from it,
and even a member can not secure a loan (1) if he is not in good stand
ing, (2) if he has failed to repay any previous loan or is in arrears
on a current loan, or (3) if his indorsers have ever had to pay any
of his obligations.
Any member desiring to secure a loan must make his application
therefor in writing, stating the purpose for which he intends to use
the money and what security, if any, he can offer. Some societies
also require that the applicant shall certify that “ no consideration
has passed or will pass from the borrower to the indorsers for their
indorsement.”
Practice in regard to security required differs in the various credit
unions. ^One or two societies have a rule that no loans may be
made without security. In the majority, however, loans on char
acter may be made in amounts up to $25 or $50 (usually $50); for
loans above that amount security must be given. The security
may be a note indorsed by one or more fellow members. A sur
render to the society of the borrower's share capital may also be
required as security.
The loan must have the approval of all the members of the credit com
mittee present at the meeting to consider the loan and these usually
must constitute at least two-thirds of the full committee. In many
societies, an unsuccessful applicant for a loan may appeal from the
committee to the board of directors or to a meeting of stockholders.
Loans may be made in many societies “ only for provident pur
poses or urgent needs,” or when they “ promise to be of benefit to
the borrower.”
Business Done (Loans Granted) During 1929

T he following table shows that during 1929 the credit unions
reporting made loans amounting to $54,048,353, and had outstand
ing at the end of the year $30,811,582. The average amount granted
per loan was $350.
T able 46.—LOANS GR A N TED B Y C R E D IT UNIONS DU RING 1929, AVERAGE AM OU NT

OF LOAN, AN D AM OU N T OUTSTANDING AT END OF Y E A R

State

Alabama______________ _____ _______ ____________
Arizona___ _ .
^ _
_ _ _
Arkansas_______________________________________
California_________________________ ____ _________
Colorado________________________________________
Connecticut_____ _____ __________________________
District of Columbia__________________ __________
Florida............ .............. ...............................................
Georgia________ ________________ ________________
Illinois_______________________ ___________ ______
Indiana__________ ___________________ ___________
Iowa________ ________ ______________ __________
Kansas...........................................................................
Kentucky............................. ...... ..................................
Louisiana........ ..............................................................

Num
ber of Number
of bor
soci
eties
rowers
report in 1929
ing
23
1
1
16
1
1
1
1
21
32
19
36
8
8
5
1

a 2,615
146
35
1,774
618
340
873
180
4,339
5,555
*1,917
1,406
126
931
1,122
762

Loans granted during
year

Amount

a$235,234
6,831
4,049
208,520
131,277
150,320
30,252
40,000
537,109
863,306
285,849
* 170,755
7,659
176,696
91,772
104,361

* Based upon societies reporting both number of borrowers and loans granted.
* 22 societies.
318 societies.
4 27 societies.

Loans
outstand
Aver ing
at end
age loan
per bor of year
rower 1
$90
45
45
118
212
102
14
172
124
155
102
133
61
190
82
137

$98,528
6,533
1,578
115,827
80,710
34,677
12,630
32,000
258,988
435,592
138,790
93,781
5,871
107,362
38,560
78,253

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

T able 46 .—LOANS G R A N T E D B Y C R E D IT UNIONS DU RIN G 1929, AVERAGE AM OUN T

OF LOAN, AN D A M O U N T OU TSTAN DIN G A T END OF Y E A R —Continued

Num
ber of Number
soci
of bor
eties
rowers
report in 1929
ing

State

Maryland_________
........ ............... .. ..
___ _ . ..........
.....
Massachusetts..
Michigan_______________________________________
Minnesota______________________________________
Missouri_____________________________ _____ _____
Montana_______________________________________
Nebraska_______________________________________
New Hampshire_________________________________
New Jersey_____________________________________
New Y oik______________________________________
North Carolina................................... ..........................
Ohio...............................................................................
Oregon_________________________________________
Pennsylvania—. ______________ ____ ______________
Rhode Island____________________________________
South Carolina__________________________________
Tennessee_______________________________________
Texas. _ _______________________________________
Utah...................................................................... ........
Virginia...................-.....................................................
Washington_____________________________________
West Virginia___________________________________
Wisconsin_______________________________________
Total....................................................................

3
299
20
43
43
1
5
2
7
125
21
2
3
1
9
1
12
4
4
17
6
6
9

Loans granted during
year

Loans
outstand
Aver ing at end
age loan of year
per bor
rower i

Amount

350
52,853
(«)
3,896
10,335
23
463
4,014
7 980
41,792
1,159
121
1,981
10
2,918
72
»1,787
93
349
5,498
766
855
880

$27,888
* 29,500. 000
372,392
(*)
(6)
7,500
66, 252
144,612
130,194
18,365,000
8129,395
9,580
107,073
175
679 936
10.668
476,794
5,257
36,050
510,348
51,488
io 107,442
266,319

$80
$21,644
8558 12,628,949
09
472,570
(«)
326
3,500
143
35,906
36 1,343,664
119
52,783
439 11,532,531
116
115,710
79
5,067
54
47,654
18
150
233 1,886,364
148
5,560
210
237,117
57
4,088
103
17,337
93
263,275
67
62,603
139
63,370
303
472,060

818 “ 153,934

12 54,048,353

350 30,811,582

1 Based upon societies reporting both number of borrowers and loans granted.
8Estimated.
7 6 societies.
911 societies.
11794 societies.
•No data.
8 20 societies.
10 5 societies.
12 720 societies.

Interest on Loans
T h e maximum rate of interest that may be charged on loans is
fixed by the laws of 26 of the 32 States having credit union laws.7
The most common rates charged are 5.9, 6.0, 8.0, and 12.0 per
cent. The following statement shows, for the 395 societies reporting
on this point, the rate charged:
Number of
societies

5 per cent per annum_______________________________________
5 per cent per annum, in advance___________________________
5% per cent per annum_____________________________________
5 and 5.9 per cent per annum--------------------------------------- -—
5.9 per cent per annum_____________________________________
5 and 6 per cent per annum-------- ----------------------------------------5 -7 per cent per annum_____________________________________
6 per cent per annum_______________________________________
6 per cent per annum, in advance__________________________

1
2
3
1
98
82
1
* 66
5

7Thus, in North Carolina the legal rate may be charged and in New Hampshire not to exceed the legal
rate. In South Carolina the interest rate may not exceed 7 per cent, in Indiana 8 per cent per year “ not
collectible in advance,” in Texas 10 per cent, and in Utah 12 per cent. In 17 States the rate may not exceed
1 per cent, in West Virginia 1H per cent, and in Virginia 1H per cent per month, computed on the unpaid
balances. The New Jersey law also provides that “ no charges, bonus, fees, expenses, or demands of any
nature whatsoever other than as above provided shall be made upon loans or advancements except upon
the actual foreclosure of the security or upon the entry of judgment.” In New York the interest may not
exceed 1 per cent per month, or 5.9 per cent per year if deducted in advance, and in either case must be
inclusive of all charges incident to the making of such loan; if the member pays off a loan before due, “ the
pro rata unearned portion of interest shall be refunded.” The Wisconsin statute provides that a rate of 1
per cent per month on unpaid balances u shall not be held to be usurious.”
8 In 1 case, according to whether mortgage or personal loan; in the other, according to term and size of
loan.

COOPERATIVE SOCIETIES IN 1929
Number of :
societies

6 and 7 per cent per annum........................... _;....................... ......
91
6 and 8 per cent per annum_________________________________
1
6.9 and 12 per cent per annum_____________________________
1
6-12 per cent per annum____________________________________
1
6 and 12 per cent per annum-----------------------------------------------1
7 per cent per annum_______________________________________
10
7 and 8 per cent per annum_________________________________
10 4
7, 7K, and 8 per cent per annum____________________________
11 I
1
7.2-9.6 per cent per annum_______________________ ;_________
8 per cent per annum_______________________________________
32
8 and 10 per cent per annum_______________________________
11 1
8, 10, and 12 per cent per annum----------------------------------------1
0.8 per cent per month______________________________________
1
9 per cent per annum_______________________________________
3
% per cent per month_______________________________________
2
10 per cent per annum______________________________________
5
Up to 11.2 per cent per annum--------------------------------------------1
12 per cent per annum______________________________________ 12 147
18 per cent per annum______________________________________
1
Total reporting-----------------------------------------------------------

13 394

Operating Expenses
T h e expense of operation of the credit societies as a group is very
small. In many cases, where the credit union membership is com
posed of the employees of a single firm, the company gives quarters
(including, of course, heat and light) and in some cases the services of
an accountant. Often, when the society is small there are no official
headquarters, the business being transacted at the home of the
treasurer, secretary, or some member of the credit committee.
Expense for salaries is at a minimum, for usually the directors and
members of committees receive no compensation,14 and as a general
thing the only persons receiving any salary are the treasurer or
secretary (or both). For this reason, the table below gives the average
rate of expense for each item, based, first, on only those societies
which had an expenditure for the particular item, and second, on the
whole number of societies (135) which furnished statements of operat
ing expenses. As is seen, of the 135 societies only 2 showed expendi
ture for heat and light and only 5 societies paid rent. Stationery
and supplies formed the most common item of expenditure.
Table 47 shows that the expenses of credit unions for the year 1929
averaged 1.79 per cent of the year’s business, i. e., the loans granted.
•According to whether an installment or straight*term loan.
In 1 case, according to size of loan.
ii According to size of loan.
i* One of these charges 7 per cent for straight-term loans.
*8Not including 1society whose charges range from 25 cents a month to 10 per cent per annum, according
to size and type of loan.
u In 29 States compensation to them is forbidden by law.

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

T a b l e 4 7 .—OPERATIN G EXPENSES OF C B E D IT UNIONS IN 1929

Rate (per cent) each item formed of
total loans granted during year
Based on societies hav
ing specified expense

Item

Number

Average

Based on
135societies
reporting

Salaries_______________________________________________________
Stationery and supplies________________________________________
Rent_________________________________________________________
Heat, light and power_________________________________________
Insurance, taxes, and fee for State auditing______________________
Premium on employees’ bonds_________________________________
Interest on borrowed money____________________________________
Repairs___________ _________________________________________
Depreciation_____ _
_______________________________________
Bad debts....... ................................ ......................... ............... .........
Miscellaneous______ __________________________________________

73
125
5
2
52
88
26
2
5
10
67

Per cent
1.10
.20
.17
.13
.59
.03
.33
.50
.32
.25
.45

Per cent
0.91
.16
.01
.01
.24
.02
.05
.04
.04
.04
.25

Total.............................................................................................

135

1.79

Only 10 societies reported any losses due to the failure of borrowers
to repay loans. For the societies which incurred these losses they
amounted to one-fourth of 1 per cent of the year’s loans; for all the
135 societies they amounted to only 0.04 per cent. The director of
the department of remedial loans of the Russell Sage Foundation
recently cited the case of one of the large credit unions in New York
City which has 11,000 members, and which during its 14 years’
existence made loans aggregating some $12,000,000 and has in afl that
time lost only $40 in bad debts.15
Division of Profits
P r o v i s i o n for reserve or “ guaranty fund,” or both, is almost
universally made, being required by all the recent laws, the most
general amounts set aside for this purpose annually being 20 or 25
>er cent of profits. This continues until an amount has been accumuated equal to that proportion of the share capital (or deposits)
required by the State law. To this fund are also added the entrance
fees, fines, and transfer fees.
Losses from bad debts or other causes are charged against the
reserve. One society provides that the reserve is to be kept to take
care of depreciation or for emergencies in connection with the business
or for any expansion or development that the members see fit.
Several credit unions allow the reserve, when it exceeds a certain
amount, to be drawn upon for the relief of individual members
“ in cases of extreme urgency, such as sickness or death necessities.”
Deposits receive interest at a fixed rate, usually determined by the
board of directors. Of the 343 credit umons which reported on this

i* American Bankers' Association Journal (New York City), July, 1930, pp. 43 et seq.: “ Small Loan
Cooperatives,” by Rolf Nugent.

COOPERATIVE SOCIETIES IN 1929

point, 148 receive no deposits, while the rates paid on deposits by
the remainder are shown below:
Number of
societies

2 per cent_________________________
3 per cent_________________________
3.5 per cent_______________________
4 per cent_________________________
4 and 4.5 per cent________________
4 and 5 per cent__________________
4.5 per cent_______________________
5 per cent_________________________
5.5 per cent_______________________
6 per cent_________________________

2
13
2
70
2
1
13
51
4
22

Number of
societies

7 per cent____ ________ ___________
7.2 per cent_______________________
7.5 per cent_______________________
8 per cent________________________
8.4 per cent_______________________
8.6 per cent_______________________
9 per cent_________________________
10 per cent_______________________
Total-

4
1
1
4
1
1
2
1
195

Dividends.—After expenses are paid and provision made for
reserve, interest on deposits, etc., the remainder of the profit is
divided among the members in proportion to the stock held by them.
Of the 820 societies for which reports were received, 387 paid
dividends on the 1929 business. The amounts returned by these
aggregated $222,163. It should be borne in mind that a very large
proportion of the societies have been in existence only a short time
and this has undoubtedly influenced the dividend figure. Their
failure or success, however, can not be judged merely in terms of
dividend, for their main benefit lies not m the returns made to de
positors and stockholders but in the savings effected for the borrower
through the lower rates of interest at which loans are given and in
the benefit, which can not be evaluated, growing out of the relief of
the exploited borrower and the lifting of the burden of anxiety from
the shoulders of many a harassed father of a family, enabling him to
regain his financial standing and self-respect.
T able 48.—AM OUNT A N D RA TE OF DIVIDENDS RETU R N E D B Y C R E D IT UNIONS, B Y

STATES

State

Alabama....................
Arizona.................... .
Arkansas.................. .
California................. .
Colorado...................
District of Columbia.
Florida.......................
Georgia......................
Illinois...................... .
Indiana......................
Iowa...........................
Kansas.......................
Kentucky..................
Louisiana................. .
Maine........................
Maryland..................
Michigan................. .
Minnesota.................
Missouri....................

Num
Dividends
ber of
paid
socie
ties
paying
Rate
divi Amount (per
dends
cent)1

18
24
16
16

8
5

2
7
43

$5,914
518
87
4,170
4,228
293
2,700
14,166
20,854
10,641
4,556
52
5,248
1,899
2,264
265
7,957
3,177
2,120

6.1

8.2

5.5
4.1
9.0

2.1

8.3
6.4
4.9
4.2
4.8
1.5

6.2
5.1
5.4
1.3
5.0

1.0

State

Montana............
Nebraska...........
New Hampshire.
New Jersey.......
New Y ork.........
North Carolina.
Ohio...................
Oregon...............
Rhode Island.. .
South Carolina..
Tennessee..........
Utah...................
Virginia.............
Washington.......
West Virginia...
Wisconsin..........
Total........

Num
Dividends
ber of
paid
socie
ties
paying
Rate
divi Amount (per
dends
cent)1

4
125
14

2
2

10
3

2387

6.0

$180
548
2,032
8,231
42,750
2,640
159
1,245
29,853
409
15,903
809
12,329
3,766
3,308
6,892

3.0
3.8
5.3
8.4
7.8
5.9
6.3
6.5
5.7
4.4

222,163

1.5

3.5
4.6
4.7
.4

8.2

(8)

1 Based on capital of societies reporting.
225 other societies paid dividends (at rates ranging from 3.48 to 18 per cent) but did not report amount so paid,
*No data as to capital.

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

Development Since 1925
T h e table below shows the status of the credit unions in 1929,
as compared with 1925 when the previous study was made. An
enormous expansion has taken place, as the figures show.
T able 49.—D EVELO PM EN T OF C R E D IT SOCIETIES, 1925 A N D 1929

Item
Total number of credit unions_________________________________________
Number furnishing reports___________________________________________
Membership:
Number of members_____________________________________________
Average per society______________________________________________
Resources:
Paid-in share capital_______________________________________________
Reserves________ ________________ _______ ________________________
Deposits_____________________________ _____________________________
Loans:
Number of borrowers during year________________ ______ ______ ____
Amount granted in loans___________________________________________
Average per borrower_________________________________ ____________
Amount outstanding at end of year_________________________________
Dividends paid:
Number of societies_______________________ ________________________
Amount returned_______________ ______ ___________ _________________
Average rate of expense (per cent)______________________________________

1925

1929
284
176

974
838

107,779
612

264,908
320

$10,706,099
$973,873
$4,700,768

$24,065,407
$2,079,450
$9,017,786

52,836
$20,100,356
$381
$13,390,423

153,934
$54,048,353
$350
$30,811,582

135
$458,183
1.80

387
$222,163
1.79

Federation Among Credit Unions
M u c h of the growth of the credit union movement of the past few
years has been due to the work of the Credit Union National Exten
sion Bureau, at Boston. This is a privately financed organization
which has devoted itself, first, to the work of obtaining in the various
States of a credit union law,16 which gives legal status and sanction
to credit societies, and second, to the promotion of organization of
credit societies within groups of various sorts—trade-unions, church
groups, fraternal organizations, local groups, and other organizations.
Certain labor groups, notably the Brotherhood of Railway Clerks,
have also taken an active interest in the formation of credit unions
among the membership of the locals. The rapid spread of the cooper
ative credit idea among the postal employees throughout the country
has been due mainly to the encouragement given by the Director of
Service Relations of the United States Post Office Department.
It is part of the plan of the Credit Union National Extension Bureau
that when there are enough credit unions functioning in a State to
warrant such action, these should unite to form a State credit union
league for mutual help and education, and that eventually these
State leagues should federate into a national league.
There has been such a State league in Massachusetts for the past
six years. The June, 1930, issue of The Bridge, which is the organ
of the Credit Union National Extension Bureau, pointed out that
Minnesota and Indiana have State leagues and that there is a suffi
cient number of local societies to justify the formation of a State
league in Alabama, Georgia, Illinois, Iowa, Missouri, North Carolina,
and Virginia.
Preliminary meetings looking to the formation of State leagues
were being held, at the time the article was written, in Illinois, Iowa,
16 There are now (summer of 1930) such laws in 32 States.

COOPERATIVE SOCIETIES IN 1929

and Missouri and similar meetings were planned to be held in Alabama,
Georgia, North Carolina, and Virginia early in the fall of 1930.
Cooperative Banks
HE formation of cooperative banks is authorized by law in Iowa
and Nebraska.17 Thus far, however, no banks have been organ
ized under the law of Nebraska. One bank, the Cooperative Bank
of Newell, has been formed in Iowa, but the bureau has been unable
to obtain any information concerning it.

Labor Banks
N JUNE 30, 1930, there were in existence 14 banks operating
under labor-union auspices. These banks had combined deposits
O
of $59,817,392, and total resources amounting to $68,953,855. The
details, by banks, are shown in the following table, supplied by Prof.
Douglas Brown, of Princeton University.
T able 5 0 .—C ONDITION OF LABOR BANKS AS OF JUNE 30, 1930

Name and location of bank

Share
capital

Surplus
and un
divided
profits

Deposits

$1,189,653 $18,130,880
519,974 11,349,764
6,659,455
210,573
224,453
6,021,853
183,547
4,112,415
3,674,030
230,022
191,925
2,676,150
159,277
2,526, 560
82,423
1,714,226

Total re
sources

$20,558,834
12,845,579
7,701,328
6,681,691
4,735,829
4,325,401
3,369,174
3,033,182
2,138,036

Federation Bank & Trust Co., New York, N. Y ..............
Amalgamated Bank of New York, New York, N. Y ._ .
Telegraphers’ National Bank, St. Louis, M o............ .
Labor National Bank, Paterson, N. J_________ ______
Mount Vernon Savings Bank, Washington, D. C.........
Union National Bank, Newark, N. J..............................
Labor National Bank, Jersey City, N. J_ ....................
Amalgamated Trust & Savings Bank, Chicago, 111-----The American Bank, Toledo, Ohio............. ...................
Farmers & Workingmen’s Savings Bank, Jackson,
Mich____________________________________________
United Labor Bank & Trust Co., Indianapolis, Ind___
Hawkins County Bank, Rogersville, Tenn.i..................
Gary Labor Bank, Gary, Ind.2........................................
Labor National Bank, Three Forks, M ont.....................

$750,000
650.000
500.000
300.000
400.000
375.000
400.000
200.000
200,000
100,000
112,500
50.000
50.000
25.000

16,132
26,712
50,000
13,592
7,053

849,834
702,326
596,627
606,617
196, 655

1,070,647
843,572
731,627
670,674
248,281

Total (14 banks)......................................................

4,112,500

3,105,336

59,817,392

68,953,855

i As of Dec. 31, 1929.

2 Bank closed Aug. 19,1930.

Beginning with the establishment of the Locomotive Engineers’
Cooperative Bank in Cleveland in 1920, the labor bank movement
grew, at first quite slowly, then with increasing momentum,
reaching its high point in 1925, when there were 36 such banks, with
deposits of nearly $100,000,000 and total resources of $115,000,000.
A decline began in 1926, which has continued from year to year since
then.
The Brotherhood of Locomotive Engineers, which at one time
owned an interest (in some cases a controlling interest) in some 15
banks, is no longer represented in the labor-banking field, as the
above table shows.
Table 51 gives the development of the labor banks, since the
inception of the movement, in 1920:
For the provisions of these laws, see p. 121.

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

T able 51.—D E V E LO PM E N T OF LABOR BANKS IN THE UNITED STATES, 1920 TO 19301

Num
Surplus and
ber of Share capital undivided
banks
profits

End of December—

$960,000
1,280,000
2,050,473
4,222,230
6,441,267
9,069,072
8,914,508
8.282.500
7.537.500
6.687.500
4.112.500

1920..
1921
1922.
1923..
1924-:
1926 2
1926
1927-.
1928..
1929 3.
1930 3.

$194,446
255,869
742,689
1,353,022
1,891,757
3,467,829
3,837,377
3,747,176
3,821,205
3,807,579
3,105,336

Deposits

$2,258,561
9,970,961
21,901,641
43,324,820
72,913,180
98,392,592
108,743,550
103,290,219
98,784,369
92,077,098
59,817,392

Total re
sources
$3,628,867
12,782,173
26,506,723
51,496,524
85,325,884
115,015,273
126,533,542
119,818,416
116,307,256
108,539,894
68,953,855

1 Data are from Princeton University, Industrial Relations Section, Report on Labor Banking Movement
in the United States, Princeton, 1929, p. 277, and additional new material furnished by the university
to the Bureau of Labor Statistics.
2Amalgamated Bank of Philadelphia not included.
3June 30.

Mutual Savings Banks
UTUAL savings banks, like the building and loan associations,
may be considered as cooperative to some extent. The
M
encyclopedia defines them as follows: “ A savings bank is a mutual
institution conducted for the benefit of the depositors, without profit
to the managers or trustees, for the purpose of receiving on deposit,
for safekeeping and investment, such sums as shall be offered by the
depositors, repaying the principal on demand or upon legal notice,
and distributing the earnings among the depositors as interestdividends, after paying expenses, and setting the remainder aside
as a surplus fund for the protection of all.” 18
The control of a mutual savings bank is in the hands of a board
of trustees named in the original articles of incorporation. This
board is self-perpetuating. As a rule its members serve without
any compensation whatever, even for attendance at meetings.
A mutual savings bank is a nonstock association, and having no
stock, is also without stockholders, being owned by the depositors
collectively. “ The depositors are, in a sense, partners, in that the
profits belong to them and the losses, if any, are legally assessable
upon them, the latter process being, however, a rare occurrence.”
The following data are taken from the 1929 report of the Secretary
of the Treasury on “ The State of the Finances.” Table 52 shows
the number of mutual savings banks in the United States on June 30,
1929, the number of depositors, the total and average deposits, and
the average rate of interest paid on deposits, by States.
i» The Americana, 1927, Vol. I ll, p.

COOPERATIVE SOCIETIES IN 1929

T able 53.—D E V E LO PM E N T OF M U TU AL SAVINGS BANKS, JUNE 30, 1929, B Y STATES

Deposits
State

Num
ber of
banks

Number of
depositors

California--------Connecticut.......
Delaware............
Indiana..............
Maine.................
Maryland..........
Massachusetts__
Minnesota..........
New Hampshire.
New Jersey........
New York-------Ohio...................
Pennsylvania—
Rhode Island—
Vermont............
Washington.......
Wisconsin..........
Total........

Amount

Aver
age
Aver rate of
age per interest
depos paid
itor
Percent
4.25
4.75
4.50
4.00
4.00
4.00
4.74
3.75
4.08
3.97
4.00
4.00
3.96
4.34
4.17
772
4.75
577
3.00
408

75
2
5
33
14
196
5
52
27
150
3

904,981
47,691
139,563
225,782
325,148
2,973,468
141,063
334,930
460,525
5,116,151
128,496
542,029
196,386
127,961
93,074
20,968

$75,527,000
627.058.000
24.641.000
24.505.000
113.402.000
194.199.000
2.042.506.000
71.797.000
2 215,759,000
267.167.000
4.463.046.000
104.466.000
447.124.000
169.300.000
98.813.000
53.739.000
8,550,000

$1,081
693
517
619
502
597
687
509
644
580
872
813

611

11,748,085

9,001,599,000

766

1 Estimated.
2 Includes savings of 11 trust companies and 11 guaranty savings banks.
3 Includes return of 1 stock savings bank.

By a curious coincidence, Massachusetts and New York, which
are the leading credit-union States, are also those in which the mutual
sayings banks have reached the greatest development. Of the 611
banks, 384 are in the New England States and 186 in the Middle
Atlantic States.
Table 53 shows the development of these banks since 1920. As it
shows, the high point in number of banks was reached in 1921.
Although the number of banks has decreased since then, the number
of depositors, amount of deposits, and average amount per depositor
have all shown a steady increase from year to year.
T a ble 5 3 .— DEV E LO PM E N T OF M U TU AL SAVINGS BANKS, 1920 TO 1929

Deposits
Year

Num
ber of
banks

Number of
depositors
Amount

Aver
age per
deposi
tor

1920..............................................................................
1921..............................................................................
1922..............................................................................
1923..............................................................................
1924..............................................................................

620
623
619
618
613

9,445,327
9,619,260
9,655,861
10,057,436
10,409,776

$5,186,952,000
5,575,147,000
5,779,506,000
6,288,551,000
6,693,246,000

$549
580
599
625
643

1925..............................................................................
1926..............................................................................
1927................. ............................................................
1928....... ................................................... ...................
1929...........- ................................................................

611
620
618
616
611

10,616,215
11,053,886
11,337,398
11,732,143
11,748,085

7,146,951,000
7,577,504,000
8,077,099,000
8,672,823,000
9,001,599,000

673
686
712
739
766

CHAPTER IV .— CREDIT AND BANKING SOCIETIES

Building and Loan Associations
A S BUILDING and loan associations are, in part at least, cooperative in character, summary data concerning them are given
below. These data were compiled from the annual reports of the
secretary of the United States Building and Loan League.
Table 54 shows the status of the associations, by States, in 1929.
jC jL

T able 5 4 .-C 0 N D I T I 0 N OF BUILDING AND LOAN ASSOCIATIONS, 1929, B Y STATES

Number
of asso
ciations

State

Alabama....................
Arizona......................
Arkansas....................
California...................
Colorado.....................
Connecticut...............
Delaware....................
District of Columbia.
Florida.......................
Georgia........................
Idaho..........................
Illinois........................
Indiana......................
Iowa...........................
Kansas.......................
Kentucky...................
Louisiana...................
Maine..........................
Maryland 1................
Massachusetts...........
Michigan...................
Minnesota...................
Mississippi..................
Missouri......................
Montana.................... .
Nebraska................... .
Nevada......................
New Hampshire.........
New Jersey................ .
New Mexico.............. .
New York...................
North Carolina...........
North Dakota_______
Ohio........................... .
Oklahoma.................. .
Oregon.........................
Pennsylvania..............
Rhode Island..............
South Carolina1.........
South Dakota............ .

44
44
24
69
36
14
927
402
74
155
158
106
36
1,200

227
69
79
43
237
27
83
4
29
1,562
19
309
233

Wyoming___
Other States.
Total.
2 No data.

42.500
6,700
75,271
437,584
117,023
32,808
19.500
72,043
16.500
15,083
6,900
918.000
450,373
64,421
211,938
170,500
204,496
29,000
330.000
519,198
212,672
92,554
29.500
265,774
43,728
1,360
17,208

1,200,000
5,047

810
91
39
3,901
8
151
23
38
176
24
14
91
73
63
187
13

105,058
19,600
2,388,625
265,679
51.000
1,650,000
42,021
33.000
10,880
21.300
187,880
126,536
5,940
65.000
293,816
67.300
303,407
20,750

12,342

12,111,209

Texas...............
Utah................
Vermont.........
Virginia...........
Washington__
West Virginia..

Members

Total assets

Mortgage loans
outstanding

$30,271,200
4,414,866
43,601,366
477,226,116
54,017,612
24,730,822
14,031,047
68,409,716
21,658,451
5,149,446
4,474,998
448,423,317
312,330,284
49,045,649
132,186,748
110,805,706
190,561,316
23,508,352
215,000,000
543,654,998
161,105,257
39,422,419
19,862,916
198,852,368
20,367,830
163,460,364
819,670
12,726,849
1,151,503,097
4,805,512
422,141,280
95,848,057
10,952,539
1,283,665,876
139,808,782
28,320,667
1,400,000,000
27,827,463
26,500,000
5,439,587
15,532,832
137,015,904
51,680,143
4,066,425
58,878,642
105,316,958
41,827,485
282,781,402

11,121,886

8,695,154,220

$25,634,807
3,968,295
37,965,108
416,802,996
45,117,257
22,752,873
12.062.400
65,163,001
17.074.400
4,457,486
4,001,215
415,190,738
282,837,023
45,081,130
107,956,918
108.611.540
173,887,938
22,048,158

(2)

502,637,271
147,942,994
33,234,090
17,891,290
178,416,924
18,281,801
139,870,118
745,974
12,196,619
1,062,722,473
4,064,291
380.170.540
88,585,047
10,384,000
1,146,545,352
127,719,842
22,538,321

1,200,000,000
25,915,049

(3)

4,793,245

(3)

122,886,727
42,716,239
3,883,293
52,837,266
83,864,584
36,954,310
269,287,737
9,405,286
230,301,417
7,787,405,383

3 Included in “ Other States.”

The table following shows their development, by years, since 1920.
It is seen that while there was a decrease in number of associations
from 1927 to 1928 and from 1928 to 1929, the membership and
assets have shown an unbroken increase year after year.

COOPERATIVE SOCIETIES IN 1929

T able 55.—D E V E LO PM E N T OF BUILDING AN D LOAN ASSOCIATIONS, 1920 TO 1929

Number
of asso Membership
ciations

Year

Assets

Mortgage loans
outstanding

1920.
1921.
1922
1923
1924

8,633
9,255
10,009
10,744
11,844

4,962,919
5,809,888
6,864,144
7,202,880
8,554,352

$2,519,914,971
2,890,761,621
3,342,530,953
3,942,939,880
4,765,937,197

2 $900,000,000
2 1,260,000,000
2 1,460,000,000

1925.
1926.
1927.
1928
1929.

