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ISADOR LUBIN, Commissioner


C Q fi
• • • • fl|Oe OVO



JULY 1934


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





Price 10 cents



U n it e d S tates D e p a r t m e n t


L abor ,

B u r e a u o r L abor S t a t is t ic s ,

Washington, May 3, 1934.

F r a n c e s P e r k in s ,


Secretary of Labor
M adam S e c r e ta r y : I have the honor to transmit herewith a re­
port intended for the use of groups wishing to organize cooperative
buying clubs or consumers’ cooperative societies on the Rochdale
plan. This bulletin has been prepared at the request of the Con­
sumers’ Advisory Board of the National Recovery Administration.
The contents of the present report are based upon many years’
practical experience of the societies affiliated with The Cooperative
League of the U.S.A., New York City. The Bureau takes this
opportunity to acknowledge its indebtedness to the league, and
especially to Dr. James P. Warbasse, its president, for the material
Respectfully submitted.
Isa d o r L u b in , Commissioner.




Part 1.—Organization and management of consumers* cooperative
The idea behind the cooperative________________________________
Starting right—First steps in organization______________________
The preliminary survey_____________________________________
Number necessary to start__________________________________
Preliminary organization work______________________________
First organization meeting_______________________ ______________
Constitution and bylaws________________________________________
Rochdale principles________________________________________
Rochdale methods__________________________________________
Articles of incorporation________________________________________
Share capital_______________________________________________
Loan capital-----------------------------------------------------------------------Amount of single holding___________________________________
Interest on capital--------------------------------------------------------------Meetings______________________________________________________
Voting power__________________________________________________
Store location and premises_____________________________________
Beginning of operations________________________________________
Net savings-----------------------------------------------------------------------------Reserve fund__________________________________________________
Savings returns or purchase refunds-----------------------------------------Other uses for net savings--------------------------------------------------------Record of purchases____________________________________________
Store manager_________________________________________________
Duties of manager__________________________________________
Other employees-----------------------------------------------------------------------Policies, wages, hours, unions____________________________________
Audit--------------------------------------------------------------------------------------Inventory and depreciation______________________________________
Cash or credit?________________________________________________
Fidelity bonds or security guaranties-----------------------------------------Buying of merchandise---------------------------------------------------------------






P a r t 1.—Organization

and management—Continued.
Delivery and service-----------------------------------------------------------------Price cutting__________________________________________________
Meeting competition___________________________________________
Educational work----------------------------------------------------------------------General principles_____________________________________________
Sources of cooperative information______________________________
Appendix A : Model bylaws for a consumers’ cooperative society___
Appendix B : Sample pledge, membership application, and receipt_
P a r t 2.— Organization and management of consumers* cooperative clubs:
Object and scope-----------------------------------------------------------------------Organization__________________________________________________
Larger possibilities__ ___________________________________________
Appendix: Model bylaws for a consumers’ cooperative club________



P a r t 3.— B i b l i o g r a p h y :

Consumers’ cooperation: A selected list of references-------------------



No. 598____________________

WASHINGTON_________________ JULY


Renewed and increased interest in cooperative effort is one of the
results of the severe economic hardships of the past few years.
This is not a new phenomenon. Years of general prosperity are
usually lean years as regards the spread of the cooperative philos­
ophy. That philosophy is primarily an economic one, making its
appeal first to the financial self-interest of the individual, by the
possibilities of savings that it offers. When times are good, when
wages are high and money is plentiful, such small savings as the
cooperative society offers make little appeal to the average wage
earner in this country, especially considering the effort involved in
obtaining these savings.
In hard times, on the other hand, with decreased employment and
lessened income, the wage earner is forced to take stock of his posi­
tion and look about for possible ways of improving it. It is under
such conditions that consumers5 cooperation makes its greatest
The average working man who thinks of joining a cooperative
thinks only of saving for himself the retailer’s small net profit. He
does not take due account of the fact that retail cooperative societies
unite to form wholesales, and that these wholesales go into manu­
facturing and the production of raw materials, and that the great
cooperative movement of the world is moving on to put into the
pockets of the consumers that vast fund known as the “ profits of
business.” This is known to be a very concrete fact in those countries
where a large part of the people supply their needs through their
cooperative societies.
The distinguishing feature of the cooperative system is that it
exists for the common good. All land, buildings, or goods acquired
become the common property of all the members. Every economy
in distribution or manufacture and every advance in efficiency made
within the society benefits every member of it, instead of going to
swell the profits of some one person.




In an association organized on a truly cooperative basis there is
genuine democracy. Membership is voluntary and open to all.
Shares are of low denomination and may usually be paid for in
installments. At meetings each member has 1 vote and no more,
regardless of the amount of stock held. In order to insure com­
parative equality in the financial status of members the number of
shares that may be held by any one member is limited. Capital
receives interest at no more than a legal rate, it being the cooperator’s
idea that the owner of capital should receive a fair price for the use
of his money, but no more than a fair price. The possessor of a
great deal of money therefore has no more power in the affairs of
the society and no higher status than his poorer fellow members.
In the cooperative movement all are on the same footing. It has been
said that the motive power of the movement is the man and not his
money, and this principle is logically extended to every part of the
movement, federations as well as retail societies. No financial group
can obtain a controlling interest in a retail cooperative society; and
such a society can increase its power over the policy and operations
of a cooperative wholesale society only by increasing its member­
ship. On the other hand, all the economy which results from the
combination of a large number of industrial operations under one
management can be obtained under the cooperative system through
the method of federating societies for the purposes of wholesale
trading and manufacture.
I f cooperative organizations are to be successful it is necessary that
all of the above conditions obtain and that certain fundamental
principles be followed in both organization and operation. This
has been disclosed very clearly by studies made by the Bureau
of Labor Statistics and by experience both in the United States and
abroad. Given adherence to these basic principles and an enlight­
ened and interested membership, cooperative organizations will suc­
ceed. Lacking these they fail entirely or become noncooperative
organizations. This being so, it is desirable that proper guidance
be available to wage earners wishing to better their economic condi­
tion through the pooling of their purchasing power along cooperative
This bulletin is concerned with methods of organization for con­
sumers’ cooperative associations of all types, whether for the supply
of goods or services. Model bylaws, together with explanations
(where necessary) of the reasons why particular provisions are de­
sirable or important are also given. As is pointed out, the con­
sumers5 cooperative law of the particular State should be studied
before bylaws are finally adopted, as the various States set certain
requirements which must be met by cooperative societies incorporat­
ing within their borders.



Part 2 of the report presents information and bylaws adaptable
to the more elementary form of consumers’ cooperative effort—the
cooperative buying club. Under the club form there is no store or
other establishment, the members merely pooling their orders, making
the purchase from private merchants, and dividing up the goods
when delivered. Clubs are excellent as training for eventual opera­
tion of a consumers5 cooperative association and are often a prelim­
inary step to that end.

58151*— rS4-------2


Part 1.—Organization and Management of Consumers’
Cooperative Associations
The Idea Behind the Cooperative

Cooperative business differs from profit business in spirit and
purpose, as well as in method and structure. There is a distinc­
tion between the private dealer and the consumer who is seeking
service. In the ordinary shop, the counter separates people with
different economic interests; in the cooperative, the customer in
front of the counter is the employer of the clerk or manager behind
the counter.1
Starting Right—First Steps in Organization

The most effective group with which to begin organizing a co­
operative society is one in which the members have personal ac­
quaintance with each other. It is best that members should be
neighbors; or persons bound by some fraternal tie; or members of
the same labor union, community center, farmers’ fraternal or
marketing or other organization, which already gives a sense of
Before launching a cooperative business the group should meet
regularly for the purpose of studying and discussing the history,
the methods, and the possibilities of cooperation. Literature on
the subject should be distributed. Members of the group should
individually secure as much information on the subject as possible.
This preliminary education has been found by experience to be
The Preliminary Survey

An advance survey of the proposed field is essential for the
following reasons:
An association whose members are not familiar with the
principles and methods of cooperation is not on a sound basis. It
1 For a good exposition of the philosophy of cooperation and of the differences between
cooperation and profit business see any of the following:
American Labor Monthly, July 1923, pp. 64—6 9 : “ The Place of the Cooperative Move­
ment ; the Consumers* Philosophy ” , by Cedric Long.
Harris, Emerson P .: Cooperation, the Hope of Consumer. New York, The Macmillan
Co., 1918.
328 pp.
Warbasse, Dr. James P .: Cooperative Democracy through Voluntary Association of the
People as Consumers. New York, The Macmillan Co., 1927. Second edition. 331 pp.




cannot succeed without real cooperators—men and women who un­
derstand the meaning of distribution for service instead of for
private profit.
(2) There must be a genuine economic need for the cooperative
venture; high ideals alone will not sustain it for any length of
time. The preliminary survey must, therefore, establish the fact
that a reasonable number of families need higher quality goods at
better prices than are otherwise obtainable.
(3) Certain classes of the population do not offer a promising field
for cooperative effort. Thus, the economic status of the families in
the community should be considered. The comfortable middle class
does not generally make good material for cooperative organization;
neither do the very poor, the casually employed, nor the shiftless
form a substantial membership for the cooperative association.
Those living at the poverty line, no matter how cooperative they may
be in spirit, must seek immediate bargains; they cannot afford the
luxury of present sacrifices for the sake of future benefits.
(4) It is essential to ascertain what men and women may be
counted upon to help with the initial problems of organizing the
business. The survey should find out where technical information
of a financial or legal nature may be procured. It should note the
nature of the competition that is to be met. It should provide the
information required by the organizers and help to determine
whether there is a chance to establish a successful store, or whether
it may be better to begin with the more informal cooperative buying
club which requires less capital, runs with lower expenses, and
offers fewer technical difficulties.2
Number Necessary to Start

As few as 75 or 100 families may start a store if they are familiar
with the methods of cooperation. I f they stick together through the
difficulties of the first year, giving it all their patronage and support,
they may expect to succeed. In a city the number should be 200 or
more members. In this connection, however, it is well to bear in
mind that some of the early members may desert the organization
and that a small membership does not create sufficient trade.
A store carrying a full line of general merchandise will require at
least twice as much capital as one carrying only meat and groceries.
The latter might get along with $3,750# if an inexpensive line of
fixtures is to be installed and members are to pay cash for all goods
purchased. These figures are for stores started in rented quarters.
I f a building is to be erected or bought, which is most inadvisable
a For directions for starting such a club and for model bylaws therefor, see pp. 59
and 67.
8 This is the figure set as a minimum by The Cooperative League (New York City) on
the basis of the experience of its member societies.



at the early stage, the required amount of capital increases
So important is constant patronage to the success of the society
that the policy of not allowing nonpurchasing members any vote is
worth considering, if the State laws permit such a policy. Every
member should agree to trade at his store. Without such support
the store cannot prosper.
Preliminary Organization Work

The essentials of a well-informed initial membership will not be
met unless many preliminary meetings for discussion are held and
house-to-house canvassing carried on. This requires volunteer work
on the part of the first members, and some money for printing, hall
rent, etc. The money for such organizing should not come out of
share capital contributed by the members but should be raised
through voluntary contributions by all who are interested, through
a per capita organizing assessment, or through special social func­
tions. It is often necessary to get direct contributions and then raise
other money in addition. An organizing fee, say 50 cents for each
member, may be collected.
Those who are to be the active organizers and canvassers should
know what cooperation means. Great injury has been done to the
cooperative movement by organizers who have not understood con­
sumers’ cooperation and who have therefore given a false impression
to the members they enrolled. Organizers should not make exag­
gerated claims of the benefits of cooperation; they should not promise
large rebates, cut rates, rapid expansion to other communities, nor
extension of credit. Such promises encourage people to become
members with false hopes, and when the promises are not fulfilled
the reputation of the society is damaged.
Thus there should be careful instruction of the organizers. They
should be familiar with cooperative history and theory. They should
realize that only small benefits are likely to come to the cooperative
membership during the first year. They should convey to others
the ideal of a nonprofit business institution. If possible, some of the
early members should attend training schools or the summer insti­
tutes conducted by central cooperative organizations.4 Failing this,
they should subscribe to a correspondence course on cooperation.5
* Such courses or institutes have been given by the Central States Cooperative League,
1410 North Main Street, Bloomington, 111.; Northern States Cooperative League, 2100
Washington Avenue North, Minneapolis. M inn.; Eastern States Cooperative League, 112
Bast Nineteenth Street, New York C ity; and Central Cooperative Wholesale, 1700 Winter
Street, Superior, Wis. Information as to which leagues are holding or^planning such
courses at any given time can be obtained from The Cooperative League of the U.S.A.,
167 West Twelfth Street, New York City.
5 Such a course is given by The Cooperative League, 167 West Twelfth Street, New York



I f organizers do their work without pay there will be no charges
brought against them later that they were “ out to make all they
could get.” However, it is often necessary to pay organizers enough
to cover actual outlay and sometimes a small wage. I f all possible
publicity is given to such remuneration, there is no actual harm
done. There must, however, be no impairment of capital to cover
such organizing expenses.
As soon as enough intelligent interest has been created and a
sufficient number of members enrolled, the organization of the co­
operative society may begin. A preliminary committee should be
appointed. Its duty should consist in securing all available infor­
mation on the details of organization; such information can be ob­
tained from the district cooperative league or from the national
cooperative organization.6 The committee should consider the quali­
fications of its members with a view to making nominations for the
board of directors and the necessary committees at the organization
meeting. It is advisable also, during the preliminary period, for the
committee to give thought to the selection of a manager for the store.
First Organization Meeting

When this preliminary work has been done, when sufficient cap­
ital and an adequate number of members pledged to trade at the
store are assured, an organization meeting should be called, but not
until then.
The business to be transacted at the meeting may include:

Explanation of the purposes of the meeting, and discussion.
Adoption of temporary bylaws.
Election of board of directors.
Election of committees.
(а) Committee on constitution, bylaws, and incorporation.
(б) Committee on membership.
(c) Committee on education.
(d) Committee on business.

The conveners of the meeting should come prepared to explain in
detail the purposes of the meeting and the reason for organizing a
cooperative association, and they should invite all the discussion pos­
sible. I f those present do not seem sufficiently interested in the
idea, committees may be appointed for further canvassing or a more
complete survey, but no actual organization should be attempted.
However, if those present are enthusiastically in favor of proceed­
ing with organization, regular committees should be appointed as
•These leagues are as follows:
The Cooperative League of the U .S A ., 167 West Twelfth Street, New York City.
Eastern States Cooperative League, 112 East Nineteenth Street, New York City.
Central States Cooperative League, 1410 North Main Street, Bloomington, 111.
Northern States Cooperative League, 2100 Washington Ayenue North, Minneapolis, Minn,

CONSTITUTION a n d b y l a w s


outlined above. Tentative rules or bylaws should also be presented
at this meeting so that those present may know how a cooperative
association is organized. The committee then elected to take care of
bylaws and incorporation will modify and enlarge the rules already
approved and will take up the question of incorporation under the
laws of the State. This committee should write to the secretary of
state and to the nearest district cooperative league for informal
tion, and again for approval of the bylaws when completed. These
precautions insure their legal correctness and their adherence to
cooperative principles and practices.
The committee on membership will seek new members. The com­
mittee on education will plan further meetings of the present mem­
bers, with adequate educational programs. (For a typical blank for
membership application, see p. 58.)
The business committee will look into the matter of location for
the store, fixtures, stock of goods, manager, bookkeeping set-up, etc.
The meeting should not close until everyone present has had a
chance to raise any other questions that seem important. Much bet­
ter results will come from such a meeting if a group of women is
appointed ahead of time to prepare some simple refreshments, or if
some other entertainment or social diversion is planned.
Constitution and Bylaws

Before the society begins business it should draw up its articles
of incorporation and adopt a set of bylaws. (For model bylaws, see
p. 39.) This may serve as a basis, but should be modified to fit the
specific local needs and the State law.
The form for the constitution or the articles of incorporation is
usually established by the laws of the State and must be closely
followed, although the details are determined by the local society
to meet its own particular needs.7 It is often necessary that most
of the provisions contained in the articles of incorporation be re­
peated in the bylaws, unless both documents are to be published
together and put into the hands of all members.
Rochdale principles and methods should be incorporated in the
bylaws and adhered to in the administration of the society. To
depart from these is to invite failure.
Rochdale Principles

1. One vote only for each member, regardless of number of shares
held. No voting by proxy. Democratic control. Business con­
ducted to supply the members as consumers with commodities or
services for their own use.
7An analysis of the various State cooperative laws can be obtained from the
Bureau of Labor Statistics, Washington, B.C., on request.




2. Capital to receive interest (if any is declared) at not more than
the current legal rate in the territory where the association is
3. Net surplus savings (“ profits ” ) to be returned as savings
returns, or patronage refunds (“ dividends” ), in proportion to the
patronage of each member, or to remain in the society’s treasury as
share or loan capital credited to the members’ accounts, or to be
used collectively for the general social good of the members, or to
remain temporarily undivided.
Rochdale Methods

1. Unlimited membership.
2. Business to be done for cash*
3. Appropriation, out of net savings, of a substantial sum to be
placed in the reserve fund.
4. Goods to be sold at current market price—not at cost.
5. Education in the history and methods of cooperation to be
carried on.
6. Efficient bookkeeping and accounting, outside audits, and regu­
lar reports to members to be required.
7. Manager, treasurer, or anyone else handling large amounts of
money to be bonded.
8. Affiliation as soon as possible with the nearest district coop­
erative organization and the nearest cooperative wholesale.
Articles of Incorporation

Associations should write to the secretary of state at the State
capitol for a copy of the law governing cooperative associations.
Even though in many States the law under which societies must
incorporate is weak from the cooperative standpoint, incorporation
is advised because it protects the individual members from extra
liability for the debts of the society and gives certain other legal
The number of incorporators required varies from State to State,
but usually the application must bear the signatures of 3, 5, or 7
persons. Such information as the following is also required:
Proposed name for the association.
Purpose for which it is formed.
Whether it is to be a stock or a nonstock corporation.
The amount of capital stock (if a stock corporation).
The par value of a share and the number of shares to be issued.
Limitation of interest on share capital.
Limitation on number of shares to be owned by one person.
The minimum amount of stock with which the association begins business.
Limitations of voting power.



Methods of distributing surplus savings.
Time and place of annual meeting.
The name of the city or town, and county in which the head offices are
The length of time the association is to remain in business.
The number of its directors, with their names and addresses.
The names and addresses of the incorporators, with number of shares for
which each has subscribed.*

The State usually charges a filing fee.
A seal should be designed and ordered.

Whereas the articles of incorporation establish the legal status
of the society, the bylaws are the common rules governing the rela­
tions of the members, their officers, and their employees; they bind
these members together in a voluntary association. The chief points
to be covered in the bylaws are the following:
Name.—This should always include the word “ cooperative.” The word
“ society ” or “ association ” is better than “ company.”
Memb&t'ship.—Limitations, duties, and responsibilities.
Capital.—Total amount authorized, interest to be paid, value of the share,
how subscribed and paid, etc.
Meetings.—Date, how called and conducted, quorum, special meetings, etc.
Directors and officers.—Number, how elected, duties, disqualifications of,
vacancies, meetings, etc.
Surplus savmgs.—Distribution to interest, reserves, education, savings
• Management.
Committees.—Designation of, and duties.
Bookkeeping and (mditi/ng.
Miscellaneous provisions, such as bonding, fiscal year defined, cash sales or
limitations upon credit, complaints, amendments.

Certain States9 permit the incorporation of consumers5 coopera­
tive societies as membership or nonstock associations. There are
some advantages in such a form of incorporation, but a central coop­
erative organization should be consulted before positive decision
is made.

