The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
U N ITED STA TE S D EPAR TM EN T OF LABO R FRANCES PERKINS, Secretary BUREAU OF LABOR STATISTICS ISADOR LUBIN, Commissioner BULLETIN OF THE UNITED STATES t BUREAU OF LABOR STA T ISTIC S/ • • • * COOPERATION No. 606 SERIES ORGANIZATION AND MANAGEMENT OF COOPERATIVE GASOLINE AND OIL ASSOCIATIONS (WITH MODEL BYLAWS) UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1934 For sale by the Superintendent of Docum ents, Washington, D.C. Price 5 cents- LETTER OF TRANSMITTAL U n it e d S t a t e s D e p a r t m e n t op L abor, B u r e a u op L abor S t a t is t ic s , , , Washington September 1 193% .. Hon. F ran ces P e r k in s , Secretary o f Labor. : I have the honor to transmit herewith a report intended for the use of groups wishing to organize cooperative gaso line and oil associations on the Rochdale plan. This bulletin has been prepared at the request o f the Consumers’ Advisory Board of the National Recovery Administration. The contents of the present report are based upon the experience o f several hundred associations, mainly in the Middle West. These associations handle petroleum products and often tires, accessories, etc. Though the largest proportion of their business consists o f the sale of gasoline, they call themselves “ oil associations.” The Bureau takes this opportunity to acknowledge its indebted ness to Mr. Howard A. Cowden, president o f the Union Oil Co. (Cooperative), North Kansas City, Mo., for the material furnished. Respectfully submitted. M ad am S ecretary I sador L u b i n , Commissioner. in Contents Page Introduction________________________________________________________ Steps preliminary to organization_________________________________________ First organization meeting________________________________________________ Articles of incorporation__________________________________________________ Constitution and bylaws__________________________________________________ Bylaws_______________________________________________________________ Cooperative principles________________________________________________ Rochdale methods_________________________________________________ Membership______________________________________________________________ Share capital_____________________________________________________________ Amount of capital needed_____________________________________________ Interest on share capital______________________________________________ Meetings_________________________________________________________________ Directors_________________________________________________________________ Officers__________________________________________________________________ Voting power_____________________________________________________________ Surplus savings___________________________________________________________ Reserve fund_____________________________________________________________ Educational fund_________________________________________________________ Savings returns or purchase refunds_______________________________________ Record of purchases______________________________________________________ Price policy______________________________________________________________ Importance of operation on cash basis____________________________________ Manager_________________________________________________________________ Other employees__________________________________________________________ Bookkeeping and auditing________________________________________________ Inventory and depreciation_______________________________________________ Surety bonds_____________________________________________________________ Buying of supplies________________________________________________________ Cooperative manufacturing_______________________________________________ A ppendix A.— Suggested articles of incorporation and bylaws for a cooper ative gasoline and oil association________________________________________ A ppendix B.— Petroleum code, Executive orders, and definition of a co operative association___________________________________________________ A ppendix C.— Provisions of revenue act regarding cooperative associa tions___________________________________________________________________ A ppendix D.— Suggested forms for records of cooperative gasoline and oil associations____________________________________________________________ v 1 2 3 4 4 5 5 6 6 6 7 8 8 10 11 12 13 14 14 14 15 16 16 17 18 18 19 19 19 20 21 29 32 34 BULLETIN OF THE U.S. BUREAU OF LABOR STATISTICS No. 606 WASHINGTON ~ Oc t o b e r , 1934 ORGANIZATION AND MANAGEMENT OF COOPERA TIVE GASOLINE AND OIL ASSOCIATIONS Introduction The growth of cooperative buying associations in the United States has been a gradual one. Consumers have entered many fields of cooperative purchase and supply, an important one being the han dling o f petroleum products and related lines. The cooperative oil movement, started by farmers, followed the development and suc cessful operation of their producing and marketing cooperative associations. As the number o f automobiles, trucks, and tractors used by farmers increased, the volume of petroleum products consumed grew rapidly. In some of the great agricultural States the cost of petroleum products is the largest cash item in the production cost o f agricultural commodities. In all States it is an important factor* Through cooperative buying the farmers found a way to reduce this cost. Their average saving on petroleum products purchased cooperatively, during the past 5 years, has been about 15 percent. Since the beginning of this movement, about 10 years ago, interest in cooperative buying of petroleum products and related lines has spread rapidly. Cooperative gasoline filling stations are now being started by wage earners in towns and cities. These associations, like other consumers’ cooperative societies, op erate in accordance with the accepted Rochdale principles. Member ship in these associations is voluntary and open to all. Shares are o f low denomination and may usually be paid for in installments. A t meetings each member has one vote and no more, regardless of the amount of stock held. In order to insure comparative 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 o f capital should receive a fair price for the use of this money, but no more than a fair price. It has been said that the motive power of the cooperative movement is the man and not his money, and this prin ciple is extended to every part of the movement, federations as well 1 2 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS •as retail societies. No group can obtain a controlling interest in a retail cooperative society; and a retail society can increase its power over the policy and operations of a cooperative wholesale society only by increasing its membership. On the other hand, the economy which results from the combination of a large number o f industrial operations under one management can be obtained under the coopera tive system through the method o f federating societies for the pur poses of wholesale trading and manufacture. ^ Fundamentally, the procedure o f organizing a new cooperative gasoline and oil association is the same as that observed in cooper ative associations of other types. This pamphlet is concerned with methods o f organization for cooperative gasoline associations accord ing to Rochdale principles. The information and conclusions here presented are based upon the experience o f several hundred such associations whose methods and results have been studied. Steps Preliminary to Organization An essential of success of the local cooperative oil association, as o f other cooperatives, is a membership thoroughly informed on the fundamentals o f cooperation. The educational work should be started well in advance o f the actual organizing. It is as hopeless to try to build a thriving, successful cooperative association without a background of real cooperative understanding and belief among the membership as it is to try to build a profit business by selling at cost. Unless the cooperative oil association is