12,403
12,626
12,904

9,886,997
10,665,705
11,336,261
11,995,905
12,111,209

5,509,176,154
6,334,103,807
7,178,562,451
8,016,034,327
8,695,154,220

5,085,009,639
5,852,689,591
6,584,818,419
7,336,124,154
7,787,405,383

12,666

12,342
1.No data.

2 Estimated.

Chapter V*—Workers* Productive Associations
HE number of workers’ productive societies in the United States
has decreased in recent years. At the time of the bureau’s
cooperative study made in 1925 there were 39 associations of this type.
One association was organized later that same year, but so far as the
bureau is aware, none has been formed since that time. On the other
hand, 17 have gone out of business and 2 are no longer cooperative
in any respect. Thus there are only 20 productive associations left.
Various fields of industry have been entered, from time to time,
by workers’ cooperative enterprises. These include the manufacture
of cigars, window glass, stoves, knit goods, cloth, shingles and lumber
products, clothing (gloves, suits, shoes, hats), sanitary pottery,
boxes, and bakery goods, the operation of coal mines, the canning of
fish, laundry operation, etc.
#Many of the societies were formed because of some motivating
circumstance, without adequate study of the field which it was
proposed to enter. In fact the field has often been such as to mean
an inevitably dwindling business for the cooperative enterprise.
The manufacture of articles by hand, in industries which if not
wholly mechanical are rapidly becoming so, is a highly precarious
undertaking. Thus, of the many cooperative plants manufacturing
hand-blown window glass none remain, while only three factories
manufacturing cigars by hand are still in operation. In other
instances groups of miners have taken over from the owners unprofit
able mines ana have worked them—in some instances successfully—
but when the vein gave out the society was at an end. Other groups
have entered highly competitive businesses where conditions were
unusually difficult. Of the numerous shingle mills on the Pacific coast
only a few remain, and these must compete not only with other
shingle manufacturers, but also with the manufacturers of patent and
fireproof roofings.
That some of these cooperative groups have attained a considerable
degree of success, however, must be put down to their credit. One
such instance is that of a group of shoe workers which started
its own factory 15 years ago. Each year has shown an expansion in
business, until now it employs in the business an average of 270
persons, does a business of nearly a million and a half dollars a year,
and has accumulated a surplus of nearly $300,000. This success,
in an industry as competitive and as subject to fluctuations of style
as the manufacture of shoes, shows a high quality of management.
In many instances the cooperative business was started as a result
of a strike or lockout in the industry in which the men were employed,
and the cooperative enterprise was looked upon as a means of giving
employment to some of the members and possibly, also, as an added
factor in bringing to terms the employer against whom the strike was
directed. When a satisfactory settlement was obtained there was
in some cases a loss of interest in the cooperative enterprise.
73
18672°—31----- 6

COOPERATIVE SOCIETIES IN 1929

Workers’ societies may be handicapped by business inexperience
and lack of knowledge of salesmanship and of market conditions.
They may therefore be at a disadvantage when it comes to disposing
of their product.

Mistakes in judgment may also result disastrously, as in the case of a
society which after several years of profitable operation had built up a
considerable surplus, which it used toward the purchase of an expen
sive building which was much larger than needed. Shortly after it had
assumed this burden, a business depression occurred, sales fell, and the
society, having used up its surplus and being unable to meet its
obligations, had to close.
Lack of adequate capital is another handicap and probably there
have been many societies which have collapsed in adverse times but
which could have succeeded if they had had funds enough to enable
them to absorb some loss and tide over until conditions changed
for the better.
Internal difficulties may also present added problems. Some
reports have spoken bitterly of the shortsightedness of the members
in wanting to draw out all of the profits for immediate use and failing
to see the importance and necessity of building up adequate reserves.
Others have complained of the difficulty of maintaining harmonious
relations among the members. One man who was one of the main
stays of a cooperative enterprise for the 25 years of its operation
states his opinion that—
Cooperative plans or institutions may sound ideal in theory but they are
impossible in practice, because if the leader of such a group is sufficiently talented
as to make the business a success, he can not and will not allow himself to be
subjected to the indignities and unjust criticisms, not to speak of the remunera
tion which is invariably denied to him.

In some instances outside factors which the organization was power
less to control have meant failure to the enterprise. Thus the
exhausting of natural gas in some parts of Indiana where cooperative
plants had been started put an end to many of these. In other
instances failure was due to high prices of materials and an unstable
market after the close of the World War; loss of factory by fire; the
increasing competition of machine-made products, etc.
Uncertain as the outlook is for this type of cooperation, it is possible
that much could be done for such organizations through a central
educational association such as is found in the consumers’ cooperative
movement. The workers’ productive associations operate in various
lines of business, it is true, but they all have common problems of
capitalization, merchandising, accounting, organization of production,
etc., upon which valuable information would be obtainable through
some central body organized for this purpose. Such central organiza
tions have been formed in those foreign countries in which workers’
productive enterprises have attained any degree of development.
General Characteristics of Cooperative Workshops

T he “ ideal” workers’ productive society is composed of workers
in the shop who have contributed all the capital of the enterprise
and do all the work, the business being managed by men elected by
and from the members. The worker-owners work on a wage basis,

CHAPTER V .— W ORKERS’ PRODUCTIVE ASSOCIATIONS

but receive in addition any profits made from the business, these
being divided among the members by various methods.
The cooperative workshop, however, is exposed to a temptation
not present in other forms of cooperation. In the consumers’ society,
for instance, it is to the interest of the members to enlarge the mem
bership, for each new member increases the business of the society.
The increased volume of business in turn reduces the percentage of
overhead expense and increases the savings made in the business and
therefore, also, the benefits accruing to each member. In the work
ers’ societies the situation is exactly reversed. Every additional
member increases the number who must share in the profits, though
not necessarily increasing the business done or the amount of profits
to be shared. # Each new member, therefore, is likely to be looked
upon as reducing the profits of the others. Especially if the society
achieves business success, there may develop an increasing tendency
among the members to limit their numbers so as to retain all the
savings from the business for themselves, and, if additional workers
are needed, to secure these as employees, not as members. The
impetus to such an attitude is also all the greater in a workers’ pro
ductive organization, inasmuch as the society represents the mem
bers’ livelihood; and as the matter is a serious one to them an exclu
sive membership policy is understandable and excusable. In direct
proportion as this occurs, however, the society loses its cooperative
character.
Some unavoidable limitation upon membership is, of course, im
posed by the nature of the business or work carried on and this
becomes greater with the degree of skill required. ^If the principle
that all the members are to be workers in the business is observed,
then obviously in a highly specialized undertaking, such, for instance,
as the manufacture of shoes or hand-made window glass, only per
sons skilled in the various processes can be admitted to the society
as members.
The present study has disclosed varying degrees of cooperative
ness among the workers’ productive societies. Some of these coopera
tive companies are in reality more of the nature of trade-union or
even joint-stock enterprises than of cooperative workshops and this
fact is recognized by the companies themselves. In some cases the
greater part of the capital has been furnished by the local tradeunion of the members’ craft and in some of these only unionists are
eligible for membership in the company. One of the most successful
fish cannery societies has reached the point of being more nearly a
profit-sharing than a cooperative society, as only a small proportion
of the workers are stockholders and of the employees only the actual
producers—the fishermen—share in the profits.
These societies could not, therefore, be measured by the same
strict standard as the consumers’ societies. In the consumers’
movement, while material benefits from the enterprise are desired,
there is usually also a certain amount of idealism, a vision of something
above and beyond the shopkeeping activities, with shopkeeping
simply a first step toward a better ordering of society to be striven
for patiently but hopefully in the interest of all consumers. This may
not be true of each individual cooperator nor of each individual soci

COOPERATIVE SOCIETIES IN 1929

ety, for many have material benefit as their main and only object,
but it is true of the consumers’ cooperative movement as a whole.
This wider vision seems to be less characteristic of the workers’
productive societies.
Geographical and Industrial Distribution

Of t h e 20 societies of producers which were in operation at the
end of 1929, 11 have furnished data for. the present report.
The table below shows the geographical distribution of the socie
ties in 1925 and in 1929, and of those which furnished data for the
present report.
T able 5 6 . —GEOGRAPHICAL D ISTRIBU TION OF W O R K E RS' P R O D U C TIV E SOCIE,

TIES, 1925 A N D 1929

Number in
existence

Num
ber re
port
ing,
1929

State
1925
_________________

Illinois__________________
Indiana________________

Massachusetts_________
Michigan______________
Minnesota____ ____ ____
Missouri
New Jersey____________
New York........................

1929

1
2
2
3
1
3
1
1
1

2
3

1
1

1
1
1

Number in
existence

Num
ber re
port
ing,
1929

State
1929

1925
Ohio....................
Oregon. ______ _
Pennsylvania__________
Washington____________
West Virginia__________
Wyoming.........................

4
5
1
11
2
1

Total_______ _____

2
1
7

1
2
5

.............. 1

The following table shows the distribution in 1929, by kind of
business carried on:
T able 5 7 .— T O TAL N U M BE R OF W ORKERS’ PRODUCTIVE ASSOCIATIONS AND

N U M BE R REPO RTING, 1929

Type of society

Box factories_______________
Cigar factories______________
Coal mining................................
Enameling plants
Fish canneries....... ................ Laundries__________________

Number
reporting

Total
1
3
2
1
2
8

Type of society

Number
reporting

Total

Shingle mills............................
Shoe factories______________
Veneer factories.......................

4
3
1

3
1
1

2
2

T otal.............................

Year of Establishment

The societies reporting have been in existence, on the average, 12
years and 10 months, although they range from 4 years and 8 months
to 33 years and 2 months. One association was formed in 1896, 3 in
1915, 2 in 1920, and 1 each in 1916, 1919, 1921, 1922, and 1925.
Membership Policies

As a l r e a d y stated, a number of the societies limit their member
ship to trade-unionists in general, or to members of the particular
craft of the society. Others make no specific limitation, admission

CHAPTER V .— W ORKERS’ PRODUCTIVE ASSOCIATIONS

being open to anyone who purchases a share of stock, though/except
in a society doing work requiring no particular skill or training, this
could hardly be carried out cooperatively^ as unqualified persons could
not be employed in the business.
In one or two cases some of the stock is held by local labor organiza
tions which are in sympathy with the cooperative project.
One association provides that—
No person shall become or remain a stockholder in this company unless he is
actively engaged in working in some capacity in and about or for the company,
devoting his entire time, energy, and attention to the promotion and conduct of
the business of the company, and shall remain a stockholder only so long as he
continues in such connections and employment of the company unless excused for
a fixed period by a majority vote of the trustees of the company.

Employment and Wage Policies
How far these societies have attained the state in which the working
force and the owners are identical is shown by the following table:
T able 58.—N U M BER OF M EM BERS AND OF EM PLOYEES OF W O R K E RS' PRODUC

TIVE SOCIETIES, 1925

Shareholders
Society

Society No. 1........ .
Society No. 2______
Society No. 3______
Society No. 4______
finMAtv Wa R
Society No. 6........

Shareholders

Nonshare
Number
holder
Num employed employees
in
ber
business
65
603
68
94
215
208

24
162
13
15
i
83

108
4
1

Society

Nonshare
Number
holder
employed
employees
Number
in
business

Society No. 7_____
Society No. 8_____
Society No. 9..........
Society No. 10____

73
8
16
55

73
8
16
26

68
28
18
9

T ota l1...........

1,405

421

236

11 society did not report on these points.

It is seen that in three of the societies the shareholders are identical
with the workers; in two of these, however, there are more nonmember
employees than there are shareholders (in one three times as many),
while the third society employs nearly as many. Three societies are
unable to give employment to all the shareholders, but they have
no outsiders working in the business. One society has more than
200 stockholders but operates only part of the year and uses the
services of only one person, although the policy of the association is
to give employment to the members as fast as the condition of the
business permits. Society No. 9 provides in its by-laws that “ All
stockholders of this company must be workers for the company
unless excused from such service for good and sufficient reasons,
and this provision is evidently put into practice.
Table 59 shows the number of shareholders and employees, by
kind of business carried on.

COOPERATIVE SOCIETIES IN 1929

T able 5 9 .— N U M BE R OF SHAREHOLDERS AND OF EM PLOYEES, B Y KIN D OF BUSI.

NESS DONE

Shareholders
Number of
societies
reporting

Kind of business

Number

Nonshare
holder
Number employees
employed
in business

Cigar factories.................................................................
Fish canneries...... .............................................................
Laundries_________________________________________
Shingle mills.....................................................................
Shoe factories.....................................................................
Veneer factories.................................................................

2
2
1
3
1
1

162
423
65
79
603
73

28
84
24
50
162
73

55
108
68

Total-........................ - ............................................

1,405

421

236

i Not including 1 society which did not report on these points.

All but one of the societies work an 8-hour day; that society has
a working-day of 8 hours and 40 minutes.
In seven of the associations the workers are paid union rates and
two report that the “ current rate” is paid. In one society the men
work on a piece-rate basis.
Capitalization and Business

The value of the shares runs higher in the workers’ productive
associations than in the consumers’ societies. Common amounts are
$50 and $100, while one society has shares of $600 each.
Three societies place no limit to the amount of stock that may be
held by any member. One association, however, limits the amount
to 1 share, 1 association to 3 shares, 1 to 12 shares, 1 to 20 shares,
1 to one-fifth of the total stock, and 1 to $10,000. One organization
provides that “ no member of this company shall own more shares
of stock than any other member.”
The working capital and amount of business done by these societies
in 1929 are shown in the table following:
T able 60.—C A PITALIZATION A N D 1929 BUSINESS OF W ORKERS’ PRODUCTIVE

SOCIETIES, B Y KIN D OF BUSINESS

Kind of business

Cigar factories............ ......................................
Fish canneries____________________________
Laundries_______________________________
Shingle mills________________ ____________
Shoe factories_______ . . . . . . . . . __________
Veneer factories_______________ ___ _______
Total..
11 society only.

____

____________- ........

Number
of socie
ties re
porting

Paid-in
share
capital

Surplus
and
reserves

2
2
2
3
1
1

$39,463
199,124
56,743
118,100
102,800
292,000

$3,220
i 407,349

808,230

Amount
Average
of business, business
1929
per society

87,900
293,670
8,000

$55,106
801,646
160,174
629,425
1,354,818
846,497

$27,553
400,823
80,087
209,808
1,354,818
846,497

800,139

3,847,666

349,788

CHAPTER V .— W O RK ERS' PRODUCTIVE ASSOCIATIONS

The amount of business done by these societies during each of the
10 years, 1920 to 1929, is shown in the table following:
T a b l e 61.-—BUSINESS DONE B Y W ORKERS’ PRODUCTIVE SOCIETIES OF EACH

T YPE , 1920 TO 1929

Cigar
factories

Year

1920.
1921.
1922.
1923.
1924.
1925.
1926.
1927.
1928.
1929.

Fish can
neries (2)

Laundries

Shingle
mills (3)

Shoe fac
tory

l $17,345 i $1,019,054 i $132,643
(*)
128,231
1601,298
196,142 i $216,613
i 43,499
l 95,729 8 375,811
1632,812
i 51,446
l 723,043 i 111, 495 3 421,542
i 44,998
i 650,756 1146,711 3 440,544
i 37,170
i 749,192 1145,985 3 470,300
76,543
i 740,774
i 32,955
538,416
81,500
869,750
i 35,689
532,691
134,838
527,608
762,531
61,282
55,106
160,174
629,425
801,646

$175,000

(2)

11 society only.

(2)

363.000
451.000
627.000
796.000
1,092,697
1,264,561
1,374,413
1,354,818

2 No data.

Veneer
factory

Total

$1,344,042
942,284
2,047,705
2,683,338
2,622,284
2,942,182
2,481,385
2,784,191
2,760,672
846,497 3,847,666

$536,854
924,812
712,275
743,535

32 societies only.

Amount and Division of Profits

I n a d d i t i o n to the wages paid, the stockholder employees receive
a share of any profits made by the business. The basis of division
of profits varies in the different societies. Of the 11 reporting, 6
divide the profits on the basis of the stock held by the individual,
just as in the ordinary stock company. Two of the organizations
divide the profits equally among the shareholder employees, while
one-half of the profits are so divided in another. A somewhat
different method is used by the two fish canneries. One pays 6 per
cent interest on the capital stock; of the remaining profits 25 per
cent is put into a sinking fund while the remaining 75 per cent is
divided among the fishermen who deliver their catch to the associa
tion. In the other company, 50 per cent of the profits goes into a
surplus fund upon which the shareholders receive interest at the
rate of 3 per cent (this fund being regarded as loan capital), the
other 50 per cent being divided among the fishermen in proportion
to the amount of fish each one has delivered; interest at the rate of
2 per cent is paid on the share capital.
The table below shows the number of societies reporting a profit
or loss on the 1929 business, its amount, and the amount returned
to the shareholders:
T able 6 3 .— PROFITS AND LOSSES OF W ORKERS’ PRODUCTIVE SOCIETIES, AND

AM OUNT D IV ID E D AM ON G M EM BERS

Kind of business

Cigar factories ________________________________________________
Fish canneries ___ __________________________________________
Laundries____________________________________________________
Shingle mills__ _______________________________________________
Shoe factories_________________________________________________
Vftnfiftr fftfitnries
_ _
T ota l

_ .

Number
reporting
profit or
loss

Amount of
profit

1
1
2
3
1
1

i $760
30,192
2 2,951
<9,711
47,937
75,210

3 2,915
3 4,500

8 166,001

48,635

i Loss.
2 1 society; the other reported a loss of $4,871.
3 1 society.
< 1 society; 1 had a loss of $7,000, and the third a loss the amount of which was not reported.
« Not including losses reported, aggregating $12,631.

Amount
divided
among
members
$250

15,420
25,550

COOPERATIVE SOCIETIES IN 1929

Business Methods and Management
T h e final control of the society lies in the general meeting of stock
holders. In all but two of the associations reporting, each share
holder has but one vote irrespective of his investment in the organiza
tion. Proxy votes are prohibited in five societies but the other six
allow this method of voting.
The actual conduct of the business rests upon the board of directors
and the manager. The latter receives his position by election, by the
board of directors in three societies and by the stockholders in five
societies. Once elected, however, he has authority over the work
ers—both members and nonmember employees—except that usually
a stockholder may nob be discharged except by vote of the general
meeting. One association specifies in its by-laws that “ each stock
holder shall perform any kind of work in or about the plant to which
he may be assigned, in a creditable manner, and shall not work for
his personal interest but for the interest of all concerned.” ^
Regular audits of the books are made in all of the 10 societies which
reported, and all but one of these employs a professional auditor for
the purpose. In this exceptional society the accounts are audited
by a committee appointed from among the stockholders. In one
organization the audits are made monthly, in another quarterly, and
in a third, yearly.

Other Benefits
O n e society has established a compensation fund from which a
member who is incapacitated for work receives benefits at the rate of
$15 a week for the first four days and $20 a week thereafter. In case
of accident while at work the member receives $2 a day (except for
Sundays and holidays) during the time he is absent from work,
subject to a maximum of 90 days’ benefit, which period may, however,
be extended by a majority vote of the members. In case of death
the society pays a death benefit of $200.

Development from 1925 to 1929
T h e table below compares the returns in 1925 with those in the
present study. It shows that the sales, share capital, surplus and
reserves, »nd net profit per society were larger in 1929 than in 1925.
More of the profit was retained in the business in 1929, however, and
a smaller amount was returned to the stockholders.
T a b l e 63.—D E V E LO PM E N T OF W ORKERS’ PRODU CTIVE SOCIETIES, 1925 A N D 1929

Item

1925

Number of societies re
21
porting...........................
Shareholders:
Number......................
2,438
Number employed. —
465
Nonshareholder employ
ees........ ..........................
807
Share capital:
Amount...................... $1,025,509
Average per society__
51,275
Surplus and reserves:
653,590
Amount......................
72,621
Average per society__
1 Net, after deducting losses.

1929

Item

11
1,405
421
236
$808,230
73,475
800,139
100,007

1925

Business:
Amount...................... $4,573,329
Average per society__
238,596
Profits:
*229,458
Amount......................
Average per society...
16,390
Amount returned to
shareholders............
109,470
Average per society...
27,368

1929

$3,847,666
349,788
1 153,370
30,674
48,635
9,727

Chapter VI.—Dissolved Societies
N THE four years since the bureau's previous study, 596 societies
are reported as having gone out of business. Not all of these went
bankrupt (some sold out to private persons or voluntarily dissolved
and some reorganized on a joint-stock basis) but this number of
societies was lost to the cooperative movement. Kansas led the list
with 71 societies failed, voluntarily dissolved, or sold. The greatest
mortality occurred in some of the agricultural States of the Middle
West—Illinois, Iowa, Kansas, Minnesota, Nebraska, and Wisconsin—
but Pennsylvania and Washington also suffered severe losses.
In some instances the society failed because of circumstances over
which it had no control. Thus, two miners’ societies had to close
because the mine shut down and many members were forced to move
to other places to find work, while in a third instance failure of the
natural gas in the region caused the removal of the businesses using
it as well as of their employees who were members of the cooperative
society. The farmers’ societies naturally suffered the consequences
of the depression in agriculture.
In the remaining cases the same reasons for nonsuccess occur again
and again: (1) Poor (or dishonest) management; (2) too much credit;
(3) overhead too high; (4) insufficient capital; and (5) lack of patron
age and support by the members. Loss of interest by the membership
caused the dissolution of the society in several cases. One of these
had been operating successfully under a special charter since 1877;
when the charter ran out the membership was not sufficiently inter
ested either to renew the charter or to incorporate under the State
cooperative law, and so voted to disband. Another society, whose
manager had made large piofits over a period of years and whose
members had accordingly profited by a high dividend return, voted
to dissolve when a small loss was sustained. There are isolated cases
in which other causes figured, such as overstocking at high prices
only to be caught by a falling market, dissension among the member
ship over politics, etc., but the five reasons given above seem to have
been the most powerful of the preventable factors leading to failure.
The records of the bureau are filled with instances of failure caused
by one or a combination of these factors. The consideration that
arrests the attention here is that these are all preventable if the so
ciety has wide-awake loyal members and a board of directors that is
on the job.

Losses Due to Failure of Cooperative Societies
N THE endeavor to find out just what losses to the members and
business men having dealings with cooperative societies are caused
by the failure of the latter, this question was propounded in all cases in
which a former officer or member could be located. It was interest
ing to note what comparatively small losses were involved either to
members or to creditors, but especially to the latter. Thus, of 70
societies which have gone out of business and for which the bureau

COOPERATIVE SOCIETIES IN 1929

has data, 7 dissolutions involved losses to neither members nor out
siders. The losses to members in 36 cases aggregated $291,616; as
these societies had a combined membership at the time of dissolution
numbering 2,651, there was an average loss per member of $110.
In four societies all the members’ share capital was lost (and in one
of these each member was also assessed $5 on each share held); while
in one society each the loss amounted to 82 per cent, 75 per cent,
73 per cent, 70 per cent, 67 per cent, 50 per cent, 25 per cent, and 8 per
cent of the share capital. In one case of voluntary liquidation each
member received $1.75 for each $1 he had invested, and in another
$1.50 for each $1.
In 49 cases there was no loss to creditors, in 2 cases the creditors
received only 50 per cent of the amounts owed them, and in 1 case
only 40 per cent. In the 9 cases in which the amount of the creditors’
losses was reported these aggregated $96,030, of which $82,439 was
lost in the failure of two workers’ productive enterprises; the losses
of the creditors of the 7 consumers’ societies were therefore only
$13,591, or less than $2,000 per dissolution.
Period ol Business Operation
N 68 cases in which both the date of establishment and of dissolu
tion are known, 16 were in operation less than 5 years, 28 between
5 and 10 years, 18 between 10 and 15 years, 2 between 15 and 20 years,
1 between 25 and 35 years, 2 between 35 and 50 years, and 1 for over
50 years.

Chapter VIL—Legislation Relating to Consumers’
Cooperative Societies
General Summary
ONSIDERABLE amendment has been made in the past 10
years in the legislation relating to consumers’ cooperative
societies. This chapter endeavors to present a picture of the laws
governing such societies, as of June, 1930.
Perhaps the most extensive amendments have been made in the
laws of Oregon and Wisconsin, but many changes have also been
made in those of Connecticut, Minnesota, Missouri, New York, and
South Dakota. Arkansas passed an entirely new act in 1921, while
in the same year the North Dakota statute (which had previously
been much amended) was again amended and the whole was reenacted.
There are now on the statute books consumers’ cooperative laws 1
of varying completeness in 34 States and Alaska.2 In Alabama, New
York and Washington, there are separate enactments for associa
tions organized with capital stock and those without it. The most
complete laws are those of Illinois, Iowa, Minnesota, Missouri, New
York, North Dakota, Oregon, and Wisconsin. The briefest are those
of Ohio (which consists of two short sections permitting the forma
tion of “ trading associations dealing in articles of merchandise” and
authorizing the distribution of earnings in proportion to purchases),
Tennessee (three sections, permitting associations to buy or sell agri
cultural products and merchandise and setting the number necessary
for incorporation), and Vermont (one section, setting up a definition
and standards to be followed).

It may be said that the amendments made in the past 10 years
have been almost entirety in the direction of liberalizing the laws,
widening the fields of business which may be entered, enlarging the
powers of the associations organized under them, and raising the
requirements or standards from the cooperative point of view.
i Some of these, however, also cover agricultural marketing associations.
* Alabama (stock—Code, 1923, secs. 7047-7056; nonstock—Code, 1923, secs. 7057-7061); Alaska (Acts of
1917, ch. 26); Arkansas (Acts of 1921, No. 632); California (Civil Code, 1906, sec. 653a-l, as amended by
Acts of 1921, ch. 170); Colorado (Comp. Laws, 1921, secs. 2413-2417); Connecticut (Gen’l Stats., 1918, secs.
3600-3609, as amended by Acts of 1919, ch. 96; Acts of 1921, ch. 115; Acts of 1923, ch. 110; and Acts of 1925,
ch. 227); Florida (Comp. Gen’l Laws, 1927, secs. 6385-6390); Illinois (Rev. Stats., 1917, ch. 32, secs, 103-128,
233-259, as amended by Acts of 1917, pp. 303, 304); Indiana (Bums’ Ann. Stats., 1914, sec. 4359a-4359e);
Iowa (Code, 1927, ch. 389, as amended by Acts of 1929, chs. 5, 18, 398); Kansas (Rev. Stats., 1923, secs.
17-1501 to 17-1515); Kentucky (Carroll’s Kentucky Stats. (Baldwin’s Rev.), 1930, secs. 883d-l to 883d-9);
Massachusetts (Gen’l Laws, 1921, ch. 157); Michigan (Comp. Laws, 1922, ch. 175, secs. 9053 (78)-9053 (96));
Minnesota (Gen’l Stats., 1923, ch. 58, secs. 7822-7847); Missouri (Rev. Stats., 1919. secs. 10247-10262, as
amended by Acts of 1919, p. 270; Acts of 1925, p. 145; Acts of 1929, p. 334); Montana (Rev. Codes, 1921, ch.
25, secs. 6375-6396); Nebraska (Comp. Stats., 1922, secs. 642-648, as amended by Acts of 1925, ch. 79); Nevada
(Rev. Laws, 1912, secs. 1249-1260); New Jersey (Comp. Stats., 1910, pp. 1580-1584); New York (stock—Acts
of 1913, ch. 454, as amended by Acts of 1920, chs. 104 and 591; Acts of 1921, ch. 359; Acts of 1926, ch. 231,
art. 7; nonstock—Acts of 1920, ch. 166, art. 21, as amended by Acts of 1926, ch. 231, art. 5); North Carolina
(Consol. Stats., 1919, secs. 5242-5259); North Dakota (Acts of 1921, ch. 43); Ohio (Gen’l Code, 1910, secs.
10185,10186); Oklahoma (Comp. Stats., 1921, secs. 5637-5652); Oregon (Olson’s Oreg. Laws. 1920, secs. 69546981, as amended by Acts of 1929, ch. 412); Pennsylvania (Stats., 1920, secs. 5520-5542, as amended by Acts
of 1923, No. 404; Acts of 1929, Nos. 211,215); South Carolina (Civil Code, 1922, secs. 4331-4343); South Dakota
(Rev. Code, 1919, secs. 8839-8853, as amended by Acts of 1919, ch. 140; Acts of 1921, ch. 153; Acts of 1923,
chs. 127 and 131; Acts of 1929, ch. 89); Tennessee (Thompson’s Shannon’s Code, 1919, secs. 2186-2188);
Vermont (Gen’l Laws, 1917, title 25, sec. 4897, as amended by Acts of 1929, No. 81); Virginia (Ann. Code,
1919, sec. 3855, as amended by Acts of 1928, ch. 166); Washington (stock—Acts of 1913, ch. 19, as amended
by Acts of 1925, ch. 99; nonstock—Remington & Ballinger’s Code, secs. 3752-3764); Wisconsin (Wisconsin
Stats., 1923, secs. 185.01-185.23, as amended by Acts of 1925, ch. 181; Acts of 1928, 1929, ch. 527); and W yo
ming (Comp. Stats., 1920, secs. 5119-5134).

COOPERATIVE SOCIETIES IN 1929

The laws of 24 States now contain provisions as to the distribution
of earnings, and these provisions always include the payment of
patronage dividends. Only eight States 3 leave the distribution of
earnings to be determined by the association in its by-laws, but of
these the laws of Florida, Indiana, and Kansas set up a cooperative
standard (in defining a “ cooperative association” within the meaning
of[ (the act) which must be met by all associations organized under
the act, and which always includes the payment of dividends on
the basis of patronage. The laws of five States (Alabama, Arkansas,
Colorado, New York (nonstock), and Washington) are silent as to
distribution of earnings, but in those of Arkansas and Colorado the
association must conform to the cooperative standard of the act.
Thus it may be said that the most characteristic feature of coopera
tive associations—distribution of the earnings of the association on
the basis of patronage and not on capital invested—is now provided
for in more than 80 per cent of the laws.
An increasing number of laws are recognizing the value of the
teaching of the principles of cooperation and are making provision
for the appropriation, from the societies’ net earnings, of a certain
proportion (generally 5 per cent) for this purpose. In only five States,
however, has this provision as yet been made mandatory.
In 1929 the former Pennsylvania provision prohibiting an associa
tion from either giving credit or taking it was repealed.
Provisions unusual, but in the direction of cooperative progress,
are that of Wisconsin allowing the stockholders, at their option, either
to return all of the net earnings to the patrons or to use them “ for
the general welfare of the members of the association” ; that of
Oklahoma and Wyoming holding the directors liable in case they
distribute dividends when the association is bankrupt or on the verge
of insolvency; the Missouri law requiring that the books of the asso
ciation be audited once a year by a “ competent auditor” who is not
a member of the association; and two Wisconsin provisions, one of
which permits a consumers’ association to enter into contracts
binding the member to purchase all of his goods through it or through
facilities created by it, and the other of which forbids discrimination
by other business organizations against cooperative societies on
pain of forfeiture of charter or license to do business.
A few of the changes in the cooperative laws seem to be of rather
dubious value from the cooperative standpoint, as, for instance,
the amendment of the New York and Oregon laws so as to permit
the appointment of persons not connected with the association to
serve as secretary and treasurer, and in the latter State to permit
the directors to reside and hold meetings outside the State. Other
provisions in this class are that of Montana allowing the society
to put the value of its shares as high as $5,000 (though it is specified
that they may be paid for in installments); the Missouri provision
allowing each member, in the election of the directors, to cast as
many votes as he has shares, multiplied by the number of directors
to be elected; and the South Dakota provision specifying that in
associations with capital of more than $500,000 voting shall be by
shares.
• California, Connecticut, Florida, Indiana, Kansas, Nevada, New Jersey, and Ohio.