Cooperative associations are benefited by increase of membership.
New members (and more shares) not only add prosperity* to the
group, but keep the association from being an exclusive and closed
corporation run in the interest of a few.
8 Advice on incorporation may also be procured from the various district cooperative
leagues. See note 6, p. 8.
•Alabama, California, Nevada, New York, Oregon, Washington, and Wisconsin.

58151°— 34-------- 3



Some associations exclude from membership all individuals who
are engaged in a business competing with that of the cooperative or
who directly benefit from such competing business. This rule is con­
trary to strict Kochdale methods and should be adopted only where
there is real danger of injury to the association or interference with
its development.
The store may sell to nonmembers. While the law in some States
provides for the payment of patronage rebates to nonmembers, this
is not found to be good practice. Cooperative associations make
profit from nonmembers, and profit is not the purpose of cooperation.
However, every inducement should be offered nonmember purchasers
to become members. The growth of the ideal of cooperation depends
on the policy of membership open to all, irrespective of creed, race,
sex, or station.
The best cooperatives provide for means of buying back the stock
of inactive members and reselling it to active patrons who have not
yet become members. This eliminates the “ dead wood ” within the
association and insures an active membership. In a consumers’ coop­
erative association the body of patrons and the body of shareholders
should be as nearly identical as possible.
Share Capital

The price of a share in a store association should range from not
less than $10 to not more than $50. I f the State law sets the value
of a share at $510 or at some other small sum, each member should
be required to subscribe for several shares. The shares may be paid
for in installments. A part of the amount subscribed should be paid
in at the time the organization of the store is being planned, and at
least three quarters (but preferably all) the subscribed capital of each
member should be paid up before the store is opened for business.
Cash refunds and interest on stock (and in some instances voting
privileges) are usually withheld until the shares are fully paid for.
It is a fundamental of consumers’ cooperation that shares shall
never be given a value above their par or original value.
No eligible person should be refused admission because he has not
the money to buy the required shares of stock. Such a person should
be permitted to join upon the payment of $1, or whatever amount he
can pay. The surplus savings due him from his patronage should be
applied to the payment of his stock. He becomes a member with
full privileges when the necessary amount of stock has been paid for.
One hundred and fifty members, each subscribing $25, would give
an initial capital of $3,750. There is, however, a decided advantage
» A s in N«w York.



in beginning with at least 200 members, each subscribing $50, which
provides a capital of $10,000. A store with such a capital can buy to
better advantage than one with a smaller capital, and in many other
ways will work more effectively. Members should be encouraged to
subscribe for more than the minimum number of shares required by
the rules.
I f the capital cannot be raised at the outset it is wiser to postpone
starting until it can. To fail to raise capital is better than to fail
later for the want of it. However, many stores start on a few hun­
dred dollars only, especially in small villages. With extreme econ­
omy of expenses and by maintaining a small inventory, such stores
may become successful, provided there is the proper cooperative
spirit among the members.
Loan Capital

Additional capital may be secured later if the members allow
their savings returns and interest to remain on deposit with the
association in the form of share or loan capital. Loan capital may
also be borrowed from members and nonmembers.
Interest is paid on such loans at the current rate.
Amount of Single Holding

The amount of share capital that any person may hold should be
limited to $1,000; but the loan capital may be extended above that
amount indefinitely, provided no large loans of any character are
negotiated or accepted by the manager without the knowledge of
the board.
The number of shares is unlimited and they never go above par.
This prevents speculative traffic in shares, for they cannot be held at
a premium.

Withdrawal of share capital should not be allowed unless it can
be done without injury to the society. The board of directors may
allow a member leaving the community, or one in distress, to transfer
his shares to another member or to a person satisfactory to the asso­
ciation; or where the law does not expressly forbid, the board may
purchase such shares out of the surplus funds of the association.
Unless there is a rule against unrestricted withdrawals, anyone may
furnish a pretext for withdrawing. This permits enemies or dis­
satisfied members to spread false or discouraging reports and start
a run on the association, possibly wrecking it by rapid withdrawal
of capital.
Loan capital should be withdrawable in small sums on 7 days’
notice, but in large sums only on 60 or 90 days’ notice; otherwise there
is a danger of a run on the loan fund in time of strike or other unem­



ployment or hard times. Preferred capital stock may be issued
This cannot be withdrawn on such short notice; therefore it is a
safer form of capital for the association to raise than the loan
capital. On the other hand, members are not so ready to subscribe
for stock which they cannot dispose of in an emergency.
None of these forms of supplementary capital should be allowed
to become large; the chief reliance should be placed upon the ordi­
nary share capital of the members.
Interest on Capital

At the time of starting the association, the maximum rate of
interest on capital stock should be decided upon. It should never
vary with the surplus savings, though it may vary as the association
itself needs more or less capital and thus increases or decreases this
form of encouragement of investment by the members. The most that
is paid is the legal rate; but if, as in some parts of Canada, the legal
rate is 10 percent or upward, then the cooperative limit should not
be more than 6 percent or 8 percent. In the absence of any legal
requirement on this point, the association may decide to pay no
interest on amounts less than $100, or even to pay no interest at all.
Before any decision is made regarding the interest rate, the co­
operative law should be consulted, as some States set specific rates to
be paid on capital stock.11

It is customary to hold general meetings of the stockholders quar­
terly. It is better to hold them monthly if material for interesting
discussion is available.
The annual meeting is the most important of all, for here the elec­
tions take place and the annual financial report, manager’s report
for the year, and other important matters come up for review.
The business transacted at all meetings usually consists of reports
of officers, committees, and manager; discussion of reports; disposal
of net surplus savings for the period in review, elections, other new
business. Notice of meetings should be sent out at least 10 days in
advance. The date for the annual and semiannual meeting should
be set late enough to allow the auditor time to prepare his report
before the meeting.
11 Thus, the rate is set at not to exceed 5 percent in Massachusetts; at 5 percent on
ordinary and 6 percent on permanent stock in Pennsylvania; at not to exceed 6 percent
in New York, North Carolina, and Vermont; at not to exceed 7 percent in Michigan; at 8
percent in Montana and not to exceed 8 percent in Alaska, Minnesota, Nebraska, North
Dakota, Oregon, Washington, and Wisconsin; and at not to exceed 10 percent in Iowa,
Missouri, and South Dakota. In the othei States this point is left to the discretion of
the membership.



The number of members constituting a quorum should be set by
the bylaws. In small associations it may be 30 percent or 40 percent
of the membership; in large ones it may be as low as 10 percent. In
some States the minimum is established by law. Associations too
large for a members5meeting should be divided into district sections,
each having local autonomy and delegate representation in the cen­
tral society’s meetings.
Special meetings may be called from time to time, but only such
business may be taken up as is specified in the call sent to the mem­
The privileges of the membership meeting should be clearly under­
stood. While the meeting has the right to hire or discharge em­
ployees, interfere with management, or dictate the policies of the
board of directors, such action on the part of the membership is un­
wise. Selection of the manager should be left to the board. The
membership should only review the broad policies of the board and
management, discuss them, and express approval or disapproval. If
it disapproves, it should not attempt to dictate specific acts to either
directors or manager, but it may in extreme cases recall the entire
board of directors and elect a new one.
Discussion of political, religious, or other questions upon which
the members of the association may be divided should not be per­
mitted ; such discussions cause internal strife and may do much harm
to the organization. Cooperative associations should be neutral in
these matters.
Meetings should be called by one or more of the officers. Special
meetings may be called by the directors or by petition of a specified
number of members.
Good speakers should be invited to address the meeting when such
are available.
Following the business meeting it is always good policy to have an
educational session. Let the members feel that this is their social
center. Occasional entertainments, following the business meeting,
with music, dancing, movies, and refreshments may wisely be

The board of directors generally consists of from 5 to 11 mem­
bers,12 elected by ballot on nominations from the floor or by a
12 But many State laws set a minimum number which must be observed. Thus, the
directors must number not less than 3 in Kentucky, Minnesota, Montana, Vermont,
Washington (stock), and Wyoming; not less than 5 in Alabama (stock), Alaska, Arkansas,
Connecticut, Illinois, Iowa, Kansas, Michigan, Missouri, New Jersey, New York (stock),
North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, and Wisconsin; not
less than 5 nor more than 9 in South Carolina; and not less than 7 nor more than 9 in
Alabama (nonstock) ; and 6, 8, or 10 in Pennsylvania. In the remaining States the
matter is left, either specifically or by implication, for the membership to determine.



nominating committee. It is advisable for them to be chosen at the
first election to serve for different periods: One third of the directors
for 1 year, one third for 2 years, and one third for 3 years, and at
all subsequent regular elections, one third of the board for a full 3year term. A small board of 3 or 5 elected for short but continuous
service can often act more quickly and to better advantage, but the
larger board serves to hold the interest of more members.
The board should meet once a week for the first few months, and
once or twice a month thereafter. The directors should always bear
in mind that they are acting for the association and are responsible
to the members for the loyal performance of the following duties:
1. To engage a staff to undertake the work of the association, with suitable
heads of departments, or a manager over all, and to determine the duties and
salaries of each.
2. To provide suitable accommodations, machinery, and plant to conduct the
association’s business.
3. To insure that the business is carried on in accordance with the bylaws.
4. To control all investments, whether in shares and loans or in land,
property, and fixtures.
5. To administer the distribution of savings such as for interest, reserve
patronage refunds, and educational funds.
6. To consider and defray the administrative expenses, such as wages, rent,
repairs, telephone, light, heat, delivery, insurance, taxes, etc., or to see that
the manager takes care of these items.
7. To provide the best conditions and wages for labor in the association’s
employ; to demand and secure equivalent results in superior service, faithful­
ness, and diligence.
8. To call meetings of the membership regularly and to render all necessary
reports thereto.
9. To maintain a direct and vital connection with other cooperative organi­
zations both in this country and abroad.
10. To foster a spirit of enthusiasm for cooperative work both in the staff
and in the members of the association, and to identify themselves with every
good feature of cooperative activities.

Much thought should be given to the election of these directors, on
whom rests heavy responsibility. They should be people of thought,
level headed, and shrewd, with administrative ability, who under­
stand that the best happiness consists in advancing one’s self by
advancing the welfare of one’s fellow men.
It should be definitely established that no individual on the
board of directors is himself engaged directly or indirectly in the
making of profit from any business running in competition with that
of the cooperative society. Each director should be expected to give
loyal patronage to the cooperative store and his resignation should
be asked for when he is no longer loyal. He should expect no pay
for attendance at meetings or for other services in behalf of the
association. Some associations pay a nominal amount to directors
for attendance at meetings so as to insure the presence of the full



board, but the amount should not be large enough to tempt even the
poorest' members to seek the office for the sake of its financial re­
wards; $1 or $1.50 per meeting is enough. No director should be
connected with any business which makes profit by any commerce
or other transactions with the cooperative association, if such com­
merce or transactions are to the personal advantage of the director.
The board should be so selected that every large element within the
membership is represented by at least one director. It is also well
if these directors supplement one another; thus at least one should
be efficient in bookkeeping, another in merchandising, another in edu­
cational and propaganda work, another in legal problems. The
entire board should not be devoted purely to the theoretical and
educational activities of the organization. All the directors should
have a good knowledge of cooperative history, principles, and practi­
cal affairs. They should be selected for their good judgment, knowl­
edge, and ability, and not for their capacity to talk.
They should supervise the manager but they should not dictate
to him in matters of merchandise to be bought, prices to be paid,
clerks to be hired or fired, or fixtures to be procured or rearranged.
These are matters for the manager.
Directors should not be so engrossed in the commercial aspect of
cooperation that they have no time nor interest to create a coopera­
tive atmosphere within their immediate circle. They have an oppor­
tunity to develop interest and enthusiasm in the subjeet of cooper­
ation, not only among the members but also among the employees.
The directors may elect an executive committee for certain special
functions or to act in their stead in emergencies. Some associations
create such a committee as supplementary to the directors.

Up to the time of the final organization the meetings should be
informal and run by a temporary chairman and secretary elected
from the floor.
All officers should be elected from and by the board of directors
rather than by the membership at large. The former are better
qualified than the latter to know who will fill the various positions
most efficiently.
The president should be chosen, not because of his popularity or
eloquence, but because of sound judgment, executive ability, honesty,
knowledge of cooperation, and devotion to its cause. He should not
be autocratic. He should preside at all meetings, carry out the will
of the members, and zealously watch over all affairs of the
The vice president takes over the responsibilities of the president
in the latter’s absence.



The secretary may also be treasurer in the early years of an
association.13 He is usually elected by the members and his services
are gratuitous. He serves as secretary both at the meetings of the
directors and at members’ meetings. In small associations his duties
are to keep the minutes and records, attend to all correspondence,
and keep watch over the bookkeeping and accounts. He should also
be the custodian of the seal, the stock certificates, and the member­
ship records. The election to these offices of men who, though
honest, are deficient in knowledge of accounts and business
procedure, is unwise.
The accounts should be correctly balanced by the treasurer, who
may pay all bills. The treasurer should also render periodic re­
ports to the membership. In many associations the manager pays
all bills and signs checks, thus fulfilling this function of the treas­
urer. The checks should be countersigned by the president or other
countersigning officers. The directors should fully inform them­
selves from week to week how the association stands in its finances.
Voting Power

Equal representation must be insured by limiting each member to
one vote irrespective of his ownership of share capital. This pre­
vents privilege, insures democracy, and provides that membership
shall forever remain open to newcomers on equal terms with the
founders of the society.
All subscribers to the capital stock who have paid in full for their
shares should be entitled to vote, except as any member may have
been deprived of this privilege by action of the board of directors
for some heavy indebtedness to the store, which practically destroys
the value of his share capital investment. In some States full voting
power must be granted when shares are subscribed fo r ; and the sub­
scriber immediately has full membership privileges. Unless the law
specifically grants such privileges, however, it is well to withhold
them until most of the subscribed capital has been paid in. Voting
should be by show of hands or by “ aye ” and “ no ” voice, except in
the case of election of directors or other matters on which there is a
demand for a secret ballot.
Store Location and Premises

The location of the store should be given careful consideration.
Generally it should be placed within easy reach of the majority of
the members, otherwise the shoppers will save labor and go else­
18Except in Montana, New Jersey, New York (nonstock), and Washington (stock),
Where the law makes no provision for combining the two offices.



where after their first cooperative enthusiasm has waned. It is not
wise to place the new cooperative in a high-priced location with the
purpose of catching transient trade and thus building up a large
volume of sales with nonmembers. The cooperative is first of all a
membership organization, and nonmembers should be sought only
with the idea of making them members, not with the idea of making
money from them.
The new cooperative society should not buy or build a store; it
should rent its quarters and thus be in a position to move if the loca­
tion does not prove desirable. Only in the very small country com­
munity where there is no danger of a mistake in location is it
advisable to purchase or build. Sometimes an established grocer
may be bought out with his line of goods and fixtures, but always
it is better to fit up a store with new equipment and stock of goods.
The old supply of groceries inevitably includes much that is deteri­
orated and otherwise unmarketable, and the fixtures may be out of
date. Furthermore, the established old-line business has a reputa­
tion for being a profit-making concern and this reputation will carry
along with the old equipment, regardless of the fact that the mem­
bers know it has been bought out by the cooperative. The non­
profit service idea is new in the community and should be built into
a store that is as new and different from the others as possible.
Injury should never be done to an existing business if such injury
can be avoided. I f there is but one merchant in a town and the
establishment of a cooperative store threatens to destroy his business,
every consideration should be given to purchasing his business at a
fair price and making him manager of the cooperative store at a
fair salary. This latter is naturally predicated upon the possibility
of his genuine sympathy with the cooperative method.
Beginning of Operations

The association having been organized, the future possibilities of
the town or neighborhood and the chances for expansion of the
association must be considered. Two important factors of success
must be discussed and determined in advance:
(1) The average amount of monthly sales as a whole, and to each
member, and the kind of merchandise to be handled; and (2) the
cost of operating the business.
In a large city the general merchandise store will be found im­
practicable and the society will begin with groceries only, or with
meat, fresh produce, and groceries, or perhaps only with *meat and
fresh produce (the two items in which there is the least severe com­
petition from the chain grocery stores). In the country community
or mining town the sale of general merchandise, work clothes and
08151°— 34------ 4



shoes,, work tools, perhaps some stationery, piece goods, and children’s
clothing, will often be advisable. The number of commodities car­
ried will be determined by the demands of the members, the amount
of capital available for investment in stocks, the size of the store,
and the nature of the local competition.
The grocery store should have monthly sales of at least $3,000. A
larger figure is much safer. The most loyal member with a family
of four or five should spend in this store at least $40 per month; the
average for all the members will be lower than this, though it should
not be, if they are fully employed. The store carrying a full line
of general merchandise may have sales running anywhere from $3,000
and upward per month, depending upon the size of the buying mem­
bership ; but it can barely afford to get along with any less than that,
for a much larger amount of money is tied up in inventories. The
best patrons should spend nearer $75 than $40 a month in such a
The following generalizations apply at present to general merchan­
dising stores running independently outside the large cities. Stores
that are affiliated with a cooperative wholesale may be run on a more
economical basis. With $10,000 capital, $8,000 may be used for
merchandise and working funds, and not more than $2,000 for equip­
ment. This amount will equip and run an average independent
modern grocery with the, best goods and up-to-date labor-saving
devices, cash register, electric mill, etc.
For a grocery store, the monthly sales should exceed the capital
invested in merchandise—that is, a society with an average inventory
of $4,000 should do a business of at least $4,000 a month. A member­
ship of 200 should guarantee an average trade of at least $20 a month
per member. No society, however small, should run a grocery busi­
ness on a turn-over of less than 12 times a year. The savings made
by the society are dependent on the rapidity with which the stock is
turned over as well as on the efficiency of the administration. Some
chain stores and some successful cooperative stores have a yearly
turn-over 40 times their inventory. That is, with a stock of $8,000
worth of goods they have a sale of goods whose wholesale value is
$320,000—about $400,000 at retail. In the store carrying a more gen­
eral line of merchandise the turn-over is usually below 8 times per
The percentage of operating expenses to sales varies according to
localities and according to the volume of business. As the amount
of business increases the percentage of expenses should be auto­
matically reduced. It should be considered in advance and made
to conform as nearly as possible to the following, which is figured



on a basis of $8,000 monthly business in a store handling groceries
only and giving neither credit nor delivery service:
Percent of turn-over

Salaries--------------------------------------------------------------------- 5- 6, or $400- $480
Rent (in cities and large towns)----------------------------------- 2- 3, or $160- $240
Fixed charges, such as heat, light, telephone, wrapping,
interest, taxes, insurance, repairs, depreciation, leak­
age _______________________________________________ 3- 4, or $240- $320
10-13, or $800-$l, 040

Kents in small country towns should not be more than 1 percent,
possibly even less than 1 percent, of turn-over.
I f delivery is undertaken, its cost must be figured additionally,
ranging from 2 to 4 percent of the business done. Granting credit
to customers may increase the expenses another 2 or 3 percent.
The sales made by each clerk should average at least $55 per day
on poor days, about $1,500 a month, $18,000 a year.
Average sales per employee in small grocery stores a few years
ago were .$15,800 a year. The highest figure recorded was $43,000
per person. The chain-store average was nearly $30,000. A store
doing a cash-and-carry business of $8,000 a month, therefore, should
not have more than four employees on its working force, preferably
fewer. A general store will find its clerks doing nearer $1,600 per
month, $19,200 per year; and if delivery orders must be put up and
credit accounts kept, the average volume of sales per clerk may be
reduced 50 percent by the extra labor involved. A high volume of
sales per employee is obtained by economical arrangement of goods,
good layout of the store, elimination of delivery and credit service,
and by other labor-saving policies.14
Net Savings