to be organized in a com munity where there are already other strong cooperative organiza tions, and where the consumers generally have some realization of the possibilities o f cooperation, then the first real problem is an educational one. Too often, misunderstandings arise later because those who took the lead in organizing did not themselves have a true understanding o f what cooperation really is. What can reasonably be expected should be fully understood. It is unwise policy to carry on a sen sational campaign, to hold out the prospect o f large savings, and to expect the whole community to become cooperative at once. True cooperation comes slowly and steadily, as those who have had ex perience are ready to testify. Great accomplishments must not be expected for the first year or perhaps even the second year. The organization will make progress just as fast as the consumers realize what cooperation means, and no faster. It therefore becomes the FIR ST OR G AN IZA TIO N M E E T IN G 3 first duty o f those who take the lead in the organization of the coop erative association to teach the principles of cooperation.1 It is suggested that from these leaders an organization committee be appointed to carry on the preliminary organization work and to handle the affairs in connection with the organization until sufficient capital has been subscribed, when the first shareholders’ meeting should be held. 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: 1. 2. 3. 4. Explanation o f the purposes of the meeting, and discussion Adoption of temporary bylaws. Election o f board of directors. Election o f 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 possible. 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 actively in favor of proceeding with organization, regular committees should be appointed as outlined above. Tentative rules or bylaws should also be presented at this meeting so that those present may know how a cooperative associa tion is organized. The committee then elected to take care of bylaws and incorporation will modify and enlarge the rules already ap proved and will take up the question of incorporation under the laws o f the State. This committee should write to the secretary of state and to the nearest district cooperative league for information, and again for approval of the bylaws when completed. These precau tions insure their legal correctness and their adherence to cooperative principles and practices. 1 Information in this respect is available from any one of the regional cooperative leagues, as well as from the Cooperative League of the U.S.A. These leagues are as follows: The Cooperative League of the U.S.A., 167 West Twelfth Street, New York C ity; 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, 458 Sexton Building, Minneapolis, Minn. 82674°— 34------ 2 4 COOPERATIVE GASOLINE AND OIL ASSOCIATIONS Articles of Incorporation Associations should write to the secretary of state at the State capitol for a copy of the State 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 advantages. 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 of 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 o f a share and the number of shares to be issued. Limitation o f interest on share capital. Limitation on number o f 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 located. The length o f time the association is to remain in business. The number of its directors with their names and addresses. The names and addresses o f the incorporators with the number o f shares for which each has subscribed.* The State usually charges a filing fee. A seal should be designed and ordered. Constitution and Bylaws The form for the constitution or the articles o f 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.8 It is often necessary that most of the provisions contained in the articles of incorporation be repeated in the bylaws, unless both documents are to be published together and put into the hands of all members. * Advice on incorporation may also be procured from the various district cooperative leagues. See note 1, p. 3. 8 An analysis of the individual State cooperative laws can be obtained from the U.S. Bureau of Labor Statistics, Washington, D.C., on request. CONSTITUTION AND BYLAWS 5 Bylaws W hereas the articles o f incorporation establish the legal status o f th e society, the bylaw s are the common rules governing the relations o f the members, their officers, and their em ployees; they bind these members together in a voluntary association. The chief points to be covered in the bylaw s are the fo llo w in g : Name.— This should always include the word “ cooperative.” The word: “ society” or “ association” is better than “ company.” Purpose. Membership.— Limitations, duties, and responsibilities. Capital.— ' otal amount authorized, interest to be paid, value of the share, T how subscribed and paid for, etc. Meetings.— Date, how called and conducted, quorum, special meetings, etc. Directors and officers.— Number, how elected, duties, disqualifications of, vacancies, meetings, etc. Voting. Surplus savings.— Distribution to interest, reserves, education, savings returns. Management. Committees.— Designation of, and duties. Bookkeeping and auditing. Miscellaneous provisions, such as bonding, fiscal year defined, cash sales or limitations upon credit, complaints, amendments. Certain States 4 perm it the incorporation o f consumers’ cooperative societies as membership or nonstock associations. There are some advantages in such a form o f incorporation, but a central cooperative organization should be consulted before final decision is made. Cooperative Principles T he follow ing are the cooperative principles and methods which the association should fo llo w : 1. One vote only fo r each member, regardless o f number o f shares held. N o voting by proxy. Dem ocratic control. Business conducted to supply the members as consumers with commodities or services fo r their own use. 2. C apital to receive interest (if any is declared) at not more than the current legal rate in the territory where the association is located. 3. N et surplus savings (“ profits ” ) to be returned as savings re turns, or patronage refunds (“ dividends ” ) , in proportion to the patronage o f 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 fo r the general social good o f the members, or to remain tem porarily undivided. * Alabama, California, Nevada, New York, Oregon, W ashington, and Wisconsin^ 6 COOPEBATIVE GASOLINE AND OIL ASSOCIATIONS Rochdale Methods 1. U nlim ited membership. 2. Business to be done fo r cash. 3. A ppropriation , out o f net savings, o f a substantial sum to be placed in the reserve fund. 4. Goods to be sold at current m arket price— not at cost. 5. Education in the history and methods o f cooperation to be carried on. 6 . Efficient bookkeeping and accounting, outside audits, and regu lar reports to members to be required. 7. M anager, treasurer, or anyone else handling large amounts o f money to be bonded. 