CHAPTER VII.— LEGISLATION, CONSUMERS' SOCIETIES

Definition of “ Cooperative Association”
T h e laws of 11 States contain some definition of what shall con
stitute a “ cooperative association” within the meaning of the act.
Those of Arkansas, Kansas, and Kentucky define such an associa
tion as one which distributes its earnings by a fixed return on capital
and pro rata dividends on patronage, while the Wisconsin law adds
to this definition the requirement of one vote per member. The
laws of Colorado, Florida, Indiana, Michigan, Nebraska, and North
Dakota define a cooperative association as one which distributes its
earnings wholly or in part on the basis of patronage or of services
performed for the association. The New York (stock) law considers
as a cooperative organization one conducted “ primarily for the
mutual help and benefit of its shareholders, employees, and patrons,
without profit, which pays not to exceed 6 per cent on capital and
distributes the remainder on the basis of patronage or of labor per
formed for the society.”

Kind of Business Permitted
T h e cooperative laws of eight States 4 give cooperative associations
formed under them blanket authority to carry on “ any lawful busi
ness,” that of Kansas permits any business or industrial pursuit,
while that of Vermont permits any business “ not repugnant to the
laws of the State.” The law of Missouri covers any agricultural
or mercantile business, while that of Massachusetts adds dairies
to these two fields of business. The Ohio law (perhaps the briefest
cooperative enactment) authorizes the formation only of trading
associations dealing in articles of merchandise, while that of Ten
nessee adds to this the right to buy and sell agricultural products.
Seven States 6 permit any agricultural, dairy, mercantile, mining,
manufacturing, or mechanical business, while to this list Arkansas
adds banking; Minnesota adds marketing, warehousing, commission
business, building, telephone, and the supply of electricity, heat,
light, or power; and North Dakota adds grain elevators and the
telephone business. Virginia substitutes brokerage for mining in the
above list, while Oklahoma and Wyoming substitute livestock,
irrigation, horticultural, and industrial businesses for mining.
The law of Alabama allows the carrying on by cooperative societies
of any mutual aid, benefit, or industrial business; the law of Alaska
permits any lawful mercantile, manufacturing, agricultural, or other
industrial pursuit; that of Connecticut, trade or any lawful mercan
tile, mechanical, manufacturing or agricultural business; and that of
Illinois, any general mercantile, manufacturing, or producing business.
The Montana law permits a cooperative association to carry on trade
or any branch of industry, and the purchase or distribution of com
modities for consumption, and even to borrow or lend money for in
dustrial purposes. The New Jersey law permits the operation of
mechanical, mining, manufacturing, or trading businesses.
The most detailed laws in this respect are those of New York and
Pennsylvania. The New York law relating to cooperative associa
* California, Colorado, Florida, Indiana, Michigan, Nebraska, Nevada, and Oregon.
5 Iowa, Kentucky, North Carolina, South Carolina, South Dakota, Washington (stock), and Wisconsin.

COOPERATIVE SOCIETIES IN 1929

tions with capital stock gives them the right to carry on any general
producing, manufacturing, warehousing, merchandising, or processing
and cleansing business in articles of common use, including farm
products, food supplies, farm machinery and supplies, and articles
of personal and domestic use; buying, selling, or leasing homes or
farms for members; or building or conducting housing or eating
places. The nonstock law of the same State permits the purchase,
manufacture, preservation, drying, canning, storing, handling, and
utilization of agriculture, dairy, horticultural, or other food products,
family or other household supplies to be consumed by the families or
guests of the members or any other household operation; the per
formance of services connected with the purchase or hiring of supplies,
machinery, or equipment; or educational work in home economics or
mutual help in educational work. The Pennsylvania law permits the
operation of any agricultural, horticultural, mining, quarrying,
building, mechanical, or manufacturing business; cultivating, raising,
trading or dealing in all kinds of goods or produce, or of livestock; or
the holding, leasing, or improving land, tenements, or buildings.
Number Who May Organize

In f o u r States® only three persons are necessary for the incorpora
tion of a cooperative society, but the Vermont act requires that they
must be adults and Kentucky that they must be residents of the State.
The Montana act specifies not less than three nor more than seven
persons. In 17 States7 five persons are required for incorporation
(of whom a majority must be residents, in Alaska). Seven persons
are required in Connecticut, Massachusetts, New Jersey, and Ten
nessee, 10 in Colorado, Florida, and Oklahoma, 12 in Missouri, 15 in
Alabama (nonstock associations, a majority of incorporators must be
residents of State) and North Dakota, 20 in Arkansas, Kansas (all
citizens), and Nebraska, and 25 in Indiana. The Ohio act contains
no provision on the subject.
Management

Directors—The great majority of the laws specify that the coopera
tive association shall have not less than five directors, those of 18
States8 having this provision. The number may not be less than
three in Kentucky, Montana, Vermont, Washington (stock), and
Wyoming, not less than 5 nor more than 9 in South Carolina, and
not less than 7 nor more than 9 in Alabama (nonstock). The Penn
sylvania law sets the number of directors at 6, 8, or 10; the matter
is left to the association to fix, in its by-laws, in Nevada, New York
(nonstock associations only), and Washington (nonstock), while the
acts of nine States9 contain no provision on the subject. The Oregon
law prohibits any director from occupying a salaried position in the
association or to be a party to any contract with the association
which will yield him a profit.
6 Kentucky, Michigan, New York (stock), and Vermont.
7 Alabama (stock), Alaska, California, Illinois, Iowa, Minnesota, Nevada, New York (nonstock), North
Carolina, Oregon, Pennsylvania, South Carolina, South Dakota, Virginia, Washington, Wisconsin, and
Wyoming.
8 Alabama (stock), Alaska, Arkansas, Connecticut, Illinois, Iowa, Kansas, Michigan, Minnesota, Mis
souri, New Jersey, New York (stock), North Carolina, North Dakota, Oklahoma, Oregon, South Dakota,
and Wisconsin.
• California, Colorado, Florida, Indiana, Massachusetts, Nebraska, Ohio, Tennessee, and Virginia.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

Officers.—Practically all of the laws which have any provision as
regards officers specify that they shall consist of a president, one or
more vice presidents, secretary, and treasurer (the last two of which
may be combined).10 Of these acts, those of 12 States 11 require that
the officers shall be elected by the directors from their own number.
The Kansas and New Jersey acts except the secretary from this pro
vision, and those of Missouri, New York (stock), and Wisconsin
except both secretary and treasurer. The Oregon and New York
laws differ from all the others in this respect. The New York law
relating to stock associations specifies that the secretary and treasurer
need not even be stockholders in the organization, while the Oregon
law gives the directors permission to engage as secretary and treasurer
any persons considered capable of rendering the most efficient service.
Term of office.—Most of the laws leave the term of office of directors
to be determined by the association in its by-laws. Those of Ala
bama (nonstock), Alaska, Connecticut, New Jersey, Oklahoma,
Pennsylvania, Vermont, and Wyoming, however, provide that they
shall be elected for one year, that of Oregon for not more than two
years, that of New York (nonstock) for three years, and that of
South Dakota for not more than three years.
The laws of 13 States 12 provide for one-year terms for the officers.
The remaining laws are silent on this point.
Capital Stock
A l l o f the laws except those of California and Nevada provide for
associations with capital stock. Alabama, New York, and Wash
ington have two cooperative laws each—one relating to associations
with capital stock, and the other to nonstock associations; in the
latter type of association the funds are obtained through the sale of
membership certificates. The laws of Oregon and Wisconsin offer
the association a choice as regards its manner of capitalization, but the
same law covers both types of associations. In almost all instances
capital stock is all of one class, but the laws of Oregon and Virginia
permit the issuance of both preferred and common stock and that of
Pennsylvania the issuance of “ permanent” stock which is transferable
(subject to the by-laws) but not withdrawable and of which each
member must purchase at least one share, and “ ordinary” stock,
which is both transferable and withdrawable in accordance with the
by-laws.
Amount.— Generally the cooperative law sets no limit upon the
amount for which an association may be capitalized. The act of
South Carolina, however, provides that no association may be
capitalized at less than $100, that of Vermont at less than $500, and
that of Alabama at less than $5,000. The Massachusetts law speci
fies that the capital stock may not be less than $100 nor more than
$100,000. Maximum limits of $100,000 and $200,000, respectively,
are set by the laws of Minnesota and Connecticut.
10 Alaska, Arkansas, Illinois, Iowa, Kansas, Kentucky, Michigan, Minnesota, Montana, New Jersey,
North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Washington, and Wisconsin.
11 Arkansas, Illinois, Iowa, Kentucky, Michigan, Minnesota, New York (stock), North Carolina, North
Dakota, South Carolina, South Dakota, and Washington (stock).
13 Arkansas, Illinois, Iowa, Kansas, Kentucky, Michigan, Minnesota, New York, North Carolina, South
Carolina, South Dakota, Washington, and Wisconsin.

COOPERATIVE SOCIETIES IN 1929

The Alabama law requires that $5,000 in capital must be in hand
before the association is allowed to start its business operations, while
the acts of Arkansas, Kansas, Minnesota, and Oklahoma require at
least 20 per cent and that of Washington (stock) at least 25 per cent
of the capital, and that of Wyoming at least 20 per cent of the stock
subscribed for. The Oregon law specifies that 60 per cent of the
common stock must be subscribed for and 25 per cent paid in before
business may be begun.
Value of shares,—Only seven laws place any limit on the value of
the individual share, this matter usually being left to the society to
determine. Of these seven, however, that of New York specifies that
each share shall be not more than $5 and that of South Carolina not
less than $5, that of Pennsylvania not less than $5 nor more than $25,
that of Illinois not less than $5 nor more than $100, that of New
Jersey not more than $50, and that of Vermont not more than $100.
In Montana shares may be not less than $10 nor more than $5,000
each, and may be paid for in installments.
Stock ownership per member.—The maximum amount of stock which
any individual member may own in a cooperative association is set
by the law of Montana at 1 share, by that of Illinois at 5 shares or not
to exceed $500 in value, by that of Oldahoma at 5 per cent of the stock
outstanding, but not to exceed $500 in value, and by that of Nebraska
at 5 per cent of the stock in the case of individuals and 20 per cent in
the case of other organizations which are members of the association.
No individual member may hold more than 10 per cent of the associa
tion’s stock in Arkansas, Kansas, Massachusetts, Missouri, and
Vermont, or more than 20 per cent in North Carolina, South Carolina,
and Washington. The law of Wyoming limits the amount to onethird of the shares outstanding but not to exceed $1,000 in value,
while the sum of $1,000 is set as a limit by the law of Minnesota (10
per cent of the amount of paid-in capital and permanent surplus,
in the case of member associations), Pennsylvania (but this may be
increased by vote of the members), and Virginia (in common stock
only). The South Dakota law sets the maximum sum at $1,000 in
associations with capital of $100,000 or less and 1 per cent of the stock
in those with capital of more than that amount. The laws of Iowa
and New York set the maximum at $5,000. The other laws contain
no provision on this point.
Liability of Members and Directors for Debts of Association

An i n d i v i d u a l member may be held liable for debts of the asso
ciation only in the amount still unpaid on the capital stock subscribed
by him in Arkansas, Illinois, Montana, New Jersey, Oklahoma,
Oregon, Washington (stock), and Wyoming. In Pennsylvania, how
ever, he is also liable for the full amount owed by the association on
the wages of its employees.
The laws of Iowa and Missouri specifically state that the private
property of a member shall be exempt from execution for the debts of
the corporation, while in Pennsylvania, in case of the private debts of
a member who is a householder with a family, $25 worth of stock is
exempt from execution. In Montana the member’s stock in the
association, up to $500, is exempt from attachment or sale under
execution.

CHAPTER V n .— LEGISLATION, CONSUMERS’ SOCIETIES

In New York (nonstock) the individual member is liable for what
ever amount is specified on the association’s certificate of incorpora
tion. In general the liability consists of his per capita share of all
1icontracts, debts, and engagements” of the society, plus an equal
amount in case any other member’s liability proves to be uncollecti
ble, plus any further amounts specifically mentioned in the certificate
of incorporation.
In Oklahoma the directors are liable for any debts, agreed to by
them, in excess of the society’s subscribed capital and surplus, and
in Wyoming for any amounts in excess of the capital stock.
Voting
T h e democratic principle of one man, one vote, regardless of the
amount of stock held, is set down as a requirement in the laws of 24
States.13 This is a requirement in Missouri, also, in all matters
except the election of the directors; in that case each member is
entitled to cast as many votes as he holds shares, multiplied by the
number of directors to be elected. The Oregon law provides that in
an emergency threatening the life of the association, voting may be
in proportion to the member’s patronage of the association, while
that of Virginia allows, as an exception to the general 1-vote policy,
that the association may specify that stock held by persons who are
not members of certain designated nonstock corporations shall have
no voting power. The law of South Dakota requires that in associ
ations with capital of more than $500,000 voting shall be by shares.
Vote by mail or proxy.—Vote by mail by a member unavoidably
absent is allowed under the laws of 10 States,14provided the absentee
has been previously notified in writing of the question to be voted
upon and provided he returns with his ballot a copy of the motion
upon which he is casting his vote (in Oregon a statement signed by
him). The Minnesota act also requires that the vote must be signed
and certified by the stockholder. The Michigan law requires that
opportunity to vote by mail must be afforded to absent members,
while that of New York (nonstock) provides for voting by registered
mail on certain specific questions. The California law provides that
the conditions of vote by mail or proxy may be determined by the
association in its by-laws, but in all cases secrecy of ballot must be
maintained. The Alabama (nonstock) law specifically permits votes
by mail and by proxy in the election of the directors; in such cases
proxies must be filed 30 days before the election. Under the Okla
homa act the association may determine its policy as regards voting
by mail and by proxy, but unless these questions are specifically
covered in the by-laws both types of voting are prohibited.
Proxies are forbidden by the laws of New Jersey, New York (non
stock), Oregon, Pennsylvania, and Wisconsin. The North Carolina
act provides that proxies must be written and that no member may
vote more than one.
13 Alaska, Arkansas, California, Connecticut, Iowa, Kansas, Kentucky, Massachusetts, Minnesota,
Montana, Nevada, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania,
South Carolina, South Dakota, Vermont, Virginia, Washington, Wisconsin, and Wyoming.
14 Illinois, Iowa, Minnesota, New York (stock), North Carolina, North Dakota, Oregon, South Dakota,
Washington (stock), and Wisconsin.

18672°— 31------- 7

COOPERATIVE SOCIETIES IN 1929

Distribution of Earnings
T h e laws of 16 States 15 contain mandatory provisions governing
the manner in which the net earnings of the association shall be dis
tributed, while those of 8 others 16 contain suggested procedure but
leave its adoption to the action of the association. In most cases
in which the law covers the question of distribution of earnings, the
provision for reserves, a fixed return (at a specified rate) on capital,
and patronage dividends are most frequently required, but a few also
provide for depreciation reserves and 14 States specifically authorize
the appropriation of a certain percentage of the profits for a fund to
be used for the teaching of the principles of cooperation.
The laws of 13 States 17 require that the distribution of earnings
must take place at least once a year.
Mandatory provisions.—The law of Massachusetts provides that
cooperative associations may pay in interest on capital stock not
more than 5 per cent, that of Pennsylvania not more than 5 per
cent on “ ordinary” stock and 6 per cent on “ permanent” stock,
those of New York (stock) and Vermont not more than 6 per cent,
that of Michigan not more than 7 per cent, and those of Alaska,
Minnesota, Nebraska, Oregon, and Washington (stock) not more than
8 per cent. The Minnesota law provides that interest shall be paid
on capital stock only when the income has been sufficient to pay it,
and that such interest shall not be cumulative (in case of failure to pay
in previous years); violation of the provisions relating to interest is
punishable by cancellation of the society’s charter. The Montana
law provides for interest at 8 per cent, and that of Missouri at not to
exceed 10 per cent. The Illinois law calls for the payment of interest
on stock, but sets no limit—either minimum or maximum—on the
rate to be paid.
The laws of 13 States require regular appropriations from the net
income, to be added to the reserve fund. The accessions to this
fund are set at 5 per cent of the net profits in Pennsylvania, Nebraska,
and Montana, and at 10 per cent in Alaska and Connecticut. Not
less than 10 per cent must be so appropriated in Massachusetts,
Missouri, New York, and Vermont. The Oregon law requires that
some provision be made for reserves out of each year’s net earnings,
but does not specify the rate, while in Washington (stock) not less
than 10 per cent nor more than 25 per cent must be so appropriated.
In South Dakota not less than 25 per cent must be set aside. Some
of the laws permit the reduction or discontinuance of the appropria
tions to the reserve fund when this fund reaches a certain amount,
fixed at 20 per cent of the paid-in capital in Nebraska and Con
necticut, 30 per cent in Massachusetts, Montana, and New York, and
50 per cent in Missouri, South Dakota, and Vermont. In Minne
sota all of the first and second year’s earnings may be covered into the
reserve fund, and thereafter 10 per cent must be, until the fund
amounts to 50 per cent of the paid-in capital.
Only five States require the setting aside of funds to teach coopera
tion. Of these, the law of Pennsylvania requires 2}{ per cent of the
18 Alaska, Connecticut, Illinois, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska,
New Jersey, New York (stock), Oregon, Pennsylvania, South Dakota, Vermont, and Washington (stock).
16Iowa, North Carolina, North Dakota, Oklahoma, South Carolina, Virginia, Wisconsin, and Wyoming.
17 Alaska, Illinois, Iowa, Massachusetts, Michigan, Missouri, Montana, New York (stock), North
Carolina, North Dakota, Vermont, Washington (stock), and Wisconsin,

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

net profits, that of South Dakota not less than 1 nor more than 5 per
cent, those of Alaska and Montana 5 per cent, and that of Massa
chusetts not more than 5 per cent.
The law of Minnesota requires that “ reasonable and adequate”
reserves for depreciation be made, while that of Pennsylvania requires
that buildings shall be depreciated at the rate of 2% per cent and fur
niture and fixtures at the rate of 10 per cent.
The laws of 12 States18 require that after provision is made for some
or all of the above-mentioned funds (capital, reserve, depreciation,
education, etc.), the remainder shall be distributed as dividends. The
laws of Massachusetts, Montana, New York (stock), and Oregon
provide that patronage dividends shall be paid to nonmembers as well
as to members, and those of Massachusetts, Montana, and Oregon
that the nonmember’s dividends may be applied on the purchase of a
share of stock so that he eventually becomes a member of the associa
tion. The Pennsylvania law requires that all patronage dividends
be applied on the purchase of stock until each member has to his
credit the maximum allowed. The law of Washington (stock)
provides that any dividend uncalled for at the end of 6 months, and
that of Oregon at the end of one year, shall revert to the association.
Optional provisions.—Subject to revision by the association, the laws
of eight States set maximum limits on the rate of interest payable on
stock, the limit being 6 per cent in North Carolina and South Carolina,
8 per cent in North Dakota, Oklahoma, Virginia, Wisconsin (may not
be cumulative), and Wyoming, and 10 per cent in Iowa.
Likewise subject to the ultimate decision of the stockholders,
suggested provision for reserves is given in the laws of nine States.19
Those of Iowa, North Carolina, South Carolina, Virginia, and Wyo
ming suggest annual appropriations of not less than 10 per cent, that
of North Dakota of not more than 10 per cent, and that of Ken
tucky of from 10 to 25 per cent.
Provision for an educational fund, at the rate of not less than 2 per
cent, is suggested in the law of North Carolina, of 5 per cent in the
acts of Iowa, Minnesota, New York (stock), Oklahoma, South
Carolina, and Virginia, of not less than 5 per cent in Wisconsin, and
of not more than 5 per cent in North Dakota.
Dividends on employees’ wages at the same rate as members’
patronage dividends are permitted in the laws of Iowa, Massa
chusetts, New York (stock), North Carolina, North Dakota, South
Carolina, Virginia, and Wisconsin.
The Wisconsin law provides that after provision for reserve, depre
ciation, interest, and education, all or part of the remainder of the
net profits may be used “ for the general welfare of the members of
the association,” or in case the stockholders so decide, the whole
amount of the net proceeds of the year’s business may be returned
to the patrons.
The laws of Oklahoma and Wyoming contain the provision that if
the directors distribute dividends when the association is insolvent or
when such distribution would make it so, they shall be jointly and
18 Alaska, Illinois, Iowa, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New York, Oregon,
Pennsylvania, and Washington.
» Iowa, Kentucky, Michigan, North Carolina, North Dakota, Oklahoma, South Carolina, Virginia, and
Wyoming.

COOPERATIVE SOCIETIES IN 1929

severally liable for all debts of the association then existing or there
after incurred during their incumbency; however, any director may
relieve himself of this liability by filing with the secretary of the
association and with the county clerk his written objection to such
payment of dividends.
Purchase of Stock of Other Cooperative Organizations
T h e laws of 16 States20 permit a cooperative society to subscribe
for shares (i. e., become a member) of another cooperative organization.
A majority vote of the members is required before the association
may purchase stock in another organization, by the laws of Michigan,
New York, North Dakota, Pennsylvania, South Carolina, South
Dakota, Virginia, Washington, and Wisconsin, by a majority vote
of a majority of the members in Iowa, and by a two-thirds vote of
two-thirds of the members in Illinois.
Only the surplus may be used for this purpose in Illinois, and
only the reserves in Iowa, Michigan, and South Carolina.
The Pennsylvania act puts no limit on the amount of the invest
ment. The amount, however, is limited in Illinois to 25 per cent of
the amount of paid-in capital if authorized by a two-thirds vote
of the members; the directors may of their own judgment invest an
amount not to exceed 10 per cent of the amount of paid-in capital.
In Iowa, New York (stock), South Carolina, and South Dakota, the
amount may not exceed 25 per cent, in Michigan 20 per cent, and in
New Jersey one-third of the paid-up capital. In Oregon the amount
so invested may not exceed 20 per cent and in Wisconsin 25 per cent
of the paid-in common stock and reserves.
The amount of the other organization’s stock that may be pur
chased is limited in Kansas to 5 per cent of its stock, and in Min
nesota to 10 per cent of its capital and permanent surplus.

Annual Reports
A n n u a l reports to some specified State authority are required
from cooperative societies in 14 States. Thus the law of Arkansas
requires that the report be made to the State Commissioner of
Mines, Manufactures, and Agriculture; those of Illinois, Iowa, Kansas,
North Dakota, Washington (stock), and Wisconsin to the Secretary
of State, and of Connecticut to the Secretary of State and to the
clerk of the town in which the association is located; that of Min
nesota to the State Commissioner of Agriculture; that of New Jersey
to the clerk of the county and to the State Bureau of Statistics of
Labor and Industries; that of New York to the State Department
of Farms and Markets; that of North Carolina to the Secretary of
State and the Division of Markets and Rural Organizations; that of
Oregon to the State Corporation Commissioner; and that of South
Carolina to the State Commissioner of Agriculture, Commerce, and
Industries.
In Connecticut failure to make the above report subjects the board
of directors, jointly and severally, to liability for all existing debts
of the association. In New Jersey failure to report, or the making
of any false statement in the report, subjects each director or officer
20 Arkansas, Illinois, Iowa, Kansas, Michigan, Minnesota, New Jersey, New York (stock), North
Dakota, Oregon, Pennsylvania, South Carolina, South Dakota, Virginia, Washington, and Wisconsin.

CHAPTER V II.— LEGISLATION, CONSUMERS' SOCIETIES

concerned in the making of the report to a fine of $100, recoverable
in any action by any member or creditor of the association. In
Wisconsin, where the report is required to be made before April 1
of each year, failure to report before June 1 subjects the association
to a fine of $10 and if the delinquency continues beyond January 1
to the forfeiture of its corporate rights.
Voluntary Dissolution

A s o c i e t y may be dissolved on written request of two-thirds of its
members in California, Nevada, and Washington (nonstock), by a
two-thirds vote in Oregon, and by a majority vote in Pennsylvania
and Wisconsin. In New York a two-thirds vote of the stockholders
is necessary for dissolution and a duplicate report of the proceedings
at the dissolution meeting must be filed in the office in which the
articles of incorporation were filed.
Dissolution is automatic in Nebraska whenever the individual
membership falls below 20.
The law of Iowa provides that if no dividends are paid for 5 con
secutive years, five members may petition for the dissolution of the
society. If no interest is paid on stock for five years, dissolution
may be granted on petition of a majority of the stockholders in Michi
gan, of five or more members in Minnesota and New York (stock),
and of the holders of a majority of the shares in Montana.
Use of Word “ Cooperative* * in Name

No o r g a n i z a t i o n may use the word “ cooperative” in its name
unless it complies with the provisions of the act in Kansas, Massa
chusetts, Nebraska, Oklahoma, Oregon, South Dakota, Washington
(stock), and Wyoming. A 1929 amendment to the Oregon law pro
vides that should the courts uphold the right to the use of the name
“ cooperative” by organizations formed prior to 1913, then such
organizations must insert in the name of the association on letter
heads and otherwise, the phrase “ does not comply with Oregon
cooperative laws,” in type at least two-thirds as large as that used
in the word “ cooperative.” In 11 States21 the prohibition against
the use of “ cooperative” is limited to organizations formed after thg
passage of the act. Violation of this provision subjects the violatine
organization to injunction, which may be obtained by any member
of a cooperative society in Illinois, Iowa, North Carolina, South
Carolina, and Virginia; by any member or any cooperative associa
tion organized under the law in Kentucky, Missouri, North Dakota,
and Washington (stock); and by any citizen in Kansas, Oklahoma,
and Wyoming. Penalties are provided for violation in the laws of
Kentucky (fine of not less than $50 nor more than $1,000), Massa
chusetts (fine of $10 per day), Nebraska (fine of not to exceed $100
per day), Oklahoma and Wyoming ($100 for each offense), South
Dakota (fine of not to exceed $1,000), and Wisconsin (fine of not
more than $500 or six months' imprisonment or both).
The Montana law also forbids the use of the word “ farmer” in the
name of the association unless one-half of its members are “ farmers
by occupation.”
21 Illinois, Iowa, Kentucky, Minnesota, Missouri, Montana, New York (stock), North Carolina, North
Dakota, South Carolina, and Virginia.

COOPERATIVE SOCIETIES IN 1929

Names of Associations Organized Under the Act
O n l y six laws (those of Kansas, Nebraska, New York (nonstock),
Pennsylvania, Virginia, and Wisconsin) make any requirements as
to the form of names of societies organized under the cooperative law.
Of these, that of Kansas requires that the names of such associations
must begin with “ The” and end with “ association,” “ Co.,” “ cor
poration,” “ exchange,” “ society,” or “ union.” The Nebraska,
Virginia, and Wisconsin acts require that associations formed under
the act shall use the word “ cooperative” in their name, and that of
New York (nonstock) that they shall use the word “ cooperative”
and “ association.” That of Pennsylvania requires that the name
shall end in “ cooperative association” ; it is unlawful to use either
“ society” or “ company.”
Use of the word “ cooperative” in the name of the association is
now optional under the Oregon law.

Special Provisions

Auditors.—The Missouri law was amended in 1925 so as to require
that the books of every cooperative association organized under the
act be audited once a year by “ competent auditors,” who shall not
be members of the association.
Discrimination.— A 1929 amendment to the Wisconsin act provides
that any corporation which discriminates against a cooperative society
doing business in that State shall have its charter or license to do
business revoked.
Contracts.—Contracts whereby the member binds himself to deliver
to the cooperative association all of his crops are common among
the cooperative marketing associations. The Wisconsin statute,
which is applicable to both consumers’ and agricultural associations,
contains the usual provision upholding the right of the association to
make such a contract and its right to an injunction, a decree of specific
performance, and liquidated damages. It also adds, however, a
phrase which authorizes the adoption of the contract system by
consumers’ societies, i. e., it makes valid “ contracts whereby mem
bers bind themselves to * * * buy all of their goods” through
the association or the facilities created by it, providing the term of the
contract does not exceed five years.
Organization by districts.—The Oregon law, which also covers
agricultural marketing associations, provides that if the area covered
by the cooperative societies is too large for the convenient assembling
of the members, the by-laws may provide for the formation of dis
tricts and holding of district meetings and elections. In such cases,
districts may elect delegates to represent them at the annual and
special meetings of the association. The vote of a delegate shall be
considered as the vote of all the members of his district, on matters
not covered by ballot submitted to individual members.
Violations of Act
V i o l a t i o n s of provisions of the cooperative law are misdemeanors
and subject to a fine of not less than $100 nor more than $1,000 in
Montana, and by a fine of not more than $500 or one year’s imprison
ment, or both, in New York (stock).

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

Synopsis of Laws
Alabama (Stock)
(Code, 1923, secs. 7047-7056)

Scope and purpose.— Any mutual aid, benefit, or industrial business.
Number who may organize.— Five or more.
Filing articles of incorporation.— With judge of probate in county in which
principal place of business is located. Certified copy to State superintendent of
insurance.
Filing fee.— Same as for other corporations.
Management.— Not less than five directors, elected annually.
Capital stock.— Not less than $5,000. Sum of $5,000 must be in hand before
business can be begun.

Alabama (Nonstock)
(Code, 1923, secs. 7057-7061)

Scope and purpose.— Any mutual aid, benefit, or industrial business.
Number ioho may organize.— Fifteen or more, a majority of whom must be
residents of State.
Filing articles of incorporation.— With judge of probate of the county in which
principal place of business is located. Certified copy to State superintendent of
insurance.
Filing fee.— Same as for other corporations.
Management.— Board of trustees of not less than seven nor more than nine
members of corporation, elected annually.
Capital stock.— Nonstock.
Voting by mail or by proxy.— Specifically permitted in annual election of
trustees. Proxy must be made 30 days before election.
Assets.— Net assets at all times must equal $1.50 for each $100 of insurance
at risk.