A cooperative store should accumulate its surplus savings. In a
noncooperative store this surplus goes to the private tradesmen or
investors as profit. In a cooperative store this surplus cannot prop­
erly be called “ profits.” It is the money that accumulates from the
difference between the buying and distributing price of the articles.
The members, instead of buying at cost, advance the amount of this
difference to the whole society to form a collective fund. It is essen­
tially a loan.
This collective surplus or saving is the essence of cooperative
business. It is of extraordinary power and has produced most sig­
nificant economic and social results- The use of this surplus marks
14 The amounts given in this section are those arrived at by The Cooperative League on
the basis of the experience of its member societies.



the difference ‘between the cooperative and the profit systems of
Reserve Fund

The permanent reserve fund is an extra sum added to the capital
to insure the future safety of the business. A great many State
laws require that cooperatives shall establish such a reserve fund.
Usually from 5 to 25 percent of the year’s net savings must be added
to the fund until the latter amounts to from 20 to 50 percent of the
paid-in capital. Many associations prefer to exceed the minimum,
however, and may accumulate a reserve fund considerably in excess
of their share capital. Members should be encouraged to be generous
to their reserve fund and the future security of their association and
not be too anxious to divide among themselves at the end of the year
every penny available.
The educational fund is also important, though the cost of educa­
tional work may be paid out of current operating expenses, in which
case a special fund established out of surplus is not necessary.15 The
important thing is that such work be done and adequately financed.
Savings Returns or Purchase Refunds

After the interest on capital, the addition to the permanent reserve
and the educational funds have been deducted, the balance of the
surplus savings may be paid to the members as savings returns or
refunds (“ dividends on purchases” as they are called in Europe),
according to the Rochdale method. They are usually paid semi­
annually or annually and are based on the amount of purchases
(not on the amount invested, as in profit-making business).
The balance to be returned to patrons may be paid back in cash,
or in credit toward purchases at the store, or in credit toward pur­
chase of additional shares, or as loan capital certificates. The first
method is usual where the association already has sufficient capital
for current needs; the last where more eapital is needed. However,
the membership meeting itself must make the decision as to how
the distribution is to be made; the directors should only make recom­
mendations. Earnings on sales to nonmembers should not be paid
to members, but should be placed in the reserve fund if they are
not to be returned to the nonmembers themselves. The bylaws
should specify that the association has a lien on the surplus savings
of members for any amounts owing to the store, so that such refunds
may be withheld if the member is in debt to the association.
15 But some Sktate laws (i.e., those of Alaska, Iowa, Massachusetts, Minnesota, Mon­
tana, New York (stock), North Carolina, North Dakota, Oklahoma,' Pennsylvania, South
Carolina, South Dakota, Virginia, and Wisconsin) require regular additions to a special
fund for tVis purpose.



There are three methods of treating nonmember purchasers: (1)
No returns to such patrons until they have purchased at least a
small amount of stock; (2) refunds at the same rate as to mem­
bers; and (3) refunds at half the rate at which members are paid.
Several of the State laws have definite provisions on this point
which must be met.16 In the absence of a specific requirement in
the cooperative law, however, one or the other of the last two
methods named is recommended. Refunds to a nonmember should
not be paid in cash, but should be credited to his account for the
purchase of shares so that he may become a member.
Other Uses for Net Savings

There are many associations which either distribute no savings
returns to members or distribute only a very small proportion of
the actual funds available. These cooperatives believe in what is
popularly known as the “ Belgian plan ”, which is the use of sav­
ings for the social benefit of the entire membership and even of the
whole community. With these savings there may be established
insurance funds, vacation homes for the women and children, medi­
cal or dental clinics for the members, community halls, libraries,
art centers, the free distribution of papers or other literature,
Christmas gifts, the employment of special lecturers, or free schol­
arships in cooperative schools. The number of such benefits is
limited only by the amount of funds available. The objection to
this system is that those who enjoy the most of the benefits may
not be the members whose patronage creates the most of the funds.
Record of Purchases

The practice of giving savings returns on purchases necessitates
the introduction of some system whereby the association may deter­
mine the trade done by each member at the close of each quarter in
order to apportion to him his savings.
Most associations require that the purchaser shall keep records
of his purchases. He saves his cash-register slips or other evidences
of purchase until the end of the accounting period and then turns
them all in at the store to be counted for refunds. Some associations
themselves keep the records of purchases by their members, believ­
ing that although this entails extra bookkeeping expense, it guar­
16 Thus, the laws of Alaska, Illinois, Massachusetts, Minnesota, Missouri, Montana, New
York (stock), North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South
Carolina, South Dakota, Vermont, Virginia, Washington (stock), and Wisconsin require
the distribution of patronage dividends (impliedly to nonmembers as well as members),
but of these Massachusetts, Montana, New York (stock), North Carolina, Pennsylvania,
Virginia, Washington (stock), and Wisconsin specifically allow payment at half the
members’ rate.



antees a more equitable distribution of savings. The most satis­
factory method is the use of a cash register which issues slips in
duplicate or triplicate, each slip showing the member’s number, date,
and amount of purchase.
Store Manager

The ideal store manager is one who combines knowledge of co­
operation with technical skill in storekeeping, in the buying and
selling of goods, and in the keeping of store records and accounts.
The experienced groceryman trained in profit business may be effi­
cient in many ways, but he may ruin the cooperative spirit of the
store by practicing methods which are contrary to cooperative princi­
ples. On the other hand, the idealistic cooperator, directly from the
ranks of the wage earners or farmers, may make serious business
mistakes which may plunge the association into bankruptcy before
he acquires the technical knowledge of his position. This com­
bination of cooperative understanding with administrative ability
is rare but it is being developed among many of the younger people
working in cooperative stores and studying in the cooperative train­
ing schools.17
The character and cooperative qualifications are the most essential,
and after them in importance come the business qualifications.
The manager must be able to delegate responsibility to those under
him so that he does not carry the entire load of duties on his own
shoulders. He must' have financial and business judgment and
tact. He must win and hold the respect of customers, employees,
and business houses with which he deals.
Duties of Manager

In the small store the manager must be a jack-of-all-trades; he
must know something of buying, selling, banking, investing, super­
vising others’ work, bookkeeping, presiding at meetings, driving a
truck, and advising members in financial or domestic trouble. He
must meet and deal tactfully with complaints from all directions,
exact discipline and at the same time inculcate cooperative enthu­
siasm in his employees, watch carefully the many places where leaks
and losses to the business occur, and understand the value of publicity
and advertising whether in the store windows or in the local press.
He must plan the store for the economic handling of goods and must
plan storage space so that each kind of merchandise shall be kept
where it is easily reached and not suffer from dampness, vermin,
excessive heat or cold. He should render regular reports to the
17 See note 4, p. 7.



directors and meet patiently their many criticisms. He should
regularly hold meetings with his staff of employees for discussion
of both business problems and cooperative principles. He must culti­
vate the best of relations with the membership and the general public,
and give the utmost possible support to the central educational league
and cooperative wholesale of his district.
It is important that the manager should not become obligated
to the salesmen of any particular private wholesale house. A man­
ager who accepts gifts from such tradesmen should be promptly
Other Employees

Clerks and deliverymen are the most important individuals in
the store from the point of view of contact with the membership
and the general public. The spirit of the cooperative store will be
interpreted by the purchasers in accordance with their opinion of
these employees; they will judge of its efficiency almost entirely in
terms of their efficiency. Finally, there can be no adequate means of
educating the buying public to the meaning of cooperation unless
these workers are taken into the confidence of the educational com­
mittee and made partners in the educational program. This one
principle must always be borne in mind: No store is truly coopera­
tive until its clerks habitually learn to think of themselves not as
salesmen trying to dispose of goods to the public but as partners of
the public in the common effort to obtain quality goods at fair prices
and to build a united cooperative movement. They must learn to
conduct themselves not as sellers, but as buyers for their fellow
members. They should have the interest of the members as their
chief concern.
Policies, Wages, Hours, Unions

The wise manager will not employ any member of his own family
nor let himself be bullied into the employment of any favorite of
any of the directors; if he succumbs to these temptations he greatly
weakens the spirit and morale of the store, for, no matter how good
his motives, there will be many to say he is showing favors. He
must expect to work longer hours than his clerks.
Managers’ salaries should not be below the standard set by profit
business. A good man deserves good pay and a poor one should
not be employed at all. Other employees should receive wages equal
to or better than those established by the labor union. I f there is
no union in the neighborhood, wages should, whenever possible, be
slightly higher than those of employees of the profit business firms
for the same kind of work Affiliation with the union should be



encouraged, provided the union itself is an honest one and is friendly
to the cooperative. Straight wages without any bonus or commis­
sion on sales should be the policy adopted by the directors for both
manager and other employees.18

There are several special committees required by every efficient
cooperative society. Among them are the committees on education,
auditing and inventory, finance, business or management, relations
with other cooperatives, etc. Some of these committees may be
combined; others will have several subcommittees for specialized
It is customary to have the directors appoint committees whose
work is with the business of the store, and to elect from the mem­
bership those which are to devote themselves to the broader questions
of the membership at large or to check the work of the directors.
Thus the membership meetings may elect the educational, the mem­
bership, and the audit committees, while the board may appoint or
elect from among its own membership the other committees
enumerated above.
Committee on education.—The success of the committee on edu­
cation depends upon efficiency and loyalty. Loyalty depends on
members who understand cooperation. Thus the perpetual duty of
this committee is to keep on educating itself. The committee may
be large and divided into subcommittees as follows:
The membership committee should bring in new members and hold
and educate the old. It must work among nonpurchasing members
who have grievances against the store, among patrons who have
riot yet become members, among fraternal, religious, labor, or farmer
groups from whom new members may be recruited; it must use the
papers, the movies, the radio, and the lecture platform.
The program and entertainment committee should arrange the
program for the members’ meetings, provide for debates, entertain­
ments, speakers, picnics, suppers, and other social pleasures, as well
as conduct more serious study courses for members and employees.
The junior committee should develop interest and loyalty among
children and young people. Literature and books suitable for them
should be read aloud and discussed. Outings, entertainments, and
other young people’s parties and educational meetings should be
18The laws of Iowa, Montana, New York (stock), North Carolina, North Dakota,
Pennsylvania, South Carolina, Virginia, Washington (stock), and Wisconsin require the
distribution of part of the surplus savings as bonuses on wages to employees; the Bureau
of Labor Statistics knows of only one society, however, the Soo Cooperative MercantUe
Association, at Sault Ste. Marie, Mich., which actually pays such bonuses.



arranged. Athletic teams, dramatic groups, and musical organiza­
tions should be fostered.
The women’s committee or women’s guild has the dual responsi­
bility of stimulating greater loyalty to the store on the part of its
present members and of interesting other women throughout the
community. Since it is the wives and mothers who spend more than
80 percent of the funds that go to the stores of the country, their
devotion to and thorough understanding of the cooperative is essen­
tial. In England and in other countries of Europe, it is the ambition
of the foremost cooperators to enroll in the associations the wives,
mothers, and sisters of every man who holds stock in the cooperative
associations. The guild is a more effective and permanent organiza­
tion than the committee and is to be more highly recommended wher­
ever it can be formed. It is a semi-independent and self-perpetuating
body, while the committee is elected from time to time by the mem­
bership meeting.
The library and literature committee should keep on hand in a
suitable place, preferably close to the store, up-to-date magazines,
literature, and books for distribution. This committee should con­
duct a library and reading room. It should see that every member
subscribes to or regularly receives a magazine or some current peri­
odical bringing to each home the news and ideals of the cooperative
The whole educational committee should strive to keep the asso­
ciation closely related to the organized cooperative movement, not
only in the State but throughout the Nation and the world.
Committee on audit and inventory.—As soon as possible the com­
mittee on audit and inventory should see to it that the association
makes use regularly of a qualified public accountant, preferably a
cooperative accountant if one is available. Such outside audits by a
public accountant should be quarterly for the first year or two; later
they may be at intervals of 6 or 12 months.
Business management committee.—The business management com­
mittee is usually elected from and by the directors, if the board of
directors is a large one. The committee may consist of the two or
three directors most conversant with business problems. It meets
with the manager at frequent stated intervals for the consideration
of the various problems of finance, merchandising, insurance, em­
ployment of help, relations with wholesale houses, enlargement of
the business premises, etc. This is the committee which assists the
manager in carrying out the general policies set by the entire board
of directors.
In the association which has a small board of directors, meeting
frequently, the entire board may perform the duties of this special
58151°— 34------- 5




As the store grows larger it is advisable to employ a bookkeeper.
The practice of putting the responsibility for bookkeeping entirely
in the hands of the manager, secretary, or treasurer, even though it
is sometimes advocated, is not a wise one.
The books and records are of such importance that an expert
should be put in charge of them at the earliest possible time. Book­
keeping is for keeping records of what has transpired; even more
important, it is a chart of future progress, the rudder by which the
cooperative is steered into new waters.
The accounting system must record all cash and credit transactions,
and protect the association from fraud on the part of employees or
outsiders and from mistakes of judgment on the part of the manager.
It must be serviceable and economical to handle. It should give
complete information for each department of the store (meat, gro­
cery, dry goods, etc.), so that the directors may know which
departments are profitable and which are unprofitable.
I f there is no good bookkeeper available, the association should
select an intelligent and cooperative young man or woman and see
that he or she is given the proper training, either by attending
cooperative training courses, by subscribing for correspondence
courses, or by getting direct personal instruction from the nearest
cooperative accountant.1®

The regular cooperative accountant, or a public accountant if the
former is not available, should be engaged to audit the accounts of
the association.19 His report, when completed, should be printed
and be given to each member. With frequent and searching audits
it is difficult for associations to go wrong.
Each year more associations are adopting the practice of having
audited not only the books and records but the membership and store
as well. A regular check is made of the number of members (both
of men and of women), their holdings in shares, their loans to the
association, their purchases, the length of time they have been
members, their occupations, etc.
19 The following central organizations provide auditing service, and assistance in this
matter can be obtained from them:
Illinois.— Central States Cooperative League, 1410 North Main Street, Bloomington.
Minnesota.— Midland Cooperative Oil Association, Broadway and Johnson Street NE.,
Minneapolis; Northern States Cooperative League, 2100 Washington Avenue North, Min­
New York.— Eastern States Cooperative League, 112 East Nineteenth Street, New
York; The Cooperative League of the U.S.A., 167 West Twelfth Street, New York.
Washington.— Grange Cooperative Wholesale, Kulien Building, Seattle.
Wisconsin.— Central Cooperative Wholesale, 1700 Winter Street, Superior.



Such membership audits are the regular practice in most coopera­
tive associations of Europe. A store audit means a regular check-up
of the store by an outside expert, to establish its cleanliness, its neat­
ness of appearance, the economical lay-out of its fixtures, counters,
and shelves, the reduction of hazards from fire or freezing or expo­
sure to heat and damp, etc.
A competent auditor, even though his official work is only that of
auditing the books, will not neglect these other matters but will look
into them at least superficially and then meet with the directors and
discuss with them the various problems that he feels are of impor­
tance. He will be a business adviser to the association as well as its
auditor. This should be the function of the accountants of the
national central organization. The central cooperative accounting
bureau should be employed by all associations.
Inventory and Depreciation

An inventory should be taken at least semiannually by both the
manager and the auditing committee. The inventory should be
figured at billed cost, with a deduction for any decline in market
prices after goods are purchased. Overvaluation of stock should be
Depreciation should be figured in the inventory. Depreciation on
fixtures should be figured at 10 percent; on automobiles, at 20 to 40
percent; on stocks of goods, at anywhere from 2 to 10 percent, de­
pending upon their condition, their marketability, etc. The public
accountant will set this last figure.
Cash or Credit?

All business of the society, both buying and selling, should be
strictly for cash.
In times of distress societies may allow members credit to the
amount of half their paid-in share capital, with the proviso that
such members must pay up the account before the end of the current
quarter. Any member failing to do so should have the amount
which has been extended in credit deducted from his share capital
and should not receive directly any purchase rebates until his shares
are again fully paid for. But credit is bad, whether granted by the
store to the members or demanded by the manager from wholesale
supply houses.
The following are some of the reasons most often advanced for
permitting credit to customers:
Competitors grant credit; we must do the same, competition compels it.
Our people are habituated to credit; we must meet the demand; it is their



Unemployment or other hard times force us to give credit; many members
have no money, and the cooperative cannot turn them away.
This store has always given credit; it is impossible to change the habit now.

On the other hand, the following arguments may be advanced in
opposition to credit trading:
The extra expenses involved require charging higher prices for goods.
More capital is required by the credit stores. Credit is a banking function
and we cannot run both a grocery and a banking business on capital which
is sufficient for only a store, nor on technical training which knows nothing
of banking practices.
Credit in large quantities quickly dissipates the capital of the society, for
a considerable proportion of the accounts will not be collected and ultimately
will be written off as bad debts.
Credit to customers usually means that bills to wholesalers cannot be paid
promptly and therefore higher prices must be paid for goods.
Credit encourages extravagance on the part of weak-willed patrons; they
will go in for luxuries that do not have to be paid for at once, whereas they
will do without them if cash is required on the spot.
The credit system is undemocratic. If credit is given to one member of a
cooperative it must be given to all, and to the same amount. Yet such equal­
ity of credit is impossible for it would bankrupt the store; thus credit in­
volves extending to some favors that others are denied.
Credit puts the debtor in bondage to his society. Many workers have lived
most of their lives in such bondage; the cooperative should help to free them,
not add to their chains.

Credit, if taken advantage of by all, will destroy the store.
It is evident that credit is expensive financially and morally
and that it should be eliminated by all cooperative societies. For
many years it was supposed that it could not be eliminated. Now
we know that this was a mistake. It is not necessary that the store
should adopt a policy to meet the demands of the weakest or poorest
members; it may form its policies to conform to the standards of
the strongest and the more secure and thus raise all its members
up to those standards. It must level upward rather than downward.
There are several methods of eliminating credit trading from the
cooperative. Obviously, the directors cannot merely issue an edict
and expect the membership to accept it meekly. The latter must
be educated to see its dangers and must then, in membership meet­
ing, vote to end it. As an alternative for those who still need credit,
a credit union or small saving and loan association may be organized
and needy members may borrow from this, as all members may learn
to deposit special loan capital with their society during good times
and draw against this when times are bad.
In order to avoid credit trading in connection with delivery, mem­
bers should be required to deposit sums approximately equal to their
week’s purchases in advance; or they may arrange to have the money
ready when delivery is made. If some credit of this kind seems



absolutely unavoidable, the driver should be made to assume direct
responsibility for the larger part of it; this will stimulate him to
greater caution in granting credit where it is unnecessary.
Credit procured by the society from wholesale supply houses is
equally bad; it means loss of the special discounts offered by the
latter for prompt payment of bills, and such discounts mount up in
the course of the year to many hundreds, sometimes thousands of
dollars. It necessitates charging correspondingly higher prices to
patrons. It is better to borrow extra loan capital from members
and pay good interest for it than to lose discounts from wholesalers
and also lose the confidence which the latter should have in the
business integrity of the cooperative society.
Credit selling and credit buying have been among the most fre­
quent causes of cooperative failure in America.
The members should positively set themselves against credit
trading and accept no compromise.
Fidelity Bonds or Security Guaranties
All persons handling the funds of the association should be bonded
to the full amount of money or property handled. A security com­
pany bond, which is superior to a personal bond, costs from $4 to $10
per $1,000. The central cooperative organization should provide
bonds for officers or employees of its affiliated associations at a lower
rate, provided their books are being audited by its accountants or
other reliable auditors.
Buying of Merchandise
Details of buying merchandise cannot be discussed here. It
should, however, be a fundamental rule of every cooperative associa­
tion that its manager shall give all possible support to the nearest
cooperative wholesale association, and the directors should require a
regular report from the manager on this point.
I f there is no such wholesale association in the territory, several
cooperative stores should combine their purchases and gradually lay
the foundation for such a wholesale.20
20 The addresses of the several cooperative wholesale societies, and the lines of goods
handled, are as follows:
Indiana.— National Cooperatives, Inc., Indianapolis. Gasoline, grease, motor oil, tires,
tubes, and batteries.
Iowa.— Farmers’ Union Service Association, Des Moines. General merchandise, flour,
feed, coal, salt, farm machinery, hardware, and petroleum products.
Minnesota.— Midland Cooperative Oil Co., Broadway and Johnson Street NE., Min­
neapolis. Petroleum products and bulk station equipment.
Missouri.— Cooperative Union Oil Co., 1721 Iron Street, North Kansas City. Gasoline,
motor oil, grease, tires, tubes, and batteries.
Nebraska.— Farmers’ Union State Exchange, Eleventh and Jones Streets, Omaha. Gen­
eral merchandise, farm supplies, petroleum products, produce, coal, salt. (See p. 32.)