8. Affiliation as soon as possible with the nearest district coopera tive organization and the nearest cooperative wholesale. M em b ersh ip I t is very hard to give a general estimate o f the number o f m em bars necessary to insure the success o f a cooperative gasoline and oil association. There are m any factors which enter into its success. Generally, however, it is regarded as inadvisable to start w ith few er than 100 members. T his is enough to insure a reasonable amount o f business. The overhead expense o f a new association usually remains rather stationary in amount, whether or not there is a large volume o f business. In other words, the larger the volum e, the lower the cost o f operation per unit and the greater the saving to be made. I t is recommended therefore that as m any members as pos sible be secured before starting operations. Sh are C a p ita l The funds o f the cooperative association are raised, in the first instance, by the purchase o f share capital by the members. The price per share, therefore, should not be so high that the average consumer cannot afford to purchase one or more shares. On the other hand, it should be large enough so that with an average number o f mem bers, enough capital can be raised to start operations o f the associa tion. Generally the value per share should range from not less than $10 to not more than $50. I f the State law sets the value o f a share at $5 or at some other sm all sum , each member should be required to subscribe fo r several shares. The shares m ay be paid fo r in installm ents. A part o f the amount subscribed should be paid in at the tim e the organization o f the association is being planned, and at least three-quarters (but preferably a ll) the subscribed capital o f each member should be paid up before the station is opened fo r SHAKE CAPITAL 7 business. Cash refunds and interest on stock (and in some instances voting privileges) are usually withheld until the shares are fu lly paid fo r. I t is a fundam ental o f consumers’ cooperation that shares shaE never be given a value above their par or original value. The number o f shares that m ay be held by any one member should be lim ited ; in that way instead o f a few stockholders with consider able money invested, the society w ill have a large number o f share holders w ith an approxim ately equal investm ent. T h is assures a larger patronage from the start. Amount of Capital Needed The amount o f capital needed w ill vary greatly. I t depends largely upon (1 ) the amount and kind o f equipment to be purchased,. (2 ) whether the association is going to operate a bulk plant only or whether a service station is also to be operated.5 The type o f service station to be purchased or constructed and the cost o f ground fo r the service station must also be considered in this connection. Cost of bulk-station equipment.— In m ost cases gasoline and oil associations start with the handling o f two grades o f gasoline and one grade o f kerosene or distillate. I f these three commodities are to be handled, the purchase o f three storage tanks w ill be necessary. The size o f the storage tanks w ill depend on the anticipated number o f gallons to be handled. I t is recommended th at tanks larger than im m ediately needed be purchased. The m inim um size o f storage tanks should be 12,000 gallons. Below is listed the equipment needed to operate a bulk plant. The prices given are f.o.b . factory prices prevailing in the M iddle W e s t; they w ill, however, vary from place to place and are given only to furnish an idea o f the approxim ate cost— in short, as an indication o f the probable investm ent required fo r the business. 3 11- by 17-foot (12,000-gallon) vertical storage tanks with 14-inch steel bottoms, &-inch sides, and 12-gage cone tops ($373.76 e a c h ). $1,121.23 1 50-gallon-per-minute twin rotary pump with 2-hp. 3-phase 60-cycle electric motor_________________________________________________________ 182. 50 1 set of valves and fittings to set up pump, to pump from tank car to storage tanks and from storage tanks to truck tank_________ 70. 60 2 truck tank-loader arms, complete ($17.85 u ie li)____________________ 35.70 1 double tank-car unloading rack______________________________________ 39. 00 3 storage-tank connections ($7.65 each )______________________________ 22.95 12.00 1 2-way manifold to connect 2 storage tanks to 1 pump_______________ 5 M ost cooperative oil associations have found it profitable to handle, in addition to petroleum products, tires, tubes, batteries, and auto accessories, while some handle other lines, such as paint, binder twine, fly spray, dips, and disinfectants. There is usually a wide margin o f profit on these items, and they can be handled by the cooperative with a small investment and little additional overhead expense. Most o f these commodities can be purchased through the N ational Cooperatives, Inc., Indianapolis, Ind., which ownsthe Co-Op trade mark, or from one o f its regional members. 8 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS 200 feet of 2-inch black p ip e 6 ($18.80 per 100 fe e t )___________________ 1 600-gallon truck tank with vertical barrel carriers complete, painted and lettered________________________________________________ 1 8- by 10-foot corrugated galvanized iron pumphouse_____________ 1 tank-wagon fu n n el_____________________________________________________ $37.60 339.25 2 5-gallon tank-wagon delivery buckets ($3 each)____________________ 7 80.00 1.88 6. 00 Total-------------------------------------------------------------------------------- 1,948.76 The above equipment m ay be varied to suit individual needs, but represents what the average plant uses fo r handling two grades o f gasoline and kerosene. Cost of service-station equipment.— Service-station equipment w ill also vary according to type o f building, anticipated volum e, etc. The follow in g w ill equip an average-sized service station. T he prices are f.o.b . factory prices in the Central W est. V arious other sm all items m ay also be needed. 2 10-gallon visible gasoline pumps ($88 eac h )____________________________ $176.00 2 550-gallon underground gasoline storage tanks with fittings ($35 each )---------------------------------------------------------------------------------------------------70.00 6 30-gallon lubricating oil dispensers ($14 eac h )_________________________ 84.00 1 %-hp. automatic air compressor_________________________________________ 120.00 2 8-bottle service sets ($3 each )___________________________________________ 6.00 1 radiator filler pail-------------------------------------------------------------------------------1.05 2.25 1 radiator hydrometer---------------------------------------------------------------------------Total________________________________________________________________ 1 459.30 Interest on Share Capital The m axim um rate o f interest on capital stock should be decided upon and incorporated in the original bylaw s. The rate should not be greater than the prevalent legal rate o f interest fo r the com m unity. In no case should it be more than 8 percent, and a lower rate is to be preferred. The rate should never vary w ith the sur plus savings, though it m ay vary as the association itself needs more or less capital and thus increases or decreases this form o f encourage ment o f investment by the members. B efore 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.8 M eetin gs I t is custom ary to hold general m eetings o f the stockholders quarterly. I t is better to hold them m onthly i f m aterial fo r inter esting discussion is available. 6 This item w ill vary to suit the location o f the storage tanks. 7 Approximate. 8 Thus, the rate is set at not to exceed 5 percent in M assachusetts; at 5 percent on ordinary and 6 percent on permanent stock in P ennsylvania; at not to exceed 6 percent in New York, North Carolina, and V erm on t; at not to exceed 7 percent in M ich ig a n ; at 8 percent in M ontana and not to exceed 8 percent in Alaska, Minnesota, Nebraska, North Dakota, Oregon, Washington, and W iscon sin; and at not to exceed 10 percent in Iowa, M issouri, and South Dakota. In the other States this point is left to the discretion o f .Ihe membership. M EE TIN G S 9 T he annual m eeting is the m ost im portant o f a ll, fo r there the elections take place and the annual financial report, m anager’s report fo r the year, and other im portant matters come up fo r review. The business transacted at all meetings usually consists o f reports o f officers, committees, and m anager; discussion o f rep orts; disposal o f net surplus savings fo r the period under review , elections, and other new business. N otice o f m eetings should be sent out at least 10 days in advance. The date fo r the annual and semiannual m eeting should be set late enough to allow the auditor tim e to prepare his report before the m eeting. The number o f members constituting a quorum should be set by the bylaw s. In sm all associations it m ay be 30 percent or 40 percent o f the m em bership; in large ones it m ay be as low as 10 percent. In some States the m inim