Alaska
(Acts of 1917, ch. 26)

Scope and purpose.— Any lawful mercantile, manufacturing, agricultural, or
other industrial pursuit.
Number who may organize.— Not less than five persons. Majority mu§t be
residents of Alaska.
Filing articles of incorporation.— To be filed with secretary of territory.
Management.— Must have not less than five directors, elected annually.
Officers shall be president, one or more vice presidents, a secretary, and a treasurer
(last two may be combined).
Capital stock.— Not limited.
Voting.— Each member one vote.
Distribution of earnings.— Not more than 8 per cent on paid-up capital stock;
10 per cent of profits to reserve; 5 per cent for educational fund; remainder
in patronage dividends. Distribution must take place at least once a year.

Arkansas
(Acts of 1921, No. 632)

Scope and purpose.— Any agricultural, dairy, mercantile, banking, mining,
manufacturing, or mechanical business.
Definition o f “ cooperative” association.— One which distributes its earnings by
fixed return on capital and pro rata dividends on patronage.
Number who may organize.— Twenty citizens of State.
Filing articles o f incorporation.— With secretary of state.
Filing fe e .— Same as for other corporations.
Term of charter.— Not more than 50 years.
Management.— Not less than five directors. Officers shall be president, one
or more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Capital stock.— Not limited. At least 20 per cent of capital stock must be
paid in before business can be begun.
Stock ownership per member.— Not more than 10 per cent of capital stock.

COOPERATIVE SOCIETIES IN 1929

Liability of individual member.— Only in amount still unpaid on stock sub
scribed by him.
Voting.— Each member one vote.
Purchase o f stock o f other associations.— May purchase not to exceed 5 per
cent of stock of another organization, using reserve fund for this purpose.
Federation of cooperative societies.— Specifically permitted.
Annual reports.— To commissioner of mines, manufactures and agriculture,
in same form as is required of other corporations. Commissioner may also
require list of members and amount of stock owned by each.
Existing organizations.— May come under act by majority vote (certified
to commissioner of mines, manufactures and agriculture) and payment of
required fees.

California (Nonstock)
(Civil Code, 1906, secs. 653a-l, as amended by Acts of 1921, ch. 170)

Scope and purpose.— Any lawful business.
Number who may organize.— Five or more.
Filing articles o f incorporation.— With clerk of county in which the principal
place of business is located; copy to the secretary of state.
Filing of amendments.— With clerk of county.
Term of charter.— Not to exceed 50 years.
Capital stock.— Nonstock.
Transfer o f stock.— May be transferred by board of directors.
Voting.— Each member one vote.
Voting by mail or by proxy.— According to by-laws, but secrecy of ballot must
be secured.
Distribution o f earnings.— According to by-laws.
Dissolution.— Upon written request of two-thirds of members.

Colorado
(Compiled Laws, 1921, secs. 2413-2417)

Scope and purpose.— Any lawful business.
Definition of “ cooperative” association.— One which distributes earnings wholly
or in part on basis of patronage or labor performed.
Number who may organize.— Ten or more.
Filing articles of incorporation.— With secretary of state.
Filing fee.— Same as for other corporations.
Stock ownership per member.— As provided in by-laws.
Distribution o f earnings.— According to by-laws.
Existing organizations.— May come under act by filing declaration of intention
and paying fee of $2.

Connecticut
(General Statutes, 1918, secs. 3600-3609, as amended by Acts of 1919, ch. 96; Acts of 1921, ch. 115; Acts of
1923, ch. 110; and Acts of 1925, ch. 227)

Scope and purpose.— Trade or any lawful mercantile, mechanical, manufactur
ing, or agricultural business.
Number who may organize.— Seven or more inhabitants of State.
Filing articles o f incorporation.— With secretary of state; certified copy to
town clerk in town in which business is conducted.
Management.— President, treasurer, and board of not less than five directors,
elected annually.
Capital stock.— Not to exceed $200,000. Subject to same franchise tax as other
corporations.
Issuance o f stock.— When paid for in full.
Voting.— Each member one vote.
Distribution o f earnings.— According to by-laws, provided that 10 per cent of
net profits shall be appropriated for a contingent fund until this fund equals 20
per cent of capital stock.
Annual reports.— To secretary of state and office of town clerk on or before
March 10; report must show property owned and debts and liabilities of every
kind. Upon failure to report, board becomes jointly and severally liable for
existing debts.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

Florida
(Compiled General Laws, 1927, secs. 6385-6390)

Scope and 'purpose.— Any lawful business.
Definition o f “ cooperative” association.— One which distributes its earnings
wholly or in part on basis of patronage or labor performed.
Number who may organize.— Not less than 10.
Filing articles of incorporation.— With secretary of state.
Filing fee.— Same as for other corporations.
Voting.— Optional with stockholders.
Distribution o f earnings.— According to by-laws.
Existing organizations.— May come under act by filing declaration of intention
with secretary of state and paying fee of $2.

Illinois
(Revised Statutes, 1917, ch. 32, secs. 103-128, 233-259, as amended by Acts of 1917, pp. 303, 304)

Scope and purpose.— General mercantile, manufacturing, or producing business.
Number who may organize.— Five or more.
Filing articles o f incorporation.— With secretary of state.
Filing o f amendments.— With secretary of state and recorder of deeds in county
in which principal place of business is located.
Management.— Not less than five directors. Officers shall be president, One or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Capital stock.— Shares not less than $5 nor more than $100 in value.
Commission for sale o f stock.— No commission shall be charged or paid for selling
stock.
Stock ownership per member.— Limited to five shares or $500 in value.
Transfer o f stock.— By-laws may provide that corporation shall have first
right to purchase any stock for sale. Transfers to be recorded on books of
society.
Liability o f individual member.— Only in amount still unpaid on shares sub
scribed by him.
Voting by mail and by proxy.— May vote by mail if notified in writing of ques
tion to be voted on and if copy of motion is "attached to vote. Written proxies
permitted.
Distribution of earnings.— Interest on stock and dividends on patronage.
Distribution must take place at least once a year.
Purchase o f stock o f other associations.— By a two-thirds vote of at least twothirds of members, may so invest its surplus to extent of 25 per cent of its paid-in
capital; the board of directors may invest surplus in amount not to exceed 10 per
cent of the paid-in capital in the same manner. Not more than 10 per cent of
other association’s stock may be purchased.
Annual reports.— To secretary of state, before March 1, showing name and
address, total business transacted, amount of stock subscribed and paid in,
number of members, operating expenses, indebtedness or liabilities, and profits
and losses.
Existing organizations.— May come under act by filing sworn statement that
members have so voted by at least two-thirds majority.
Use o f word “ cooperative.”— No corporation formed after passage of act per
mitted to use the name “ cooperative” unless complying with the provisions of
the act. Any member of a cooperative society may obtain injunction against an
organization violating this provision.

Indiana
(Bums* Annotated Statutes, 1914, secs. 4359a-4359e)

Scope and purpose.— Any unlawful business.
Definition o f “ cooperative” association.— One which distributes its earnings
wholly or in part on the basis of patronage or of labor performed.
Number who may organize.— Not less than 25.
Filing articles o f incorporation.— With secretary of state.
Filing fee.— Same as for other corporations.
Stock ownership per member.^-M&y be limited by by-laws.

COOPERATIVE SOCIETIES IN 1929

Transfer o f stock.— May be regulated by by-laws.
Distribution o f earnings.— According to by-laws.
Existing organizations.— May come under act by filing statement with secretary
of state.

Iowa
(Code, 1927, ch. 389, as amended by Acts of 1929, chs. 5, 18, 398)

Scope and purpose.— Agricultural, dairy, mercantile, mining, manufacturing,
or mechanical business.
Number who may organize.— Five or more.
Filing articles of incorporation and amendments.— With secretary of state and
the recorder of deeds of the county in which the principal place of business is
located.
Filing fee.— Ten dollars to secretary of state for filing articles, and $5 for amend
ments, provided that if capital stock is less than $500 the fee shall be $1 in each
case. Recorder of deeds to receive the usual recording fee.
Management.— Not less than five directors. Officers shall be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Not to exceed $1,000 per member.
Liability o f individual member.— Private property of member is exempt from
execution for debts of the corporation.
Voting.— Each member one vote.
Voting by mail.— May vote by mail if member has been notified in writing of
question to be voted on and copy of motion is attached to vote.
Distribution o f earnings.— Subject to revision by association, not to exceed
10 per cent on stock; not less than 10 per cent of net profits to reserve until fund
amounts to 50 per cent of paid-in capital; 5 per cent of net profits for an educational
fund; dividends on patronage to members and on wages to employees. Such
distribution must take place at least once a year. None of these funds above
mentioned may be used in payment of promotion work, commissions, salaries,,
or expenses.
Purchase o f stock o f other associations.— By majority vote of majority of members,
may invest reserves, not to exceed amount equal to 25 per cent of its capital.
Annual reports.— To secretary of state before March 1, on penalty of fine of
$10, and cancellation of charter if delayed beyond June 30. Report must show
name and address of company, amount of business transacted, capital subscribed
and paid in, number of stockholders, total operating expenses, liabilities, and
profits and losses.
Dissolution.— If no dividends are paid for five consecutive years, five members
may petition district court.
Existing organizations.— May come under act by filing sworn statement with
secretary of state and county recorder that a majority of members have so voted.
Use o f word “ cooperative.” — No corporation formed after passage of act shall
use the name “ cooperative” unless complying with this act. Any member of a
cooperative society may obtain an injunction against any organization violating
this provision.

Kansas
(Revised Statutes, 1923, secs. 17-1501 to 17-1515)

Scope and purpose.— Any business or industrial pursuit.
Definition o f cooperative” association.— One which distributes its earnings by
fixed return on capital and pro rata dividend on patronage.
Number who may organize.— Twenty or more citizens of Kansas.
Filing articles o f incorporation.— With secretary of state.
Filing fee.— Same as for other corporations.
Term of charter.— Not more than 50 years.
Management.— Not less than five directors. Officers shall be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by directors. All officers except secretary must be directors.
Capital stock.— Not limited. Twenty per cent must be paid in before business
can be begun.
Stock ownership per member.— Not over 10 per cent of society’s capital stock.
Voting.—-Each member one vote.
Distribution o f earnings.— According to by-laws.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

Purchasing stock o f other associations.— Not to exceed 5 per cent of stock of other
organization.
Annual reports.— To secretary of state.
Existing organizations.— May come under act by filing sworn statement that
majority of members have so voted, and by paying fees.
Use of word “ cooperative.”— Organizations may not use name “ cooperative”
unless complying with provisions of act. Organizations violating this provision
may be enjoined by any citizen. Associations organized under act must begin
name of society with “ The” and end with “ association,” “ Co.,” “ corporation,”
“ exchange,” “ society,” or “ union.”

Kentucky
(Carroll’s Kentucky Statutes (Baldwin’s revision), 1930, secs. 883d-l to 883d-9)

Scope and purpose.— Any agricultural, dairy, mercantile, mining, manufacturing,
or mechanical business.
Definition o f u cooperative” association.— One which distributes its earnings by a
fixed return on capital and pro rata dividend on patronage.
Number who may organize.— Three or more residents of Kentucky.
Filing articles of incorporation.— With secretary of state.
Filing fee.— Same as for other corporations.
Management.— Not less than three directors. Officers shall be president, one
or more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Voting.— Each member one vote.
Distribution of earnings.— After payment of the fixed rate on capital, by vote of
two-thirds of members may set aside for reserve not less than 10 nor more than
25 per cent of net profits.
Existing organizations.— May come under act by filing sworn statement that
majority of members have so voted, and by paying required fees.
Use of word “ cooperative.” — Not to be used in name of associations formed after
passage of act unless complying with provisions of act. Any organization violating
this provision may be enjoined by any cooperator or cooperative association,
and be fined not less than $50 nor more than $1,000.

Massachusetts
(General Laws, 1921, ch. 157)

Scope and purpose.— Any agricultural, dairy, or mercantile business.
Number who may organize.— Seven or more.
Filing articles o f incorporation.— With secretary of state after approval by com
missioner of corporations.
Filing fee.—-One-twentieth of 1 per cent of authorized capital stock but not
less than $5.
Capital stock.— Not less than $100 nor more than $100,000.
Stock ownership per member.— Not to exceed one-tenth of total stock.
Voting.— Each member one vote.
Distribution o f earnings.— Not to exceed 5 per cent on stock; not less than 10
per cent of net profits to reserve until fund amounts to at least 30 per cent of
paid-up capital; not to exceed 5 per cent of remainder of net profits for an educa
tional fund; patronage dividends to stockholders and one-half stockholders’
rate to nonmembers which may be applied on purchase of share of stock. Directors
may also vote to pay dividends on employees’ wages at same rate as members’
patronage dividend. Distribution must be made at least once a year.
Investing reserve.— May invest reserve in buildings of association or lend to
members on real estate mortgages.
Existing organizations.— May come under act by filing sworn statement that
majority of members have so voted, and by paying fee of $1.
Use of word “ cooperative.”— Not to be used in name of association unless com
plying with provisions of act, upon penalty of fine of $10 per day for time of use of
word “ cooperative.”

100

COOPERATIVE SOCIETIES IN 1929

Michigan
(Compiled Laws, 1922, ch. 175, secs. 9053(78)-9053(96))

Scope and purpose.— Any lawful business.
Definition o f “ cooperative” association.— One which distributes its earnings
wholly or in part on the basis of patronage or labor performed.
Number who may organize.— Not less than three.
Filing articles o f incorporation and amendments.— Three copies with secretary
of state, one of which goes to clerk of county in which principal place of business
is located.
Filing fee.— Same as for other corporations.
Management.— Not less than five directors. Officers shall be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Stock ownership per member.— According to by-laws.
Voting.— According to by-laws.
Voting by mail and by proxy.— According to by-laws. Opportunity to vote by
mail must be provided.
Distribution o f earnings.— Reserve, capital stock, and patronage dividends as
by-laws provide, but not to exceed 7 per cent on stock. May distribute remainder
as purchase dividend. Distribution must be made at least once a year.
Purchase o f stock o f other associations.— By majority vote, may invest reserves,
up to amount of 20 per cent of the capital.
Dissolution.— If no interest is paid on capital stock for five years, majority of
stockholders may petition county circuit court in chancery.
Existing organizations.— May come under act by complying with provisions
and filing sworn statement with secretary of state that majority of stockholders
have so voted.

Minnesota
(General Statutes, 1923, ch. 58, secs. 7822-7847)

Scope and purpose.— Any lawful agricultural, dairy, marketing, warehousing,
commission, contracting, building, mining, telephone, manufacturing, mechanical,
mercantile, or electrical, heat, light, or power business.
Number who may organize.— liv e or more.
Filing articles o f incorporation.— With secretary of state; certified copy to
register of deeds of county in which the principal place of business is located,
after approval by State attorney general.
Filing fe e .— To secretary of state, $5 for articles of incorporation or amend
ments.
Term o f charter.— Not to exceed 30 years.
Management.— Not less than five directors. Officers to be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Capital stock.— Not to exceed $100,000. Twenty per cent must be paid in
before business can be begun.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Not over $1,000 in case of individuals; not over
10 per cent of amount of paid-in capital and permanent surplus in case of
association.
Transfer o f stock.— Only with approval of governing board.
Voting.— Each member one vote.
Voting by mail and by proxy.— Vote by mail permitted if notified in writing of
exact text of question to be voted on; vote must be signed and certified by voting
stockholder. No proxies.
Distribution o f earnings.— “ Reasonable and adequate” depreciation reserves.
Not to exceed 8 per cent annually on stock (payable only when net income is
sufficient; interest is not cumulative); violation punishable by cancellation of
charter. Earnings of first and second years may be set aside for reserve fund,
and 10 per cent of annual net earnings shall be put in reserve until latter equals
50 per cent of the paid-up capital. Stockholders may increase reserve to 100
per cent of capital stock. Five per cent of net profits may be used to teach
cooperation. Remaining profits to be disbursed in proportion to patronage.
Purchase o f stock o f other associations.— Permitted, but not to exceed 10 per
cent of other organization’s capital and permanent surplus.
Annual reports.— To commissioner of agriculture, within 60 days after close of
its fiscal year, stating authorized and paid-in capital, names of officers and

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

101

directors, resources, and liabilities and such other information as may be required
by commissioner.
Dissolution.— If no interest is paid on capital for five consecutive years, five
or more members may apply to district court of county.
Existing organizations.— May come under act by amending articles of incor
poration to conform to law, filing papers as above, and paying fee.
Use o f word “ cooperative. ”— N o corporation form ed after passage o f act
perm itted to use name “ cooperative” unless com plying with provisions o f act.
Violation is misdemeanor.

Missouri
(Revised Statutes, 1919, 10247-10262, as amended by Acts of 1919, p. 270; Acts of 1925, p. 145; Acts of 1929,
p. 334)

Scope and purpose.— Any agricultural or mercantile business.
Number who may organize.— Not less than 12.
Filing articles o f incorporation and amendments.— With recorder of deeds of
county or city of place of business. Certified copy to office of secretary of state.
Filing fee.— Fifty dollars for first $50,000 and $5 for each additional $10,000
capital stock. Amendments, •$1.
Management.— Not less than five directors. Officers shall be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by the directors. President and vice presidents must be
directors.
Capital stock.— Same limit as other corporations.
Stock ownership per member.— Not more than 10 per cent of aggregate par
value.
Liability o f individual member.— Private property of stockholders is exempt
from execution for debts of association.
Voting.— In election of directors, vote by shares; on other matters, each
member one vote.
Voting by mail or by proxy.— According to by-laws.
Distribution o f earnings.— Not less than 10 per cent of net earnings to reserve
until fund equals 50 per cent of paid-in capital; not more than 10 per cent on
stock; remainder in patronage dividends. Distribution must take place at least
once a year.
Existing organizations.— May come under act by filing with secretary of state
a sworn statement that majority of stockholders have so voted.
TJse o f word “ cooperative.” — Not to be used by organizations formed after
passage of act unless complying with its provisions. Any violating organization
may be enjoined by association organized under law.

Montana
(Revised Codes, 1921, ch. 25, secs. 6375-6396)

Scope and purpose.— Trade or any branch of industry, purchase or distribution
of commodities for consumption, borrowing or lending money among members
for industrial purposes.
Number who may organize.— Not less than three nor more than seven.
Filing articles o f incorporation.— With secretary of state.
Filing fee.— Five dollars.
Term o f charter.— Not to exceed 40 years.
Management.— Not less than three directors. Officers shall be president, vice
president, secretary, and treasurer.
Capital stock.— Shares not less than $10 nor more than $5,000 each, payable
in installments.
Stock ownership per member.— One share each.
Liability o f individual member.— Only in amount still unpaid on stock sub
scribed by him. Share cajpital of any member up to $500 exempt from attach
ment or sale under execution.
Voting.— Each member one vote.
Voting by mail.— May vote by mail if notified in writing of question to be
voted on and copy of motion is attached to vote.
Distribution o f earnings.— Eight per cent on stock; 5 per cent to reserve until
fund equals 30 per cent of paid-in capital; 5 per cent for fund to teach coopera
tion; and remainder for dividends on purchases and bonuses to employees.
Patronage dividends to nonmembers at one-half the members’ rate; may be
credited on purchase of share of stock. Dividends are payable annually.

102

COOPERATIVE SOCIETIES IN 1929

Consolidations.— Consolidations of cooperative associations permitted on
written request of majority of stockholders of each corporation.
Dissolution.— If no interest is paid on capital for five consecutive years, holders
of majority of stock may petition for dissolution.
Existing organizations.— May come under act by filing with secretary of state
a sworn statement that majority of members have so voted.
Use o f word “ cooperative” and “ farm er. ”— No corporation formed after
passage of act permitted to use name “ cooperative” unless complying with
provisions of act, nor may it use “ farmer” unless one-half of its members are
farmers by occupation.
Violations of act.— Violation is misdemeanor and punishable by fine of not
less than $100 nor more than $1,000.

Nebraska
(Compiled Statutes, 1922, secs. 642-648, as amended by Acts of 1925, ch. 79)

Scope and purpose.— Any lawful business.
Definition o f “ cooperative” association.— One which distributes its earnings
wholly or in part on the basis of patronage or of labor performed.
Number who may organize.— Not less than 20 persons nor less than 5 companies.
Filing articles o f incorporation.— With secretary of state.
Filing fe e .— Same as for other corporations.
Stock ownership per member.— Not more than 5 per cent in case of individuals
nor more than 20 per cent in case of companies.
Transfer of stock.— According to by-laws.
Distribution o f earnings.— Not to exceed 8 per cent on stock; 5 per cent to
reserve until such fund equals 20 per cent of paid-in capital; remainder as divi
dends on patronage or on labor performed.
Dissolution.— Automatic whenever individual membership falls below 20.
Existing organizations.— May come under act by filing sworn statement with
secretary of state.
Use of word “ cooperative.”— Forbidden unless incorporated under act, and
violation punishable by fine of not to exceed $100 per day for each day name is
used. Associations formed under act must incorporate word “ cooperative” in
name.

Nevada (Nonstock)
(Revised Laws of 1912, secs. 1249-1260)

Scope and purpose.— Any lawful business.
Number who may organize.— Five or more.
Filing articles of incorporation.— With secretary of state and clerk of county
in which principal place of business is located.
Management.— According to by-laws.
Capital stock.— Nonstock.
Voting.— Each member one vote.
Voting by mail.— May be provided for in by-laws.
Distribution o f earnings.— According to by-laws.
Dissolution.— By written request of two-thirds of members.

New Jersey
(Compiled Statutes, 1910, pp. 1580-1584)

Scope and purpose.— Any lawful mechanical, mining, manufacturing, or trading
business.
Number who may organize.— Not less than seven residents of State.
Filing articles o f incorporation.— To be approved "by chief of bureau of sta
tistics of labor and industries. Filed with clerk of county in which principal
place of business is located, and with bureau of statistics of labor and industries.
Management.— Not less than five directors, elected annually. Officers shall
be president and treasurer (both of whom are directors), and secretary.
Capital stock.— Shares not to exceed $50 each.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— To be regulated by directors, unless otherwise
provided in by-laws.
Transfer o f stock.— According to by-laws.
Liability o f individual member.— Only in amount still unpaid on stock sub
scribed by him.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

103

Voting.— Each member one vote, cast in person.
Distribution o f earnings.— According to by-laws, but must set aside 5 per cent
for reserve until fund amounts to 30 per cent of capital stock. Distribution
must take place at least once a year.
Purchase o f stock o f other associations.— May so invest amount not exceeding
one-third of paid-up capital.
Annual reports.— To clerk of county and chief of bureau of statistics of labor
and industries. Reports must show amount of stock, number of shares issued
and par value thereof, number of stockholders and number of shares held by
each, amount and character of society's property and of its debts and liabilities.
Failure to comply with this provision or the making of false statements of con
dition of society subjects each officer or director concerned to fine of $100,
recoverable in action by any member or creditor.
Dissolution.— Same as any other corporation.

New York (Stock)
(Acts of 1913, ch. 454, as amended by Acts of 1920, chs. 104 and 591; Acts of 1921, ch. 359; Acts of 1926, ch.
231, art. 7)

Scope and purpose.— General producing, manufacturing, warehousing business,
processing and cleansing business, in articles of common use, including farm
products, food supplies, farm machinery and supplies, and articles of domestic
and personal use, buying, selling, or leasing homes or farms for members, or
building or conducting housing or eating places.
Definition of “ cooperative” association.— One conducted “ primarily for the
mutual help and benefit of its shareholders, employees, and patrons without
profit,” which pays not to exceed 6 per cent on capital and distributes remainder
on basis of patronage or labor performed.
Number who may organize.— Three or more.
Filing articles o f incorporation and amendments.— Same as provided for other
corporations.
Management.— Not less than five directors. Officers shall be president, one
or more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by directors. President and vice presidents must be directors.
Secretary and treasurer need not be stockholders.
Capital stock.— Shares of $5 each.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Not over $5,000.
Transfer of stock.— By written consent of association.
Voting.— Each member one vote.
Voting by mail.— Permitted if member has been notified in writing of question
to be voted on and if a copy of motion is attached to vote.
Distribution o f earnings.— Not to exceed 6 per cent on stock; and not less than
10 per cent of net earnings for reserve until fund equals 30 per cent of paid-up
capital; may set aside 5 per cent of net earnings for educational fund. Remainder
to be distributed in patronage dividends to members and as wage bonuses to
employees. Nonmembers, dividends at one-half members' rates. Distribution
must be made at least once a year.
Purchase o f stock o f other associations.— By majority vote may invest amount
not exceeding 25 per cent of its capital.
Annual reports.— To department of farms and markets, within three months
after close of association's fiscal year, showing name and address, amount of
business transacted, number of stockholders, amount of stock subscribed and
amount paid in, operating expenses, amount of liabilities, and profits and losses.
Dissolution.— If no interest is paid on capital for five consecutive years, five
or more members may petition supreme court of county.
Existing organizations.— May come under act by filing sworn statement that
majority of members have so voted.
Use of word “ cooperative. " — Not to be used in name of any corporation formed
after passage of act unless complying with provisions of act.
Violations o f act.— Punishable by fine of not more than $500 or one year's
imprisonment, or both.

New York (Nonstock)
(Acts of 1920, ch. 166, art. 21, as amended by Acts of 1926, ch. 231, art. 5)

Scope and purpose.— Purchase, manufacture, preservation, drying, canning,
storing, handling, and utilization of agricultural, dairy, horticultural, or other

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COOPERATIVE SOCIETIES IN 1929

food products, family or other household supplies to be consumed by the fam
ilies or guests of the members, or any other household operation, performance
of services connected with purchase or hiring of supplies, machinery, or equip
ment, or educational work in home economics or mutual help in educational
work.
Number who may organize.— Five or more, none of whom is engaged in dealing
or is directly or indirectly interested in dealing in any agricultural, horticultural,
or dairy products, or other family supplies except those produced by him.
Filing articles of incorporation and amendments.— Same as for other corpora
tions.
M anagement— According to by-laws. Directors to hold office for three years,
one-third to be elected each year. Officers shall be president, vice president,
secretary, and treasurer, appointed annually by the directors.
Capital stock.— Nonstock.
Liability o f individual member.— As stated in certificate of incorporation. In
general, member is liable for his per capita share of all contracts, debts, and
engagements, plus an equal amount in case any other member’s liability proves
uncollectible, plus any further amounts prescribed in the certificate of incorpo
ration of the association.
Voting.— Each member one vote.
Voting by mail and by proxy.— Voting by registered mail permitted on specific
questions. No proxies.
Annual reports.— Copy of report of annual audit to be filed with department
of farms and markets.
Dissolution.— Upon two-thirds vote of stockholders and filing report of pro
ceedings, in duplicate, in office where articles of incorporation were filed.
Use of word “ cooperative .”— Name of association must contain words “ cooper
ative” and “ association.”

North Carolina
(Consolidated Statutes, 1919, secs. 5242-5259)

Scope and purpose.— Any agricultural, dairy, mercantile, mining, manufac
turing, or mechanical business.
Number who may organize.— Not less than five.
Filing articles o f incorporation.— With secretary of state and clerk of superior
court in county in which principal place of business is located.
Filing fee.— Ten dollars and fee allowed by law to secretary of state, $2 when
capital stock is less than $1,000. Fifty cents to clerk of court. For filing amend
ments, $5, or $2 if capital stock is less than $1,000.
Management.— Not less than five directors. Officers shall be president, one
or more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Capital stock.— According to by-laws.
Issuance of stock.— When paid for in full.
Stock ownership per member.— Nor more than 20 per cent of paid-up capital
stock.
Transfer of stock.— According to by-laws.
Voting.— Each member one vote.
Voting by mail and by proxy.— May vote by mail if notified in writing of question
to be voted on and if copy of motion is attached to vote. Proxies must be
written and no member may vote more than one proxy.
Distribution of earnings.— Subject to revision by association, not to exceed
6 per cent on stock; not less than 10 per cent of net profits to reserve until fund
amounts to 30 per cent of paid-up capital; not less than 2 per cent of net profits
for an educational fund; remainder in patronage dividends to members and
nonmembers at one-half members’ rate, and bonus to employees on wages.
Distribution must take place at least once a year.
Annual reports.— To secretary of state and division of markets and rural
organization on or before March 1. Report must show name and address of
association, amount of business transacted, amount of stock subscribed and paid
in, number of shareholders, total expenses of operation, amount of liabilities,
and profits and losses.
Existing organizations.— May come under act by filing sworn statement with
secretary of state that majority of stockholders have so voted.
Use o f word “ cooperative.”— Not to be used in name of any organization here
after formed unless complying with provisions of act. Any organization violating
this provision may be enjoined by any member of a cooperative association.

CHAPTER V II.— LEGISLATION, CONSUMERS' SOCIETIES

105

North Dakota
(Acts of 1921, ch. 43)

Scope and purpose.— Any agricultural, grain elevator, dairy, mercantile, mining,
manufacturing, mechanical, or telephone business.
Definition o f “ cooperative” association.— One which distributes its earnings
wholly or in part on the basis of patronage or of labor performed.
Number who may organize.— Not less than 15 persons.
Filing articles of incorporation.— With secretary of state.
Filing fees.— Ten dollars; $3 for amendments.
Management.— Not less than five directors. Officers shall be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by and from directors.
Issuance o f stock.— When paid for in full.
Voting.— Each member one vote.
Voting by mail.— Permitted if member is notified in writing of question to be
voted on and if a copy of motion is attached to vote.
Distribution o f earnings.— Subject to revision by meeting of stockholders, not
to exceed 8 per cent on stock; may set aside not more than 10 per cent for reserve
until fund equals paid-in capital; may set aside not more than 5 per cent for an
educational fund; remainder distributed on wages of employees and on patron
age. Distribution must take place at least once a year.
Purchase o f stock o f other associations.— By majority vote may invest its reserve
fund, up to amount not to exceed 25 per cent of its capital stock.
Annual reports.— To secretary of state within 30 days after close of association’s
fiscal year, showing name and address, nature of business, amount of business,
names, addresses, and compensation of officers and directors, and date of expira
tion of term of office, number of stockholders, amount of capital authorized, sub
scribed, and paid in and amount sold during year, expenses of operation, profits
and losses, amount of dividends paid, and detailed statement of assets and
liabilities.
Existing organizations.— May come under act by filing sworn statement that
majority of members have so voted, and by amending articles of incorporation to
conform with provisions of act.
Use o f word “ cooperative.” — N ot to be used b y any organization form ed after
passage of act unless com plying with act. Violating organizations m ay be
enjoined by any stockholder or any cooperative organization.