I f the stock of a private merchant is bought, his liabilities should
be investigated so as not to assume unknown debts.
Delivery and Service

Delivery service is expensive. Studies of a large number of stores
show that the average expense of all operations is 14.8 percent for
stores without and 18.3 percent for those with such service. Deliv­
ery service is often a nuisance and a frequent cause of friction
between customers and employees. Also, it is frequently quite
unnecessary and is maintained only through force of habit of
members and manager.
When delivery service is necessary those who benefit from it should
bear the expense of maintaining it; those who carry their goods
home should not be given the extra burden of paying to support a
truck and driver demanded by those who will not do their own
errands. Delivery may be charged for at a flat rate per trip, or at
various rates, depending upon the distance traveled by the truck.
Special kinds of purchase-rebate records may be given to delivery
customers, and a rebate sufficiently lower to cover the cost of delivery
may be paid on such slips at the end of the year.
Special trips for orders should never under any circumstances be
encouraged; they virtually double the expense of the delivery service.
Members may either telephone or send in orders by mail if it is
impossible for them to send messengers or give the orders when the
previous order is delivered.
The man making the delivery must not only be highly efficient in
handling his truck, caring for his merchandise, and keeping records
of orders and routes; he must also be a genuine cooperator. The
latter qualification is even more essential in the deliveryman than in
the store clerk, for he is often the sole person from the association to
see some of the members and customers, and their opinion of the
entire cooperative will often depend upon the contact they have
with him. The most economical kind of truck should be purchased;
it should be depreciated rapidly on the books of the association, and
replaced by a new one before it is badly worn and its tum-in value
reduced too much. Delivery routes should be carefully and scien­
tifically zoned so that there is no duplication of roads covered and so
that all patrons are served at approximately equal intervals of time;
*> Continued. New York.— Eastern Cooperative Wholesale, 112 East Nineteenth Street,
New York. Groceries, flour, feed, and coal.
Ohio.— Ohio Farm Bureau Service Co., 632 East Broad Street, Columbus. Fertilizer,
feed, grain, seed, oil, and coal.
Washington.— Grange Cooperative Wholesale, Kulien Building, Seattle. Groceries,
hardware, feed.
Wisconsin.— Central Cooperative Wholesale, 1700 Winter Street, Superior. Groceries,
clothing, tires, light hardware, bakery products, building material.



two or three times a week is usually often enough for delivery to
each customer. Patrons should be trained to adhere strictly to the
schedule established and not ask for special trips for orders forgotten
or neglected.
In general it is strongly urged that everything possible be done to
discourage as many members as can be discouraged from having
delivery to their homes—but of course such discouragement must not
be carried to the point of driving them away from the association.
I f delivery is encouraged or passively permitted, even those mem­
bers who otherwise would carry their groceries will begin to demand
delivery and soon most of the sales will be handled in this expensive
Price Cutting

A fundamental principle of cooperation is that goods should not
be sold at cost or even at cost-plus. Nor should temporary under­
selling of neighboring stores be advocated, except to meet unusual
conditions. Cooperative stores that fall into this error do not
succeed in the end.
Selling at cost is inadvisable for the following reasons: (1) It
deprives the association of surplus. (2) It makes savings returns
impossible. (3) It prevents the accumulation of a reserve fund for
development and expansion. (4) It prevents social, recreational,
and educational work. (5) Actual costs cannot be accurately esti­
mated in advance and such a sales policy therefore increases the
danger of an operating loss. (6) Selling at cost also increases the
hostility of the private merchants.
Meeting Competition

The cooperative must meet competition as does the private store.
It may incur the direct hostility of local merchants’ associations as
well as the competition that all stores face in a world where compe­
tition is still considered “ the life of trade.” The entire question
should be given thought from the beginning and the preliminary sur­
vey made before the store is opened should give careful considera­
tion to this hostility.
The chain stores are generally looked upon as the most severe of
competitors, though it has often been the private merchants who
make the most severe attacks upon the consumers’ store. However,
the chains are not so serious a problem, especially in these days
when each large community has wholesalers selling merchandise at
prices about as low as the chain stores are paying. Cooperative di­
rectors and managers have acquired the habit of fearing the chain



stores and trying to imitate them, instead of stepping out boldly to
make the cooperative society something distinctly different from and
better than these stores.
The store belonging to the customers may not have large capital
behind it, but it has unique assets that no other corporation can boast.
It should capitalize these, and not try to emulate the wealthy chainstore corporation. The cooperative can specialize in quality and
guaranteed values. It can build up within its membership a sense of
direct ownership, loyalty to the people’s store, and pride in creating a
business institution unlike anything else in the community. It can
specialize also in social and fraternal activities to strengthen the
bond which unites the members—entertainments, lecture courses,
forums, and other enjoyable and profitable functions. It can cut
some of the expenses of operation that every chain store must have;
it can rely on its customers more and therefore install equipment for
a greater amount of self-service; it can call for volunteer help in
making repairs, meeting extra holiday trade, even in getting some of
the janitorial work done. The cooperative must learn to make full
use of its unique opportunities and assets. Its opposition often
consists not so much in the other stores as in the lack of imagination
among its own leaders and lack of loyalty among its own members.
Wholesale houses sometimes discriminate against the cooperatives,
in higher prices or inferior service. The blame for this discrimina­
tion cannot always be placed upon those firms themselves; many of
them have had poor treatment from cooperative stores, bills have
gone unpaid, or there has been gross discourtesy. It is the ultimate
hope of cooperators that they will some day have their own whole­
sales in all industries; but that time is not yet. Therefore they
should strive to have the best of credit rating, cultivate the soundest
of business relationship with the local banks, and show the world of
business that the cooperatives are efficient and trustworthy. Once
such a reputation is established, managers will complain less of
The cooperative should wear no political labels. Directors, mem­
bers, and employees should see to it that the association keeps clear
of political entanglements. A consumers’ nonprofit store should
remain just that and nothing else. Some of the evils of competition
arise from the misguided zeal of members who are adherents of par­
ticular sects or parties and who want to commit the entire organi­
zation to their faith. This is competition from within and not only
creates factions among the members, but discredits the cooperative
throughout the community.



Educational Work

The first essential of educational work in the cooperative society
is frankness, open records, and no secrets regarding the conduct
of the business or the activities of officers and committees. If
the members do not have confidence in their leaders, no educational
work can be effective.
The second principle underlying educational work is that such
work shall be connected closely with the business of the store itself,
and not treated as something divorced from the association’s eco­
nomic life, the special prerogative of the educational committee.
The handling of merchandise, the creating of a cooperative atmos­
phere, and the dissemination of cooperative ideas must all go along
together, else neither the business nor the education prove truly
The third essential is that each local association keep frequently
and closely in touch with the nearest educational center of the co­
operative movement,21 seek its ideas and advice, send to it information
on the local work, and participate actively in cooperative conferences,
conventions, and joint activities between cooperatives.
Educational work may be divided into three fields—that done
among the employees, that done among the members, and that done
for the community at large.
1. Education of employees is of two kinds—technical education to
make them more efficient workers, and general cooperative education.
One statistical bureau finds that of all people who stop trading at a
given store, 33 percent leave because of inefficiency of employees,
and another 30 percent because of poor facilities for service. A
large percentage of cooperative failures is due to lack of cooperative
understanding among the workers.
Opportunities for both kinds of education are available within the
cooperative movement. Special training schools and summer insti­
tutes are organized by the Cooperative League and its district leagues
and are run primarily for employees. The courses of study are
designed both for the technical training of employees and directors
and for instruction in the general principles of cooperation.22
2. Educational work for the membership may be carried on both
inside and outside the store. The best work from within is that
handled by the employees themselves either through the spoken
a Such centers are:
The Cooperative League of the U.S.A., 167 West Twelfth Street, New York. N.Y.
Eastern States Cooperative League, 112 Bast Nineteenth Street, New York, N.Y.
Central States Cooperative League, 1410 North Main Street, Bloomington, 111.
Northern States Cooperative League, 2100 Washington Avenue North, Minneapolis, Minn.
* See note 4, p. 7.
58151°— 34-------0



word, the cooperative approach to customers, or the use of posters,
bulletins, etc. The goods now being packed by cooperative whole­
sales under special cooperative labels have value in conveying the
cooperative idea. All stores to which they are available are expected
to stock them and educate the patrons to buy them.
The work outside the store may be direct and intensive, as in study
classes, distribution of cooperative literature, lectures, attendance at
cooperative schools and institutions. Again, it may be more gen­
eral and combined with social and recreational affairs. Finally, it
may accompany some of the direct work of the cooperative associa­
tion in its nonmerchandising activities. Thousands have been made
better cooperators because of the summer camp the cooperative asso­
ciation ran, the library it organized, the medical assistance it gave
to the unemployed, or its lunch rooms for members.
Work for the community of nonmembers may take the form
of general publicity or advertising. Publicity is designed to ac­
quaint the public with the idea behind the cooperative and to arouse
interest in its general work; advertising is to focus attention upon
particular commodities. The cooperative movement should make
more use of the former. Cases of goods sent to the unemployed,
house-to-house canvassing by members of the educational committee,
special assistance to the local hospital or orphans’ home, meetings
planned in the neighborhood church or lodge room—all may be
made effective in spreading interest in the cooperative. The special
membership drive, usually put on during a designated cooperative
week or cooperative month, has proved a valuable means of reaching
a new public.
Both the women’s guild and the young people’s committee should
be encouraged to take responsibility for educational work among
members and nonmembers. They have more and closer contacts with
those who should be reached than have the directors or officers or
even the members of the educational committee.
General Principles
Groups starting cooperative associations should beware of outside
organizers who are interested in taking their money. Associations
also should investigate any organization claiming to be a cooperative
wholesale which asks them to join it. No country has ever had so
many fraudulent and dangerous schemes, masquerading as cooper­
ative, as America. Associations in the same districts, which know
one another, should federate to form their district league or unions
and purchasing agencies.
Cooperators at all times must remember that cooperation is not
merely a business. It is something more than that. It is an experi-



merit in a different kind of civilization. It should be approached by
members in that spirit.
Sources o f Cooperative Information
The Cooperative League of the U.S.A., 167 West Twelfth Street,
New York City, stands in the position of a central clearing house for
the cooperatives in the United States. It is the national federation
of consumers’ cooperative associations of this country, and is affili­
ated with the International Cooperative Alliance. It promotes
education, gives advice, and unites these associations for their mutual
Cooperative associations should be affiliated with this federation
of cooperatives for purposes of advice and assistance.
The league issues special forms of stock certificates; membership
buttons bearing the cooperative emblem; transparencies of the em­
blem to be used on store windows, sides of trucks, etc.; cards for dis­
play in stores; small flyers for insertion in bundles or distribution at
meetings; annual calendars depicting cooperation symbolically; and
other aids to cooperative education.
The following federations of cooperative consumers’ associations
are in affiliation with the Cooperative League and offer information
on the local problems of cooperative business:
Northern States Cooperative League, 2100 Washington Avenue
North, Minneapolis, Minn.
Central States Cooperative League, 1410 North Main Street,
Bloomington, 111.
Eastern States Cooperative League, 112 East Nineteenth Street,
New York City.
National Cooperatives, Inc., Indianapolis, Ind.
Statistical information and advice on cooperative problems may
be obtained from the Bureau of Labor Statistics of the United States
Department of Labor. The Federal Farm Credit Administration
has specialists in auditing, accounting, and financing who may be
called upon by farmers’ cooperatives.
The Division of Subsistence Homesteads in the Department of
the Interior, and the Self-Help Cooperative Division and the Emer­
gency Educational Program, both of the Federal Emergency Relief
Administration, promote cooperative organization and education
among groups having small financial resourses.


Appendix A.— Model Bylaws for a Consumers* Cooperative
Bylaws of the ................................... Cooperative Society

r t ic l e

I.—Identity of the Society

S e c t io n 1. Name.—The name of this society (association) shall be The
--------- ------------------- , Inc.
N o t e .— (a) After a suitable name has been iselected by the incorporators,
permission to use the same must be obtained from the authorities of the State
in which the society is to do business.
(b) The word “ cooperative ” should always appear in the title of a coopera­
tive society.
(c) Either “ Society” or “Association” should also be part of the title. It
is desirable not to use “ Company ” or “ Corporation ” ; they are peculiar to
profit business.
(d) Either “ Inc.” or “ Incorporated” should appear in the title as an
indication that the liability of members is limited.
(e) If the society is not incorporated, it functions as a company in which
each member is liable for the obligations of the whole. There is a real ad­
vantage in the absence of incorporation—each member has more at stake and
accordingly must be more zealous for the success of the society. Nonincor­
poration promotes membership interest. Still, incorporation is to be recom­
mended, as interest in the society can be maintained by other methods.
S e c . 2 . Place of business.—The p l a c e o f b u s i n e s s o f t h e s o c i e t y ( a s s o c i a t i o n )
shall be located in the city (or town or township or county) o f _____ _________
and in such adjoining cities, towns, townships, or counties as the board of
directors shaU determine.
N o t e .—A cooperative society does not have to confine its business to a
single community. However, no society should extend its activities into a com­
munity already served by another cooperative society engaged in the same
kind of business. Violation of this principle may result in the delinquent
society being forbidden to take membership (or if already a member, to
maintain its membership) in the national cooperative federation or in the
cooperative wholesale society which serves its territory. Competition for busi­
ness is not practiced among cooperative societies. No society tries to take
business away from another. Such practice is absolutely noncooperative.
Cooperative societies cooperate with one another.

r t ic l e

II.—Object of the Society and Nature of its Business

S e c t i o n 1. Object—The object of this society (association) shall be (1) to
promote the economic welfare of its members by utilizing their united funds
and united efforts for the purchase, distribution, and production of commodities
of the best quality, and for the performance of services in the interest of the
members in the most economical way; (2) to associate itself with other con­
sumers’ cooperative societies throughout the State, the United States, and
countries abroad for purposes of mutual aid; (3) to advance the consumers’
cooperative movement as a system of business having service for its motive;
and (4) to do such other things as shall serve the economic and cultural wel­
fare of its members and the public.
N o t e .— (a) The mistake must not be made to place a propaganda purpose
ahead of the economic purpose. A consumers’ cooperative is first and foremost
an association of persons for business purposes.




(6) The society exists primarily for its members. It may also sell to non­
members, but this is not its purpose.
(c) If the society is truly to serve the economic interests of its members,
it must at all times resist the prevailing tendencies toward poor quality, adul­
teration, and high prices; it must emphasize high quality, purity, and fair
(d) “ Economical way” does not mean selling at cut prices.
(e) It is a mistake to assume that the direct economic interests of the local
members may be served adequately by a society which has no contact with the
rest of the cooperative movement. That contact is essential for business rea­
sons—reasons of economical buying, legal advice, expert bookkeeping and ac­
counting service, participation of manager and directors in the experiences of
other cooperative leaders and workers. It is also essential in order that the
local society have the help of and give help to other cooperative societies
throughout the country and the world. In unity is strength. It is most desir­
able that the society shall not remain isolated, but shall affiliate with the
national cooperative organization and with the nearest cooperative wholesale.
In no country has the cooperative movement become strong and effective
until its societies united in a national federation.
Seo. 2. Nature of business.—The general nature of the business to be carried
on by this society (association) shall be to buy, store, distribute, sell or handle,
process and produce for its members or for its members and other patrons,
foodstuffs, clothing, merchandise of all kinds, fuel, petroleum products, build­
ing materials, and any and all other commodities which the society (associa­
tion) may see fit to handle; to perform such other services as the members may
desire; to acquire, either by purchase or lease, real estate and other properties
or facilities necessary or desirable in the conduct of its business; to mortgage,
sell, and convey such properties; and to purchase, hold, sell, assign, or transfer
the shares of capital stock of other cooperative corporations. It shall also
enjoy all other rights and privileges consistent with its certificate of incorpora­
tion and the laws of the State o f ___________ _
N o t e . —•(») In general it is well to include all these purposes in the bylaws,
even though immediate plans call for only one or two lines of merchandising.
If they are all included in the bylaws from the very beginning, there is no
necessity for amending them every time the society enters a new kind of busi­
ness. The word “ service ” is desirable because a society may wish to supply
something more than commodities. It may want to conduct housing, a movingpicture show, theater, dance hall, recreation club, circulating library, medical
service, undertaking business, transportation service, electric supply, or other
Strict compliance with the laws of the State in which the society is
incorporated is essential. Some States will not permit a cooperative to enter all
these various lines of activity. Most of the States, for instance, will not permit
banking, insurance, or transportation by a business corporation. Those who
frame the bylaws for a newly organized society must study carefully the coop­
erative laws of their own State; and in those States in which there is no coop­
erative law, they must study the provisions of the ordinary corporation law.
(c) If the law permits, the last clause of the first sentence should by all
means be written in. Otherwise; it may prove difficult at some future date to
join the nearest cooperative wholesale society, or, for that matter, any central
cooperative organization.
(d) If the society is also to market agricultural products for its farmer
members, another clause to that effect must be inserted, preferably at the end
of the first sentence. The following wording may be used: “ Or marketing
for the same of grain, seeds, hay, eggs, poultry, milk, cream, butter, cheese,
livestock, and all products of the farm, together with the byproducts produced
in the manufacture or handling of these products.”