um is established by law . Associations too large fo r a members’ m eeting should be divided into district sections, each having local autonomy and delegate representation in the cen tral society’s m eetings. Special m eetings m ay be called from tim e to tim e, but only such business m ay be taken up as is specified in the call sent to the membership. The privileges o f the membership meeting should be clearly under stood. W h ile the m eeting has the righ t to hire or discharge em ployees, interfere with m anagement, or dictate the policies o f the board o f directors, such action on the part o f the membership is unwise. Selection o f the m anager should be le ft to the board. T he membership should only review the broad policies o f the board and m anagement, discuss them , and express approval or disapproval. I f it disapproves, it should not attem pt to dictate specific acts to either directors or m anager, but it m ay in extreme cases recall the entire board o f directors and elect a new one. Discussion o f p olitical, religious, or other questions upon which the members o f the association m ay be divided should not be per m itted ; such discussions cause internal strife and m ay do much harm to the organization. Cooperative associations should be neutral in these m atters. M eetings should be called by one or more o f the officers. Special meetings m ay be called by the directors or by petition o f a specified number o f members. G ood speakers should be invited to address the m eeting when such are available. F ollow in g the business m eeting it is alw ays good policy to have an educational session. L et the members feel that this is their social center. I t is also good practice to provide fo r occasional entertain m ents, follow in g the business m eeting, w ith m usic, dancing, m ovies, and refreshm ents. 10 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS D irectors T he board o f directors generally consists o f from 5 to 11 mem bers, 9 elected by ballot on nominations from the floor or by a nom i nating committee. I t is advisable for them to be chosen at the first election to serve fo r different p eriods: O ne-third o f the directors fo r 1 year, one-third fo r 2 years, and one-third fo r 3 years, and at all subsequent regular elections, one-third o f the board fo r a fu ll 3-year term . A sm all board o f 3 or 5 elected fo r short but continuous service can often act more quickly and to better advantage, but the larger board serves to hold the interest o f more members. T he board should meet once a week for the first few m onths, and once or twice a month thereafter. T he directors should always bear in m ind that they are acting fo r the association and are responsible to the members fo r the loyal perform ance o f the follow in g d u ties : 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. T o 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, prop erty, 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 re gu toly 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. M uch thought should be given to the election o f these directors, on whom rests heavy responsibility. T hey should be level-headed, shrewd persons, w ith adm inistrative ability, who understand that the •B ut many State laws set a minimum number which must be observed. Thus, the directors must number not less than 3 in Kentucky, Minnesota, Montana, Verm ont, Wash ington (sto ck ), and W yom in g; not less than 5 in Alabama (stock ), Alaska, Arkansas, Connecticut, Illin ois, Iow a, Kansas, M ichigan, M issouri, New Jersey, New Y ork (stock ), North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, and W iscon sin ; not less than 5 nor more than 9 in South C arolin a; and not less than 7 n or 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 im plication, for the membership to determine. OFFICERS 11 best happiness consists in advancing one’s self by advancing the wel fare o f one’s fellow men. I t should be definitely established that no individual on the board o f directors is him self engaged directly or indirectly in the m aking o f profit from any business running in com petition with that o f the cooperative society. Each director should be expected to give loyal patronage to the cooperative society and his resignation should be asked for when he is no longer loyal. H e should expect no pay fo r attendance at m eetings or fo r other services in behalf o f the asso ciation. Some associations pay a nom inal amount to directors for attendance at meetings so as to insure the presence o f the fu ll board, but the amount should not be large enough to tem pt even the poorest members to seek the office for the sake o f its financial rew ards; $1 or $1.50 per m eeting is enough. N o director should be connected with any business which makes profits by any commerce or other trans actions with the cooperative association, i f such commerce or trans actions are to the personal advantage o f the director. The board should be so selected that every large element within the membership is represented by at least one director. I t is also w ell i f these directors supplem ent one another; thus at least one should be efficient in bookkeeping, another in m erchandising, an other in educational and propaganda work, another in legal prob lems. The entire board should not be devoted purely to theoreti cal and educational activities o f the organization. A ll the directors should have a good knowledge o f cooperative history, principles, and practical affairs. T hey should be selected fo r their good ju d g m ent, knowledge, and ability, and not fo r their capacity to talk. T hey should supervise the manager but they should not dictate to him in m atters o f merchandise to be bought, prices to be paid, clerks to be hired or fired, or fixtures to be procured or rearranged. These are m atters for the m anager. D irectors should not be so engrossed in the commercial aspect o f cooperation that they have no tim e nor interest to create a coopera tive atmosphere w ithin their immediate circle. T hey have an op portunity to develop interest and enthusiasm in the subject o f cooper ation, not only am ong the members but also am ong the employees. T he directors m ay elect an executive committee fo r certain special functions or to act in their stead in emergencies. Som e associations create such a committee as supplem entary to the directors. O fficers U p to the tim e o f the final organization the m eetings should be inform al and run by a tem porary chairman and secretary elected from the floor. 82674°— 34------3 12 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS A ll officers should be elected from and by the board o f directors rather than by the membership at large. The form er are better qualified than the latter to know who w ill fill the various positions m ost efficiently. The president should be chosen, not because o f his popularity or eloquence, but because o f sound judgm ent, executive ability, hon esty, knowledge o f cooperation, and devotion to its cause. H e should not be autocratic. H e should preside at all m eetings, carry out the w ill o f the members, and zealously watch over all affairs o f the association. T he vice president takes over the responsibilities o f the president in the latter’s absence. The secretary m ay also be treasurer in the early years o f an asso ciation.10 H e is usually elected by the members and his services are gratuitous. H e serves as secretary both at the m eetings o f the directors and at members’ m eetings. In sm all associations his duties are to keep the minutes and records, attend to all correspondence, and keep watch over the bookkeeping and accounts. H e should also be the custodian o f the seal, the stock certificates, and the member ship records. T he election to these offices o f men who, though honest, are deficient in knowledge o f accounts and business procedure, is unwise. The accounts should be correctly balanced by the treasurer, who m ay pay all b ills. The treasurer should also render periodic reports to the membership. In m