Ohio
(General Code, 1910, secs. 10185, 10186)

Scope and purpose.— Trading associations dealing in articles of merchandise.
Distribution of earnings.— According to by-laws. May be distributed in pro
portion to purchases.

Oklahoma
(Compiled Statutes, 1921, secs. 5637-5652)

Scope andjpurpose.— Any agricultural, dairy, livestock, irrigation, horticultural,
mercantile, manufacturing, mechanical, or industrial business.
Number who may organize.— Ten or more.
Filing articles of incorporation and amendments.— With secretary of state.
Management.— Not less than five directors, elected annually.
Capital stock.— Not limited, but 20 per cent must be paid in before business
may be begun.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Not more than 5 per cent of stock outstanding
or more than $500.
Liability of individual member.— Only in amount still unpaid on capital stock
subscribed by him. Directors are liable for any debts agreed to by them, in
excess of society’s subscribed capital and surplus.
Voting.— Each member one vote.
Voting by mail or by proxy.— As provided in by-laws, but if not specifically
covered in by-laws both forms of voting are prohibited.
18672°— 31------- 8

106

COOPERATIVE SOCIETIES IN 1929

Distribution of earnings.— Subject to revision by stockholders, not less than
10 per cent to reserve until fund amounts to 50 per cent of paid-in capital and
not to exceed 8 per cent on stock; may set aside 5 per cent for educational fund;
remainder in patronage rebates. If directors distribute dividends when the asso
ciation is insolvent or would be made insolvent by such distribution, they shall
be held liable for all debts of the association then existing or thereafter incurred
during their incumbency; written objection to such dividend filed with secretary
and the county clerk absolves any director from this liability.
Use o f word “ cooperative.” — Not to be used unless organized under this act,
on penalty of $100 fine for each offense. Violating organization may be enjoined
by any citizen.

Oregon (Stock or Nonstock)
(Olson’s Oregon Laws, 1920, secs. 6954-6981, as amended by Acts of 1929, ch. 412)

Scope and purpose.— Any lawful business.
Number who may organize.— Not less than five.
Filing articles o f incorporation and amendments.— With corporation commis
sioner and clerk of county.
Filing fe e .— Ten dollars to corporation commissioner, 20 cents per 100 words
to clerk of county. For amendments, $5 to corporation commissioner and 20
cents per 100 words to clerk of county.
Organization expenses.— Not to exceed 20 per cent of paid-in capital.
Annual license fee.— Ranges from $5 for associations whose authorized stock
does not exceed $5,000 to $100 for associations whose stock exceeds $2,000,000.
Five dollars for nonstock associations.
Management.— Not less than five directors, elected for not more than two
years. Officers shall be president, one or more vice presidents, secretary, and
treasurer (last two may be combined). If deemed advisable, office of secretary
and treasurer “ may be filled by engaging any person or persons” considered
capable of rendering the most efficient service.
Capital stock.— Not limited in amount.
Association may issue both common
and preferred stock. Sixty per cent of common stock must be subscribed and
one-fourth paid in before business may be begun.
Issuance of stock.— When paid for in full.
Stock ownership per member.— According to by-laws.
Liability of individual member.— Only in amount still unpaid on capital stock
subscribed by him.
Nonstock associations.— May also incorporate under this act.
Voting.— According to by-laws, but may provide that in an emergency threat
ening the life of the association, voting may be in proportion to the amount of
business done through the association.
Voting by mail and by proxy.— Vote by mail permitted if notified of question
to be voted on and if vote is accompanied by signed statement of voter. No
proxies, but if association covers large area various districts may be represented
by delegates.
Distribution of earnings.— Must make provision for reserve, then interest on
stock not to exceed 8 per cent; remainder in patronage dividends. Dividends to
nonmembers may be applied to purchase of stock.
Purchase o f stock o f other associations.— May invest not to exceed 20 per cent of
paid-in common stock and reserve fund.
Annual reports.— To corporation commissioner on or before August 1, showing
name and address, capital stock authorized, subscribed, unsubscribed, issued,
and paid in (same information for membership fees for nonstock associations),
and number of stockholders.
Federation o f cooperative associations.— Specifically permitted.
Dissolution.— By vote of two-thirds of members. Dissolution fee of $2 to
corporation commissioner.
Existing organizations.— May come under act by filing sworn statement with
corporation commissioner that majority of members have so voted and by paying
fees.
Use of word “ cooperative. ”— Not to be used unless complying with provisions
of act. Use optional with associations organized under act.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

107

Pennsylvania
(Statutes, 1920, secs. 5520-5542, as amended by Acts of 1923, No. 404, and Acts of 1929, Nos. 211, 215)

Scope and purpose.— Any agricultural, horticultural, mining, quarrying, build
ing, mechanical, manufacturing, cultivating, raising, trading or dealing in all
kinds of goods, wares, merchandise, chattels, grains, vegetables, roots, fruits,
or other produce or animals for sale, food or other purposes, or for the purpose
of holding, leasing, or improving lands, tenements, or buildings.
Number who may organize.— Five or more.
Filing articles o f incorporation and amendments.— With secretary of state and
recorder of deeds of county in which principal place of business is located.
Filing fee.— Ten cents for each 100 words to secretary of state and recorder of
deeds.
Management.— Six, 8, or 10 directors and 2 auditors. Officers shall be presi
dent, secretary (directors ex officio), and treasurer. One-half of directors and
one auditor to be elected every six months, for one year. Bonds to be required
of every person handling money.
Capital stock.— Shares of $5 to $25 each. Stock may be of two classes. “ Per
manent stock,” transferable, subject to by-laws, but not withdrawable, each mem
ber to purchase at least one share; and “ ordinary stock,” transferable and with
drawable in accordance with by-laws.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Limited to $1,000, but may be increased by vote
of members.
Liability o f individual member.— For wages of employees, to full amount owed;
for other debts, only to amount still unpaid on stock subscribed. Stock of
householders with family exempt up to amount of $25, for member’s individual
debts.
Voting.— Each member one vote.
Voting by proxy.— No proxies.
Distribution o f earnings.— Depreciation at rate of 10 per cent on fixtures, etc.,
2y2 per cent on buildings; interest of 5 per cent on ordinary stock and 6 per
cent on permanent stock; 5 per cent for reserve; not less than
per cent for
propaganda and social fund; dividends to members on patronage and to em
ployees on wages, and patronage dividends to nonmembers at half members’
rate. Dividends to be applied on stock up to limit of stock allowed.
Purchase o f stock o f other associations.— By majority vote of members. Amount
not limited.
Reports.— Monthly reports to be posted in principal office of association.
Dissolution.— By majority vote of members.
Existing organizations.— May come under act by a majority vote.
Name o f association.— Last two words of name shall be cooperative associ
ation.” It shall be unlawful to use either “ society” or “ company.”

South Carolina
(Civil Code, 1922, secs. 4331-4343)

Scope and purpose.— Any agricultural, dairy, mercantile, mining, mechanical,
or manufacturing business.
Number who may organize.— Five or more.
Filing articles of incorporation.— With secretary of state.
Management.— Not less than five nor more than nine directors. Officers shall
be president, secretary, and treasurer (last two may be combined), elected
annually by and from directors.
Capital stock.— Not less than $100. Shares not less than $5 each.
Stock ownership per member.— Not over one-fifth of total stock.
Voting.— Each member one vote.
Distribution of earnings.— Subject to revision by association, not to exceed
6 per cent on stock; not less than 10 per cent to reserve until fund amounts to
30 per cent of the paid-up capital stock; 5 per cent to educational fund; remainder
in dividends— one-half to shareholders on patronage and to employees on wages,
and the other half to nonmembers and may, in the case of nonmembers, be
credited on purchase of stock.
Purchase of stock o f other associations.— By a majority vote, may so invest all
or part of reserve, or not to exceed 25 per cent of capital.

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COOPERATIVE SOCIETIES IN 1929

Annual reports.— To commissioner of agriculture, commerce and industries on
or before January 1. Report must show name and address, amount of business
transacted, stock subscribed and paid in, number and names of stockholders,
total operating expenses, liabilities, and profits and losses.
Existing organizations.— May come under act by filing sworn statement that
majority of stockholders have so voted.
Use of word “ cooperative.” — Not to be used as part of name by any organization
formed after passage of act unless complying with provisions of act. Violating
organization may be enjoined by any stockholder in a cooperative society.

South Dakota
(Revised Code, 1919, secs. 8839-8853, as amended by Acts of 1919, ch. 140; Acts of 1921, ch. 153; Acts of 1923,
chs. 127 and 131; Acts of 1929, ch. 89)

Scope and purpose.— Any agricultural, dairy, mercantile, mining, manufactur
ing, or mechanical business.
Number who may organize.— Not less than five.
Filing amendments.— With secretary of state.
Management.— Not less than five directors, elected for not more than three
years. Officers shall be president, one or more vice presidents, secretary, and
treasurer (last two may be combined), elected annually by and from directors.
Stock ownership per member.— Not more than $1,000 in associations with cap
ital of $100,000 or less, nor more than 1 per cent in associations with capital of
more than $100,000.
Voting.— Each member one vote, except that in associations with capital of
more than $500,000 vote shall be by shares.
Voting by mail.— Permitted if previously notified in writing of question to be
voted on and if copy of the question is attached to vote.
Distribution o f earnings.— Not to exceed 10 per cent on stock; not less than 25
per cent to reserve until fund amounts to 50 per cent of paid-up capital; not less
than 1 nor more than 5 per cent for educational fund; remainder as patronage
dividends.
Purchase o f stock o f other associations.— By a majority vote, may so invest reserve
and not to exceed 25 per cent of capital.
Existing organizations.— May come under act by filing sworn statement with
secretary of state that majority of members have so voted.
Use of word “ cooperative ”— Not permitted unless complying with provisions of
act, on penalty of fine of not to exceed $1,000.

Tennessee
(Thompson’s Shannon’s Code, 1919, secs. 2186-2188)

Scope and purpose.— Buying or selling agricultural products and dealing in
merchandise.
Number who may organize.— Seven or more.

Vermont
(General Laws, 1917, title 25, sec. 4897, as amended by Acts of 1929, No. 81)

Scope and purpose.— Any business or object not repugnant to laws of State.
Number who may organize.— Three or more adults.
Filing articles o f incorporation and amendments.— With secretary of state.
Management.— Not less than three directors, elected annually. Officers are
president and treasurer.
Capital stock.— Not less than $500. Shares not more than $100 each.
Stock ownership per member.— Not more than 10 per cent of capital.
Voting.— Each member one vote.
Voting by proxy.— According to by-laws.
Distribution o f earnings.— Not to exceed 6 per cent on stock; not less than 10
per cent to reserve until fund amounts to 50 per cent of paid-in capital; all or
part of remainder distributed as patronage dividends. Distribution must take
place at least once a year.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

109

Virginia
(Annotated Code, 1919, sec. 3855, as amended by Acts of 1928, ch. 166)

Scope and purpose.— Any agricultural, dairy, mercantile, merchandise, broker
age, manufacturing, or mechanical business.
Number who may organize.— Not less than five.
Stock ownership per member.— N ot to exceed $1,000 in com m on stock.
Voting.— Each mem ber one vote. Association may specify that stock held b y
persons n ot members of certain nonstock corporations shall have no voting pow er.
Distribution of earnings.— Subject to revision by association, not to exceed 8
per cent on stock; not less than 10 per cent of net profits to reserve until fund
amounts to 30 per cent of paid-up capital; 5 per cent for educational fund;
patronage dividends to shareholders and to nonshareholders at one-half members*
rate and bonus to employees on wages.
Purchase o f stock of other associations.— By majority vote, may invest reserve
or capital in amount not to exceed 25 per cent of capital.
Existing organizations.— May come under act by amending articles of incor
poration to conform to provisions of act.
Use o f word “ cooperative.”— Not to be used as part of name by any organiza
tion formed after passage of act unless complying with provisions of act. Any
violating organization may be enjoined by any stockholder of a cooperative asso
ciation. Word “ cooperative” must be used by associations formed under act.

Washington (Stock)
(Acts of 1913, ch. 19, as amended by Acts of 1925, ch. 99)

Scope and purpose.— Any “ lawful business,” defined to include agricultural,
dairy, mercantile, mining, manufacturing, or mechanical business.
Number who may organize.— Not less than five.
Filing articles of incorporation and amendments— With secretary of state, and
county auditor of county in which principal place of business is located.
Filing fee.— Twenty-five dollars to secretary of state and 15 cents per 100
words to auditor plus 15 cents for filing. For amendments, $10 to secretary of
state, and 15 cents per 100 words to auditor plus 15 cents for filing.
Term o f charter.— Not to exceed 50 years.
Management.— Not less than three directors. Officers shall be president, one
or more vice presidents, secretary, and treasurer, elected annually by and from
directors.
Capital stock.— Not limited in amount. One-fourth of stock must be paid in
before business may be begun.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Not more than one-fifth of total stock.
Liability o f individual member.— Only in amount still unpaid on stock sub
scribed by him.
Voting.— Each member one vote.
Voting by mail.— Permitted if notified in writing of exact question to be voted
on and fi copy of motion is attached to vote.
Distribution o f earnings.— Not to exceed 8 per cent on stock; not less than 10
nor more than 25 per cent of remainder to reserve fund; dividends on patronage
to members and on wages to employees and on patronage to nonmembers at onehalf members' rate. Distribution must take place at least once a year. Divi
dends uncalled for in six months revert to association.
Purchase o f stock o f other associations.— By a majority vote, may so invest all
or part of reserve.
Annual reports.— To be made to secretary of state before March 1, showing
name and address, total amount of business done, amount of stock subscribed
and paid in, number of stockholders, total operating expenses, amount of liabili
ties, and profits and losses.
Existing organizations.— May come under act by filing sworn statement with
secretary of state that majority of members have so voted.
Use o f word “ cooperative.”— Not to be used as part of name by any corporation
unless complying with provisions of act. Any violating organization may be
enjoined by any association or stockholder in a cooperative association

110

COOPERATIVE SOCIETIES IN 1929

Washington (Nonstock)
(Remington and Ballinger’s Code, secs. 3752-3764)

Scope and purpose.— Any lawful purpose except carrying on of a business,
trade, avocation, or profession for profit.
Number who may organize.— Not less than five.
Filing articles o f incorporation.— With secretary of state and county auditor
of county in which principal place of business is located.
Filing fe e .— Same as for corporations.
Term o f charter.— Not to exceed 50 years.
Management.— According to by-laws.
Capital stock.— Nonstock.
Voting.— All members have equal power.
Dissolution.— Upon written request of two-thirds of members.
Existing organizations.— May come under act by filing statement with secre
tary of state that majority of members have so voted.

Wisconsin (Stock or Nonstock)
(Wisconsin Statutes, 1923, secs. 185.01-185.23, as amended by Acts of 1925, ch. 181; and Acts of 1928, 1929,
ch. 527)

Scope and purpose.— Any agricultural, dairy, mercantile, mining, manufactur
ing, or mechanical business.
Definition o f “ cooperative a s s o c ia tio n — One which allows only one vote per
member, which pays a fixed return on capital, and which distributes its net earn
ings on basis of patronage.
Number who may organize.— Not less than five.
Filing articles o f incorporation and amendments.— With secretary of state and
register of deeds of the county in which the principal place of business is located.
Filing fee.— For capital stock associations, $1 for those with capital of less than
$500; in other cases $10, up to stock of $25,000, plus $1 for each $1,000 of author
ized capital over $25,000; for amendments $1 for those with capital of less than
$500, $5 for other organizations. For nonstock associations $5 for articles and
$1 for amendments.
Organization expense.— Not to exceed 5 per cent of paid-in capital or member
ship fees.
Management.— Not less than five directors. Officers shall be president, one or
more vice presidents, secretary, and treasurer (last two may be combined),
elected annually by directors. All except secretary and treasurer must be
directors.
Issuance o f stock.— When paid for in full.
Voting.— Each member one vote.
Voting by mail and by proxy.— Vote by mail permitted if member received
notice in writing of motion to be voted on and if copy of question accompanies
vote. No proxies.
Distribution o f earnings.— In discretion of directors may make provision for
reserve; reasonable amount for depreciation (this and reserve may be considered
as part of expenses); not more than 8 per cent on stock (may not be cumulative);
not more than 5 per cent for educational fund; bonus on wages not to exceed rate
of patronage dividend; all or part of remainder for “ general welfare of the members
of the association.” Any of the net earnings not used as above must be distrib
uted as dividends on patronage; that of nonmembers may be at one-half mem
bers' rate and may be applied on purchase of a share of stock. Association may
decide to return to patrons the entire net proceeds of the year's business. Dis
tribution must take place at least once a year.
Purchase o f stock o f other associations.— By majority vote, may so invest not to
exceed 25 per cent of paid-in common stock and reserve.
Contracts.— Contracts whereby members bind themselves to sell to or to buy
all of their goods through association or any facilities created by it are valid,
providing term of contract does not exceed five years. Contracts may be made
self-renewing for further 5-year periods. Contracts may also provide for decree
of specific performance and liquidated damages up to 30 per cent of value of
products involved.
Discrimination against cooperative associations.— Any corporation which dis
criminates against a cooperative society doing business in State shall have its
charter or license revoked.

CHAPTER V II.— LEGISLATION, CONSUMERS’ SOCIETIES

111

Annual reports.— To secretary of state, on or before April 1, showing name
and address, amount of business, capital stock subscribed and paid in, rate of
interest on stock, number of stockholders, total operating expenses, amount of
liabilities, and profits and losses. Failure to report before June 1 subjects the
association to a fine of $10 and, if continued beyond January 1, to forfeiture of
corporate rights.
Dissolution.— By majority vote of stockholders.
Existing organizations.— May come under act by filing sworn statement that
majority of stockholders have so voted.
Use o f word “ cooperative.”— Not to be used as part of name by any corporation
organized after passage of act unless complying with provisions of act, on penalty
of fine of not more than $500 or six months’ imprisonment, or both. Word
“ cooperative” must be used by associations under act.

Wyoming
(Compiled Statutes, 1920, secs. 5119-5134)

Scope and purpose.— Agricultural, dairy, livestock, irrigation, horticultural,
mercantile, manufacturing, mechanical, or industrial business.
Number who may organize.— Five or more.
Filing articles o f incorporation and amendments.— With secretary of state and
clerk of county in which business is carried on.
Filing fee.— Same as for other corporations.
Term o f charter.— Not to exceed 50 years.
Management.— Not less than three directors, elected annually. Officers must
include president and secretary.
Capital stock.— Not limited. Twenty per cent of stock subscribed must be
paid in before business may be begun.
Issuance o f stock.— When paid for in full.
Stock ownership per member.— Not more than $1,000 nor more than one-third
of outstanding stock.
Liability o f individual member.— Only in amount still unpaid on stock sub
scribed by him. If indebtedness of association at any time exceeds capital
stock, directors assenting thereto are liable for such excess.
Voting.— Each member one vote.
Voting by mail or by proxy.— Not permitted unless provided for in by-laws.
Distribution o f earnings.— Subject to revision by members, not to exceed 8
per cent on capital stock; not less than 10 per cent of net earnings to reserve
until fund amounts to 30 per cent of paid-up capital stock; remainder in patronage
dividends to members and may be provided by by-laws to nonmembers. If
directors distribute dividends when the association is insolvent or would be made
insolvent by such distribution, they shall be held liable for all debts of the associa
tion then existing or thereafter incurred during their incumbency; written objec
tion to such dividend filed with the secretary of state and the county clerk
absolve any director from this liability.
Annual reports.— Statement to be kept on file with the secretary of association
and be open to examination by any stockholder.
Use o f word “ cooperative.” — Not to be used as part of the name unless comply
ing with the provisions of the act. Any violating organization may be enjoined
by any citizen and be fined aat to exceed $100 for each offense,

Chapter VIIL—Legislation Relating to Credit and
Banking Societies
HERE are at present laws authorizing the formation of cooper
ative credit societies in 32 States.1 Of these, 22 have been enacted
since 1920; in addition, in 1926, Massachusetts passed an act amending
the old law throughout, while in 1929 Oregon repealed its former law
and passed a new one.
There is a good deal of similarity in the cooperative credit associa
tion laws, and the wide variation evidenced in the consumers’ coop
erative laws is absent. This is due mainly to the fact that the great
majority of the cooperative credit laws are based on the standard bill
sponsored by the Credit Union National Extension Bureau of Boston.
The present chapter endeavors to present a picture of this legislation
as it stands in July, 1930.
As cooperative credit societies are generally termed “ credit unions,”
in this country, most of the laws specify that the societies formed under
them shall be called credit unions, and have exclusive title to the
term. In Utah, however, they are known as “ cooperative banks for
personal credit,” while in North Carolina the original credit union act
has been amended so as to change the nomenclature of these societies
to “ savings and loan associations.”
The powers granted to the associations by the various State laws
generally include the right to buy and hold property, to sue and be
sued, to borrow money, and to lend it. Generally the society is given
the right to receive savings deposits from its members, and a few
States also permit acceptance of deposits from nonmembers.
The widest powers are conferred by the law of Utah, which permits
societies formed under it to conduct a general banking business for
the benefit of the members. It is of interest, in this connection, to
note that the Illinois law expressly prohibits credit unions from doing
a banking business. Two States, however, Iowa and Nebraska, have
each enacted not only a credit union law but also an act providing for
the incorporation of cooperative banks; the Nebraska act was passed
in 1921 and that of Iowa in 1927.2

1 Alabama (Acts of 1927, No. 597); Arizona (Acts of 1929, ch. 58); California (Acts of 1927, ch. 36); Florida
(Acts of 1929, ch. 14499, p. 978); Georgia (Acts of 1925, No. 429, p. 165); Illinois (Acts of 1925, p. 255); Indiana,
(Acts of 1923, ch. 114); Iowa (Code, 1927, secs. 9283-bl to 9283-b26 and 9305-al to 9305-a23); Kansas (Acts
of 1929, ch. 141); Kentucky (Carroll’s Kentucky Stats. (Baldwin’s Rev.), 1930, secs. 883g-l to 883g-28);
Louisiana (Acts of 1924, No. 40, p. 63); Maryland (Acts of 1929, ch. 337); Massachusetts (Gen’l Laws, 1921,
ch. 171, as amended by Acts of 1926, ch. 273; Acts of 1930, ch. 180); Michigan (Acts of 1925, No. 285, as
amended by Acts of 1929, No. 303); Minnesota (Acts of 1925, ch. 206); Mississippi (Acts of 1924, ch. 177);
Missouri (Acts of 1927, p. 164, as amended by Acts of 1929, p. 50); Montana (Acts of 1929, ch. 105); Nebraska
(Comp. Stats. 1922, Art. X V , secs. 649-670 and 7982-8051); New Hampshire (Pub. Laws, 1926, ch. 267, as
amended by Acts of 1929, ch. 46); New Jersey (Acts of 1924, ch. 48, as amended by Acts of 1929, ch. 266;
Acts of 1930, ch. 153); New York (Acts of 1914, ch. 369, arts. 450-479, as amended by Acts of 1915, ch. 294;
Acts of 1923, ch. 701; Acts of 1929, chs. 323, 324, 325); North Carolina (Consol. Stats. 1919, ch. 93, subch.
Ill, secs. 5208-5241, as amended by Acts of 1925, ch. 73; Acts of 1929, ch. 47); Oregon (Acts of 1929, ch. 396);
Rhode Island (Gen’l Laws, 1923, secs. 3925-3950); South Carolina (Civil Code, 1922, secs. 4003-4027)
Tennessee (Acts of 1923, ch. 68); Texas (Rev. Civil Stats. 1925, arts. 2461-2484, as amended by Acts of 1929,
ch. 17 and 2d spec, sess., 1929, ch. 85); Utah (Comp. Laws, 1917, secs. 1060-1082, as amended by Acts of 1929,
ch. 40); Virginia (Acts of 1922, ch. 449, p. 775, as amended by Acts of 1930, ch. 16); West Virginia (Acts of
1925, ch. 36); and Wisconsin (Stats. 1923, ch. 186, secs. 186.01-186.18, as amended by Acts of 1929, ch. 323).
2 Iowa (Code of Iowa, 1927, secs. 9283-bl to 9283-b26); Nebraska (Comp. Stats., 1922, secs. 7982-8051).
Massachusetts also has a law relating to cooperative banks, buUa that State “ cooperative bank ” is the term
used- to designate building and loan associations.

T12

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

113

Provisions of Credit Union Laws
Number of Incorporators

HE LAW of California sets the minimum number of residents
necessary for incorporation of a credit union at 3; those of Rhode
Island and Montana at 5; those of 19 States 3 at 7; those of Georgia,
Kentucky, Virginia, and West Virginia at 8; and those of South Caro
lina, Texas, Utah, and New Jersey at 10. In Nebraska 15 persons
and in Massachusetts 20 persons are necessary for incorporation.

Field of Membership

No r e s t r i c t i o n is placed on the field from which the credit union
membership may be drawn in the laws of 15 States.4 All of the others,
however, have some provisions on this point. Those of 13 States6
limit the field to groups having a common bond of occupation or asso
ciation, or to persons residing within a well-defined neighborhood,
community, or rural district. The New York law, although phrasing
its provision a little differently, covers practically the same groups,
except that it permits also the formation of credit unions among
“ persons who * * * have such a community of interest as will
insure proper administration.” The Michigan act adds that if a
credit union is formed among the employees of a factory, workshop,
mine, quarry, mercantile establishment, or public utility, the appli
cation for charter must be approved by the board of directors of the
employing corporation. The New York law prohibits the formation
of “ neighborhood” credit unions to cover an area of more than
10,000 population and that of Illinois more than 50,000 population.
The Illinois act requires, furthermore, that the statement of incor
poration must specify the group to which membership shall be limited.
The Texas law is that of narrowest application, authorizing only the
formation of rural credit unions. The New Jersey law, .as first
enacted, was limited to employees of the same employer; later amend
ments permit the formation of credit unions among members of a
church parish, society, or organization of war veterans and among
agricultural workers. South Carolina restricts the membership to
“ natural persons,” but the laws of 10 States specifically allow the
admission to membership in the credit union of any organization of
the same general membership as the credit union, and the Massa
chusetts law of any organization whose members are eligible to mem
bership in the credit union.
Powers of Credit Union
T h e cre d it u nion s are g en e ra lly g iv e n th e usual co r p o r a te p ow ers,
in clu d in g th e p o w e r to a cq u ire p r o p e r ty a n d to in v e st o r b o r r o w
m o n e y , th o u g h th ese la st are o fte n re stricte d , th e m o s t u su al re stric
tio n o n in v e stm e n t b e in g th a t lim itin g th e secu rities p e r m itte d t o
3 Alabama, Arizona, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, M in
nesota, Mississippi, Missouri, New Hampshire, New York, North Carolina, Oregon, Tennessee, and
Wisconsin.
* California, Georgia, Indiana, Kentucky, Maryland, Massachusetts, Nebraska, New Hampshire,
North Carolina, Oregon, Rhode Island, Tennessee, Utah, Virginia, and Wisconsin.
Alabama, Arizona, Florida, Illinois, Iowa, Kansas, Louisiana, Michigan, Minnesota, Mississippi,
Missouri, Montana, and West Virginia.

114

COOPERATIVE SOCIETIES IN 1929

those allowed to savings banks or trust funds. In Rhode Island a
further restriction limits such investments to one-third of the cap
ital, deposits, and reserve. The laws of Alabama, Arizona, Florida,
Iowa, Michigan, and Montana allow the credit union to invest up
to 25 per cent of its capital in the shares of building and loan asso
ciations or of other credit unions, and those of Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, Tennessee, Virginia, and West
Virginia, 10 per cent of the capital and reserve in the stock of other
credit unions. North Carolina also permits the investment of 25 per
cent of capital and reserve in the stock of a central association.
The credit union laws of 23 States 6 contain restrictive provisions
as to borrowing money, the amount permitted being as follows:
20 per cent of the assets in Illinois, 25 per cent in Wisconsin, and 50
per cent in Alabama, Arizona, Florida, Iowa, Michigan, Minnesota,
and Montana; 25 per cent of the deposits in New Jersey; and 40
per cent of paid-in capital in California, New York, and Oregon
(except that in New York and Oregon, if the credit union has capital
of less than $5,000, it may borrow up to $2,000); 25 per cent of the
capital, surplus, and reserve in Kansas and Missouri, 50 per cent in
Georgia, Indiana, Louisiana, Mississippi, and Tennessee, and 4Q0
per cent in North Carolina. In Kentucky, Virginia, and West
Virginia credit unions may borrow and rediscount notes, but the
total of sums borrowed and notes rediscounted may not exceed
the sum of the capital, surplus, and reserve. In Wisconsin the period
of such borrowings may not exceed 90 days unless approved by the
commissioner of banking.
In North Carolina a 1925 amendment gives seven credit unions
the right to form a central corporation “ for the purpose of securing
credit and discounting notes with any outside agency, and to act
as a clearing house in the settlement of these accounts.”
Massachusetts provides that “ at least 5 per cent of the total
assets of a credit union shall be carried as cash on hand or as balances
due from banks and trust companies, or invested in the bonds or
notes of the United States or of any State, or subdivision thereof,
which are legal investments for savings banks as above provided.
Whenever the aforesaid ratio falls below 5 per cent, no further loans
shall be made until the ratio as herein provided has beenreestablished.”
Management
A ll of the laws (except those of California, Illinois, Massachusetts,
and Rhode Island) specify that the number of directors of the credit
union shall be not less than five (the New Jersey law also stipulates
not more than 10), and that there shall also be a credit committee
of not less than 3 members and (except California, New Jersey, and
Wisconsin) a similarly constituted supervisory committee. The Mas
sachusetts law requires not less than 11 directors (unless there are
fewer than 11 members), a credit committee of not less than 3, and an
auditing committee of 3. In California the credit union must have
at least 3 directors, a supervisory committee of not less than 7 mem
bers and a credit committee of not less than 3 members; and in Rhode
6 Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,
Michigan, Minnesota, Mississippi, Missouri, Montana, New York, North Carolina, Oregon, Tennessee,
Virginia, West Virginia, and Wisconsin.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

115

Island the number of directors must be some multiple of 3. The
law of South Carolina also provides for a special committee to pass
upon loans approved by the credit committee.
Directors and members of the committees are usually elected from
the membership. The Texas act, however, provides that the mem
bers of the credit committee, and that of Illinois of the supervisory com
mittee also, shall be chosen by and from the directors. In Virginia
and West Virginia the directors may act as a credit committee if
the membership so decides. The New York, North Carolina, and
Oregon laws provide that if the credit union is not in a city, the board
of directors may act as the credit committee. In Wisconsin, a di
rector may not be a member of the credit committee. Unless there
are fewer than 11 members in the association, a director may not be
a member of both committees in Maryland and Massachusetts, or of
either committee in nine States;7 nor may any person be a member
of both committees in six States.8 The laws of Nebraska, Rhode
Island, South Carolina, Utah, Virginia, and West Virginia contain
both these restrictions, and the Oregon law the second of them, with
out regard to the size of the association.
In all States the officers (president, vice president, secretary, and
treasurer) are elected by the directors from their own number.
Under the laws of 29 States,9 no director or member of either com
mittee may receive any compensation for his work; eight of these
(Maryland, Massachusetts, New Hampshire, New Jersey, North
Carolina, Rhode Island, South Carolina, and Wisconsin) also stipu
late that the officers may receive such pay as is authorized, either
by the membership or the directors. Rhode Island also includes
members of the credit committee in the foregoing provision. A
1929 amendment of the New York law provides that no credit union
may pay compensation to members of committees except an attend
ance fee, nor to officers (except the one designated as manager)
unless the net earnings for the previous year were equal to 6 per
cent of the capital stock outstanding and unless the total compen
sation to officers, committee members, counsel, and employees
amounted to less than one-fourth of gross earnings for the preceding
year.
Meetings
R e g u l a r general meetings of all the members must be held annually
under the provisions of the laws of 28 States.10 Special meetings may
be called at any time by order of the board of directors in California,
Massachusetts, and Wisconsin; of the board of directors or the
supervisory committee in 18 States;11 or of a majority of either body
in New Hampshire. Special meetings must be called upon the request
7 Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Hampshire, and Ten
nessee.
8 California, New Hampshire, New York, North Carolina, Oregon, and Texas.
9 Alabama, Arizona, California, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mary
land, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New
Jersey, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, West
Virginia, and Wisconsin.
10 California, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michi
gan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York,
North Carolina, Oregon, Bhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia,
and Wisconsin.
h Georgia, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Nebraska, New
York, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and West
Virginia.