Abticxe III.—Method of Business
S e c t i o n 1. Adherence to cooperative principles.—The business shall be carried
on according to the principles and methods of Rochdale cooperation which are
as follows:
(1) One vote for each member and no more.
(2) Interest paid on capital at not more than the current legal rate.
(3) The difference between the net cost price and net distributing price,
after paying overhead costs and setting aside reserves, to be returned to the
members as savings returns in proportion to their patronage, or used collec­
tively for social purposes.
(4) Unlimited membership.
(5) Political, religious, and social neutrality,
(6) Business on a cash basis.
(7) No proxy voting.
The purpose of these methods is democratic control and a system of business
carried on to supply the owners of the business directly with commodities and
services for their own use as ultimate consumers.
A r t ic le


S e c t i o n 1. Membership defined.—The members of this society (association)
shall be the holders of its shares of capital stock, who are more than 18 years
of age, and who have complied with all the requirements of article V, section
4, of these bylaws.
N o t e .— (a) These bylaws are for a cooperative corporation financed by means
of capital stock, since this is the prevailing form of consumers’ cooperative
society in America as well as in other parts of the world. However, Alabama,
California, Nevada, New York, Oregon, Washington, and Wisconsin permit
the incorporation of a consumers* cooperative as a membership association
without capital stock; and where such a law is available, there are some
excellent arguments in favor of this form of incorporation, such as the
1. The distinction between the cooperative and the profit form of business
is much more sharply defined if the former is a nonstock organization. In a
community where “ capital stock ” is for most people associated with dividends
on stock, voting of stock, and other common business practices, it is very
easy for many people, even members of the cooperative, to look upon their
society as only one more example of profit business; and in annual meetings
or elsewhere even to demand excessive stock dividends, more than one vote
for the holder of several shares, a splitting up among the members of the
reserve fund or of the profits on sales to nonmembers. If the society is a
straight membership organization without stock, it is easier to explain that
its true nature is that of a fraternal association or club run in the interest of
its members and without profit.
2. Many people are afraid to buy stock in any organization, especially if they
have once lost money by investing in some worthless stocks.
3. Interest paid on the capital stock of cooperative associations is regarded,
for Federal income-tax purposes, as a part of the profits of the business and
therefore taxable. One society having capital stock outstanding of nearly
$1,000,000, and paying 6 percent interest to the shareholder members—$60,000
interest disbursements—would pay taxes to the Government of over $7,000 on
this item alone. If the society had been financed by means of money borrowed
from its members instead, all this interest oould legally have been oharged as
an overhead expense and it would not have been taxable.
(&) A nonstock membership organization is financed by means of loans
secured from its members and' elsewhere. There are several sound financing
schemes for such a society. Commonly nonstock associations issue certificates
of membership instead of stock. The price of these certificates is often similar
to the price of shares of stock. Additional funds are sometimes secured by
the issuance of bonds or notes. Any cooperative group wishing to utilize this



form of organization, once it has been ascertained that it is possible under the
laws of its own State, should write to the office of the Cooperative League, 167
West Twelfth Street, New York, N.Y., for further information.
S e c . 2. Qualifications of membership.—Membership shall be open to all con­
sumers who are in agreement with the aims and purposes of the society
(association) regardless of their race, religion, nationality, trade or profession,
social position, or political opinions. The membership of the society (associa­
tion) shall therefore be unlimited, excepting as otherwise provided by the State
or National law under which it is incorporated or under which it operates.
N ote .— (a) It is unwise to limit the membership of a consumers’ cooperative
to those who hold to particular beliefs or who belong to special economic or
social groups. There are distinct religious, political, or social organizations
formed for the purpose of propagandizing in behalf of such special causes.
The cooperative is purely an economic organization of consumers and should be
open on equal terms to all who will patronize it and who are in sympathy
with its aims. In countries where adherence to particular religious or political
beliefs are made a condition of membership in cooperative societies, those who
adhere to opposite political or religious beliefs have organized competing coop­
eratives, with the result that these national movements are divided into two
or more hostile and competing consumers’ groups. Such a divided movement
is to be found in France, Belgium, Holland, Finland, Poland, and other
countries. So serious is this situation in Europe that the Cooperative Union
of Sweden excludes from affiliation with it any society which restricts its
members to a particular group, and other European central unions are adopting
the same rule.
(6) This feature of unlimited membership distinguishes the cooperative.
The membership of a cooperative prospers best as the number of members
increases; the more members, the more patronage, and the larger the turn-over.
(o) Organizations such as the Farm Bureau, the Farmers’ Union, or the
Grange sometimes resolve to create a cooperative society from their member­
ship. Such cooperatives observe the spirit of this article, if the membership
of the constituent organization is unlimited.
S eo . 3. Application for membership.—Application for membership shall be
made in writing on a form provided for the purpose, shall be endorsed by a
member of the society (association), and shall be presented to the board of
directors which shall pass upon such application at its next meeting. An ini­
tiation fee of $1 shall accompany the application. If the board of directors
rejects the application, the initiation fee shall be returned and the board shall
state its reasons for such rejection if any member shall demand them; but such
an explanation does not have to be made to the applicant.
The application shall contain the applicant’s full name, his mailing address,
his occupation, his age, and a statement as to whether he is married or single.
The society (association) at its members’ meetings shall accept, or reject,
the candidates passed upon by the directors.
N ote .— ( a ) A certain amount of formality in membership is desirable. Most
societies admit new members merely on the recommendation of another member
or even without such recommendation. In a small community where people are
well acquainted these formalities may be dispensed with, whereas in a large
city it is wise to be much more strict.
(b) The initiation fee may be larger or smaller or may be dispensed with
entirely. Many societies charge only 25 or 50 cents as an initiation fee. No
eligible consumer with spending power should be denied admission on account
of lack of money to pay a full fee or buy a share of stock.
(c) Every society should have available the few elementaty facts about all
its members. Most of the central cooperative unions of Europe demand that
their constituent societies have such records.
S e c . 4. Action on application by board of directors.— U p o n a p p r o v a l o f th e
a p p lic a t io n b y t h e b o a r d o f d ir e c t o r s , th e a p p lic a n t s h a ll s u b s c r ib e f o r __ . . . .



shares of the capital stock of the society (association) and shall make an
initial payment on such subscription of at least $_____ , as required in article
V, section 4. The applicant becomes a full member with voting privileges only
after he has paid f o r _____ shares of stock. The membership of any share­
holder who fails to pay promptly all installments on the entire amount sub­
scribed as they fall due may, at the discretion of the board of directors, have
his membership canceled, in which case the money he has already paid for
stock shall be returned to him as per article IV, section 6. No member shall
have the right to withdraw and demand the return of his money until he has
paid in full the amount subscribed.
N o t e .— (a) Directors should have excellent reasons before rejecting an ap­
plication. The only two really valid reasons are (1) inability of the applicant
to patronize the society’s business and (2) positive knowledge of the applicant’s
hostility to the cooperative, its aims and purposes, the nature of its business,
or its membership. Hostility on the part of the applicant to particular indi­
viduals on the board of directors or among the employees is not sufficient
grounds for rejection.
(6) Many societies issue to members on their admission a membership card
or book. A card is merely a formal indication of membership with its rights
and privileges. A membership book usually contains blank pages on which
may be recorded the various installments paid on subscribed capital, other
payments or loans made to the society, quarterly, semiannual, or annual pur­
chases made from the society, interest payments on capital and savings returns
received by the member. This system is not used so extensively in the United
States as in European countries, for the average member here objects to
carrying a membership book to the cooperative at regular intervals.
It is advised that the provision giving the society the right to repur­
chase inherited stock be printed on the stock certificate itself.
S e c . 5. Other applications for membership.—Legal heirs of deceased members,
who have inherited stock in the society (association), may apply for member­
ship by making formal application as authorized in section 3 of this article
and payment of an initiation fee of $1. The board of directors shall have the
same rights to approve or reject such persons as are indicated in section 3 of
this article. The society shall have the right to repurchase the shares of stock
of an inheritor if his application is rejected. Nonmembers, patrons of the
society’s (association’s) business who have accumulated surplus savings in the
form of credits toward the purchase of capital stock to the value of $_______ _
or the amount necessary for membership, may upon making application be
elected to membership by the board of directors and receive the stock certificates
to which they are entitled.
N o t e .—It often happens that a patron of the society who is not able to pay
for membership, desires to become a member, or the society desires to have him
as a member. Under these circumstances, he applies for membership, continues
his patronage, and a record is kept of the savings returns he would have
received were he a member. When the total equals the cost of the share or
certificate necessary for membership, he is elected a member and given the
certificate of full membership.
Sec. 6. Withdrawal from membership.—A member wishing to terminate his
membership shall make written application to the board of directors. Mem­
berships shall terminate only at the end of the fiscal year. The application
shall be presented at least 2 months prior to the date on which the member
wishes to withdraw. Favorable action upon such an application shall be
followed by the repurchase of the withdrawing member’s shares of stock in
accordance with article IV, section 5. The member’s duties and responsibilities
dhall not cease until his stock has been repurchased by the society (association).



The initiation fee shall not be returned to a member who withdraws or is
Note.— (a) This rule is in the interest of accounting regularity. There is no
reason why members should be permitted to withdraw their capital whenever
the whim seizes them. The interest of the society and the majority of its
members is paramount to that of any one individual.
This rule also is to permit sufficient time for consideration by the board
of directors, not only of the application itself but of the financial condition
of the society as well.
S e c . 7. Expulsion from membership.—The board of directors shall at all
times have the right to dismiss and repurchase the shares of stock of any
member or members who have failed to patronize the business of the society
to a minimum amount in the previous fiscal year, as specified in article IV,
section 11, or it shall have the right to dismiss and repurchase the shares of
stock of any member who has been judged by the board of directors to be
acting contrary to the best interests of the society (association) : Provided,
That said member has had the opportunity to appear in his own defense before
the next regular or special meeting of the society (association) and the board
of directors has been sustained in its action by a majority vote of the members
N o t e .— (a) This minimum amount will vary according to the nature of the
business and other local considerations. A society handling milk or bread
only would set a much lower figure than one handling a full line of general
This rule is to insure also the consumer nature of the membership.
There are societies whose membership is largely that of nonpurcliasing stock­
holders, while the business is done largely with nonmembers. In such a case
the interest of the member becomes increasingly a stockholder’s interest rather
than a consumer’s interest, until ultimately these members may decide to
reorganize as an ordinary stock corporation and the consumers’ cooperative
becomes a profit business. It is therefore essential that the actual patrons of
the society constitute the membership. In case the financial condition of the
society does not permit the repurchase of all shares of stock held by nontrading
members, the board of directors may postpone such action to a more favorable
time; but they should have this r.ght. Every effort also should be made to
induce nonmember patrons to become members and stockholders.
When a member is before the society for dismissal, the case may often
best be heard by a special committee appointed for that purpose.
Though the board of directors should have this right, it should be exer­
cised only in extreme instances, such as, for example, when the offending
member has opened a private business of his own in direct competition with
that of the cooperative business.
S e c . 8. Membership roll.—A list of the members with their addresses, occu­
pations, and age at the time of admission to the society (association) shall be
kept by the secretary. Each member shall agree to notify the secretary within
10 days of any change of address.
S e c . 9. Presentation of bylaws.—A copy of these bylaws shall be given to
each applicant for membership not later than the date on which his application
has been approved.
N o t e .—It is essential that every member possess a copy of the bylaws of his
society at the earliest possible date. In fact, he can legally demand it. It is
not necessary that a large sum of money be spent on the printing of the bylaws;
they can be mimeographed at a small expense by a local firm of stationers or by
the nearest cooperative educational center.
S e c . 10. Organization members.—Cooperative societies or other organizations
not operated for profit and whose aim and purposes are not in opposition to
those of this society (association) may make application for membership and
on approval by the board of directors shall subscribe for the minimum amount


of stock set forth in article IV, section 4, or such larger amount as the board
of directors shall determine. Such an organization member shall, however, be
entitled to only one voting delegate in meetings of the society.
N o t e . — {a) Unless it is clearly established that the laws of the State in which
the society is incorporated permit such organization membership in a cooper­
ative corporation, this section must be stricken out. The laws of the State
must also be consulted to determine what voting rights are permitted in such an
(&) The directors may determine that another association, which has ample
funds and is going to demand more in the way of service than is accorded an
ordinary householder, should contribute a larger amount to the capital stock of
the society.
(c) The voting privilege here is a fair rule. A consumers’ cooperative is
organized primarily for the benefit of the men, women, and children who are
ultimate consumers, and the interests o f :other individuals or organizations
must be subordinated to this fundamental purpose. Under some circumstances
there are reasons for giving such a member society delegate representation with
one vote for a certain number of members.
( d) In some European countries the town, city, or municipality, as a political
corporation, has joined the local cooperative society.
(e) When the cooperative society is a wholesale, or a federation of societies,
the total membership is made up of other organizations; the constituent mem­
bership then may have votes in proportion to their number of individual
members or to their patronage with the wholesale. Such an organization
should have bylaws specifically for an association of associations. These
present bylaws are for an association of individuals who may incidentally take
into their membership one or more desirable associations.
Seo. 11. Rights cmd duties of members.—Every member must agree to obey
the rules of the society (association) as set down in these bylaws, or elsewhere,
and the decisions of the general membership meeting or of the board of directors.
He must also help to promote the aims and purposes of the society (association),
the success of its business, and the welfare of its members. By patronizing
its business and by participating in its membership activities, he shall aim to
serve himself by promoting the interests of his fellow members in the spirit
of mutual aid. Every member shall have an equal right to participate in
regular or special meetings and to vote on all matters brought before such
meetings, to patronize the place of business of the society (association), to
receive interest on his paid-in capital, and to share in the distribution of
savings returns: Provided, however, That the provisions of this section of
article IV shall be subordinate to any special rules pertaining to voting,
payment of interest, or distribution of savings returns contained in these
N o t e .—Some societies have a pledge embracing these obligations.
This is
printed on the form used for application for membership. Others ask for a
verbal pledge when the applicant is admitted by the board of directors. Al­
though objection has been raised that a pledge of this kind has no real value,
since it cannot be strictly enforced, this is not a final argument against it.
There is a genuine moral value in any promise which impresses upon the
prospective member the fact that he has duties and responsibilities, as well as
rights and privileges, a s long a s he is a part of the society.

A rticle Y.—Capital
S e c t i o n 1. Fiscal period.—The business period of this society (association)
shall begin with January 1 of each year and end on December 31 of the same
N o t e .— T h e f i s c a l p e r i o d , i n s t e a d o f t h i s , m a y b e a p e r i o d o f 6 m o n t h s , o r o f
3 m o n t h s , o r i t m a y b e g i n a t s o m e o t h e r t im e .



Seo. 2. Various hinds of capital.—The capital of the society (association)
shall be composed of (1) the funds paid in by the members for its shares or
certificates; (2) such funds as it may borrow from its members or from other
sources; (3) the accumulated surplus savings accruing from its business and
the properties purchased with such savings; and (4) the properties which
it builds or creates.
N o t e . — (a) The share capital, generally known as common stock, is the basic
and most important capital of the organization, for it represents the direct
contribution made by the members. Some States permit cooperative societies
to issue preferred stock also. Such preferred stock would be somewhat similar
to the “ loan capital” indicated in section 10 of this article; it has a claim
upon the assets of the society prior to that of the common stock. Generally
the interest on the preferred stock, which must be paid before any interest is
paid on common stock, is definitely fixed as to rate. Its payments can be
virtually guaranteed by any sound business.
(6) These funds include not only the reserve fund, which is made up of
funds actually set aside out of surplus savings for emergencies and for the
future extension of the business, but also such savings returns of members or
nonmembers as are hot paid to them in cash but are applied to their capital
(c) Cooperative societies are sometimes organized without capital stock,
in which case many of the provisions of this article would have to be rewrit­
ten. See note under article IV, section 1.
Seo. 3. Share capital.—The authorized share capital (common stock) of the
society (association) shall be ___________ dollars ($_____ ), divided into
_________ ( ______) shares of nonassessable stock of the par value o f __________
dollars ($_____ ) each.
N o t e .— (a) The amount of capital will differ according to the nature and
the needs of the business to be undertaken. A cooperative store, for the
handling of food only, should have $5,000 of capital, and one handling general
merchandise as well should have at least two or three times that amount. A
bakery requires much more capital than a restaurant or store. A housing
association will need a large initial capital. A credit union or a buying club,
on the other hand, can start with a few dollars. In most States it is not
required that the entire amount of capital for which the society is incor­
porated shall be raised before starting business; therefore it may be wise
to set this figure in the bylaws much higher than actual immediate require­
ments, so that it will not be necessary to go through the troublesome process
of increasing the authorized capitalization within 2 or 3 years, since a society
is not permitted to sell stock in excess of its authorized capitalization. The
laws of the State on this entire matter must be consulted before this amount
is established.
( J>) Cooperative shares never go above par value. It is here specified more
to comply with the technicalities of legal procedure than anything else.
Some States definitely fix the value of the individual shares of stock in
a cooperative society. Many States, however, have no laws on this matter,
which leaves the local society free to set its own valuation on a share of
Seo. 4. Shareholders.—Each person or organization admitted into the mem­
bership of the society (association) shall subscribe for a minimum o f _______
( -------- ) shares of its capital stock and shall make an initial payment thereon
of at least $------------ The balance of the subscribed amount shall all be
paid within 12 months from the date of subscription. In the event that
all payments are not completed within 12 months the board of directors shall
have the right to return to the subscriber the amount already paid and can­
cel his membership. The privileges of full membership shall be given to each
subscriber when he has paid the full amount subscribed, and he shall not
receive a stock certificate nor savings returns in the form of cash until the full
subscribed amount has been paid. No shareholder shall hold either directly



or indirectly more than 5 percent of the total shares outstanding, unless the
total number of members is less than 20. A numbered certificate of shares
in the society (association) shall be issued to each member on the full pay­
ment of his subscription to the capital stock, such certificates to be numbered
and registered as issued and to contain the shareholder’s full name, the num­
ber of shares owned by him, and their yalue at par, and to be signed by the
president and treasurer and impressed with the seal of the society (associa­
tion). The record*of stockholders and the outstanding stock shall be kept
by the secretary in a stock book for that purpose.
N o t e . — (a) The amount required from each member depends upon local
conditions. Most store societies should require each member to subscribe at
least $25. Many such societies set a lower figure, but they handicap them­
selves by so doing. Some store societies demand that each member subscribe
$100, and give him a long period in which to pay it. If organizations as
members are required to subscribe larger amounts and to make larger initial
payments than individuals, this fact should be specified in the bylaws, or the
board of directors should be given explicit permission to make exceptions in
such instances.
(&) Loan capital is entitled to its interest before share capital. In fact, the
interest on the former should be charged to the expenses of running the busi­
ness, while interest on the latter must come out of net surplus savings or
“ profit.” It may be well to offer a higher interest on loan than on share capital
when extra funds are needed, thus encouraging contributions on which interest
is not considered taxable income by the Federal Internal Revenue Bureau.
(c) Not less than $10 should be required in a new business which needs all
the capital it can get. If at some later date the society finds itself prosperous
and able to attract new members by reducing this amount, this clause can be
amended. Many old societies take in new members on the payment of $1 or
even of 50 cents or 25 cents, and in England some societies offer memberships
for 2 cents. This simply means that their subscriptions are all paid ultimately
out of accumulated surplus savings.
(d) Six months or 3 months may be allowed for payment of subscriptions.
If minimum subscription is $100, then it is well to make this 24 months.
(e) Cancelation of subscription is essential to protect the society from
becoming overloaded with members who have not completed their obligations,
but it need not be enforced in the case of a subscriber w;ho is financially em­
barrassed and unable to meet this requirement strictly on time.
(/) Too many shares in the hands of any one member are not desirable. A
member might hold only 5 percent himself, yet have additional shares owned
by minor members of his family—children not legally entitled to exercise all
the privileges of membership. A member with a large number of shares might
not have the power of more than one vote, but he would be in a position perhaps
to injure the society by removing all of his money at once. No one individual
should be in a position to cripple the society, or to exercise undue influence
over the board of directors by virtue of the fact that he is a “ big shareholder.”
(ff) In some States without a cooperative law and in which, if the society
incorporates, it must do so under the general corporation law, a stockholder
must, under the law, have as many votes as he owns shares of stock. Where
this condition exists, a cooperative society can meet the situation by providing
in its bylaws that each member shall have only one share. In a State in
which the law permits the uncontrolled sale of stock by one person to any
other person at any price, then the cooperative society should organize as a
membership association with certificates of membership or loan capital in
place of stock, or it should issue only as many shares of stock as it has
(h) The Cooperative League (New York City) supplies special share cer­
tificates expressly printed for the use of cooperative societies.
(i) Other officers may be authorized to sign but these are the ones usually
Sec. 5. Interest,—Share capital may receive interest at the minimum legal
rate. This shall be not more than 6 percent per annum. No interest shall
be due on shares until the full subscription has been paid.