any associations the m anager pays all bills and signs checks, thus fu lfillin g this function o f the treasurer. The checks should be countersigned by the president or other counter signing officers. The directors should fu lly inform themselves from week to week how the association stands in its finances. V o tin g P o w er Equal representation m ust be insured by lim itin g each member to one vote irrespective o f his ownership o f share capital. T his pre vents privilege, insures democracy, and provides that membership shall forever rem ain open to newcomers on equal terms w ith the founders o f the society. A ll subscribers to the capital stock who have paid in fu ll for their shares should be entitled to vote, except as any member m ay have been deprived o f this privilege by action o f the board o f directors fo r some heavy indebtedness to the store, which practically destroys the value o f his share capital investm ent. In some States fu ll voting 10Except in Montana, New Jersey, New York (non stock), and Washington where the law makes no provision fo r combining the two offices. (stock ), SU R PLU S SAVINGS 13 power m ust be granted when shares are subscribed fo r ; and the sub scriber im m ediately has fu ll membership privileges. Unless the law specifically grants such privileges, however, it is w ell to w ithhold them until m ost o f the subscribed capital has been paid in. V o tin g should be by show o f hands or by “ aye ” and “ no ” voice, except in the case o f election o f directors or other m atters on which there is a demand fo r a secret ballot. S u rp lu s S avin gs Surplus savings are the surplus which accumulates in a cooperative association as the result o f selling commodities at a price above cost. T hey are the difference between the net cost and the net selling price, after overhead expenses, interest, reserves, and other deductions have been m ade. T hey represent the profit in profit business. In coopera tion they are also called “ profit ” and “ earnings ” , but they are essentially a saving. Properly considered, the surplus savings which accumulate in a cooperative association represent loans made to the association by the members. T he members o f a cooperative put together their money and buy a tank o f gasoline. I t is theirs and they have paid fo r it. W h en a member drives up with his car and takes away 10 gallons o f the gasoline, he is taking som ething which is already his and fo r which he has already paid. H e does not buy the gasoline at that tim e. The transaction is not a sa le; one cannot buy what he already owns. Since the member wishes the business to continue, lie leaves with the association again enough money to replace the 10 gallons o f gasoline that he has taken. H e is always paying in ad vance and keeping on hand in his association enough gasoline to meet his needs. A n d then he does som ething more. H e adds to the m oney to pay fo r the cost o f the gasoline a second amount. T his is the difference between the cost and selling price. H e pays this extra amount (1 ) because his association does not cut the price o f gasoline but complies w ith the code and the best practices o f the industry, (2 ) because the exact cost o f the gasoline cannot be calculated at the tim e o f each transaction, and (3 ) because by leaving this extra money his association builds up a surplus which m ay be used fo r expansion and other beneficial purposes. T his difference between the cost price and the distributing price is essentially a loan which the member leaves with his association for the above reasons every tim e he takes away some gasoline or oil fo r his own use. H is accumulated loans are returned to him at the end o f a fiscal period. These loans represent what he saves by virtue o f his membership in the coopera tive association. W hen it is returned to him , it becomes a returned loan, or a savings return. 14 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS R eserve F u n d The permanent reserve fund is an extra sum added to the capital to insure the future safety o f the business. A great m any State laws require that cooperative associations shall establish such a re serve fund. U su ally from 5 to 25 percent o f the year’s net savings must be added to the fund until the latter amounts to from 20 to 50 percent o f the paid-in capital. M embers should be encouraged to be generous to their reserve fund and the future security o f their association and not be too anxious to divide among themselves at the end o f the year every penny available. Experience has proven the value o f substantial reserve funds and there has been a strong ten dency toward exceeding the minim um amount specified in the State law s. I t is not unusual fo r a cooperative association which has been operating over a period o f years to have built up a reserve fund the am ount o f which is greater than the amount o f capital. E d u ca tio n a l F u n d Experience has shown that those cooperative organizations which carry on continuous educational work are the ones which are the m ost successful, in both grow th and net savings. The educational work proves valuable both in securing new members and in keeping alive interest among the entire membership. I t is the usual prac tice, therefore, to set aside a sm all percent o f the net earnings fo r an educational fu nd. Com m only this is 2y2 percent o f the surplus savings.11 S avin gs R etu rn s o r P u rch ase R e fu n d s The remainder o f the surplus savings, after paying the interest on share capital, m aking provision fo r reserve fu nd, educational fu n d , etc., is available as savings returns to the members. The savings return is the paym ent to member patrons o f their share o f the surplus savings calculated upon the basis o f their patronage. In profit business it is called dividends. In cooperation it is also called “ patronage refunds ” , “ patronage returns ” , “ pat ronage rebates ” , “ patronage dividends ” , “ purchase refunds ” , etc. I t is essentially the return o f the members’ savings, resulting from th eir patronage. These savings returns are usually paid annually, or in some cases sem iannually. Such patronage returns are based on the purchases o f the members. u Some State laws (i.e., those o f Alaska, Iowa, Massachusetts, Minnesota, Montana, New York (stock ), North Carolina, North Dakota, Oklahoma, Pennsylvania, South Caro lina, South Dakota, Virginia, and W isconsin) require regular additions to a special fund fo r this purpose. RECORD OF PURCHASES 15 I f the membership so desires, the savings return m ay be paid to the members either in cash or as a trade credit. The form er p olicy is used where the cooperative association has a sufficient amount o f w orking capital. In cases where the working capital is sm all, it is the better policy not to pay out the cash, but to perm it the members to trade out the amount o f their surplus savings. Business done by a cooperative association with nonmembers is profit business. Cooperative associations m ay make profits fro m nonmembers but such business has no relation to cooperation. There are three methods o f treating nonmember purchasers: (1 ) N o returns to such patrons until they have purchased at least a sm all amount o f stock ; (2 ) refunds at the same rate as to mem b ers; and (3 ) refunds at h a lf the rate at which members are paid. Several o f the State law s have definite provisions on this point which m ust be m et.12 In the absence o f a specific requirement in the co operative law , however, one or the other o f the last two m ethods named is recommended. R efunds to a nonmember should not be paid in cash, but should be credited to his account fo r the purchase o f shares so that he m ay become a member. R ecord o f P urchases Since the amount o f savings return o f each member depends upon the amount o f his patronage w ith the cooperative association, it is im portant to him to know the exact amount o f his purchases. There are tw o methods which are commonly used, one placing the respon sib ility with the cooperative society and