116

COOPERATIVE SOCIETIES IN 1929

of 10 members in California, Massachusetts, New Hampshire, New
Jersey, New York, Oregon, Rhode Island, South Carolina, and
Texas, of 10 per cent of the membership in 13 States,12 and of 15
per cent of the members in Nebraska.
The cooperative principle of one man one vote is provided for in
the laws of 28 States,13 of which those of 6 (Massachusetts, New
Hampshire, Rhode Island, South Carolina, Texas, and Wisconsin),
provide further that after the credit society has been organized for
one year no person shall have a vote until he has been a member for
more than three months. Illinois excepts the election of directors
from the general rule of one vote per person.
Proxy voting is prohibited in 25 States,14 and except in the election
of officers in Illinois, but the law of North Carolina provides that in
case of sickness or other unavoidable absence a member may vote
by mail. The laws of 20 States 15 allow an organization which is a
member of a credit union to cast its vote through an accredited
delegate.
Funds
T h e fu n d s o f cre d it u n ion s are d e riv e d fr o m th eir share ca p ita l,
fees, an d d e p osits.

The amount of capitalization is left to the decision of the credit
union, but usually a limitation is imposed as to the par value of the
individual share of stock. This is set at $5 by the laws of Kentucky,
Massachusetts, South Carolina, Utah, and Virginia; at not to exceed
$5 by the laws of Georgia and Texas; at $10 by the Florida law; at
not to exceed $10 by the laws of 18 States; 16 and not to exceed $25
by the laws of New York, North Carolina, and Oregon.
In New York no member may hold more than 5 per cent of the
share capital of the association nor more than $5,000 worth ($500 if
the paid-in capital does not exceed $10,000); in California not more
than $2,000 worth; in Massachusetts not more than 400 shares or
$2,000 worth (except in credit unions which do not receive deposits,
in which case the member may hold 800 shares); and in South Caro
lina not more than 200 shares.
Most of the laws permit credit unions to receive savings deposits
only from members, but those of Georgia, Kentucky, North Carolina,
South Carolina, Tennessee, Virginia, and West Virginia allow
deposits from nonmembers also. In Illinois, Kansas, Louisiana, and
Missouri, deposits even from members are allowed only as part
payment on shares of stock in the credit union.
The New Jersey law provides that members must deposit 25 cents
“ or even multiple thereof at such regular intervals and subject to
such fines for failure to do so as may be determined by the by-laws
12 Georgia, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina,
Tennessee, Virginia, West Virginia, and Wisconsin.
13Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massa
chusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New
York, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Virginia, West Virginia,
and Wisconsin.
14 Alabama, Arizona, Florida, Georgia, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New York, Oregon, Rhode
Island, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
16 Alabama, Arizona, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Tennessee, Virginia, and West
Virginia.
16 Alabama, Arizona, California, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Tennessee, and West Virginia.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

117

unless excused by the board of trustees” ; deposits received from
member organizations may not exceed 25 per cent of the credit
union’s assets.
The California, Nebraska, and Wisconsin laws are silent as to
deposits; the only mention of this point in the California law is that
authorizing the credit union “ to receive money and accumulate funds
to be loaned.”
Massachusetts limits the deposits of any individual member to
$2,000.
Loans
T h e Virginia and Wisconsin laws empower the credit unions to
make loans only for provident purposes, and the laws of 12 States 17
to make loans only for productive and provident purposes. In
Texas no loans may be granted except for productive purposes or
urgent needs nor for longer than 12 months, nor may the loan be
renewed for a sum as large as the original amount. In Utah the
loans must be for productive purposes or of remedial character, and
the association is empowered to transact “ a general banking business
in the interests of its members primarily.” In Massachusetts, New
Hampshire, Rhode Island, South Carolina, Utah, and Wisconsin the
loan must be one which “ promises to be of benefit to the borrower.”
Preference must be given to the smallar loan if the funds on hand
are insufficient to cover all the loans which have been acted upon
favorably in seven States.18
The laws of 10 States 19 provide that “ a member who needs funds
with which to purchase supplies for growing crops may receive a
loan in fixed monthly installments instead of in one sum.”
To whom granted.— The laws of eight States 20permit a credit union
to make a loan to any cooperative society or other organization
having membership in the credit union. In no case, however, may
a loan be made to a nonmember—either an organization or an indi
vidual. The New Jersey act specifically prohibits loans to member
organizations. Under the laws of California, Kentucky, Maryland,
Nebraska, New York, North Carolina, Oregon, Virginia, and West
Virginia, any officer, director, or member of a committee of a credit
union who knowingly permits a loan to be made or participates in
a loan to a nonmember is guilty of a misdemeanor and may be held
liable to the corporation for the amount illegally loaned. The
Nebraska law also provides a penalty, on conviction, of not more
than $100 or imprisonment for 90 days.
The laws of New Hampshire, Rhode Island, and Wisconsin flatly
prohibit loans to members of committees (Wisconsin, credit committee
only) and those of Illinois, Indiana, and Tennessee to both directors
or members of committees. In 9 States 21 loans to directors and
members of committees may be allowed if approved by a vote of
the members (in Utah by vote of supervisory committee), but those of
17 Alabama, Arizona, Florida, Illinois, Iowa, Michigan, Minnesota, Montana, New Jersey, South Caro
lina, Texas, and West Virginia,
is Indiana, Kansas, Louisiana, Massachusetts, Mississippi, Missouri, and Tennessee.
19 Georgia, Indiana, Kansas, Kentucky, Maryland, Missouri, North Carolina, Tennessee, Virginia,
and West Virginia.
20 Alabama, Arizona, Florida, Iowa, Michigan, Minnesota, Montana, and West Virginia.
21 Georgia, Kentucky, Louisiana, Maryland, Mississippi, Nebraska, Oregon, South Carolina, and Texas.

118

COOPERATIVE SOCIETIES IN 1929

12 States 22 allow such loans only to the amount held by such member
in shares and deposits.
In Kentucky, Maryland, North Carolina, Virginia, and West
Virginia, if such loans are approved, the supervisory committee must
appoint a substitute to serve in the borrower’s place. A 1929 amend
ment of the New York law provides that no director, officer, or mem
ber of a committee shall borrow or become surety for a loan unless he
pledges an equal or greater amount in share capital, and in such
cases the interest charged shall be not less than the rate charged
“ for loans of like character in the ordinary course of business.”
Indorsements by directors and committee members of a loan to a
member are prohibited in 14 States 23 and in 9 additional States24
unless specifically authorized by vote of the membership. The
Kansas and Missouri laws allow indorsements by directors and com
mittee members of loans up to the amount of shares held by such
members. In Utah such indorsements are forbidden after the third
annual meeting of the credit union. In New Hampshire no member
of a committee may become an indorser of a loan, but a director may
do so if authorized by vote of the members.
Procedure.—In all of the 32 States except New Jersey applications
for loans must be made in writing or on a form supplied by the credit
committee, stating the purpose for which desired and the security
(if any) offered. In 27 of these States 25 no loan may be granted
unless it has the unanimous approval of the members of the credit
committee who are present (and who must constitute at least a
majority of the committee),26 but appeal may be taken from the
committee’s decision to the board of directors, if the by-laws so pro
vide. In 4 States 27 all members of the credit committee present
must approve the loan and be satisfied “ that it promises to benefit
the borrower. ”
Security.—For loans of more than $50, security must be given in
18 States,28 and for those over $100 in Massachusetts. For this
purpose an indorsed note is deemed security in all of these States
except Wisconsin. In New Jersey, if the proposed loan is less than
90 per cent of the borrower’s deposits with the association, the assign
ment of these deposits is sufficient security and no indorsement is
necessary; in this State, no member is acceptable as an indorser if he is
already a borrower or indorser. In Illinois and Maryland the law
specifically prohibits loans upon the security of first mortgages upon
real estate, but in Utah all loans of more than $500 must be secured
by real estate valued at twice the amount of the loan or by approved
securities. The Massachusetts law accepts an assignment of wages
as satisfactory collateral for loans not over $250.
Maximum loan.—No person may borrow more than $500 in Louisi
ana and New Jersey, more than $1,000 in Illinois, Kansas, Missouri,
22 Alabama, Arizona, California, Florida, Iowa, Kansas, Maryland, Massachusetts, Michigan, Minne
sota, Missouri, and Montana.
23 Alabama, Arizona, California, Florida, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota,
Montana, Rhode Island, Tennessee, and Wisconsin.
24 Georgia, Kentucky, Louisiana, Maryland, Mississippi, Nebraska, Oregon, South Carolina, and Texas.
28 Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hamp
shire, New York, North Carolina, Oregon, Tennessee, Utah, Virginia, and West Virginia.
26 Two-thirds in Massachusetts and New Hampshire, and a quorum in Utah.
27 Rhode Island, South Carolina, Texas, and Wisconsin.
28 California, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Ne
braska, New Jersey, New York, North Carolina, Oregon, Tennessee, Virginia, West Virginia, and Wis
consin.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

119

and Texas, more than $2,000 in California, more than $3,000 in
Utah^ more than $3,000 in personal loans or $8,000 in mortgage
loans in Massachusetts, more than an amount equal to the borrower’s
shares and deposits in New York, or more than an amount equal to
10 per cent of the society’s paid-in capital in Oregon.
Interest.—The laws of 26 States29 regulate the rate of interest to be
charged by credit unions on loans made by them. In North Carolina
the legal rate may be charged and in New Hampshire not to exceed
the legal rate. In South Carolina the interest rate may not exceed
7 per cent, in Indiana 8 per cent per year “ not collectible in advance, ”
in Texas 10 per cent, and in Utah 12 per cent. In 17 States,30 the
rate may not exceed 1 per cent, in West Virginia 1% per cent, and in
Virginia 1% per cent per month, computed on the unpaid balances.
The New Jersey laws also provides that “ no charges, bonus, fees,
expenses, or demands of any nature whatsoever other than as above
provided shall be made upon loans or advancements except upon the
actual foreclosure of the security or upon the entry of judgment.”
In New York the interest may not exceed 1 per cent per month, or
5.9 per cent per year if deducted in advance, and in either case must
be inclusive of all charges incident to the making of such loan; if
the member pays off a loan before due, “ the pro rata unearned por
tion of interest shall be refunded.” The Wisconsin statute provides
that a rate of 1 per cent per month on unpaid balances “ shall not be
held to be usurious. ”
Reserve (Guaranty) Fund

A c e r t a i n percentage of each year’s net earnings must be put
into the reserve fund. The laws of Alabama, Massachusetts, New
Hampshire, and Utah fix this percentage at 10, that of New Jersey
at 15, those of 22 States31 at 20 per cent, and those of Maryland,
Nebraska, New York, North Carolina, and Oregon at 25 per cent.
The appropriation for reserve may be decreased or discontinued in
some States, when the fund equals a certain sum, set at the amount
of the paid-in capital in 18 States,32 at 20 per cent of the paid-in
capital in New Hampshire, at 10 per cent of the assets in Wisconsin,
at 15 per cent of the assets in Massachusetts, and at 25 per cent of
the deposits in New Jersey.
The Massachusetts law also provides that when the losses and bad
debts of the association exceed 20 per cent of the guaranty fund, a
special reserve must be created which shall equal the amount of such
excess of losses; and the Minnesota law provides for special reserves
of not less than 5 per cent of the amount of deposits. The New York,
North Carolina, and Oregon laws specify that in no case may the
reserve be allowed to exceed the capital plus 50 per cent of the other
liabilities.
29 Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Mary
land, Michigan, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New York,
North Carolina, Oregon, South Carolina, Texas, Utah, Virginia, and West Virginia.
3° Alabama, Arizona, California, Florida, Georgia, Illinois, Iowa, Kansas, Louisiana, Maryland, Michi
gan, Minnesota, Mississippi, Missouri, Montana, New Jersey, and Oregon.
Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan,
Minnesota, Mississippi, Missouri, Montana, Rhode Island, South Carolina, Tennessee, Texas, Virginia,
West Virginia, and Wisconsin.
32 Alabama, California, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri,
Nebraska, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, and West Virginia.

120

COOPERATIVE SOCIETIES IN 1929

Reports
R e g u l a r periodic reports to and examination by a specified
public authority, usually the State commissioner or superintendent of
banks, insurance, or corporations, are required by the laws of 32
States.33 But the Alabama law provides that in a credit union of
employees of an industrial establishment, the power of supervision
may be delegated to the auditing department of the establishment,
which shall furnish any reports called for by the superintendent of
insurance, and the laws of seven States34 that if the credit union has
assets of less than $25,000 the report of a certified public accountant
may be accepted.
A penalty of $5 per day for every day of delinquency in furnishing
required reports is set by the laws of 24 States35; of $10 per day in
Georgia, Kentucky, and Wisconsin; of not more than $10 per day
in Virginia; and of $1 per day in Kansas and Missouri.

Voluntary Dissolution
T h e laws of 19 States36 provide that a credit union may be volun
tarily dissolved on four-fifths vote (three-fourths vote in North Caro
lina) of the membership at a special meeting called for the purpose,
the result of the vote being reported to the State official in charge of
credit unions in a sworn statement; in such cases the association must
remain in existence for three years (five years in Oregon, time not
specified in Kentucky and North Carolina) in order to wind up its
affairs.
In Massachusetts a credit society may be dissolved on two-thirds
vote of a special meeting. In Nebraska, Rhode Island, South Caro
lina, Texas, Utah, and Wisconsin dissolution may take place if the
board of directors unanimously recommends it and it is so voted at a
special meeting at which two-thirds of the entire membership are
present, but provided (except in Nebraska) not more than 10 members
vote in the negative.
In New Hampshire the matter must have the recommendation of
not less than two-thirds of the board of directors and receive the
votes of two-thirds of all members entitled to vote, at a special meet
ing called for the purpose.
In Georgia the procedure for dissolution is the same for credit
unions as for banks (with a fee of $10), and in New Jersey the same
as for building and loan associations.

Use of Name “ Credit Union”

I n 31 States37 the words “ credit union” may not be used by any
corporation unless formed under and conforming to the credit union
33 Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Iowa, Kansas Kentucky, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New
Hampshire, New Jersey, New York, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee,
Texas, Utah, Virginia, West Virginia, and Wisconsin.
a* Arizona, Florida, Illinois, Iowa, Michigan, Minnesota, and West Virginia.
3« Alabama, Arizona, California, Florida, Illinois, Indiana, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New York, North Carolina,
Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, and West Virginia.
3®Alabama, Arizona, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michi
gan, Minnesota, Mississippi, Missouri, Montana, North Carolina, Oregon, Tennessee, and West Virginia.
37 Alabama, Arizona, California, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mary
land, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire,
New Jersey, New York, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah,
Virginia, West Virginia, and Wisconsin.

CHAPTER

Yin.— LEGISLATION,

CREDIT SOCIETIES

121

law. The unlawful use of the name is regarded as a misdemeanor in
18 of these.38 The Indiana law .provides for a penalty of not to exceed
$100, that of Louisiana for one of not less than $25 nor more than $250,
that of Virginia and West Virginia of not less than $10 nor more than
$100 per day, that of Massachusetts of not to exceed $1,000, and that
of Wisconsin for a fine of not less than $300 nor more than $1,000
or imprisonment for not less than 60 days nor more than 1 year, or
both.
Provisions of Cooperative Bank Laws
HUS far, as already stated, only two States—Iowa and Ne
braska—have enacted legislation authorizing the formation of
T
cooperative banks. A summary of the provisions of these follows. ^
Scope.—In Iowa a cooperative bank may enter any field of busi
ness open to regularly incorporated State banks.
Number of incorporators.—Fifty persons are necessary for the incor
poration of a cooperative bank in Iowa.
Value of share.—In Iowa the par value of each share is set at not
less than $10.
Stock ownership per member.—Under the Nebraska law no member
of a cooperative bank may hold more than 4 per cent of the capital
stock. The Iowa law leaves this to the directors to determine.
Meetings.—Under the Iowa law meetings must be held annually in
January. Special meetings may be called by the president or a
majority of the directors and must be held upon written request of
10 per cent of the stockholders.
Voting.—The Iowa law provides that each member shall have but
one vote, regardless of his holdings in stock; proxy voting is permitted,
however.
Distribution of earnings.—The maximum rate of interest that may
be paid on capital stock is set at 8 per cent in Iowa and 10 per cent
in Nebraska.
In Iowa cooperative banks are required to create a surplus fund
equal to one-half the amount of the capital stock. ^ In Nebraska 20
per cent of the net earnings each year must be set aside until the fund
equals 20 per cent of the paid-in capital. The Nebraska law also
provides for a special assessment to be kept in a separate fund, called
“ cooperative bank protective fund/7 for the protection of the
depositors.
The Iowa law provides that after the required surplus has been
created and interest has been paid on the capital stock, the remainder
of the net earnings may be distributed as dividends or credited to
those depositors and borrowers from the bank who are also stock
holders, in proportion to the amount of interest received and accrued
to the deposits and the amount of interest paid by the borrowers.
In Nebraska dividends may be distributed to the stockholder depos
itors or borrowers, or both, in proportion to the average daily balance
of their deposits or loans.
^Reports and examination.—Cooperative banks are under the super
vision of the State Department of Banking in Iowa, and the Depart
ment of Trade and Commerce in Nebraska. Like other banks they
38 Arizona, California, Florida, Georgia, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota,
Mississippi, Missouri, Montana, New York, North Carolina, Oregon, Tennessee, and West Virginia.

18672°— 31-------9

122

COOPERATIVE SOCIETIES IN 1929

must submit reports on their year’s operation, on the dates set for
State banks in Iowa, and four times a year in Nebraska.
They are subject to annual examination by the designated State
officials, under both laws.
Dissolution.—The Iowa statute provides that in the event of
liquidation, all capital stock must be redeemed at par, together with
accrued interest. The assets remaining shall be then distributed to
the stockholder depositors and borrowers on the same basis as is
used in the distribution of dividends.
Synopsis of Banking and Credit Laws39
Alabama
(Acts of 1927, No. 597)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Seven or more residents of State.
Filing articles o f incorporation.— With superintendent of insurance.
Limitation on membership.— Restricted to groups having a common bond of
occupation, or association or to groups within a well-defined neighborhood,
community, or rural district. May also admit to membership an organization
composed for the most part of the same general group as the credit-union member
ship.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. Officers to be president, vice president, secre
tary and treasurer (last two may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services.
Investment of funds.— Same as for savings banks and trust funds. May invest
not to exceed 25 per cent of capital in shares of building and loan associations and
of other credit unions.
Right to borrow.— Restricted to amount not exceeding 50 per cent of assets.
Meetings.— As by-laws provide.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident or productive purposes only. To members only.
Application must be on form provided, and must state purpose for which desired,
and security, if any, offered. Loans must be unanimously approved by members
of credit committee present, who must constitute at least a majority of the
committee.
Loans to and indorsements by directors, officers, and members o f committees.—
Loans only to amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Reserve fund.— Shall consist of all entrance fees and fines, plus 10 per cent of
net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually on recommendation of directors, on all shares
outstanding.
Annual reports.— To superintendent of insurance on or before February 1.
Failure to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually by superintendent of insurance, but if association
has assets of less than $25,000 he may accept audit of practicing public account
ant. If organized among employees of an industrial enterprise, he may delegate
supervision to that company, accepting its report.
Taxation.— Exempt except for real estate and franchise taxes.
Voluntary dissolution.— On vote of four-fifths of membership in special meeting,
certified to superintendent of insurance, but must remain in existence for three
years to wind up affairs.
Use o f name “ credit union.” — Prohibited unless organized under act, in which
case it must be used.
As of summer of 1930.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

123

Arizona
(Acts of 1929, ch. 68)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Seven or more residents of State.
Filing articles of incorporation and amendments.— With superintendent of
banks, Arizona Corporation Commission, and county recorder.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association or to groups within a well-defined neighborhood,
community or rural district. May also admit to membership an organization
composed for the most part of the same general group as the credit-union mem
bership.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. Officers to be president, vice president, clerk
and treasurer (last two may be combined), elected by and from directors. No
director or committee member may receive any compensation for his services.
Investment of funds.— May invest not to exceed 25 per cent of capital in shares
of building and loan associations and of other credit unions.
Right to borrow.— Restricted to sum not exceeding 50 per cent of assets.
Vote by prm?/.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident or productive purposes only. To members only
Applications must be on form provided, and must state purpose for which desired*
and security, if any, offered. Loans must be unanimously approved by members
of credit committee present, who must constitute at least a majority of the com
mittee.
Loans to and indorsements by directors and committee members.— Loans only to
amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares is accepted as security.
Reserve fund.— Shall consist of all entrance fees and fines, plus 20 per cent of
net earnings each year.
Dividends.— Payable annually on recommendation of directors, on all shares
outstanding.
Annual reports.— To superintendent of banks, on or before June 30. Failure
to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by superintendent of banks, but if association has
assets of less than $25,000, he may accept audit of practicing public accountant.
Voluntary dissolution.— On vote of four-fifths of membership in special meeting,
certified to superintendent of banks, but must remain in existence for three
years to wind up affairs.
Use of name “ credit u n io n ” — Prohibited, as misdemeanor, unless organized
under act.

California
(Acts of 1927, ch. 36)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Three or more residents of State.
Term o f charter.— Not to exceed 50 years.
Value o f share.— Not to exceed $10.
Stock ownership per member.— Not to exceed $2,000.
Management.— Not less than 3 directors, credit committee of not less than 3,
and supervisory committee of not less than 7. No person may be a member of
both committees. Officers to be president, vice president, secretary, and treasurer
(last two may be combined), elected by and from directors. No director or com
mittee member may receive any compensation for his services.
Investment o f funds.— Same as for savings banks; and in building and loan certi
ficates.
Right to borrow.— Restricted to amount equal to 40 per cent of capital.
Meetings.— Annually, in January. Special meetings on order of directors or
at request of 10 members.

124

COOPERATIVE SOCIETIES IN 1929

Loans.— To members only. Applications must be in writing and must state
purpose for which desired and security offered. Loans must be unanimously
approved by members of credit committee present, who must constitute at least
a majority of the committee.
Maximum amount of loan.— Unsecured, $50; secured, $2,000.
Loans to nonmembers.— Any officer, director, or member of a committee who
knowingly permits a loan to a nonmember is guilty of a misdemeanor and is
liable for the amount of the loan.
Loans to and indorsements by directors and committee members.— Loans only to
amount of holdings; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note is accepted as security.
Reserve {guaranty) fund.— Shall consist of all entrance fees and fines, plus 20
per cent of net earnings each year until fund equals amount of capital.
Dividends.— At discretion of board of directors, payable on fully paid shares
outstanding.
Annual reports.— To commissioner of corporations within 30 days after close
of credit union’s fiscal year. Failure to report subjects association to fine of $5
for each day of delinquency.
Examination.— Annually, by commissioner of Corporations.
Examination fee.— $25.
Use of name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act, in which case it must be used.

Florida
(Acts of 1929, ch. 14499, p. 978)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Seven or more residents of State.
Filing articles of incorporation.— With comptroller of State.
Filing fee.— $5.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups within a well-defined neighborhood,
community, or rural district. May also admit to membership an organization
composed for the most part of the same general group as the credit-union member
ship.
Value o f share.— $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than
3, and supervisory committee of 3. Officers to be president, vice president,
treasurer and clerk (last two may be combined), elected by and from directors.
Investment o f funds.— May invest not to exceed 25 per cent of capital in shares
of building and loan associations and of other credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of assets.
Meetings.— As by-laws provide.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident or productive purposes only. To members only.
Applications must be on form provided, and must state purpose for which desired,
and security, if any, offered. Loans must be unanimously approved by members
of credit committee present, who must constitute at least a majority of the com
mittee.
Loans to and indorsements by directors} officers, and members o f committees.—
Loans, only to amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Reserve fund.— Shall consist of all entrance fees, plus 20 per cent of net earnings
each year until fund equals amount of paid-in capital.
Dividends.— Payable annually on recommendation of directors, on all shares
outstanding.
Annual reports.— To comptroller of State, on or before June 20. Failure to
report subjects association to fine of $5 for each day of delinquency.
Examinations.— Annually, by comptroller of State, but if association has assets
of less than $25,000 he may accept audit of practicing public accountant.
Examination fe e .— $5.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

125

Voluntary dissolution.— On vote of four-fifths of membership in special meeting,
certified to comptroller of State, but must remain in existence for 3 years to wind
up affairs.
Use o f name “ credit union .”— Prohibited, as misdemeanor, unless organized
under act, in which case it must be used.

Georgia
(Acts Of 1925, No. 429, p. 165)

Number who may organize.— Eight or more persons.
Term o f charter.— Twenty years; renewable.
Filing articles o f incorporation.— With secretary of state, and clerk of superior
court of county.
Value o f share.—-Not to exceed $5.
Deposits.— From both members and nonmembers.
Management.— Not less than five directors and credit and supervisory committee
of not less than three each. Unless there are fewer than 11 members, no director
may be a member of either committee. Officers to be president, vice president,
secretary, and treasurer (last two may be combined), elected by and from direc
tors. No director or committee member may receive any compensation for his
services.
Investment of funds.— Same as for savings banks. May invest not to exceed
10 per cent of capital and reserve in stock of other credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of sum of capital,
surplus, and reserves.
Meetings.— Annually, in January. Special meetings at order of directors or
supervisory committee and on written request of 10 per cent of members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security offered. Loans must be
unanimously approved by members of credit committee present, who must con
stitute at least a majority of the committee.
Loans to and indorsements by directors, officers, and committee members.— Pro
hibited unless authorized by vote of stockholders in special meeting.
Interest on loans.—-Not to exceed 1 per cent a month.
Security for loans.— Indorsed note or assignment of shares is accepted as security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent
of net profits each year, until fund equals the amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— Semiannually, to superintendent of banks. Failure to report sub
jects association to fine of $10 for each day of delinquency.
Examination.— Annually, by superintendent of banks.
Taxation.— Subject only to ad valorem tax on property.
Voluntary dissolution.— Procedure same as for banks. Fee, $10.
Use o f name “ credit u n io n ” — Prohibited, as misdemeanor, unless organized
under act.

Illinois
(Acts of 1925, p. 255)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Seven or more adult residents of State.
Filing articles o f incorporation.— With auditor of public accounts, and county
recorder of deeds.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups within a well-defined neighborhood,
community, or rural district. No credit union may be formed for a neighborhood,
community, or rural district with a population of more than 50,000.
Value of share.— Not to exceed $10.
Deposits.— Allowed only as part payment on shares.
Management.— Number of directors not specified. Credit committee of not
»less than three and supervisory committee of three, elected by and from directors.
Officers to be president, vice president, treasurer, and secretary (last two may be
combined), elected by and from directors. No director or committee member
may receive any compensation for his services.

126

COOPERATIVE SOCIETIES IN 1929

Right to borrow.— Restricted to amount equal to 20 per cent of assets.
Liability o f individual member.— Limited to twice the amount of his shares.
Meetings.— As by-laws provide.
Voting.— Each member one vote, except in election of directors.
Vote by proxy.— Prohibited except in election of officers, but an organization
which is a member may cast its vote through a delegate.
Loans.— For provident and productive purposes only. To members only.
Applications must be on form provided and must state purpose for which desired
and security offered. Loans must be unanimously approved by members of credit
committee present, who must constitute at least a majority of the committee.
Maximum amount of loan.— Unsecured, $50; secured, $1,000.
Loans to and indorsements by directors, officers, and committee members.— Pro
hibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares is accepted as
security. Loans on real estate prohibited.
Reserve fund.— Shall consist of all entrance fees and fines, plus 20 per cent of net
earnings each year.
Dividends.— Payable annually, semiannually, or quarterly, on recommendation
of directors, on all shares outstanding.
Annual reports.— To auditor of public accounts on or before February 1.
Failure to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by auditor of public accounts, but if association has
assets of less than $25,000 he may accept audit of practicing public accountant.
Examination fee.— $25, plus 2 cents for every $1,000 of assets.
Voluntary dissolution.— On four-fifths vote of membership at special meeting,
certified to auditor of public accounts, but may remain in existence for three years
to wind up affairs.

Indiana
(Acts of 1923, ch. 114)

Number who may organize.— Seven or more residents of State.
Filing articles of incorporation and amendments.— With secretary of state
and county recorder.
Filing fee.— Same as for voluntary associations.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, and credit and supervisory com
mittee of not less than 3 each. Unless there are fewer than 11 members, no
director may be a member of either committee. Officers to be president, vice
president, secretary and treasurer (last two may be combined), elected by and
from directors. No director or committee member may receive any compensa
tion for his services.
Investment of funds.— Same as for savings banks.
Right to borrow.— Restricted to amount equal to 50 per cent of sum of capital,
surplus, and reserve.
Meetings.— Annually, in January. Special meetings by order of directors or
supervisory committee, and on request of 10 per cent of the members.
Voting.— Each member one vote, but an organization which is a member may
cast its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security offered. Loans must be
unanimously approved by members of credit committee present, who must
constitute at least a majority of the committee. Preference must be given to the
smaller loans, if funds are insufficient to cover all those approved.
Maximum amount o f loan.— Unsecured, $50.
Loans to and indorsements by directors and committee members.— Prohibited.
Interest on loans.— Not to exceed 8 per cent a year, not collectible in advance.
Security fo r loans.— Indorsed note or assignment of shares is accepted as
security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent
of net profits each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— Semiannually, to bank commissioner. Failure* to report subjects
association to fine of $5 for each day of delinquency.
Examination.— Annually, by bank commissioner.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

127

Examination fe e .— Same as for building and loan associations.
Taxation.— Same as savings banks.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to secretary of state, but must remain in existence for three years to
wind up affairs.
Use o f name “ credit u n io n ” — Prohibited unless organized under act, on penalty
of fine of not more than $100.