Loan capital shall receive interest at not more than 6 percent per annum,
and such interest may be cumulative.
Interest on share or loan capital may be calculated quarterly, but no capital
held by the society (association) for less than 13 weeks shall bear interest.
Such interest may, on request of the member and at the discretion of the board
of directors, be applied toward the purchase of additional shares of stock or
the deposit of additional loan capital.
N o t e .— (a) Massachusetts societies are limited to an interest rate of 5
percent Other States (see note 11, p. 14) allow higher rates, and cooperative
societies sometimes do so when they are greatly in need of capital and cannot
get it any other way. It is better, however, to limit the interest rate to 6
percent and depend upon educational methods as the soundest means of getting
the members to finance adequately their own organizations. People should not
be encouraged to look upon a cooperative society as an investment which will
yield large returns on their money. The investment should be safe; the
large returns should be in patronage.
(6) No society is permitted to pay interest on share capital unless such
money is actually saved or earned during the business year. If savings are
small, it may be well for the directors to recommend to the general meeting
that interest be paid at only 2 or 3 percent or even passed entirely for that
particular year, so that the reserve fund may be made to grow faster or the
consumer members encouraged with a slightly higher rate of savings returns.
(c) If interest is to begin as soon as 50 or 75 percent of the amount sub­
scribed has been paid in, it should be clearly stated that such interest payments
shall not be made in cash but shall be applied only toward the unpaid balance
of subscription.
(d) It is conceivable that during the first year or two the society may not
be able to pay even this interest. Therefore provision should be made that in
later and more prosperous years the past interest payments may be met.
The society has a financial obligation to its sources of loan capital which
precedes that which it has toward its sources of share capital.
(e) Interest may be paid from the date the money is received in the case
of share or loan capital.
S e c . 6 . Transfer or repurchase of shares.—The society (association) shall
have the first option on any shares of stock offered for sale. Shareholders
desiring to dispose of such shares must first offer them to the society (associa­
tion) through the board of directors which is authorized to redeem them at
a price not exceeding their par value, or book value, if the latter be less. If
the society (association) through its board of directors is unable or refuses
to redeem such shares, the shareholder shall then have the right to dispose
of them to any person eligible to membership in the society (association).
Transfers of the shares of this society (association) shall not be binding until
made upon the books of the society (association) with the approval of the
board of directors, and no transfers shall be completed until the old certificate
or certificates have been endorsed and surrendered and a new certificate issued
in the name of the purchaser.
N o t e . — (a) Some societies have suffered considerably from having outsiders,
perhaps even business men who are competitors of the society, get into their
hands a large amount of stock. If stock is to be transferred, the society
should see that the new purchaser is one who is to be a patron of the society
and in agreement with cooperative principles. This section and also the sec­
ond half of section 4 of this article should amply protect the organiza­
tion likewise against the buying up of large quantities of stock by a few
grasping individuals, who ultimately get complete control and reorganize the
society into an ordinary joint-stock company, sometimes with the connivance
of the manager. It is well to have this particular provision written on the
stock certificate itself.
(&) The redemption price of shares is often regulated by the laws of the
State. Some States compel redemption at par value, regardless of the fact
of a deficit ©r surplus on the books of the society.



If the society has refused to repurchase such shares, it cannot legally
prevent their sale to another person; therefore it must also accept the new
shareholder into membership, after he has filled out the necessary application
blank and paid the initiation fee.
S e o . 7 . Authority of board in transfer or repurchase of shares.— T h e d u r a ­
t io n o f o p t io n o f th e s o c ie t y

(a s s o c ia tio n )

t o r e p u r c h a s e s h a ll c o n t in u e f o r a

p e r i o d o f 6 m o n t h s a f t e r t h e s h a r e s h a v e b e e n o f f e r e d f o r s a le .

The board of directors shall at all times have the authority to repurchase
the shares of stock and to cancel the membership of any shareholder who
has died; who has ceased to patronize the business of the society (associa­
tion) as specified in article IV, section 7; who has failed to meet his payments
on stock subscriptions within the specified period of time; or who has, for any
other reason, been judged unfit for membership. After a shareholder’s where­
abouts have been unknown for a period of 10 years and in accordance with
the laws of the State o f ___________ , due notice and warning have been given
in the public press, the board of directors shall have the right to cancel such
membership and transfer his share capital to the reserve fund.
N o t e . — (a) No society should permit its shareholders to demand an imme­
diate return of their money. Six months should, however, be a sufficient
time for the society to find sufficient funds to pay out any small number of
retiring members. Some societies claim an option of 1 year. Yet if a society
is going to demand too long a time, more harm may be done than by immediate
payment, for if the applicant has a grievance he may talk so much about it that
he breaks down the confidence other members or creditors have in the society
and thus injures the society’s credit. As a general rule, if the applicant seems
to have a good reason for wanting to withdraw all or part of his capital, it is
best to complete the transaction at once.
(b) Consult the laws of the State for the legality of all these provisions.
(c) Some of the oldest societies in America have on their books the names
of members who' have been completely lost for many years, and legally they
have no way of getting rid of such “ members.” No society should continue
to carry this “ deadwood ” year after year. A society in Europe struck from
its membership roll in 1 year 30,000 inactive members. The rules of deprecia­
tion should apply to a society’s membership as well as to its physical property.
However, the laws of the various States are strict on this matter and must
be studied.
S e o . 8 . Reducing capital by repurchasing of shares.— Whenever the share
capital of the society (association) shall, in the judgment of the board of
directors, be in excess of current needs, the board of directors shall have the
right to repurchase from any or all shareholders, who have shares in excess
of the minimum requirements o f -------- shares of stock, as many such shares
as it shall consider necessary to the best interest of the society (association).
The board of directors shall not repurchase the shares of any withdrawing
member nor of any other member when such a reduction of the society’s
capital would in any way endanger the financial condition of the society
N o t e . — (a) Few societies ever have so much capital that they do not know
what to do with it, except for a very limited period of time. Every progressive
society should have an expansion program which continually demands more
capital. There have been many instances where a society has built up a
reserve fund of its own, large enough for all the ordinary purposes. Since
interest is paid on share capital and none is paid on money in the reserve fund,
interest charges may be reduced by retiring some of the share capital.
It would seem that the last provision is so obviously sensible that it
is not needed in the bylaws. However, many a board of directors has acted
directly contrary to its own best judgment in the face of persistent demands
on the part of some strong-willed shareholder, partly because it “ does not want
to refuse Smith after accommodating Brown last month.” It is easier to grant



than to refuse the demands of an insistent shareholder, especially if he be an
influential person in the community. A clause such as this in the bylaws will
help to stiffen the backbone of a board of directors.
Seo. 9. Lien on capital.—The society (association) shall have an absolute lien
on the share or loan capital, and on the interest due thereon, of any member
or any subscriber to share capital for his debts owed to the society (association).
N o t e . —Many a society having no such rule as this, has felt itself obliged to
redeem the capital stock of a withdrawing member, even though that member
was in debt for goods purchased. Not only should there be such a provision, but
it should be scrupulously followed.
S e c . 10. Loan capital.—The society (association) may accept loans from its
members or from nonmembers in any amount acceptable to the board of direc­
tors, and shall undertake to pay interest for the use of the same at not more
than 6 percent per annum figured quarterly. Such loan capital shall have
preference over share capital. Notes or other evidences of indebtedness shall
be given by the society (association) for such loans, but no such note shall be
for a period of less than 90 days.
N o t e . — (a) Some societies have at all times large amounts of loan capital;
in some instances twice as much as of share capital. Such an amount is dan­
gerously high. There are many members who will take the minimum require­
ment of shares of stock, but will advance additional money only in the form
of deposits or loans which are a much safer investment in the event of losses
sustained by the society’s business, and which at the same time are more easily
recovered on reasonably short notice. Thus loan capital offers many a society
a new source of capital. On the other hand, since a serious wave of unemploy­
ment or other crisis in the community might provoke a “ run ” on the loancapital fund, no society should load up heavily with such a dangerous form
of capital except on long-term callable notes or bonds.
(&) Sample form for notes against loan capital may be had from The Coop­
erative League, 167 West Twelfth Street, New York City.
Wherever agreeable to the depositor, these notes should be made for
longer periods of time—6 months or a year, or 2 years or more; or they could
be redeemable “ 90 days after demand.” Notes or bonds running 20 years or
more are advisable where the money is used for building. Bonds are safer
than short-term notes, because they insure a longer loan, and they have a
definite maturity date. Most cooperative societies will not undertake to issue
bonds, but they should try to give to these notes something of the same stabil­
ity. Of course, as long as this form of capital is needed, members should be
urged to renew their notes well in advance of date of expiration.
Sec. 11. Reserve fund.—At the end of each year, a sum not less than 5 per­
cent of the net surplus savings or profits shall be allocated to a reserve fund.
This fund shall be made up of money especially allotted to it from net savings
or earnings of the business, initiation fees, fines, contributions from individuals,
confiscated capital of removed or dead members, and any other funds appro­
priated to it by action of the board of directors or the general membership
meetings. The reserve fund shall be for purposes of unforeseen losses due to
extraordinary depreciation of equipment, fire, theft, or other causes, for the
extension of the society (association) as a consumers’ cooperative, or for any
program of social welfare or insurance or other development directly associ­
ated with the cooperative movement as shall be decided by a general meeting
of the membership. The reserve fund shall be the indivisible property of the
society (association) as a whole.
N o t e . — (a) Under this section, it is possible for the society to make an appro­
priation to the central, national, or district educational headquarters. Gener­
ally, however, such appropriations should be made out of current surplus savings
or earnings. Funds should not be appropriated from the reserve fund as
donations to organizations or causes outside the consumers’ cooperative move­
ment; such action establishes a precedent from which it is difficult to disen­
tangle the society in the future; furthermore, it may cause disagreements and



division in the membership. Donations to pure philanthropies by unanimous
vote of the membership are the only exception.
(b) It is unlawful to pay savings returns or interest on share capital for
any particular year out of the general reserve fund.
(c) The indivisibility of the reserve fund is important. Its meaning should
be made clear to the membership, for this is one particular in which cooperative
business differs radically from profit business. Many societies have made the
mistake of crediting each shareholder with “ his share ” of the reserve fund
and actually turning this over to him in the form of cash when he withdraws.
In other societies, the membership meeting has voted to divide the reserve
fund. Either practice is objectionable.
(d) Before the amount to be placed in the reserve fund is determined the
State law should be consulted, as some of the laws have a definite provision on
this point.
Sec. 12. Educational fund.—At the end of each year, a sum not less than 5
percent of the net surplus savings or profits shall be allocated to an educational
fund. This fund shall be placed in the hands of the educational committee
of the society (association) to be used for purposes of education among the
members and the public.
S e c . 13. Distribution of surplus savings.—At the end of each fiscal period,
after paying the interest on capital stock, and after providing for the reserve
fund and the educational fund, as required by article V, sections 5, 11, and 12,
the remainder of the surplus savings may be used collectively for social pur­
poses or may be divided according to the Rochdale method among the members,
who have paid in full for their shares of stock and who are not in arrears, in
proportion to the amount of their patronage. Any fraction thereof remaining
shall be carried to the account of the member for the next fiscal period. All
such savings returns not withdrawn within 10 days after being declared shall
be carried to the member’s surplus savings account. Savings returns may be
allotted to members who have not paid in full for their shares of capital stock
if they agree to allow this money to go toward the payment of the said stock.
N o t e . —Some societies pay savings returns to nonmembers in one half the
amount paid to members. (But see note 16, p. 23.) Such nonmembers should
be urged to allow these savings returns to remain on the books toward the
payment for their share capital.

r t ic l e


S e c t i o n 1. Distribution prices.—Goods and services shall be supplied to the
members at the prices prevailing in the profit business of the neighborhood
or with which the society (association) competes.
N o t e . —The reasons for this difference between cost and distributing price
are (1) to create a surplus (this difference is the profit in profit business; it is
the surplus saving in cooperative business); (2) to prevent the hostility of
competing profit business which arises if the cooperative sells at cost; and
(3) to make it easier to know what prices to ask because of the difficulty of
figuring exact cost at the time of sale. Cooperatives sometimes find it advan­
tageous to have some prices below the market. There must always be a good
reason for such pricing.
A r t ic le

VII.—Use of Surplus

1. Surplus savings.—The surplus savings (or profits) which accu­
mulate shall be used for (1) paying overhead costs, (2) paying interest on
capital, (3) creating a permanent surplus fund, (4) expanding the business,
(5) general welfare undertakings in the interest of all the members, (6)
philanthropic service, and (7) the balance shall be returned to the members
in proportion to their patronage.
N o t e .—-Some societies find it advantageous to use much or all of their sur­
plus savings for the general good of the members in the form of education,
S e c t io n



recreation, insurance, health protection, housing, and other welfare services.4
The disadvantage of this is that the benefits are not always enjoyed in equitable
proportion by those whose patronage have created the surplus savings. It is
more equitable to return to each member the surplus which his own patronage
created. The society may then make available for him the above services,
which he may directly purchase with his own savings returns or returned
A r t i c l e VIII.—Government
S e c t i o n 1. Membership control.—The control of the society (association) shall
be vested in the membership meetings. The board of directors and such special
committees as may be elected by the membership meetings are elected to ad­
minister its affairs. Final and supreme authority resides in the membership
meeting. All meetings shall be governed by “ Rules of Order.”
N o t e .— (a) Included under this head are both regular and special meetings.
( See secs. 3 and 5.)
(&) For the number and nature of such committees see sections 15 and 16
and footnote. These committees must not be confused with those elected or
appointed by the board of directors. The latter are under the control of and
responsible to the board of directors only.
(c) General control and centralized administration are the basis of coopera­
tive business.
( d) Roberts’ or other authoritative rules of order may be used.
S e o . 2. Quorum.—A quorum competent to transact business shall consist of
20 percent of the members. No meeting shall proceed with business unless a
quorum be present.
N o t e .—The number necessary for a quorum should be given careful considera­
tion. It should depend upon the size of the society and the possibility of mem­
bers’ attending. In a society of more than 1,000 members, the quorum may be
made less than 20 percent. In a smaller society it should be more.
S e o . 3 . Regular membership meetings.—The regular meetings of the member­
ship shall be held semiannually on th e ___ day o f __________ and th e ____ day
o f _________ at 8 p.m., at a place to be determined by the board of directors
and specified in the call to the meeting.
Notice of regular meetings shall be posted prominently in the society’s
(association’s) places of business and shall also be sent by mail to the address
of every member as registered on the books of the society at the time the
notices are sent. Notices shall be sent at least 6 days before the date set for
Nom— (a)^ Some societies have regular meetings quarterly, and a few even
monthly. On the other hand, many of the older societies, in which the mem­
bers are not interested in attending more often, meet regularly only once
a year. Much depends upon local conditions. Such meetings should take
place at least twice a year; four times is even better, provided the members
are really interested in attending. Monthly meetings are excellent, especially
during the early life of a society when enthusiasm is high and the members
are eager to educate themselves, but it is probably wiser to designate frankly
such monthly affairs as educational meetings. In a small town it is easier
to have frequent meetings than in a large city. People having few other social
affiliations will attend cooperative meetings more frequently than people who
belong to other active groups, clubs, fraternities, unions, etc.
( b)
“ Third Thursday of February and third Thursday of August” is the
way one society designates the date of meeting. Some States (New York
is one) demand that the exact day be designated in this way. Others permit
the directors to use their own discretion in each instance. If the State law
does not require this, it may be left out and in its place may appear the words
“ on such a date as may be determined by the board of directors.” The date

1 But the laws of some States require the distribution of surplus savings in proportion
to patronage. See note 16, p. 23.
* v



should, however, be at least a month, preferably 6 weeks, after the end of the
fiscal period. See article V, section 1.
(o) A few States demand that the place for the meeting shall also be fixed
in the bylaws but this is unusual. The call to the meeting is sent out by the
secretary, either on a postcard or by letter. Whenever possible it should also
be published in the local press or in the publication of the local society, if
there is one.
(#) Six days’ notice is usually enough, but again, in a community where
many of the members make many engagements in advance (a large city for
instance), this might better be 10 days or 2 weeks.
Seo. 4. Order of business <ti regular meetings.—The order of business at
regular membership meetings shall include:
Reading of minutes of last regular or special meeting.
Unfinished business left from previous meetings.
Report of secretary.
Report of treasurer.
Report of manager.
Report of audit committee.
Report of education committee.
Report of membership committee.
Report of other committees.
Discussion of the reports.
Election to fill vacancies on board of directors or committees.
Action on distribution of net surplus savings.
Action on other recommendations of board of directors.
Other new business.
Note.’— (a) The items here set down are only the most important ones, and
they should not be looked upon as a complete order of business. Some of
them might not be applicable to the semiannual or quarterly meeting (elec­
tions, for instance, or distribution of savings, if such action takes place only
once a year).
(&) It is very easy for a meeting to confine itself exclusively to business
matters. Therefore, it is essential that a place be definitely allotted on the
agenda for discussion of education and membership. It is important to have
a sound educational policy as well as a sound financial policy. Expansion
and development of the membership are as essential as expansion and develop­
ment of the business. Otherwise the members lose contact with their busi­
ness institution, become indifferent to it, and soon begin to look imper­
sonally upon it, merely as one of several competing stores in the neighborhood.
(o) The board of directors should always present its recommendations on
the distribution of surplus savings, advising the membership as to how much
should go to the reserve fund, to the educational fund, how much to be distrib­
uted as savings returns, and how much to other funds and causes. The meeting
is then ready for a worth-while discussion of the whole matter and may accept
the recommendations, modify them, or reject them.
(d) Other matters to be presented may cover a wide range of subjects,
such as proposed amendments to the bylaws, construction of a new store
building, placing a mortgage on the society’s real estate, expelling a member,
opening a new department or branch store, authorizing a delegate to a national
or district convention.
(e) Discussion of new subjects proposed by members from the floor would
come under the heading of new business.
Sec. 5. Special meetings.—Special meetings of the membership may be called
at any time by action of the board of directors, and such meetings must be
called whenever a petition therefor is signed by at least 10 percent of the mem­
bers and presented to the board of directors.
Notice of special meetings shall be given in the same manner as is provided
for regular meetings (see sec. 3), but such notices shall be sent at least 10 days
before the date set for the meeting.