the other with the member. In the first case, the association keeps an accurate ledger account fo r each member show ing the amount o f each purchase. The second method requires th at the member him self keep slips given to him which show the amount o f each purchase and the date, receiving h is savings return on all purchase tickets which he turns back to the company at the dividend-paying time. Since a large number partici pate in the savings return, the first method entails considerable book k eepin g; but this is sometimes considered advisable inasmuch as i t insures the paym ent o f dividends even to those who have not k ep t their purchase slips, thus helping to stim ulate their interest in the cooperative. Probably the m ost satisfactory method is the use o f a cash register which issues slips in duplicate or triplicate with each “ Thus, the laws o f Alaska, Illinois, Massachusetts, Minnesota, Missouri, M ontana, New York (sto ck ), North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Verm ont, Virginia, W ashington (stock ), and W isconsin require the distribution o f patronage dividends (im pliedly to nonmembers as well a s m em bers), but o f these Massachusetts, Montana, New York (stock ), North Carolina, Pennsylvania, Virginia, Washington (stock ), and W isconsin specifically aUow paym ent at half the members’ rate. 16 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS purchase. T his check contains the am ount, the date, and the m em ber’s number. One copy is given to the member and one is retained by the association. P rice P o licy A s already indicated, it is the policy o f m ost cooperative gasoline and oil associations to follow the prices established by the m ajor oil companies. T h is policy has several advantages over selling at cost. .Besides the im possibility o f determ ining in advance what the actual cost would be, without this method there would be no funds to use in the creation o f surpluses and fo r the carrying on o f educational work as previously discussed. Im p o rtan ce o f O p eration on C ash B asis The advisability o f adhering closely to buying and selling on a cash basis is o f great im portance. Extension o f credit has been one o f the m ost frequent causes o f failure among cooperative organiza tions. Some o f the cooperative oil associations which have been operating fo r several years have considered it advisable to do a credit business because o f the fa ct that their competitors were granting credit. Experience has shown, however, that the policy is often abused and that it works to the detriment o f the organization. In no event should a cooperative oil association hereafter organized establish the policy o f selling for credit. There are m any argum ents against it. T o sell fo r credit incurs extra expense in the keeping o f records and reduces the m argin o f surplus saving. A larger capital is required to handle a credit business. Once the policy o f extending credit is adopted it is found that too often a large percent o f the working capital becomes tied up in accounts receivable, and this curtails the efficiency o f the organization. In some cases it compels the society to forego cash discounts on purchases, and this likewise narrows the m argin o f operating savings. I t is true that there are some members to whom the extending o f credit is a real convenience. W here this is necessary, it is much better that these cases be taken care o f through the organization o f a cooperative credit union or bank, the purpose o f which is to make sm all loans to the members. In the case o f truck deliveries where it is im possible fo r the truck salesm an to see his customer on each call, the policy o f perm itting the member to pay fo r the last load when the next load is delivered is often used w ith satisfactory results. The handling o f the business o f a cooperative association on a cash basis is largely one o f education. B efore the cash basis o f oper ation is adopted the members must be educated to see that the cash M ANAGER 17 method is to their advantage. I t is w ell that these advantages be thoroughly understood, also, by the com m ittee which has charge o f the prelim inary educational work and which m ay then work to see that all members fu lly understand it from the beginning. M an ager The selection o f a manager is an im portant factor in assuring the success o f the association. H e should be a man who is w illin g to work closely w ith his board o f directors, one who has the courage and the ability to take the lead, and who also has good sound busi ness judgm ent. Someone who has had actual business practice is much to be preferred. I t is, however, o f prim ary im portance that he be a thoroughgoing cooperator. T his com bination o f cooperative understanding w ith adm inistrative ability has in the past sometimes been difficult to find but, while still rare, is being developed among m any o f the younger people w orking in cooperative societies and studying in cooperative training schools.18 I t is to be preferred in most cases that the manager be someone who has a thorough knowledge o f the com m unity and a wide acquaintance among the membership. There are m any instances, however, in which someone from outside the com m unity has been selected and hired as m anager, who has been a valuable asset to the association. The m anager’s ability to work with and fo r the membership and to gain their respect and regard fo r his judgm ent is im portant. The salary o f the m anager, as w ell as those o f other em ployees, is governed largely by local conditions. I t is found to be the best policy to pay as much as is paid fo r equal services by the profit businesses o f the com m unity. The m anager is the executive officer o f the cooperative association. U pon his ability to perform efficient service rests largely the success o f the society. H e m ust be capable o f m anaging and have an in ti m ate knowledge o f all phases o f operations o f the association, includ ing the buying o f all supplies under contracts made by the board o f directors, keeping o f the records, the proper handling o f all funds o f the com pany, and the supervision o f proper selling prices— all o f these either directly or by supervising others. The number 18 Such courses or institutes have been given by the Central States Cooperative League, 1410 North M ain Street, Bloom ington, 111.; Northern States Cooperative League, 458 Sexton Building, Minneapolis, M in n .; Eastern States Cooperative League, 112 East Nineteenth Street, New York C it y ; and Central Cooperative Wholesale, 1700 Winter Street, Superior, W is. Inform ation as to which leagues are holding or planning such courses at any given time can he obtained from The Cooperative League of the U.S.A., 167 W est Tw elfth Street, New York City. 18 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS o f employees under his supervision is, o f course, determined by the volume o f business o f the cooperative association. I t usually becomes his duty to hold frequent council with members. Com plaints should have his personal attention, and their handling requires diplom acy and judgm ent. H e must be alert to detect places where waste and losses occur and correct them. H e is the contact man between the association and the general public. H e should be able to secure and m aintain loyalty am ong the employees and secure from them their best ideas fo r the future development o f the organization. O th er E m p lo y e e s M embers and prospective members o f the association form their opinion o f the association from their contact with truck salesmen and other employees as w ell as the manager. The efficiency o f the association is judged by the efficiency o f the employees. The em ployees o f a cooperative association are, therefore, more than sales men o f goods. They must think o f themselves as partners o f those whom they are serving and as a part o f the movement which is seek in g to obtain quality goods at fa ir prices fo r consumers who are buying cooperatively. U pon their ability to help make the best o f relationship w ith their members and their prospective members largely depends the future development o f the association. B o o k k eep in g an d A u d itin g Experience has taught cooperative associations the importance o f accurate and complete bookkeeping records. Societies now have the advantage o f being able to secure help from one o f several co operative auditing associations which have a staff o f auditors not only thoroughly inform ed on the problem s o f cooperatives but also w ell trained in accounting m ethods.14 I f such services are not avail able, good public accountants should be secured fo r this purpose. I t is im portant that, at regular intervals, a complete audit statement be sent to the members. A complete audit should be made at least once each year, or more frequently if the committee on auditing or the board o f directors deems it advisable. A quarterly audit has much in its favor. 