Iowa (Cooperative Banks)
(Code, 1927, secs. 9283-bl to 9283-b26)

Number who may organize.— Fifty or more persons.
Value o f share.— Not less than $10.
Stock ownership per member.— Left to discretion of board of directors.
Meetings.— Annually, in January. Special meetings may be called by president
or a majority of directors and must be called upon written request of 10 per cent
of members.
Voting.— Each member one vote.
Proxy voting.— Permitted.
Distribution of earnings.— Not to exceed 8 per cent on stock. Unspecified
amount to be set aside for reserves fund each year until fund equals one-half
of capital.

Iowa (Credit Unions)
(Code, 1927, secs. 9305-al to 9305-a23)

Number who may organize.— Seven or more residents of State.
Filing articles of incorporation.— With superintendent of banking.
Filing fee.— $2.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups within a well-defined neighborhood,
community, or rural district. May also admit to membership an organization
composed for the most part of the same general group as the credit-union mem
bership.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than
3, and supervisory committee of 3. Officers to be president, vice president,
treasurer, and clerk (last two may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services.
Investment of funds.— Same as for savings banks. May invest not to exceed
25 per cent of capital in paid-up shares of building and loan assoc ations and of
other credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of assets.
Meetings.— Annually. Special meetings as provided in by-laws.
Voting.— Each member one vote.
Voting by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident or productive purposes only. To members only.
Applications must be on form provided and must state purpose for which desired
and security offered. Loans must be unanimously approved by members of credit
committee present, who must constitute at least a majority of the committee.
Loans to or indorsements by officers and committee members.— Loans, only to
amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security fo r loans.— Indorsed note or assignment of shares is accepted as security.
Reserve fund.— Shall consist of all entrance fees and fines, plus 20 per cent of
net earnings each year.
Dividends.— Payable annually, on recommendation of the directors, on all
shares outstanding.
Annual reports.— To superintendent of banking, on or before January 1.
Examination.— Annually, by superintendent of banks, but if association has
assets of less than $25,000 he may accept audit of practicing public accountant.
Taxation.— Subject to taxes on real estate, money, and credits.

128

COOPERATIVE SOCIETIES IN 1929

Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to superintendent of banking, but must remain in existence for 3 years
to wind up affairs.
Use of name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act.

Kansas
(Acts of 1929, ch. 141)

Number who may organize.— Seven or more residents of State.
Filing articles o f incorporation and amendments.— With bank commissioner, and
secretary of state.
Filing fee.— $5, to secretary of state.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups residing within a well-defined neighborhood,
community, or rural district.
Value o f share.— Not to exceed $10.
Deposits.— Allowed only as part payment on shares.
Management.— Not less than 5 directors, and credit and supervisory committees
of not less than 3 each. Unless there are fewer than 11 members, no director may
be a member of either committee. Officers to be president, vice-president, sec
retary, and treasurer (last two may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services.
Investment of funds.— Same as for savings banks.
Right to borrow.— Restricted to amount equal to 25 per cent of sum of capital,
surplus, and reserve.
Meetings.— Annually, in January. Special meetings at order of directors or
supervisory committee and at request of 10 per cent of members.
Voting.— Each member 1 vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security, if any, offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee. Preference must be given
to the smaller loans, if funds are insufficient to cover all those approved.
Maximum amount of loan.— Unsecured, $50; secured, $1,000.
Loans to or indorsement by directors or committee members.— Only to amount of
shares held.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security on loans.— Indorsed note or assignment of shares is accepted as security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent of
net earnings each year, until fund equals amount of paid-in capital.
Dividends.— Payable annually on all fully paid shares outstanding.
Reports.— Semiannually, to bank commissioner. Failure to report subjects
association to fine of $1 for each day of delinquency.
Examination.— Annually, by bank commissioner.
Examination fee.— $20, if resources are less than $25,000; if over that amount,
the same fees as are paid by banks.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to bank commissioner, but must remain in existence for three years to
wind up affairs.
Use of name (i credit union ” — Prohibited, as misdemeanor, unless organized
under act.

Kentucky
(Carroll's Kentucky Statutes (Baldwin’s Revision), 1930, secs. 883g-l to 883g-28)

Number who may organize.— Eight or more residents of State.
Filing articles of incorporation and amendments.— With head of department of
banking, and county clerk.
Value of share.— $5.
Deposits.— From both members and nonmembers.
Management.— Not less than 5 directors, and credit and supervisory committees
of not less than 3 each. Unless there are fewer than 11 members, no director may
be a member of either committee. Officers to be president, vice-president, sec
retary, and treasurer (last two may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

129

Investment o f funds.— Same as for savings banks. May invest not to exceed 10
per cent of capital and reserve in stock of other credit unions.
Right to borrow.— Restricted to amount equal to sum of capital, surplus, and
reserve.
Meetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and on written request of 10 per cent of membership.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security, if any, offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee.
Maximum amount o f loan.— Unsecured, $50.
Loans to nonmembers.— Any officer or member of a committee who knowingly
permits a loan to a nonmember is guilty of a misdemeanor and is liable for the
amount of the loan.
Loans to and indorsements by officers and committee members.— Prohibited unless
authorized by vote of stockholders at special meeting. In case of a loan to or
indorsement by a member of the credit committee, the supervisory committee
must appoint a substitute to act for him on the committee while the case is under
consideration.
Interest on loans.— “ Reasonable” rates.
Security fo r loans.— Indorsed note or assignment of shares is accepted as
security.
Reserve fund.-—Shall consist of all entrance and transfer fees, plus 20 per cent of
net earnings each year, until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— To head of department of banking. Failure to report subjects
association to fine of $10 for each day of delinquency.
Examination.— Annually, by head of department of banking.
Examination fee.— $5 per day for time actually required in examination, plus
traveling expenses of examiner.
Taxation.— Exempt from all except real estate taxes.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to head of department of banking, but must remain in existence until
affairs are wound up.
Use o f name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act.

Louisiana
(Acts of 1924, No. 40, p. 63)

Number who may organize.— Seven or more residents of State.
Filing articles o f incorporation.— In mortgage office of parish; two certified
copies to State bank commission, together with certificate showing recordation
in mortgage office.
Fees.— $2 to mortgage office; $10 to State bank commission.
Limitation on membership.— Restricted to groups having a common bond of
occupation, association or residence within a well-defined neighborhood, small
community, or rural district. May also admit to membership an organization
composed primarily of the same general group as the credit-union membership.
Value o f share.— Not to exceed $10.
Deposits.— Allowed only as part payment on shares.
Management.— Not less than 5 directors, and credit and supervisory committee
of not less than 3 each. Unless there are fewer than 11 members, no director
may be a member of either committee. Officers to be president, vice president,
secretary, and treasurer (last two may be combined), elected by and from
directors. No director or committee member may receive any compensation for
his services.
Investment o f funds.— Same as for savings banks. May invest not to exceed
10 per cent of paid-in capital and reserve in stock of other credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of sum of paid-in
capital, surplus, and reserve.
Meetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and at request of 10 per cent of members.
Voting.— Each member one vote.

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COOPERATIVE SOCIETIES IN 1929

Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security, if any, offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee. Preference must be given
to the smaller loans, if funds are insufficient to cover all those approved.
Maximum amount o f loan.— Unsecured, $50; secured, $500.
Loans to and indorsements by directors and committee members.— Prohibited
unless authorized by vote of majority of membership.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security fo r loans.— Indorsed note or assignment of shares is accepted as
security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent
of net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Annual reports.— To State bank commissioner on or before January 21. Failure
to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by State bank commissioner.
Examination fee.— $10 for associations with gross assets of less than $75,000;
for those over that amount, the same fees as are paid by savings banks.
Taxation.— Exempt from all except real estate taxes.
Voluntary dissolution.— By four-fifths vote of membership in special meeting,
certified to State bank commissioner, but must remain in existence for three years
to wind up affairs.
Use o f name “ credit union.” — Prohibited, on penalty of fine of not less than
$25 nor more than $250. If organized under act, name must be used.

Maryland
(Acts of 1929, ch. 337)

Number who may organize.— Seven or more residents of State.
Filing articles of incorporation and amendments.— With State Tax Commission.
Filing fee.— Same as for other corporations.
Value of share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, and credit and supervisory committee
of not less than 3 each. Unless there are fewer than 11 members, no director
may be a member of both committees. Officers to be president, vice president,
secretary, and treasurer (last 2 may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services;
officers, such compensation as members authorize.
Investment o f funds.— Same as for savings banks.
Meetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and on request of 10 per cent of members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing and must state
purpose for which desired and security, if any, offered. Loans must be unani
mously approved by members of credit committee present, who must constitute
at least a majority of the committee.
Maximum amount o f loan.— Unsecured, $50.
Loans to nonmembers.— Any officer or member of a committee who knowingly
permits a loan to a nonmember is guilty of a misdemeanor and is liable for the
amount of the loan.
Loans to and indorsements by directors and committee members.— Only to amount
of holdings in shares and deposits, unless authorized by majority vote at regular
meeting, advance notice being given of matter to be considered. In case of a
loan to or indorsement by a member of the credit committee, the supervisory
committee must appoint a substitute to act in his place on the committee while
the case is under consideration.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares is accepted as secur
ity, but not mortgages on real or leasehold property.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

131

Reserve fu nd .— Shall consist of all entrance and transfer fees and fines, plus 25
per cent of net earnings each year.
Dividends.— Payable annually, in manner provided in by-laws.
Annual reports.— To bank commissioner. Failure to report subjects associa
tion to fine of $5 for each day of delinquency.
Examination.— Annually, by bank commissioner.
Taxation.— Exempt except from tax on real estate.
Voluntary dissolution.— On four-fifths vote of membership at special meeting,
certified to bank commissioner, but must remain in existence for three years to
wind up affairs.
Use o f name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act.

Massachusetts
(General Laws, 1921, ch. 171, as amended by Acts of 1926, ch. 273; Acts of 1930, ch. 180)

Number who may organize.— Twenty or more residents of State.
Filing articles of incorporation.— With commissioner of banks, and secretary of
state.
Filing fee.— $5 to secretary of state.
Limitation on membership.— As provided in by-laws. May admit to member
ship any fraternal organization, voluntary association, partnership, or corporation
having place of business in the State and composed of members who themselves
are eligible for membership in the credit unions.
Value of share.— $5.
Stock ownership and deposits per member.— Not more than 400 shares of stock
(except in credit unions which do not receive deposits, 800 shares); deposits not
to exceed $2,000.
Deposits.— From members only. .Deposits from organizations which are
members may not, in the aggregate, exceed 25 per cent of the credit-union assets.
Management.— Not less than 11 directors (unless the membership is less than
11), credit committee of not less than 3, and auditing committee of 3, elected by
and from directors. Unless there are fewer than 11 members no director may
be a member of both committees. Officers to be president, one or more vice
presidents, clerk, and treasurer (last two may be combined), elected by and from
directors. No director or committee member may receive any compensation
for his services; officers, such compensation as authorized by members.
Investment of funds.— May invest funds not needed for loans in securities legal
for savings bank investments or in shares of cooperative banks (building and loan
associations) of the State. But at least 5 per cent of the total assets must be
carried as cash or in investments legal for savings banks, failing which no more
loans may be made until the ratio of 5 per cent is reestablished.
Meetings.— Annually, not later than 30 days after last business day of October.
Special meetings on order of majority of directors and on written application of
10 or more voting members.
Voting.— Each member one vote, but not until after three months’ membership;
minors under 18 not entitled to vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— Only for purposes which promise to benefit the borrower. To mem
bers only. Applications must be in writing and must state purpose for which
desired and security, if any, offered. Loans must be unanimously approved by
members of credit committee present, who must constitute at least two-thirds
of the committee. Preference must be given personal loans, and to smaller
loans when funds are insufficient to cover all those approved.
Maximum amount o f loan.— Personal loans: (1) Secured only by note of
borrower, $100; (2) secured by note of borrower and two or more indorsements or
collateral or by joint note of two or more members, $300; (3) secured by note of
borrower and two or more indorsements or collateral or by joint note of three or
more members, $1,000; (4) secured by note of borrower and two or more indorse
ments or by joint note of three or more members, with (in either case) collateral
valued at not more than 80 per cent of its market value, $1,500; (5) secured by
note of borrower and collateral (in United States bonds or notes or State or
other securities legal for savings banks) valued at not more than 80 per cent of its
market value, or by assignment of pass book in savings bank, savings depart
ment of trust company, or national bank, or cooperative bank (building and loan
association), $3,000; (6) secured by note of borrower and assignment of shares and
deposits in credit union, amount of said shares and deposits.

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COOPERATIVE SOCIETIES IN 1929

Real estate moitgage loans: $8,000 or 5 per cent of assets of credit union;
in no case may amount of loan exceed 60 per cent of value of property mortgaged.
Amount that credit union may lend on mortgage is limited to 70 per cent (and
in associations with assets of less than $75,000, 50 per cent) of sum of shares,
deposits, and guaranty fund.
Loans to and indorsements by directors and committee members.— Loans, only to
amount of holdings in shares and deposits; indorsements prohibited.
Security for personal loans.— Assignment of wages is accepted as collateral for
personal loans of $250 or less.
Reserve (guaranty) fu nd .— Shall consist of all entrance fees, plus 10 per cent
of gross income each year until fund equals 15 per cent of assets, and thereafter
enough to maintain it at that figure.
Whenever losses and bad debts exceed 20 per cent of guaranty fund, a special
reserve must be set up equal to the amount of such excess.
Dividends.— Payable annually, or semiannually, according to by-laws, on all
fully paid shares outstanding. Limited to 8 per cent until guaranty fund equals
15 per cent of assets.
Annual reports.— To commissioner of banks, within 20 days after last business
day in December. Failure to report subjects association to fine of $5 for each
day of delinquency.
Voluntary dissolution.— On two-thirds vote at special meeting.
Use of name “ credit union.” — Prohibited, on penalty of fine of not more than
$1,000, unless organized under act, in which case it must be used.
Examination.— By commissioner of banks.
Examination fee.— Fifteen cents for each $1,000 of assets (but not less than
$5); fee not levied until association has been in operation three years, unless its
assets within that period amount to $25,000 or more.

Michigan
(Acts of 1925, No. 285, as amended by Acts of 1929, No. 303)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Seven or more residents of State. If credit union
is to be organized among the employees of a company, the approval of the latter
must be obtained.
Filing articles of incorporation.— With county clerk.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups within a well-defined neighborhood,
community, or rural district. May also admit to membership an organization
composed for the most part of the same general group as the credit-union
membership.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. Officers to be president, vice president,
treasurer, and clerk (last two may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services.
Investment of funds.— Same as for savings banks. May invest not to exceed
25 per cent of capital in paid-up shares of building and loan associations and of
other credit unions.
Right to borrow.— Restricted to sum not to exceed 50 per cent of assets.
Meetings.— Annually. Special meetings as provided in by-laws.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident or productive purposes only. To members only.
Applications must be on form provided and must state purpose for which desired
and security, if any, offered. Loans must be unanimously approved by members
of credit committee present, who must constitute at least a majority of the
committee.
Loans to and indorsements by directors, officersy and committee members.— Loans,
only to amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares and deposits is
accepted as security.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

133

Reserve fund.— Shall consist of all entrance fees and fines, plus 20 per cent of
net earnings each year.
Dividends.— Payable annually, on recommendation of directors, 011 fully paid
shares outstanding.
Annual reports.— To commissioner of banks, on or before December 31.
Failure to report subjects association to fine of $5 for each day of delinquency.
Examination.— By commissioner of banks, but if association has assets of
less than $25,000 he may accept audit of practicing public accountant.
Taxation.— Subject only to tax on real estate.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to commissioner of banks, but must remain in existence for three years
to wind up affairs.
Use of name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act.

Minnesota
(Acts of 1925, ch. 206)

Scope and purpose.— Promotion of thrift among members and creation of a
source of creait for them at legitimate rates of interest.
Number who may organize.— Seven or more residents of State.
Filing articles of incorporation and amendments.— With superintendent of
banks, and county register of deeds.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups within a well-defined rural district. May
also admit to membership an organization composed for the most part of the
same general group as the credit-union membership.
Value of share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. Officers to be president, vice president,
treasurer, and clerk (last two may be combined), elected by and from directors.
No director or committee member may receive any compensation for his services.
Investment o f funds.— Same as for savings banks.
Right to borrow.— Restricted to 50 per cent of assets.
Meetings.— Annually. Special meetings as by-laws provide.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast its
vote through a delegate.
Loans.— For provident or productive purposes only. To members only.
Applications must be on form provided and state purpose for which desired and
security, if any, offered. Loans must be unanimously approved by members
of credit committee present, who must constitute at least a majority of the
committee.
Loans to and indorsements by officers and committee members.— Loans only to
amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security fo r loans.— Indorsed note or assignment of shares or deposits is accepted
as security.
Reserve fund.— Shall consist of all entrance fees and fines, plus 20 per cent of
net earnings each year. Special reserve of not less than 5 per cent of amount
of deposits.
Dividends.— Payable annually, on recommendation of directors, on all shares
outstanding.
Annual reports.— To superintendent of banks, on or before December 31.
Failure to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by superintendent of banks, but if association has
assets of less than $25,000 he may accept audit of a certified public accountant.
Examination fee.— Same as for building and loan associations.
Taxation.— Subject to same taxes as savings banks.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to superintendent of banks, but must remain in existence for three years
to wind up affairs.
Use of name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act.

134

COOPERATIVE SOCIETIES IN 1929
Mississippi
(Acts of 1924, ch. 177)

Scope and purpose.— Promotion of thrift and provision of means of credit.
Number who may organize.— Seven or more resident citizens of State.
Filing articles o f incorporation and amendments.— With secretary of State, State
banking department, and clerk of chancery court of county.
Filing fe e.— Ten dollars, to secretary of state.
Limitation o f membership.— Restricted to groups having a common bond of
occupation, association, or residence within a well-defined neighborhood, small
community, or rural district. May also admit to membership an organization
composed primarily of the same general group as the credit-union membership.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, and credit and supervisory committee
of not less than 3 each. Unless there are fewer than 11 members, no director
may be a member of either committee. Officers to be president, vice president,
secretary, and treasurer (last two may be combined), elected by and from
directors. No director or committee member may receive any compensation for
his services.
Investment o f funds.— In securities approved by State banking department.
May invest not to exceed 10 per cent of capital and reserve in the stock of other
credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of sum of surplus,
capital, and reserve.
Meetings.— Annually, within the month in which annual report is filed. Special
meetings on order of directors or supervisory committee, and on request of 10
per cent of members.
Voting.— Each member one vote. If by-laws provide for referendum, such
votes to be by mail or in writing.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security, if any, offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee. Preference must be given
to the smaller loans if funds are insufficient to cover all those approved.
Maximum amount o f loan.— Unsecured, $50.
Loans to and indorsements by directors and committee members.— Prohibited
unless authorized by majority vote of membership.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares is accepted as security.
Reserve fu nd .— Shall consist of all entrance and transfer fees and fines, plus
20 per cent of net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Annual reports.— To State banking department on or before January 21.
Failure to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by State banking department.
Examination fe e .— Ten dollars a day and necessary expenses of examiner, plus
$10 a year for overhead expenses of State banking department.
Taxation.— Subject to real estate taxes, plus “ privilege” taxes based on shares
representing monthly payments, as follows: Shares up to $250, tax $5; shares
$250 to $500, tax $10; shares $500 to $1,000, tax $20; shares $1,000 to $2,000,
tax $40; shares over $2,000, tax $60.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to superintendent of banks, but must remain in existence for three years
to wind up affairs.
Use o f name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act, in which case it must be used,

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

135

Missouri
(Acts of 1927, p. 164, as amended by Acts of 1929, p. 50)

Number who may organize.— Seven or more residents of State.
Filing articles o f incorporation and amendments.— With county recorder of deeds.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups residing within a well-defined neighborhood,
community, or rural district.
Value o f share.— Not to exceed $10.
Deposits.— Allowed only as part payment on shares.
Management.— Not less than 5 directors, and credit and supervisory committee
of not less than 3 each. Unless there are fewer than 11 members, no director
may be a member of either committee. Officers to be president, vice president,
secretary, and treasurer (last two may be combined), elected by and from direc
tors. No director or committee member may receive any compensation for his
services. Salaries paid officers must be approved by members.
Investment o f funds.— Same as for savings banks.
Right to borrow.— Restricted to amount equal to 25 per cent of sum of capital,
surplus, and reserve.
Meetings.'— Annually, in January. Special meetings on order of directors or
supervisory committee and on request of 10 per cent of members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired, and security, if any, offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee. Preference must be given
to the smaller loans if funds are insufficient to cover all those approved.
Maximum amount o f loan.— Unsecured, $50; secured, $1,000.
Loans to and indorsements by directors and committee members.— Only to amount
of shares held.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares is accepted as security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent
of net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— To commissioner of securities, in January and July. Failure to
report subjects association to fine of $1 for each day of delinquency.
Examination.— Annually, by commissioner of securities.
Examination fee.— Actual cost of examination, but not to exceed $7 per day
for each examiner.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to commissioner of securities, but must remain in existence for three
years to wind up affairs.
Use o f name “ credit u n io n ” — Prohibited, as misdemeanor, unless organized
under act.

Montana
(Acts of 1929, ch. 105)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Five or more persons.
Filing articles o f incorporation.— With secretary of state.
Filing fee.— $5.
Limitation on membership.— Restricted to groups having a common bond of
occupation, or association, or to groups within a well-defined neighborhood, com
munity, or rural district. May also admit to membership an organization com
posed for the most part of the same general group as the credit-union membership.
Value o f share.— Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. Officers to be president, vice president, treas
urer, and clerk (last two may be combined), elected by and from directors. No
director or committee member may receive any compensation for his services.

136

COOPERATIVE SOCIETIES IN 1929

Investment of funds.— Same as for savings banks. May invest not to exceed
25 per cent of capital in paid-up shares of building and loan associations and of
other credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of assets.
Meetings.— Annually. Special meetings as by-laws provide.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident or productive purposes only. To members only.
Application must be on form provided and must state purpose for which desired
and security, if any, offered. Loans must be unanimously approved by mem
bers of credit committee present, who must constitute at least a majority of the
committee.
Loans to and indorsements by officers and committee members.— Loans, only to
amount of holdings in shares and deposits; indorsements prohibited.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or assignment of shares or deposits accepted
as security.
Reserve fund.— Shall consist of all entrance fees, plus 20 per cent of net earnings
each year.
Dividends.— Payable annually, on recommendation of directors, on all shares
outstanding.
Reports.— Semiannually, to State examiner, on or before June 30 and Decem
ber 31. Failure to report subjects association to fine of $5 for each day of
delinquency.
Examination.— Annually, by State examiner.
Taxation.— Subject to tax on real estate, furniture, and fixtures only.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to State examiner and superintendent of banks, but must remain in
existence for three years to wind up affairs.
Use o f name “ credit union .” — Prohibited, as misdemeanor, unless organized
under act, but any existing associations may keep present names. Name of
associations organized under act must include words “ credit union.”

Nebraska (Cooperative Banks)
(Compiled Statutes, 1922, secs. 7982-8051)

Stock ownership per member.— Not to exceed 4 per cent of capital stock.
Distribution o f earnings.— Twenty per cent of net earnings to reserve each
year until fund equals 20 per cent of paid-in capital.
Special fund.— Special fund to be created, to be called “ cooperative bank
protective fund,” for the protection of the depositors.
Examination.— Banks are subject to supervision of State Department of Trade
and Commerce.

Nebraska (Credit Unions)
(Compiled Statutes, 1922, secs. 649-670)

Number who may organize.— Fifteen or more citizens resident in one locality.
Filing articles of incorporation and amendments.— With State banking board
and county clerk.
Value of share.— Not to exceed $10.
Management.— Not less than 5 directors, and credit and supervisory committee
of not less than 3 each. No director may be a member of either committee and
no person may be a member of both committees. Officers to be president, vice
president, secretary, and treasurer (last two may be combined), elected by and
from directors.
Liability o f individual member.— Limited to twice the amount of his shares.
Meetings.— Annually, in January. Special meetings on call of directors or
supervisory committee and on written petition of not less than 15 per cent of
members.
Loans.— To members only. Applications must be in writing, on form pro
vided, and must state purpose for which desired and security offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

137

Maximum amount of loan.— Unsecured, $50.
Loans to nonmembers.— Any officer, director, or committee member who
knowingly permits a loan to a nonmember is guilty of a misdemeanor and sub
ject to a fine of not more than $100, or 90 days’ imprisonment, besides being
liable for the amount of the loan.
Loans to and indorsements by officers and committee members.— Prohibited un
less authorized by majority vote of meeting with not less than a quorum attending.
Security for loans.— Note indorsed by two solvent members is accepted as
security.
Reserve (guaranty) fund.— Shall consist of all fees and fines, plus at least 25 per
cent of net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, but rate shall not exceed rate of interest
charged on the major part of the money loaned during year.
Annual reports.— To State Banking Board, on or before February 1. Failure
to report subjects association to fine of $5 for each day of delinquency.
Examination.— By State Banking Board.
Voluntary dissolution.— On unanimous recommendation of directors and twothirds vote of membership at special meeting.
Use of name “ cooperative credit association.” — Prohibited unless organized
under act.

New Hampshire
(Public Laws, 1926, ch. 267, as amended by Acts of 1929, ch. 46)

Number who may organize.— Seven or more residents of State.
Value o f share.-—Not to exceed $10.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. Unless there are fewer than 11 members, no
director may be a member of either committee and no person may be a member
of both committees. Officers to be president, vice president, clerk, and treas
urer (last two may be combined), elected by and from directors. No director
or committee member may receive any compensation for his services; but officers
may receive such as is authorized by directors, subject to approval of commis
sioner of banks.
Investment o f funds.— In any securities approved by commissioner of banks.
Right to borrow.— Not restricted, but must be approved by commissioner of
banks.
Meetings.— Annually, within 30 days after close of fiscal year. Special meet
ings by order of majority of directors or supervisory committee and by written
application of 10 or more voting members.
Loans.— Only for purposes that promise to benefit the borrower. To mem
bers only. Applications must be in writing and must state purpose for which
desired and security offered. Loans must be unanimously approved by mem
bers of credit committee present, who must constitute at least two-thirds of the
committee.
Voting.— Each member one vote, but after association has been in existence
a year, no person may vote until he has been a member for more than three
months.
Vote by proxy.— Prohibited.
Loans to and indorsements by directors and committee members.— Loans and
indorsements prohibited to members of committees; permitted to directors if
authorized by a majority vote of special meeting of membership.
Interest on loans.— Not to exceed 6 per cent.
Reserve (guaranty) fund.— Shall consist of all entrance fees, plus 10 per cent of
net earnings each year until fund equals 20 per cent of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Annual reports.— To commissioner of banks within 20 days after last business
day of June. Failure to report subjects association to fine of $5 for each day of
delinquency.
Taxation.— Exempt.
Voluntary dissolution.— On recommendation of not less than two-thirds of
directors, and two-thirds vote of members entitled to vote, at special meeting.
Use of name “ credit u n io n ” — Prohibited unless organized under act, in which
case it must be used.
18672°— 31------- 10

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COOPERATIVE SOCIETIES IN 1929

New Jersey
(Acts of 1924, ch. 48, as amended by Acts of 1929, ch. 266; and Acts of 1930, ch. 163)

Scope and purpose.— Encouragement of thrift and furnishing of temporary
financial assistance.
Number who may organize.— Ten or more persons.
Filing articles of incorporation.— With commissioner of banking and insurance,
and county clerk.
Limitation on membership.— Restricted to persons having a common employer,
members of a church parish or society organizations of war veterans and those
engaged in agricultural pursuits; may also admit an organization doing business
within the State.
Deposits.— From members only; those received from member organizations
may not exceed 25 per cent of the assets.
Management.— Not less than 5 nor more than 10 trustees, and credit committee
of 3. Officers to be president, secretary, and treasurer, elected by and from
trustees (unless by-laws provide otherwise). No trustee or member of credit
committee may receive any compensation for his services; but officers may
receive such as is fixed by the members.
Investment o f funds,— Same as for trust funds. May invest not to exceed 25
per cent in bonds and mortgages.
Right to borrow.— Restricted to 25 per cent of deposits.
Meetings.— Annually. Special meetings on written request of not less than 10
members in good standing.
Voting.— Each member one vote.
Loans.— For provident and productive purposes only. To individual mem
bers only; loans to member organizations prohibited. Loans must be approved
by credit committee.
M aximum amount o f loan.— Unsecured, $50; secured, $500.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note or adequate collateral is accepted as security.
Assignment of deposits accepted as security for loan up to 90 per cent of the
deposits.
Reserve fund.— Shall consist of 15 per cent of net earnings each year until
fund amounts to 25 per cent of deposits.
Dividends.— Payable annually, according to by-laws.
Annual reports.— To commissioner of banking and insurance, on or before
January 31.
Fee for filing reports.— One dollar.
Examination.— Whenever deemed necessary by commissioner of banking and
insurance.
Examination fee.— Actual expense of making examination.
Voluntary dissolution.— Same as for building and loan associations.
Use o f name “ credit union .” — Prohibited unless organized under act, in which
case it must be used.

New York
(Acts of 1914, ch. 369, arts. 450-479, as amended by Acts of 1915, ch. 294; Acts of 1923, ch. 701; Acts of 1929,
chs. 323, 324, and 325)

Number who may organize.— Seven or more persons residing or employed in
State.
Filing articles of incorporation.— With superintendent of banks, in duplicate.
Limitation on membership.— Restricted to persons with the same employer;
members of the same trade, profession, club, union, society, or association;
residents of the same town, village or other political subdivision of the State with
a population of not more than 10,000; and persons who, in the judgment of the
superintendent of banks, have such a community of interest as will insure proper
administration.
Value of share.— Not to exceed $25.
Stock ownership per member.— Limited to 5 per cent of capital stock outstanding
or $5,000 in value ($500, if capital stock paid in does not exceed $10,000).
Deposits.— From members only.
Deposits per member.— Limited to $2,000.