Notice of special meeting shall state the time, place, and purpose of such
meeting, and the business to come before it; and no business other than that
specified in the notice shall be transacted.
N o t e . — {a) The right to initiate a call for a special meeting should be
recognized in every cooperative society. A very small society should prob­
ably require the signature of 20 percent of the members, whereas a society hav­
ing several thousand members might require only 5 percent or even less. One
such large society requires only 30 members to sign, which is really less than
1 percent of the membership.
(&) Ten days’ instead of 6 days* notice is suggested here because of the
extraordinary nature of the occasion. The members usually are not expecting
a call to such a special meeting, as they are at the time of a regular meeting,
and they should therefore have more time to prepare for it.
This last paragraph is a legal requirement in many States, and it
should be the law for every cooperative society. A special meeting generally
has some special purpose, and this purpose must be clearly stated in advance.
And then, once the meeting is in session, no person present should be per­
mitted to surprise the meeting with some other business, the nature of which
the members may not be prepared to discuss. In fact there might be many
members absent from the special meeting whose interests would be vitally
affected by the “ surprise” business and who would not be absent if they
knew it were to be discussed. Special meetings must be sharply restricted
to the special purpose for which they are called.
S e c . 6. Rights and limitations of the membership meeting.—The membership
meeting has both the right and the responsibility to elect directors or members
of committees and to remove them from office if and when they are derelict in
their duties; to hear and pass upon the reports of officers and the general
manager of the society (association) and of any committees which are respon­
sible to it; to determine the method of dividing the net surplus savings or
earnings; to make the final decision regarding any drastic changes in the
financial policy; to act as a final arbiter in any disputes or disagreements
which may arise between the board of directors and any committees or indi­
vidual members; to determine what amendments shall be made in the bylaws;
and to exercise its final authority in all other matters vitally affecting the society
(association) as a cooperative fraternal body and as a business organization.
N o t e . —At first glance this section may seem unimportant; it is not. Many
societies have been seriously crippled because the membership meeting did not
have its duties clearly defined; therefore it neglected some of its most impor­
tant duties (such as selecting the proper people for the board of directors or
holding them strictly to account after they were elected), and, on the other
hand, handicapped the board’s effectiveness by interfering with its work. The
meeting may establish certain broad rules or laws to guide the directors in
their work, but it must not attempt to instruct them in advance as to how they
shall handle the details of specific business problems to. arise in the future—
such as, for instance, the pricing of goods, the kind of fixtures to be installed,
or the people to be employed to fill vacancies on the staff. It is best that a
membership meeting shall not pass upon the qualifications of the manager nor
of other employees, nor dictate to the board of directors the details in the
manner of handling the day-by-day business affairs of the society. These are
technical matters. They may be discussed by the members, but official action
by a large body is apt to be swayed by oratory or other unsound influences.
Such things are best left with a special committee to investigate and report—
but not to kill.
S e c . 7 . Participants in membership meetings.— E v e r y m e m b e r w h o h a s m e t
h i s f u l l o b l i g a t i o n s a s r e g a r d s s h a r e c a p i t a l , a s s p e c i f i e d i n a r t i c l e IV, s e c t i o n
4 , a n d w h o h a s n o t in o t h e r r e s p e c t s b e e n ju d g e d d e lin q u e n t n o r a c t in g c o n t r a r y
to th e in te re s ts o f th e s o c ie ty

( a s s o c ia t io n ) b y a m e m b e r s h ip m e e tin g , s h a ll b e

q u a lifie d t o v o t e a n d t o p a r t ic ip a t e in th e m e e tin g s o f t h e s o c ie t y

(a s s o c ia tio n ).

N o t e .— I f t h e b o a r d o f d i r e c t o r s h a s a l r e a d y d e c i d e d t h a t a n y m e m b e r s h o u l d
b e d is m is s e d f o r in f r a c t i o n o f t h e r u le s o r f o r f a il i n g t o p a t r o n iz e t h e s o c ie t y ’ s



business, the offending member should not be disqualified from participating
in the meeting unless the meeting has approved the action of the board. The
board should not be placed in such power as to make it possible for it to deter­
mine who may or may not vote at a meeting. This power should rest with the
membership only.
Seo. 8. Voting rights.—Election of directors and members of committees
shall be by ballot unless unanimous consent is given to a vote by show of hands.
Action on all other matters shall be either by ballot, by a show of hands, or by
a rising vote, as the majority of members present may decide. Each member
shall have one vote on all voting occasions, and never more than one vote, and
there shall be no voting by proxy.
N o t e . — (a) In most all instances the show-of-hands method of voting proves
quite satisfactory. It is only where a contest for a place or places on the
board of directors is keenly contested, with some degree of feeling between
the candidates or their supporters, that a ballot vote is required. This con­
stitutes a secret ballot.
The one-vote rule should be enforced under all circumstances, unless the
State law contains specific provision to the contrary.2 It is one of the funda­
mental principles of consumers’ cooperation.
(c) For instances of an organization holding membership in the society
and represented in the meeting by delegate or delegates, see article IV,
section 10.
(d) Proxy voting should not be permitted in cooperative societies because it
may be used to defeat democratic control. When societies reach so great a size
or have a membership so widely scattered that the members cannot come
together in a single meeting place, such societies should be divided into district
groups, each having a meeting place, local autonomy, and delegate representa­
tion in the central meetings of the central organization. If the problem cannot
be solved in this way because of sparsely scattered membership, voting must
be carried on by referendum. That is, each question to be voted on should
be formulated to be answered “ yes ” or “ no ”, and sent to each member for his
vote. But proxy voting should not be adopted as a compromise under any
circumstances, unless the requirements of the State law make this unavoidable.*
(e) If the State law requires vote by mail under certain circumstances, a
provision to that effect should be inserted in the bylaws at this point.4
S e o . 9. Officers.—The management of the society (association) shall be vested
in a board of directors, consisting of president, vice president, secretary, treas­
urer, and five other members, whose terms of office shall be for 1 year. The
office of secretary-treasurer may be combined in one person, in which event an
extra member shall be elected to the board in order to provide for an odd
number. The board shall elect its officers.
Directors, auditors, and other officers shall be eligible to serve until the
election of their successors.
Norn—Some societies do not allow more than two consecutive terms, re­
quiring that candidates retire for one term before they become eligible for
further service. The board of directors and all other committees should
always be an odd number. The size of the board should vary with the size
of the society.
Sec. 10. Disqualification of officers and directors.—Any director or officer
shall vacate his office if he holds any other office or place of profit under the
society (association); if he becomes bankrupt or insolvent; or if he partici­
* Thus, the Missouri law provides for vote by shares in the election of the directors;
that of South Dakota for share voting in associations with a capital of over $50,000.
•As in Alabama (nonstock), specifically permitting proxy voting in the election of
the trustees, and in Illinois and North Carolina, providing for written proxies, but in the
latter State no member to vote more than 1 proxy.
* In Michigan an opportunity to vote by mail must be. provided. In Alabama (non­
stock). Illinois, Iowa, Minnesota, Montana, Nevada (nonstock), New York (stock), New
York (nonstock), North Carolina, North Dakota, Oregon, South Dakota, Washington, and
Wisconsin, a member unavoidably absent may be permitted to vote by mail if notified in
writing or the question tc be voted on and if a copy of the motion is attached to the
vote; Minnesota and Oregon require the vote to be signed and Minnesota that it b«
certified by the voting member.



pates in the profits of any outside business with the society (association). No
employee of the society (association) or person supplying the society (associa­
tion) with goods shall hold office as a director on any aceount whatever. No
director shall engage in business which competes with the business of the
society (association).
N o t e . — (a) It is highly objectionable to combine the offices of president and
manager in the same person. Some societies do this with apparent success,
but the success is often more apparent than real. Such societies tend to become
“ one man ” organizations. Sometimes the one man has such control of the
business that it is to all purposes his private affair. Such societies have often
been destroyed by being taken over by the manager upon his terms. If the
manager is both competent and sincere, the society seems to prosper, but the
membership and directors’ control becomes relaxed. A precedent is established.
And the next president-manager, if he fails in either competence or sincerity,
is pretty sure to wreck the society. Too much power in the hands of one person
sooner or later destroys a cooperative organization. A society, with a good
manager, that has not enough material in its membership to produce a good
president is in bad condition.
Although employees may not hold office, it is strongly recommended that
delegates of the employees be invited by the directors from time to time to
confer with them on matters of joint interest, and the employees should be
encouraged to organize as workers in their industry.
S e c . 11. Duties of directors.—The directors shall administer all business
carried on by or on account of the society (association). The directors shall
in all their actions be under the control and direction of any regular or special
meeting of the members. The directors shall meet at least once in 2 weeks. A
majority shall form a quorum. They may arrange themselves into subcom­
mittees. When this is done each subcommittee shall superintend one or more
of the different activities carried on by the society (association) and each
chairman shall make a detailed statement of the work done in that department
at the directors’ regular meeting.
The directors shall convene the meetings of the society (association). Any
two directors may call a special meeting by giving 2 days’ notice in writing
to the secretary, specifying the object theerof.
The directors shall act for the society (association) and be responsible to
it for the performance of the following duties:
1. To engage a staff to undertake the work of the society (association),
with suitable heads of departments, or a manager over all, and to determine
the duties and emoluments of each.
2. To provide suitable accommodation, machinery and plant to conduct the
society’s (association’s) business.
3. To insure that the business is conducted in accordance with the rules, and
that justice is given to members and to employees.
4. To control all investments, whether in shares and loans in other societies,
or in land, property, and fixtures.
5. To secure economical working of the society’s (association’s) business;
to safeguard the society (association) against fraud by providing, if possible, a
complete check against errors, carelessness, or loose handling of cash and
property by every person responsible for the same.
6. To provide the best possible conditions of labor in the society’s (associa­
tion’s) service, and to demand and secure equivalent results in efficiency,
faithfulness, and diligence.
7. To control the sources of supply of the society’s (association’s) goods and
to maintain a direct and vital connection with other cooperative organizations.
8. To foster a spirit of enthusiasm for cooperative effort, both in the staff
and the members of the society (association), and to identify themselves
with every good feature of cooperative endeavor.



S e o . 12. Duties of president and vice president.—The president shall act as
chairman at all meetings of the society (association) and of the board of direc­
tors, but should he be absent, the vice president shall take the chair; should
he also be absent, the officers and directors present shall elect one frpm among
themselves to act as chairman on that occasion. The president, or chairman
acting in his absence, shall sign all contracts.
S e o . 13. Duties of secretary.—The secretary shall attend all meetings of the
society (association) and of the board of directors and shall record the names
of all the directors present, and the minutes of their proceedings; he shall also
countersign all contracts sanctioned and entered into by the directors; he shall
likewise receive all proposals for admission into the society (association). He
shall attend to all correspondence, keep the accounts, documents, and papers of
this society (association) in such a manner and for such purposes as the direc­
tors may appoint. He shall prepare the regular statement of the society’s
(association’s) affairs. The secretary shall on all occasions in the execution of
his duties act under the superintendence, control, and direction of the board
of directors.
S e o . 14. Duties of treasurer.—The treasurer shall be required to attend all
the general meetings of the society (association) and of the directors. He
shall be responsible for such sums of money as may from time to time be paid
into his hands by the secretary or by any other person on account of the society
(association) and for the investment of the same under the authority of the
directors. He shall pay all wages due to employees and all accounts due.
He shall balance his cash account weekly and supply the secretary with a
duplicate thereof.
N o t e . —It is customary for the manager or the treasurer to be given the
responsibility of depositing the money received once daily in the bank. Checks
in payment of purchases should be signed by the treasurer and one other
officer—the president or an auditor.
S e o . 15. Election and duties of auditors.—There shall be three auditors who
shall be elected by the members of the society (association). They shall serve
for 1 year and shall at all times have access to the books, vouchers, and
accounts of the society (association), and shall examine and audit the same
and every balance sheet of the receipts and expenditures and effects of the
society (association) at least every 3 months. The auditors shall be respon­
sible for the daily and perpetual accounting system kept by the manager and
shall check same at least weekly. If in the judgment of the directors an expert
accountant is required they are authorized to employ one as often as they think
S e o . 16. Subcommittees.—The members should elect at the annual meeting
the following special committees, composed of a chairman and not less than
two other members, which shall serve for 1 year or more: Educational com­
mittee, auditing committee, and membership committee, for the purpose of
securing new members and increasing the interest of the members through
recreational and social activities.
N o t e . —Other committees may be elected or appointed from time to time to
meet special needs.
S e o . 17. Bonds.—The treasurer, manager, or other officers or employees,
having the custody of the funds or goods, shall each give a bond with corporate
surety sufficient to insure the society (association) against possible loss.
N o t e . —There is an advantage in having the bond so written that the em­
ployee is responsible for a certain initial sum in case of loss. This he covers



by making a cash deposit of that amount with the society when he takes his
position. A second responsibility in a second amount should rest upon the
society, prior to the responsibility of the bonding company. By these expe­
dients the society is held to keener vigilance as to the character of its employees,
and the liability insurance is secured at a lower cost.
Sec. 18. Amendments.—For the alteration of these rules by amendment,
repeal, elimination, or addition, a two-thirds vote of the members voting at a
membership meeting shall be necessary. Notice of the proposed changes shall
have been published to the membership at least 2 months before the meeting.

Appendix B.— Sample Pledge, Membership Application, and

N o .______ D ate------Received from

the sum of $1 for initia­
tion fee and $-------- as
advance payment for
stock as agreed on de­
tached pledge and appli­
cation form.
(Officer of Society)


Blank, N.Y....................193__.

I hereby make application for membership in the
above named society, and if elected, agree to abide
by the constitution and bylaws and by personal
effort endeavor at all times to promote the interest
of the said association. I do also pledge the fullest
possible amount of my own patronage to my
cooperative store.
I hereby make payment of $1 as my initia­
tion fee, and in addition do subscribe for_________
shares of the capital stock of the society, a t$ ______
per share.
With this application I make payment of
$---------------on my subscription of stock and do
promise to pay
________per month hereafter
until full amount is paid.

Sample subscription for capital stock
I hereby subscribe f o r ----------------------------------- shares of the capital stock
of th e --------------------------------------------------------------------------------------Society at
$ ----------------------- each, and agree to pay for sam e________________________
It is understood that such capital stock shall bear interest at------------------%
per year, and shall be withdrawable only upon 60 (or 90) days* notice in
Date -------------------------------------------


[The first of these application blanks should be In two parts as indicated, and detach­
able. They may be bound up in pads or books of 100 each. A similar form of detachable
Application may be worked ou-t for loan capital subscription.]

Part 2.—Organization and Management of Consumers’
Cooperative Clubs
Object and Scope
The object of the consumers’ cooperative club is to serve as an
initial step in cooperative organization and to save its members
money. It is organized for the purpose of training and study and
for buying in quantities sufficient to obtain discounts or wholesale
prices. It is a means of dispensing with the services of one or more
middlemen and often of getting into direct commerce with the pro­
ducers themselves. The cooperative club can yield definite results.
The members may save money for themselves and get good mer­
chandise and fair measure.
While savings are the usual object there are other objects of equal
or greater importance. Thus, it is entirely within the function of
economic cooperative enterprises to stress the educational and social
function. The club may be made a natural social center.
The club may exist under a number of conditions, each one of
which must to some extent alter its form and policy. A group of
neighbors may be completely independent, and mold their enterprise
according to the degree of cooperative intelligence enjoyed by the
members. A group of factory workers, on the other hand, may have
to depend upon the goodwill of the management if they are to have
the facilities for storage and for meetings which their employers
may supply. I f they meet outside the factory, but in a community
in which the factory has a financial interest, there may be situations
in which they will find themselves opposed. A network of interests
and reciprocities sometimes enmeshes the tradesmen and the various
business interests of a community. It is more likely today, however,
that in most industries where fair conditions of work prevail, the
management will welcome proposals from the employees looking
to self-help and mutual welfare. Managements have frequently
taken a helpful interest in these cooperatives. It is far better to let
the men organize and manage their cooperative undertakings than
to impose upon them, however generously, the form without the
spirit of cooperation. What they initiate and do for themselves
will benefit them more than what is done for them. The manage­
ment may suggest the plan to leaders among the employees, and it
should show itself sympathetic and helpful; but it should not confuse
cooperation with welfare work.




Among salaried workers in the large business houses of the cities,
the cooperative club meets with little or no resistance. The great
insurance companies are themselves to some extent cooperative, and
several large and successful cooperative clubs have been established
in these institutions.
In such cases, as well as in private business, it is important to
enlist the cooperation of the men in charge.
In community center groups where self-help is taught and prac­
ticed, the soil is rich for the growth of cooperative organizations.
The center or settlement, however, that deals with the problems of
the very poor—necessarily more or less philanthropically—will find
extreme difficulty in establishing a club or store on anything like a
democratic basis. It will be found necessary to enlist the interest
and cooperation of the more thrifty members of the community, and
then to work back, by a process of education, to the indigent and
frequently shiftless part of the population. But in any case it
should be made a community affair and not be maintained for any
length of time out of the pockets, of a few.
The cooperative club must be made a democratic association. Just
to the degree that it is not, it is not cooperative. I f every member
holds himself ready to contribute service when and where needed,
the cooperative club may become an effective agency in paving the
way to better business. It will at least produce better and more
social individuals. It establishes the habit of just dealing and the
sense of mutuality among the members.
The bylaws will have to vary to suit different conditions. Cer­
tain principles, however, are essential to every case, and may be
stated as follows:
1. Every member having one vote and no more.
2. No voting by proxy.
3. Savings distributed in proportion to patronage.
4. Adequate and responsible supervision by instructed committees.
5. Cash business.
6. Unrestricted membership.
7. Neutrality in matters of opinion and status of members.
8. Education and expansion.
In order to give the club a good start, the persons who are con­
vinced of the feasibility of the plan should try to interest as many
others as possible in the subject before any meeting is called.
The meeting duly announced and assembled, its object should be
clearly and briefly stated. The chairman should call for a tentative
plan of organization as a means of getting the whole matter quickly



before the meeting; and the tentative constitution should be sub­
The chairman should here announce that since the object of the
meeting has been stated and a form of organization proposed, a
motion is in order to organize a consumers5cooperative club. I f this
motion is carried, it may be moved that a paper be circulated through
the meeting for the signatures of those whose intention it is to sub­
scribe for shares.
A further motion may follow in order to the effect that a com­
mittee of five be appointed by the chair to draw up a constitution;
and that the meeting be then thrown open to a discussion and criti­
cism of the sample constitution that has just been read to the meeting.
Such discussion should assist the new committee in its work.
The constitution should outline a complete and self-perpetuating
organization. A cooperative club may, of course, consist of one
enthusiastic and several acquiescing members; and such a group is
likely to be content without rules of any consequence.
The bonding of the two officers through whose hands the money
and goods pass is an important guaranty of safety. It should not be
avoided out of a mistaken consideration for the feelings of these
officials, or because of their recognized personal integrity. The bond­
ing precedent should be started at once and never departed from.
Another method of electing officers than the one above proposed is
to elect a board of directors, who shall themselves select the officers
from among their number, or this latter method may be modified
by the popular election of the president alone. There might be some
gain in electing pairs of directors for 1, 2, and 3 years, or half years,
since it would insure the club against ever having only novices in
Where the need arises, a committee of three may be appointed
each month from an alphabetical list of names, to assist the manager
in checking stock orders, and in supervising distribution to the
The payment’ of savings returns as proposed in the constitution
is a feature that is popular in cooperative stores. This is not so im­
portant in the case of the cooperative club, but it is to be recom­
mended. In the case of a large club in New York City, “ we figured
our selling price by advancing our cost price an average of 10 per­
cent which made it possible to sell below prevailing retail prices and
hold our members. A savings return was then declared yearly.”
The organizer and manager of a postmen’s club writes that his club
sells rather close to cost but “ by adding an allowance far savings
returns and incidentals, it would make the nonmembers help to sup­
port the club if they purchased. In cooperative clubs the members