14 The follow ing central organizations provide auditing service, and assistance in this matter can be obtained from th e m : Illinois .— Central States Cooperative League, 1410 North Main Street, Bloom ington. Minnesota .— Midland Cooperative Wholesale, Broadway and Johnson Street NE., Minne apolis ; Northern States Cooperative League, 458 Sexton Building, Minneapolis. N ew York .— Eastern States Cooperative League, 112 East Nineteenth Street, New Y o r k ; the Cooperative League o f the U.S.A., 167 W est Tw elfth Street, New York. Washington .— Grange Cooperative Wholesale, Kulien Building, Seattle. Wisconsin .— Central Cooperative Wholesale, 1700 W inter Street, Superior. B U Y IN G OF S U PP LIE S 19 In ven to ry an d D ep recia tio n A complete inventory should be taken once each m onth. A ll item s should be figured at cost, except in cases in which there has been a decline in price, and there they should be figured at the m arket value. Care should be taken that too high a value is not placed on the stock. Adequate depreciation should be figured on all equipment, buildings, etc. T he cooperative auditor or public accountant w ill provide inform ation as to the proper rate o f depreciation. Su rety B on d s Each person who handles funds o f the association should be bonded fo r an amount equal to the largest amount o f money or property handled. T he cooperative auditing associations are usually able to secure such bonds fo r cooperative associations. B u y in g o f S u p p lies In the beginning, each local cooperative oil association operated independently o f the others. A s the number o f cooperative oil asso ciations increased, however, they began to pool their purchases w ith a view to saving fo r their members the wholesale as w ell as the retail profits. A s early as 1926, they started the development o f regional, or wholesale, cooperative purchasing groups. There are now a num ber o f cooperative regional organizations dealing in the purchase o f gasoline, m otor oil, etc., on a wholesale basis.15 Each o f these regional wholesales operates in one or more States, and there are several sm aller wholesale societies which operate in a more lim ited territory. Just as the local associations attem pt to save money fo r their members by group buying, so the regional organizations serve the same purpose for their members, the local cooperative associations. The combined purchase o f supplies at a lower price is the prim ary purpose o f the regional associations. Other im portant functions are (1 ) to furnish member cooperative associations with products o f known, uniform , and high q u ality; (2 ) to assist in the organization o f new local associations; (3 ) to assist local associations with their management and organization problem s; and (4 ) to assist in the de15 These wholesale associations a r e : Central Cooperative W holesale, 1700 W inter Street, Superior, W is .; Consumers Associated, Inc., Am arillo, T e x .; Farm Bureau Oil Co., 737 West Henry Street, Indianapolis, I n d .; Farmers Union Central Exchange, St. Paul, M in n .; Farmers Union Service Association, 300 Southwest Ninth Street, Des Moines, I o w a ; Farmers Union State Exchange, Eleventh and Jones Streets, Omaha, N eb r.; Illinois Farm Supply Co., 608 South Dearborn Street, Chicago, 111.; M idland Cooperative W holesale, Broadway and Johnson Street NE., Minneapolis, M in n .; Pacific Supply Co., Portland, O reg .; Union Oil Co. (C ooperative), 1721 Iron Street, North Kansas City, Mo. 20 COOPERATIVE GASOLINE A N D OIL ASSOCIATIONS velopment o f trained and capable leadership for the cooperative oil movement. The next logical step after the organization o f the regional whole sale associations— to combine the purchasing power o f the regionals in a national wholesale— was taken in 1933 with the organization o f N ational Cooperatives, In c. Through it seven regional wholesales have combined their purchasing power on gasoline, kerosene, dis tillate, grease, tires, tubes, etc., and raw m aterials fo r the m aking o f lubricating oils. Thus the consumer members o f the local associa tions affiliated through the regional associations with the N ational Cooperatives, In c., enjoy the savings made possible by the united buying and producing power o f the entire group. B riefly, the national wholesale association (1 ) combines the pur chasing power o f the regional wholesales, (2 ) contracts fo r uniform quality m aterial fo r the m anufacturing o f lubricating oils, (3 ) pro vides uniform cooperative brands, (4 ) provides uniform advertising, (5 ) assists in distribution o f cooperative inform ation, and (6 ) assists the regional wholesales in legislative m atters. The national association is affiliated with the Cooperative League o f the U .S .A . and through it with the International Cooperative A llian ce. C o o p erative M a n u fa ctu rin g A further step has been taken by th ree16 o f the regional associa tions, with the establishm ent o f their own com pounding plants. The purpose was to furnish known, high-quality oils to their consumer members, at the lowest possible cost. 16These associations a r e : Union Oil Co. (C ooperative), 1721 Iron Street, North Kansas City, M o .; M idland Cooperative Wholesale, Broadway and Johnson Street NE., Minne apolis, M in n .; and Farm Bureau Oil Co., Indianapolis, Ind. Appendix A.— Suggested Articles of Incorporation and Bylaws for a Cooperative Gasoline and Oil Association The following forms of articles of incorporation and bylaw’s are suggested as a guide to groups that contemplate organization of cooperative gasoline and oil associations. Proper modifications of and additions to the forms must be made in each case to conform to the requirements of any particular State and the provisions of the law under which the association is to be incorporated. Articles of Incorporation of th e ____________________ ________________ __ Oil Association o f _______________________________ (State) We, the undersigned residents of the State of ____________________ , do hereby associate together to incorporate a cooperative association under the act o f -------------------------------, and for that purpose do hereby adopt the follow ing articles of incorporation. A r t i c l e 1 . The name of this cooperative association shall b e ______________ A r t . 2. The purpose of this association shall be to engage in the business •of distributing petroleum and its products on the cooperative plan. The gen eral nature of its business shall be to deal in, handle, process, produce, and distribute petroleum and various products and byproducts thereof; also such other commodities as are essential and necessary in the operation of the busi ness of this association; to purchase, lease, build, construct, maintain, and operate warehouses, filling stations, pumping plants, and all other appliances and conveniences for use in connection with the purchase, sale, and produc tion of gasoline, petroleum, lubricating oils, and all other petroleum and oil products; to hold, lease, mortgage, encumber, sell, exchange, and convey such lands and other real and personal property as the business of the association may require; to join with other cooperative associations for forming regional, State, and national marketing, service, processing, and producing organiza tions ; and to purchase, acquire, and hold stock therein; and it shall have power and authority, either for itself or its individual members and patrons, to do and perform every act and thing necessary and proper to the conduct of the business of this association permitted by the act under which this association is organized. A r t . 