CHAPTER V m . — LEGISLATION, CREDIT SOCIETIES

139

Management.— Not less than 5 directors and credit and supervisory committee
of not less than 3. No person may be a member of both committees. If the
credit union is not in a city, the board of directors may, if the by-laws so provide,
act as a credit committee. No director shall receive any compensation for his
services nor shall any officer (except the one designated as manager), or committee
member (except an attendance fee) receive any compensation unless the net
earnings (after provision for reserve) were equal to 6 per cent of the capital out
standing and unless the total compensation to officers, committee members,
counsel, and employees was less than one-fourth of the gross earnings for the
preceding year.
Right to borrow.— Restricted to 40 per cent of capital; if capital is $5,000 or less,
may borrow up to $2,000.
Liability o f individual member.— Unless by-laws provide otherwise, not liablei for
debts of association. Shares are exempt from sale on execution to amount of $600.
M eetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and at request of 10 members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited.
Loans.— To members only. Applications must be in writing and must state
purpose for which desired and security offered. Loans must be unanimously
approved by members of credit committee present, who must constitute a ma
jority of the committee.
Maximum amount o f loan.— Unsecured, $50; secured, an amount equal to
borrower’s shares and deposits.
Loans to nonmembers.— Any officer, director, or committee member who know
ingly permits a loan to a nonmember is guilty of a misdemeanor and is liable to
the association for the amount of the loan.
Loans to and indorsements by directors, officers, and committee members.— Pro
hibited unless additional security is given, of assignment of shares or deposits
equal to or greater than the loan; in such cases the current rate of interest for
loans of like character in the ordinary course of business shall be charged.
Interest on loans.— Not to exceed 1 per cent a month, or 5.9 per cent per annum,
if deducted in advance.
Security fo r loans.— Indorsed note is accepted as security, but if loan is for an
amount less than the member’s holdings in shares and deposits, his unindorsed
note is sufficient. Mortgage on real estate also accepted, but total mortgage
loans made by credit union may not exceed 20 per cent of its capital and deposits.
Reserve (guaranty) fund.—-Shall consist of all entrance and transfer fees and
fines, plus 25 per cent of net earnings each year. Fund must never exceed
amount of capital, plus 50 per cent of other liabilities. At least one-half of funds
must be kept invested in securities authorized for savings banks.
Dividends.— Payable annually, on fully paid shares.
Annual reports.— To superintendent of banks, on or before February 1. Failure
to report subjects association to fine of $5 for each day of delinquency.
Taxation.— Exempt, as a savings institution.
Use o f name “ credit union.” — Prohibited, as misdemeanor, unless organized
under act, in which case it must be used.

North Carolina
(Consolidated Statutes, 1919, ch. 93,”Subch. I ll, secs. 5208-5241, as amended by Acts of 1925, ch. 73, and
Acts of 1929, ch. 47)

Number who may organize.— Seven or more persons employed or residing in
State.
Filing articles of incorporation.— With State department of agriculture, and
county clerk.
Filing fee.— Same as for other corporations.
Value o f share.— Not to exceed $25.
Deposits.— From both members and nonmembers.
Management.— Not less than five directors and credit and supervisory com
mittee of not less than three. If credit union is not in a city, board of directors
may act as credit committee, but otherwise no director may be a member of
either committee, nor may any person be a member of both committees. No
director or committee member may receive any compensation for his services,
but officers may receive such as the members may authorize.

140

COOPERATIVE SOCIETIES IN 1929

Investment o f funds.— May invest not to exceed 10 per cent of capital and
reserve in stock of other savings and loan associations, and not to exceed 25 per
cent of capital and reserve in stock of central association.
Right to borrow.— Restricted to amount equal to four times the sum of its
capital, surplus, and reserve.
Liability o f individual member.— Limited to amount of his shares.
Meetings.— Annually, according to by-laws. Special meetings on order of
directors or supervisory committee and on written request of 10 per cent of
members.
Voting.— Each member one vote.
Vote by proxy.— Written proxy allowed in case of sickness or other unavoidable
absence.
Loans.— To members only. Applications must be in writing and state purpose
for which desired and security offered. Loans must be unanimously approved
by members of credit committee present, who must constitute at least a majority
of the committee.
M aximum amount o f loan.— Unsecured, $50.
Loans to nonmembers.— Any officer or committee member who knowingly per
mits a loan to a nonmember is guilty of a misdemeanor and is liable for the amount
of the loan.
Loans to members o f credit committee.— In case of a loan to a member of the credit
committee, a substitute must be appointed to act for him on the committee
while the case is under consideration.
Interest on loans.— Not to exceed legal rate.
Security fo r loans.— Indorsed note is accepted as security.
Reserve fu nd .— Shall consist of all entrance and transfer fees and fines, plus
25 per cent of net earnings each year. The reserve shall never exceed the capital
plus 50 per cent of the other liabilities.
Dividends.— Payable annually, at rate not to exceed 6 per cent, on all fully
paid shares outstanding.
Annual reports.— To State department of agriculture, in January. Failure
to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by State Department of Agriculture.
Taxation.— Exempt, as a savings institution.
Voluntary dissolution.— By three-fourths vote of membership in special meet
ing, certified to State Department of Agriculture, but must remain in existence
until affairs are wound up.
Use of name “ savings and loan association.” — Prohibited, as misdemeanor,
unless organized under act, in which case it must be used.

Oregon
(Acts of 1929, ch. 396)

Number who may organize.— Seven or more persons employed or residing in
State.
Filing articles of incorporation.— In duplicate, with superintendent of banks.
Filing fee.— $5.
Value o f share.— Not to exceed $25.
Deposits.— From members only.
Management.— Not less than 5 directors and credit and supervisory committee
of not less than 3. Officers to be president, vice president, secretary, and treas
urer (last two may be combined), elected by and from directors. No person may
be a member of both committees. If the credit union is npt in a city, the board of
directors may, if the by-laws so provide, act as a credit committee. No director
or committee member may receive any compensation for his services.
Right to borrow.— Limited to 40 per cent of capital; if capital is less than $5,000,
may borrow uj> to $2,000.
Liability of individual member.— Unless by-laws otherwise provide, not liable
for debts of association. Shares are exempt from sale on execution up to $600.
Meetings.— Annually, during January. Special meetings on order of directors
or supervisory committee, or on request of 10 members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited.
Loans.— To members only. Applications must be in writing and must state
purpose for which desired and security offered. Loans must be unanimously
approved by members of credit committee present, who must constitute a major
ity of the committee.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

141

Maximum amount of loan.— Unsecured, $50; secured, not more than 10 per cent
of amount of paid-in capital of association.
Loans to nonmembers.— Any officer, director, or committee member who
knowingly permits a loan to a nonmember is liable for the amount of the loan.
Loans to and indorsements by officers and committee members.— Prohibited unless
authorized by majority vote at regular meeting, with advance notice of matter
to be voted on.
Interest on loans.— Not to exceed 1 per cent a month, computed on unpaid
balances.
Security for loans.— Indorsed note is accepted as security.
Reserve {guaranty) fund.— Shall consist of all entrance and transfer fees and
fines, plus 25 per cent of net earnings each year. Fund shall never exceed
capital plus 50 per cent of other liabilities.
Dividends.— Payable annually, on fully paid shares outstanding.
Annual reports.— To superintendent of banks, on or before February 1. Fail
ure to report subjects association to fine of $5 for each day of delinquency.
Examination.— Annually, by superintendent of banks.
Examination fee.— According to assets of credit union, as follows: Assets
$5,000 or less, fee $10; assets $5,000 to $15,000, fee $15; assets $15,000 to $25,000,
fee $25; assets over $25,000, actual cost of examination.
Taxation.— Same as for mutual savings and loan associations.
Voluntary dissolution.— By four-fifths vote of membership in special meeting,
certified to superintendent of banks, but must remain in existence 5 years, if
necessary, to wind up affairs.
TJse of name “ credit u n io n ”— Prohibited, as misdemeanor, unless organized
under act, in which case it must be used.

Rhode Island
(General Laws, 1923, sees. 3925-3950)

Scope and purpose.— Promotion of thrift among members.
Number who may organize.— Five or more citizens of State.
Value o f share.— According to by-laws.
Deposits.— From members only.
Management.— Directors, the number of whom must be some multiple of 3,
credit committee of not less than 3, and supervisory committee of 3. No director
may be a member of either committee, nor may any person be a member of both
committees. Officers to be president, vice president, clerk, and treasurer,
elected by and from directors. Directors may also elect a finance committee and
executive committee, delegating to them such powers as they deem expedient.
No director or member of supervisory committee may receive any compensation
for his services, but officers and members of credit committee may receive such
as directors authorize.
Investment o f funds.— Not more than one-third of the capital, deposits, and
reserve may be in investments legal for savings banks.
Meetings.— Annually, as by-laws provide. Special meetings on order of direc
tors or supervisory committee and on written request of 10 members.
Voting.— Each member one vote, but after association has been in existence
one year no one shall vote until he has been a member for more than 3 months.
Vote by proxy.— Prohibited.
Loans.— For purposes which promise to benefit the borrower. To members
only. Applications must be in writing and must state purpose for which desired
and security offered. Loans must be unanimously approved by members of
credit committee present.
Loans to and indorsements by committee members.— Prohibited.
Reserve {guaranty) fund.— Shall consist of all entrance fees, plus 20 per cent
of net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually on fully paid shares outstanding.
Annual reports.— To bank commissioner, within 20 days after last business day
in December. Failure to report subjects association to fine of $5 for each day of
delinquency.
Examination.— Annually, by bank commissioner.
Taxation.— Capital stock, corporate franchises, and personal property exempt.
Must pay tax on real estate and tax of 40 cents for every $100 of deposits.
Voluntary dissolution.— On unanimous recommendation of board of directors
and vote of special meeting at which at least two-thirds of membership are
present, provided not more than 10 persons object.
IJse of namq “ credit union.”— Prohibited unless organized under aqt,

142

COOPERATIVE SOCIETIES IN 1929

South Carolina
(Civil Code, 1922, secs. 4003-4027)

Scope and purpose.— Promotion of thrift among members and furnishing of
moderate loans of money for short periods and at reasonable rates of interest.
Number who may organize.— Ten or more citizens of State.
Limitation on membership.— Restricted to natural persons.
Value o f share.— $5, payable in cash.
Stock ownership per member.— Not more than 200 shares.
Deposits.— From both members and nonmembers.
Management.— Not less than 5 directors, credit committee of not less than 3,
supervision committee of 3, and special committee of 2. No director may be
a member of any committee, nor may any person be a member of two committees.
Officers to be president, vice president, clerk, and treasurer, elected by and from
directors. No director or member of a committee may receive any compensa
tion for his services, blit officers may receive such as the directors authorize.
Meetings.— Annually, as by-laws provide. Special meetings on order of direc
tors or of supervision committee and on request of 10 members.
Voting.— Each member one vote, but no one shall be entitled to vote until he
has been a member for mote than three months.
Vote by proxy.— Prohibited.
Loans.— For provident and productive purposes only, such as promise to
benefit the borrower. To members only. Applications must be in writing and
must state purpose for which desired and security offered. Loans must be
unanimously approved by members of credit committee present and by both
members of special committee.
Loans to and indorsements by directors and committee members.— Prohibited
unless authorized by two-thirds vote of membership.
Interest on loans.— Not to exceed 7 per cent.
Reserve {guaranty) fund.— Shall consist of all entrance fees, plus 20 per cent
of net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on recommendation of board of directors, but
rate shall not exceed 1 per cent above the average rate received from borrowers
during the year.
Annual reports.— To State bank examiner, within 7 days after last business day
in December. Failure to report subjects association to fine of $5 for each day
of delinquency.'
Voluntary dissolution.— On unanimous recommendation of board of directors
and vote of special meeting at which at least two-thirds of membership are
present, provided not more than 10 persons object.
Use o f name “ cooperative credit u n io n ”— Prohibited unless organized under act.

Tennessee
(Acts of 1923, ch. 68)

Number who may organize.— Seven or more residents of State.
Filing articles of incorporation.— With superintendent of banks, and county
clerk.
Value of share.— Not to exceed $10.
Deposits.— From both members and nonmembers.
Management.— Not less than 5 directors and credit and supervisory committees
of not less than 3 each. Unless there are fewer than 11 members, no director
may be a member of either committee. Officers to be president, vice president,
secretary, and treasurer (last two may be combined), elected by and from direc
tors. No director or committee member may receive any compensation for his
services.
Investment o f funds.— Same as for savings banks. May invest not to exceed
10 per cent of capital and reserve in stock of other credit unions.
Right to borrow.— Restricted to amount equal to 50 per cent of sum of capital,
surplus, and reserve.
Meetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and on request of 10 per cent of members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

143

Loans.— To members only. Applications must be in writing, on form provided,
and must state purpose for which desired and security, if any, offered. Loans
must be unanimously approved by members of credit committee present, who
must constitute at least a majority of the committee. Preference to be given to
the smaller loans if funds are insufficient to cover all those approved.
Maximum amount of loan.— Unsecured, $50.
Loans to and indorsements by directors and committee mem&ers.— Prohibited.
Security fo r loans.— Indorsed note or assignment of shares is accepted as
security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent
of the net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— Semiannually, to superintendent of banks. Failure to report sub
jects association to fine of $5 for each day of delinquency.
Examination.— Annually, by superintendent of banks.
Taxation.— Same as savings banks.
Voluntary dissolution.— On four-fifths vote of membership in special meeting,
certified to superintendent of banks, but must remain in existence for three year^
to wind up affairs.
Use of name “ credit u n io n ” — Prohibited, as misdemeanor, unless organized
under act.

Texas
(Revised Civil Statutes, 1925, arts. 2461-2484, as amended by Acts of 1929 ch. 17 and Acts of second
special session, 1929, ch. 85)

Scope and purpose.— Promotion of thrift among members and creation of a
source of credit for them at legitimate rates of interest.
Number who may organize.— Ten or more citizens of State.
Filing articles o f incorporation.— With State banking board.
Filing fee.— $10.
Value o f share.— Not to exceed $5.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. No director may be a member of the super
visory committee, nor may any person be a member of both committees. Officers
to be president, vice president, clerk, and treasurer, elected by and from directors.
No director or committee member may receive any compensation for his services.
Meetings.— Annually, as by-laws provide. Special meetings by order of direc
tors or supervisory committee and on written request of 10 members.
Voting.— Each member one vote, but no one shall be entitled to vote until he
has been a member for more than three months.
Vote by proxy.— Prohibited.
Loans.— For productive or provident purposes or urgent needs only. To
members only. Applications must be in writing and must state purpose for
which desired and security offered. Loans must be unanimously approved by
members of credit committee present. No loan may be for a longer period than
12 months, nor may it be renewed for a sum as large as the original amount.
Maximum amount o f loan.— $1,000.
Loans to and indorsements by committee members.— Prohibited unless authorized
by two-thirds vote of membership.
Interest on loans.— Not to exceed 10 per cent.
Reserve {guaranty) fund.— Shall consist of all entrance fees, plus 20 per cent of
net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Annual reports.— To State banking commissioner, within two days after last
business day of December (with fee of $5). Failure to report subjects associa
tion to fine of $5 for each day of delinquency.
Examination.— By State banking commissioner.
Examination fee.— ^Actual expense incurred by examiner.
Voluntary dissolution.— On unanimous recommendation of directors and vote
of special meeting at which two-thirds of membership are present, provided not
more than 10 members object.
Use of name “ rural credit union ”— Prohibited unless organized under act.

144

COOPERATIVE SOCIETIES IN 1929

Utah
(Compiled Laws, 1917, secs. 1060-1082, as amended by Acts of 1929, ch. 40)

Scope and purpose.— Promotion of thrift among members, the furnishing of
funds for loans for productive purposes and of a remedial character, and the
conduct of a general banking business.
Number who may organize.— Ten or more persons of the State, who are members
of the same integral group, club, institution, association, or corporation, in the
same employment, or engaged in agriculture or dairying.
Filing articles of incorporation.— With secretary of state, and county clerk.
Filing fee.— $5 to secretary of state, $5 to county clerk.
Value o f share.— $5, payable in cash.
Deposits.— From members only.
Management.— Not less than 5 directors, credit committee of not less than 3,
and supervisory committee of 3. No director may be a member of either com
mittee unless total membership is so small as to require it, nor may any person be a
member of both committees. Officers to be president, vice president, clerk, and
treasurer, elected by and from directors. No director or committee member may
receive any compensation for his services.
Liability o f individual member.— Only to amount of shares subscribed by him.
Meetings.— Annually, as by-laws provide. Special meetings as by-laws
provide.
Loans.— For productive purposes only, such as promise to benefit the borrower.
To members only. Applications must be in writing and must state purpose for
which desired and indorsements or security offered. Loans must be unani
mously approved by members of credit committee present, who must constitute
a quorum of the committee.
Maximum amount o f loan.— $3,000; but not more than $500 unless secured by
real estate valued at twice amount of loan or by approved securities.
Loans to and indorsements by members o f credit committee.— Loans must be
approved by supervisory committee. Indorsements prohibited after third annual
meeting of association.
Interest on loans.— Not to exceed 12 per cent.
Reserve (guaranty) fund.— Shall consist of all entrance fees, plus 10 per cent of
net earnings each year until fund equals amount of paid-in capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Annual reports.— To bank commissioner, within 20 days after last business
day of December. Failure to report subjects association to fine of $5 for each
day of delinquency.
Examination.— By bank commissioner.
Examination fee.— $1.25 per hour actually spent in examination.
Voluntary dissolution.— On unanimous recommendation of board of directors
and vote of special meeting at which two-thirds of membership are present,
provided not more than 10 members object.
Use o f nam.e “ cooperative bank.” — Prohibited unless organized under act.
This name or that of “ credit union” may be used by associations organized under
act.

Virginia
(Acts of 1922, ch. 449, p. 775 as amended by Acts of 1930, ch. 16)

Number who may organize.— Eight or more residents of State.
Filing articles o f incorporation and amendments,— With banking department of
State corporation commission.
Value o f share.— $5, payable in money.
Deposits.— From both members and nonmembers.
Management.— Not less than five directors, and credit and supervisory com
mittees of not less than three each. If membership so decides, directors may act as
credit committee; otherwise no director may be a member of either committee
and no person may be a member of both committees. Officers to be president,
vice president, secretary, and treasurer (last two may be combined), elected by
and from directors. No director or member of a committee may receive any
compensation for his services.
Investment o f funds.— Same as for savings banks. May invest not to exceed
10 per cent of capital stock and reserve in stock of other credit unions.
Right to borrow and rediscount.— Restricted to amount equal to sum of capital,
surplus, and reserve.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

145

Meetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and on written request of 10 per cent of members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.
Loans.— For provident purposes only. To members only. Applications
must be in writing, on form provided, and must state purpose for which desired
and security offered. Loans must be unanimously approved by members of
credit committee present, who must constitute at least a majority of the com
mittee.
M aximum amount of loan.— Unsecured, $50.
Loans to nonmembers.— Any officer or member of a committee who knowingly
permits a loan to a nonmember is guilty of a misdemeanor and is liable for the
amount of the loan.
Loans to and indorsements by members of credit committee.— Permitted, but super
visory committee must appoint a substitute for applicant to act in his place on
the committee while his case is under consideration.
Interest on loans.—Not to exceed 1 per cent a month, computed on unpaid
balances.
Security fo r loans.— Indorsed note or assignment of shares is accepted as
security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent of
net earnings each year until fund equals amount of capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— To department of banking of State Corporation Commission.
Failure to report subjects association to fine of not more than $10 for each day
of delinquency.
Examination.— Annually, by chief bank examiner.
Examination fee.— Not to exceed $15 if assets are $1,000 or less; otherwise $25
per $100,000 of assets.
Taxation.— Exempt from all franchise taxes, but subject to license tax as fol
lows: Paid-in capital not exceeding $15,000, tax of $5; capital of from $15,000 to
$20,000, tax of $10; capital of from $20,000 to $50,000, tax of $15; capital of from
$50,000 to $100,000, tax of $25; for each $1,000 of capital in excess of $100,000,
$2 additional tax.
Use o f name a credit union ” — Prohibited, as misdemeanor, and punishable by
fine of not less than $10 nor more than $100 a day. If organized under act,
name must be used.

West Virginia
(Acts of 1925, ch. 36)

Number who may organize.— Eight or more residents of State.
Filing articles o f incorporation.— With county clerk and secretary of state.
Filing fees.— Same as for other corporations.
Limitation on membership.— Restricted to groups having a common bond of
occupation or association, or to groups within a well-defined neighborhood, com
munity, or rural district. May also admit to membership an organization com
posed for the most part of the same general group as the credit-union membership.
Value o f share.— Not to exceed $10.
Deposits.— From both members and nonmembers.
Management.— Not less than five directors and credit and supervisory com
mittee of not less than three each. If membership so authorizes, board of directors
may act as credit committee; but otherwise no director may be a member of a
committee and no person may be a member of both committees. Officers to
be president, vice president, secretary, and treasurer (last two may be com
bined), elected by and from directors. No director or member of a committee
may receive any compensation for his services.
Investment o f funds.— Same as for savings banks,. May invest not to exceed
10 per cent of capital and reserve in paid-in shares of other credit unions.
Right to borrow and rediscount.— Limited, in aggregate, to sum of capital, sur
plus, and reserve.
Meetings.— Annually, in January. Special meetings on order of directors or
supervisory committee and on written request of 10 per cent of members.
Voting.— Each member one vote.
Vote by proxy.— Prohibited, but an organization which is a member may cast
its vote through a delegate.

146

COOPERATIVE SOCIETIES IN 1929

Loans.— For provident or productive purposes only. To members only.
Applications must be in writing, on form provided, and must state purpose for
which desired and security offered. Loans must be unanimously approved by
members of credit committee present, who must constitute at least a majority of
the committee.
Maximum amount of loan.—-Unsecured, $50.
Loans to nonmembers.— Any officer or member of a committee who knowingly
permits a loan to a nonmember is guilty of a misdemeanor and is liable for the
amount of the loan.
Loans to and indorsements by members o f credit committee.— Permitted, but
supervisory committee must appoint a substitute for applicant to act in his place
on the committee while his case is under consideration.
Interest on loans.— Not to exceed l } i per cent a month, computed on unpaid
balances.
Security fo r loans.— Indorsed note or assignment of shares is accepted as
security.
Reserve fund.— Shall consist of all entrance and transfer fees, plus 20 per cent of
net earnings each year until fund equals amount of capital.
Dividends.— Payable annually, on all fully paid shares outstanding.
Reports.— Semiannually, to commissioner of banking, on or before January 1
and July 1. Failure to report subjects association to fine of $5 for each day of de
linquency.
Examination.— Annually, by commissioner of banking, but if association has
assets of less than $25,000 he may accept audit of practicing public accountant.
Examination fee.— $15 for associations with assets of less than $25,000; $25 for
those of more than $25,000.
Voluntary dissolution.— On four-fifths vote of membership, certified to secre
tary of state, but must remain in existence for three years to wind up affairs.
Use o f name “ credit union.” — Prohibited, as misdemeanor, on fine of not less
than $10 nor more than $100 a day.
Violations o f act.— Punishable by fine of not less than $100 nor more than $500,
or imprisonment of not less than 1 month nor more than 6 months.

Wisconsin
(Statutes, 1923, ch. 186, secs. 186.01-186.18 as amended by Acts of 1929, ch. 323)

Scope and purpose.— Promotion of thrift among members and lending of funds
for provident purposes.
Number who may organize.— Seven or more citizens of State.
Filing articles o f incorporation and amendments.— With State commissioner of
banking, and county register of deeds.
Filing fee.— $5 to State commissioner of banking.
Management.— Not less than five directors and credit committee of not less
than three. No director may be a member of the credit committee. Officers
to be president, vice president, secretary, and treasurer, elected by and from
directors. No director or member of the credit committee may receive any
compensation for his services; officers may receive such as directors may
authorize.
Right to borrow.— Restricted to 25 per cent of assets, and for period not to exceed
90 days unless approved by State commissioner of banking.
Meetings.— Annually, in January. Special meetings on order of directors and
on written request of 10 per cent of members.
Voting.— Each member one vote, but after association has been in existence
one year no person shall be entitled to vote until he has been a member for more
than three months.
Vote by proxy.— Prohibited.
Loans.— For provident purposes only, such as promise to benefit the borrower.
To members only. Applications must be in writing and must state purpose for
which desired and security, if any, offered. Loans must be unanimously approved
by members of credit committee present.
Maximum amount of loan.— Unsecured, $50.
Loans to and indorsements by members o f credit committee.— Prohibited.
Interest on loans.— One per cent a month on unpaid balances is not “ usurious.”
Reserve {guaranty) fund.— Shall consist of appropriations of 20 per cent of net
earnings each year until fund equals 10 per cent of total assets.
Dividends.— Payable annually, on all fully paid shares outstanding.

CHAPTER V III.— LEGISLATION, CREDIT SOCIETIES

147

Annual reports.— To State commissioner of banking, on or before February 1.
Failure to report subjects association to fine of $10 for each day of delinquency.
Examination.— Annually, by State commissioner of banking.
Examination fee.— Same as other corporations., but during its first year of opera
tion association shall pay only actual cost of examination.
Voluntary dissolution.— On unanimous recommendation of board of directors
and vote of special meeting at which two-thirds of membership are present, pro
vided not more than 10 members object.
Use of name lt credit union.”— Prohibited, as misdemeanor, unless organized
under act, and punishable by fine of not less than $300 nor more than $1,000 or
imprisonment for not less than 60 days nor more than 1 year, or both.

Chapter IX .—Legislation Relating to Workers*
Productive Associations
HERE is no legislation covering only the organization of work
ers’ productive societies, but the consumers’ cooperative laws of
certain States are so framed as to permit the formation of cooperative
workshops.1
Thus, workers’ productive associations can be formed under the
laws of those States which authorize the carrying on by cooperative
societies of any lawful business,2 those which authorize any manufac
turing or mechanical business,3 and those authorizing industrial enter
prises.4 The Illinois law permits the operation of any general mer
cantile, manufacturing, or producing business and that of Montana
any branch of industry. The New York law gives cooperative socie
ties the right to carry on any general producing, manufacturing,
warehousing, merchandising, or processing and cleansing business in
articles of common use.
The laws of six of these States 5 go farther and include in the defi
nition of cooperative association given in the law not only those
societies which distribute their earnings on the basis of patronage but
also those which distribute them on the basis of labor performed for
the association. The New York (stock) law includes as a recognized
cooperative organization one conducted “ primarily for the mutual
help and benefit of its shareholders, employees, and patrons, without
profit, which pays not to exceed 6 per cent on capital and distributes
the remainder on the basis of patronage or of labor performed for the
society.”
The general cooperative laws, however, are usually drafted from the
viewpoint of the consumers’ societies and fail to cover and set up
standards for the peculiar needs of the cooperate workshops—the
general organization of the association, how earnings shall be divided
among the workers, how the management shall be chosen, etc. It is
possible that to this lack may be attributed some of the failure of the
workers’ productive associations to attain a position of importance in
the cooperative movement of the United States.

1 For a synopsis of the individual State laws, see Chapter VII.
2 California, Colorado, Florida, Indiana, Michigan, Nebraska, Nevada, Oregon, and Vermont.
a Arkansas, Connecticut, Iowa, Kansas, Kentucky, Minnesota, New Jersey, North Carolina, North
Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota, Virginia, Washington (stock), Wiscon
sin, and Wyoming.
4 Alabama, and Alaska.
5 Colorado, Florida, Indiana, Michigan, Nebraska, and North Dakota.

148

Appendix A.—Essentials of Cooperative Housing1
I. There should be no profit to the members individually or collectively from
the operation, leasing, or sale of any of the association’s property. This means
that—
(а) The interest on the members’ investments is to be at not more than the
current legal rate.
(б) If there is any distribution of net savings or earnings (after interest charges,
which are to be considered as operating expenses), it is to be made as patronage
rebates (in the form of either cash or reduction of rents).
(c) There should be no profits from renting to nonmembers.
(1) As a general rule, all apartments should be occupied in person by tenantmembers. Furthermore, they should be used only by such members and their
immediate families; they should not be used in part as rooming houses for
revenue.
(2) Where subleasing by a tenant-member is necessary, the rental charged to
the sublessee should be based on actual costs of operation to the member (with
due and conservative allowance for interest on his investment, cost of decoration,
depreciation of furniture, etc.). There should be a definite time limit set to the
duration of such subletting.
(3) Where the subleasing of vacant apartments to nonmembers is temporarily
and of necessity undertaken by the association as a whole, the rentals charged are
to be based on actual cost of operations, not at an exorbitant market rate. The
“ cost of operation” in this instance, may mean actual upkeep plus a reasonable
safety margin to cover possible losses to the association from vacancies or other
unforeseen emergencies. If a profit develops from such a safety margin it should
not be used to reduce members’ rents, but either for cooperative education and
expansion or as patronage rebates to the nonmembers in the form of credits to
assist them in financing the purchase of stock which shall make them full members.
(4) A house shall be considered cooperative when the majority of its occupants
have become members, and when, under strictly cooperative rules, it shows that
its whole purpose and policy is consciously and definitely moving toward full
cooperative development.
II. There should be complete consumer control. Voting should be based on
membership interest, not on investment interest.
III. Resident ownership should be a fundamental policy— for social reasons:
(а) So that there shall not be several different classes of tenants in buildings.
(б) To insure that the consumers shall be interested and effective in exercising
control.
IV. Provision should be made for the permanence of the cooperative features
of the association.
ESSENTIAL BUSINESS PRINCIPLES

I. Tenant-members should elect a board of directors or executive committee
which, in turn, should appoint a definitely responsible executive.
II. Tenant-members should make a regular and careful check-up both of the
execution of the general policies they have adopted for the association and of the
financial soundness of its operations. This means:
(a) Regular audits by the accounting bureau of the Cooperative League or
by some certified public accountant; and
(b) Regular reports by the executive in charge both to the board of directors
and to the tenant-members.
III. The technical ownership of the property should remain with a cooperative
association (or possibly with more than one such association); and the tenantmembers should receive leases to their apartments.
IV. Officers and employees intrusted with funds or property of the association
should be adequately bonded.
V. Adequate allowances should be made for depreciation on all buildings and
equipment.
i Reprinted from Cooperation, New York, January, 1930.

149

150

COOPERATIVE SOCIETIES IN 1929

VI. The plan of organization and the financial set-up should be such as to give
to the tenant-members every possible assurance of the security of their investment
and the permanence of their occupancy.
VI.
A very conservative attitude should be maintained toward the assets of the
association. Increases in land values or increases in current building costs should
not be capitalized except under the most extraordinary circumstances.
In
other words, the value of the property should never be appraised according to
the modern theory of reproduction cost.

Full text of Consumers', Credit, and Productive Cooperative Societies, 1929 : Bulletin of the United States Bureau of Labor Statistics, No. 531

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