are not always looking for savings returns, but we find by experience
that it is an incentive to give something to show for loyalty.” The
u Belgian idea ”—the use of surplus savings for insurance and other
mutual benefits—has much in its favor. It often means much more
to members of a cooperative society to have the food continue to come
when the pay envelop has stopped and when the breadwinner is dis­
abled by sickness than to receive cooperative savings in cash; coop­
eratively owned meeting and amusement halls, libraries, nurseries,
and dwellings are often of more benefit to the members than savings
returns in cash.
It is a serious technical matter to determine the kinds of goods with
which to start a club. Tea and coffee, butter and eggs are standard.
There is a large margin of profit on tea and coffee; and if the mem­
bers may be persuaded of the fact that 2 or 3 mixtures of
each are enough to satisfy every taste, these articles may be bought
at’ a considerable saving. Canned goods, on the other hand, are not
likely to prove economical. It seldom pays to bother with the
cheaper qualities. Cereals, biscuit, and many other package goods
will save the club a small percentage when bought in quantities.
Dried fruit, including prunes, are likely to yield larger savings, and
also dried peas, beans, and rice, hominy, and similar products in
quantity. Goods in bulk can often be handled to advantage and
with great saving. In view of the excessive profits in package
goods, bulk goods can often be packed by the club.
Clubs sometimes buy meat successfully. Smoked meat, bacon, ham,
smoked and brined fish, and sausage meat may be tried without spe­
cial facilities for storage; but fresh meat, of course, must be either
cut or distributed without delay or put into cold storage. A good
saving is made where fresh meat can be handled; and clubs have
bought sides of beef at large discounts.
The subject of buying cannot be touched on further here, since it
would require too much space to give it adequate treatment. A
booklet on buying for consumers can be consulted.
The Cooperative Wholesale Society is the economical source of sup­
ply. In some places profit wholesalers will not sell to cooperative
organizations; but they are not the rule. Not all of them, however,
will sell at equally favorable prices. The club should get in direct
touch with the farmers for a number of articles, such as eggs and
potatoes; and the express companies are offering new facilities as
direct middlemen between producer and consumer. These companies
issue circulars and price bulletins. The development of producers’
cooperation should enable cooperative clubs to reach groups of farirjers with their orders. The club secretary should get in touch with
all such groups in the surrounding counties. A committee should be



appointed to help the secretary study the best buying practice for
the locality.
When the club is small, cash should accompany the order of each
member so that money will be on hand to pay for bulk orders in
advance or on delivery. When the club is large, goods may be pur­
chased in anticipation of the demand, as a cooperative store does, but
more conservatively. It is a great advantage, of course, to be able
to buy in a cheap market without delaying to secure a lot of individ­
ual orders. Where this is permitted the members must be ready to
share any losses due to mistaken judgment on the part of the secretary-manager or a buying committee. It must not be forgotten that
a cornerstone of cooperation is cash, or no credit. Exceptional condi­
tions or the need of waiting for pay day may call for limited credit
arrangements. Credit should under no conditions be allowed to
exceed the amount of the member’s investment in the club, either as
stock or as loan capital.
More bookkeeping is necessary where savings returns are paid than
where goods are sold to members at cost. It need not be made too
difficult, however. The method of keeping a record of business is
simple; a triplicate recording machine is used. The manager writes
the member’s name, articles purchased and the amount; the original
copy is given to the member upon payment, the duplicate is turned
over with the cash to the treasurer at the end of each day, while
the triplicate copy remains within the machine on a roll. As soon as
the roll is used up this is given to the secretary to be used as a
check against the amount of sales entered in the treasurer’s books.
A machine is, of course, not necessary; and the system must be made
to suit the particular methods employed.1
Incorporation is often a difficult problem owing to a want of good
cooperative laws in some States. This question will have to be met
by each different society and in each separate State. Careful study
must be given to the law in its relation to the objects and future of
the society.
In the case of a small neighborhood club, storage room may be
hard to find. One of the members, may have a convenient cellar, or
the members can take turns in receiving the goods at their homes and
calling the club together for the distribution. This latter method
may be made a social function of importance to the group. When a
neighborhood club gets so large that it seems necessary to hire storage
room and an attendant, it is time to consider making the necessary
changes in organization to become a cooperative store society. Clubs
,in factories and business houses will probably be able to obtain space
1 Those who contemplate forming a club may get a pamphlet on accounting from The
Cooperative League of the U.S.A., 167 West Twelfth Street, New York City.



from the management at a small or no rental charge. One writes,
“ The company donated the room for our store purposes, but in no
way had any say in the management of it. Our only overhead
charges were the hire of one clerk at $12 per week, paper and twine
for packages, ice for refrigerator, and insurance premiums.” This
club practically amounts to a cooperative store.
Delivery should not be undertaken by the ordinary cooperative
club, unless it can be done by a boy of working age employed after
school hours once or twice a week. Where a large number of mem­
bers scattered over a large city buy certain staple things, a wagon
delivery twice a week would probably pay. It is important, how­
ever, to restrict delivery whenever possible. A large club could
adopt the excellent plan of charging 7 cents for each delivery. This
plan avoids taxing, for delivery to some, all those who are willing
to carry their purchases home.
Cooperative clubs sometimes arrange with local tradesmen to give
their members a definite discount on all purchases. This is some­
times done with clothiers and tailors, men’s furnishers, hardware
and furniture dealers, florists, druggists, doctors, dentists, and other
business concerns. The discount is arranged and the amount of the
discount fixed at a certain figure by agreement. Clubs that confine
themselves to this kind of business never seem to make much progress
as cooperative organizations.
Larger Possibilities

It should not be the ideal of the consumers’ cooperative club to
hold itself aloof and apart, a sort of pin point of economic democracy
in a world of struggle and combination for profit. It should make
it a definite policy to get in touch with other cooperative clubs and
with cooperative stores and to urge pooling of orders and federation.
A local federation could effect many economies and would doubtless
encourage the promotion of other cooperative organizations.
It is quite possible that a well-organized federation of cooperative
clubs would make the club feature, as distinct from the store, per­
manent. Such a federation, indeed, would be, as a whole, a kind of
store in which the comparative scattering of the membership is made
up for economically by the small overhead expenses involved. But
where the club is not established within a system, its organization
is not at all likely to remain fixed. With growth of membership,
with the paying of wages, with increase of capital, and with buying
for cheapness in anticipation of orders, the demand will set in for
a larger and more varied stock, for a suitable storage and display
room, for more paid service, and for delivery facilities. Thus the
club becomes a store, and reorganization must follow or accompany
the change.



Whether or not the club is to be more than a temporary phase of
organization it may, at least, be an important phase, and is thus of
undoubted value to the progress of the cooperative idea. The mem­
bers should conduct regular meetings for purposes of study and dis­
cussion. Specific problems in cooperation should be taken up.
Their study may be assigned to certain members to report upon the
result of their studies at certain meetings. The history, principles,
philosophy, and methods of cooperation should be studied and dis­
cussed. Speakers may be invited to address the club from time to
time. Cooperative periodicals should be subscribed for and a library
The question of expansion into other cooperative business should
constantly be before the club. Distribution of milk, coal, or petro­
leum products may be considered. A cooperative bank or credit
union can always be conducted by such a group. A bakery, restau­
rant, or boarding house may be developed. The members may organ­
ize for health protection by employing physicians, nurses, and
laboratory and clinical services. Cooperative undertaking business
is highly successful. Recreations, an orchestra, a choir, a movie, a
summer vacation home, or a farm within reach of the members offer
possibilities. People cooperatively organized are in a position to
move into any field for their mutual advantage.
The club is not a means of getting something for nothing, but it is
a way—and if rightly undertaken, a good way—of shortening and
cheapening the route from producer to consumer, and thus saving
the consumer money. It costs a dealer money for rent, say 1 to 3
percent on sales; for clerk and help hire, say 8 to 12 percent; for
insurance, interest, waste, and so on. By avoiding the incurring of
these expenses the club frequently can save the consumer on a large
portion of his food supplies from 5 to 25 percent. It can connect the
organized consumers with the organized farmers and other producers,
promoting the economic advantage of both parties, and at the same
time give training in cooperation and mutual aid and prepare the
members for expansion into other cooperative fields.


Appendix.—Model Bylaws for a Consumers* Cooperative Club
Bylaws of t h e ________ _________ Cooperative Club

r t ic l e

1 .—


The name of this organization shall be_________ Consumers* Cooperative
Club (or-------------- Buying Club or-------------- Cooperative Club, etc.)

r t ic l e


The object shall be to obtain for members at the lowest possible cost services
and the ordinary articles of consumption. The method employed is that of
voluntary economic cooperation both in buying and in manufacturing.
N o t e .—Here cooperative manufacture is understood as a consumers' enter­
prise. In a small group it would probably be confined to the making of pre­
serves, cake, etc., by the members; but in a large group, the possibilities increase
with its size.
A r t i c l e 3 .— Membership
Any person who would be benefited by membership and whose membership
would benefit the club, subscribing to the constitution and bylaws, may become
a probationer by paying the initiation fee.
A majority vote at any regular meeting shall admit the probationer to mem­
A two-thirds vote at any regular meeting may expel a member, provided that
written notice of the proposed motion be signed by at least five members and
mailed to all voting members not less than 2 weeks prior to the meeting. A
member may withdraw from the association by handing in his or her resigna­
tion and accepting 75 percent of the initial share payment as payment in full.
All surplus savings standing to such a member’s credit are to be refunded to
him in full.
A r t i c l e 4 .— Dues and Sha/res
An initiation fee of $1 shall be charged. On this no interest shall be paid.
Stock shall be sold at $5 per share. The first share of stock may be paid
for in installments of 25 cents per week.
No person shall own more than one fifth of the outstanding capital stock
of the society.
Shares are nontransferable without the consent of the board of directors
in each case. The society reserves the right to purchase at par any stock
offered for sale.
A r t i c l e 5 .—Meetings
There shall be held:
1. A regular monthly meeting of the members.
2. Four quarterly meetings at which savings are distributed and problems
and policies in connection with them discussed. These quarterly meetings
shall coincide with four of the monthly meetings.
A quorum shall consist of 10 percent or more of the members.
Each member shall be entitled to but one vote. No proxy voting shall be




Members who are paying for their shares in installments may allow their
savings returns to be applied to the payment for their shares, and they may
vote after their shares necessary for membership have been paid for.
A special meeting shall be called by the secretary at the request of any
5 percent of the members, provided notices thereof are mailed 4 days prior
to the meeting.
A r t i c l e 6 .— Savings
Services and goods shall be supplied to members at approximately the prices
that obtain in the retail market of the neighborhood.
The surplus savings effected after paying all expenses shall be divided quar­
terly by placing 5 percent in an educational fund (to be used to teach the
principles and benefits of cooperation to members and the public), 10 percent
in a reserve fund (for protecting and enlarging the economic interests of the
society), and the remaining 85 percent shall be placed at the disposal of the
individual members in exact proportion to purchases made during the quarter,
to be taken in cash, applied on the payment for shares, left with the society
as loan capital (on which 4 percent shall be paid), or disposed of collectively
in such way as a two-thirds vote of the whole membership shall determine.

r t ic l e

7 . —Officers

and Committees

The officers of this club shall be a president, a treasurer, and a secretarymanager.
The president shall perform the usual duties of that office, and shall further
undertake a special responsibility as chairman of the education committee.
The treasurer shall hold all funds, make all disbursements as voted by the
board of management, and keep an accurate record of all moneys spent and
received. The treasurer shall be bonded for $______
The secretary-manager shall be in charge of all business details of the club,
and, with the president, countersign all vouchers for payment. He shall further
carry on all correspondence and keep the minutes of all membership meetings
and of the proceedings of the board of management. The secretary-manager
shall be bonded for $--------The three officers shall constitute a board of management, the duty of which
is to transact all business for the club, subject to instructions from the members
in meeting assembled.
Three members not officers shall be elected to a committee on administration.
It shall be the duty of this committee to hear members’ suggestions and to
submit recommendations to the board. Members shall not tender complaints
or suggestions to the board unless by letter duly signed and posted.
A committee on education shall be composed of the president, as chairman,
and two elected members not officers. It shall be the duty of this committee
to encourage membership and to arouse interest in cooperation among the
members and the community.
A control committee of three shall be elected from members not on the board
of management. It shall be the duty of this committee to inspect the financial
records at least every month and to determine the manner of keeping the
accounts. The committee shall investigate and report upon the quarterly
balance sheet.
A r t i c l e 8 . —Amendments
Amendments to the constitution may be made at any regular meeting by a
two-thirds vote of the members present, provided that a written notice of the
proposed amendment to be voted on has been placed in the hands of or mailed
to each member at least 10 days before such meeting.

Part 3.—Bibliography
Consumers’ Cooperation: A Selected List of References

E en est 0

Cooperative Accounting.
pp., folders.
C e n t r a l C o o p e r a t iv e W

New York, The Cooperative League, 1920.


h o lesale.

Cooperative Builder.

Superior, Wis.

Semimonthly. Deals chiefly with the associations in the North Central States,
but contains also general articles on various phases and problems of consumers’
C o o p e r a t iv e L e a g u e

of t h e

U .S .A .

America’s Answer—Consumers’ Cooperation, by E. R. Bowen.
167 W. 12th St., 1934. 16 pp.

New York,

A challenge and a call to action.


New York.

Monthly, devoted to the consumers* cooperative movement.

------ Second Yearbook: A survey of consumers’ cooperatives in the United
States, 1932. New York, 167 W. 12th St., 1932. 256 pp., iUus.
Contains basic statistical data for each of the societies affiliated to the league; also
articles by well-known cooperators, economists, and others.

A. H o n o r a .
Cooperation: Its Problems and Possibilities. London, Longmans, Green
& Co. (Ltd.), 1927. 90 pp.
------Women’s work for cooperation.
Review of International Cooperation, London, August 1929, pp. 293-295.

n f ie l d ,

G i d e , C h a r l e s -.

Consumers’ Cooperative Societies.
1921. 251 pp.

Manchester, Cooperative Union (Ltd.),

C o n t e n t s .— The object of a consumers’ cooperative society; The cooperative
program; Criticisms of economists; The history of distributive cooperation; Statis­
tics and geographical distribution of the cooperative movement; Various systems
of sale; The division of profits; Members; Capital; Various types of consumers’
societies; Cooperative federations; The conflict between cooperative societies and
traders; Causes of success or failure of consumers’ societies; The relations between
cooperative societies and the States; Production by consumers* societies; The em­
ployees and workmen in cooperative societies; Cooperation and socialism.
G u id in g P

o in t s in * t h e


o c a t io n o f t h e

C o o p e r a t iv e S t o r e .

Monthly Labor Review, December 1923, pp. 193, 194.


P rof. F .

Handbook for Members of Cooperative Committees.
land), The Cooperative Union, Ltd., 1928. 460 pp.

a r r is ,


m erson

Manchester (Eng­


Cooperation, the Hope of the Consumer. New York, The Macmillan Co.,
1918. 328 pp.
Contents.— The failure of our middlemanism— Advertising and salesmanship
v. the consumer; Adulteration and short measure; The expensive middleman; The
social cost of competitive dealer; Reasons and the remedy— The hope of the con­
sumer ; The Rochdale plan; The passing of competition; Salesmanship and coopera­
tion ; The debits of credit; Higher gains and human values; Practical cooperation—
Awakening the consumer; Enlisting and developing store workers; When and where




to start; Buying clubs; Planning a cooperative society; Starting and running a
cooperative store; The delivery problem; Handling trade-marked goods; Cooperative
advertising and salesmanship; Background and outlook—Europe and beyond, a
story of peaceful conquest; Place and progress of cooperative production; Prospect
for cooperation of consumers in America; For a strong consumers’ movement in
America; Status and outlook of cooperative buying in different sections of North
America; Sample documents.

u g h es,




Cooperation here and abroad. A brief survey of cooperative achievement.
Minneapolis, Midland Cooperative Oil Association, 1933. 48 pp.
A vividly written account giving a brief history of the Rochdale Pioneers and
of their predecessor, Robert Owen, showing the development of certain types of
agricultural cooperative organizations and of consumers’ cooperative societies.
I n t e r n a t i o n a l C o o p e r a t iv e A l l i a n c e .

Review of International Cooperation. London.
Monthly, devoted to cooperation in the various countries of the world.
I n t e r n a t io n a l L a b o u r O f f ic e .

Industrial and Labour Information.


Contains frequent notes of the progress of the cooperative movement throughout
the world.
L o n g , C e d r io .

The place of the cooperative movement; the consumer’s philosophy.
American Labor Monthly, July 1923, pp. 64-69.
M i d l a n d C o o p e r a t iv e O i l A

Midland Cooperator.

s s o c ia t io n .

Minneapolis, Minn.

Monthly, devoted to the interests of the cooperative gasoline and oil associations.

E. G.
The economic philosophy of cooperation.
American Economic Review, December 1922, pp. 577-597.

N ck trse,

P o is s o n , E r n e s t .

The Cooperative Republic. (Translated by W. P. Watkins.)
(England), The Cooperative Union, Ltd., 1925. 226 pp.


Summarized in Monthly Labor Review of the U.S. Bureau of Labor Statistics,
Washington, July 1926, pp. 82-84.

How to Make and Use Financial Statements.
College of Agriculture, Ithaca, N.Y.

Bulletin 174, New York State

S e r w y , V ic t o r .

La neutrality cooperative et les partis politiques. 27 pp. (Exhibit de la
Revue des Etudes Cooperatives (Paris), Avril-Juin, 1931.)
Explains just what is meant by the political “ neutrality ” of the cooperative
movement; the attitude toward political parties taken by the cooperative movement
in the various countries and the reason for the adoption of this attitude; and the
relations of the cooperative societies with political parties.
S ta te s.
Department of Labor. Bureau of Labor Statistics.
Monthly Labor Review. Washington.

U n ite d

Almost every issue contains data on the cooperative movement, especially that
of the consumers.

------------------- Bulletin No. 531: Consumers’, credit, and productive cooperative
societies, 1929. Washington, 1931. 150 pp.
W a b b a s s e , Dr. J a m e s P .
Cooperative Democracy Through Voluntary Association of the People as
Consumers. New York, The Macmillan Co., 1927. Second edition.
331 pp.
“A discussion of the cooperative movement, its philosophy, methods, accomplish­
ments, and possibilities, and its relation to the State, to science, art, and commerce,
and to other systems of economic organization.'1



Dr. Jam es P.
What is Cooperation? New York, Vanguard Press, 1927. 170 pp.

W a rb a sse ,

A discussion of the consumers’ cooperative movement, its principles, methods, and
accomplishments, simply and briefly set forth.

----- Consumers’ Cooperative Methods.
The Annals of the American Academy of Political and Social Science, May
1934. 11 pp.
W a t k i n s , G ordon S.

Cooperation, a Study in Constructive Economic Reform.
versity of Illinois, 1921. 85 pp.

Urbana, Uni­

W eibb, C a t h e r in e .

The Woman with the Basket. The History of the Women’s Cooperative
Guild, 1883-1927. London, Women’s Cooperative Guild, 1927. 205 pp.
Summarized in Monthly Labor Review, April 1928, pp. 83-85.
W ebb, S id n e y a n d B eatrice .

The Consumers’ Cooperative Movement. New York, Longmans, Green &
Co., 1921. 504 pp.
A descriptive analysis of the cooperative movement, “ with a survey of its rela­
tion to other manifestations of democracy and of its possibilities for the future.”

Cooperation and the Future of Industry. London, G. Allen & Unwin, Ltd.,
1918. 141 pp.

W o o lf, L eon ard

C o n t e n t s .— Introduction; The roots of the movement; A democratic system of
industry; Labor and the movement; Problems of progress; Cooperation and political