3 . The principal place of business of this association shall be in the city (or town) o f ___________________________________________ in the county o f __________________________ and State o f --------------------------------------- , but it may have such other offices and places of business as may be deemed advisable. A r t . 4 . The term for which this association shall exist i s ------------------ years. A r t . 5. The amount of capital stock of said association shall b e -----------------dollars ($__________ ), which shall be divided into------------------------- (--------------) •shares of par value o f ------------------------------- dollars ($----------------- ) each. The ownership of capital stock in this association by any individual stockholder shall not exceed the par value of $1,000; stockholders shall be restricted to only one vote in the affairs of the association. Proxy voting is prohibited. Shares 21 22 COOPERATIVE GASOLINE AND OIL ASSOCIATIONS of stock shall not be transferable except with the approval and consent of the governing board of the association. Interest (dividends) shall not be paid on outstanding or paid-up capital stock of the association in excess of 8 percent per annum, which shall be noncumulative. The net income of the association,, except such amounts as by law are required to be set aside as a reserve fund or permanent surplus or as may be set aside by vote of the stockholders, avail able for distribution among the members or patrons, or both, as the case may be and as may be prescribed in the bylaws, shall be distributed only on the basis of patronage. Art. 6. The names and residences of the persons forming this association are as follows, to wit: N am es R e s id e n c e s Art. 7. The government of this association and the management of its affairs shall be vested in a board o f ________________ directors, each of whom shall be a stockholder of the association. Directors shall be elected by ballot as prescribed in the bylaws at the annual meeting of the stockholders, which shall be held a t _______________ o'clock_____m. on th e ____________________ of each year. Directors shall hold office until their successors have been elected and shall have entered upon the discharge of their duties. The names and places of residence of the directors of this association wh<y shall hold office until the first annual meeting are as follows: N a m ps R e s id e n c e s In testimony whereof we, the said incorporators, have hereunto set our hands ---------- ------ 19_ and seals this ------- — ----------- _ day of _ — In presence of ------------------------------------- [ S e a l ] r S t o a t .i . f S W A T -1 -------------------------___________________ _________ _ as: Be it remembered that on this— -------------day of---------------------------------- A. D. 19___ , before me, a notary public within and for said county, personally appeared -------------------------------------------------------------------------------------------------------State of ------ C ou n ty o f to me known to be the persons described in the above and foregoing instrument and whose names are subscribed thereto and severally acknowledged that they executed the same freely and voluntarily for the uses and purposes therein expressed. Notary public. My commission expires. County. A P P E N D IX A .— A R T IC L E S O P IN C O R P O R A T IO N AND BYLAW S 23 -Bylaws of the__________________ ____„_____ ___. . . ______Oil Association A rticle 1.—Identity and location of association Section 1. The name of the association shall be the______________________ Cooperative Oil Association. Sec. 2. Its principal place of business shall be at---------------------------------------- A rticle 2.— O bject o f the association Section 1. The purposes of this association shall be those set forth in its articles of incorporation. Article 3.— Capital stock Section 1. A u th orized capital stock.—The capital stock of this association is $__________ divided into______________ shares of the par value of $__________ each. Sec. 2. Certificates o f stock.— Certificates of stock shall be issued to each holder of fully paid stock. Each certificate shall state the par value of the stock, the number of shares represented, and the name of the person to whom issued, and shall bear the signatures of the president and secretary and the seal of the association. Each certificate shall be numbered and issued in chronological order. Each certificate shall bear on the face the following statements: (1) “ This certificate n o .____________, representing----------------------- shares of stock, numbers______________ _ is issued and accepted in accordance with and subject to the conditions and restrictions stipulated in the bylaws and amend ments to the bylaws of the---------------------------------- Oil Association, of--------------(2) “ No stockholder in this association shall be entitled to more than one vote regardless of the number of shares held by him, nor to hold shares of a par value greater in amount than $1,000. Interest shall not be paid on out standing stock in excess of eight (8) percent per annum, which shall be noncumulative. In case the holder of the stock represented by this certificate should desire to dispose thereof, the association shall have the right to purchase the same at its par value less any indebtedness then due the association, and in no event may the stock represented by this certificate be transferred without the consent and approval of the board of directors. In case the holder of the stock represented by this certificate should remove from the territory commonly served by the association or should cease to patronize it for 6 months, unless for good cause, the board of directors may purchase said share or shares for the par value thereof less any indebtedness then due the association. The fore going conditions shall bind every person who may become the holder of this certificate.” Sec. 3. T rea su ry stock.—The treasury stock of this association shall consist of stock of the association that may be purchased or otherwise acquired by it and shall be held subject to action of the board of directors. Such stock shall not share in the apportionment of capital stock dividends and may be canceled at the discretion of the board of directors. 24 COOPEKATIVE GASOLINE AND OIL ASSOCIATIONS Sec. 4. Certificate record and receipt .—A record of each certificate of stock issued shall be kept on the stub thereof and each certificate shall be receipted for in the following form: “ In consideration of the issuance to me of certificate of stock n o .______for __________ shares of the capital stock of th e __________________________:___ Oil Association, o f _______________________________ , I do hereby agree to all of the conditions, restrictions, limitations, and reservations stipulated in the bylaws and amendments to the bylaws of the association, and more especially to those appearing on the face of the certificate, which I have received th is__________ day o f ______________________ , 1 9 ____ “ W itness------------------------------------------------ ” Sec. 5. S tock tran sfers. —All transfers of stock shall be made upon the books of the association upon surrender of the certificate covering the same in person by the holders of the shares or by their legal representatives, but only with the consent and approval of the board of directors, and when the stockholder is free from indebtedness to the association, all subject to the conditions stated oneach certificate of stock. A r t ic l e 4.— M em bership S e c t i o n 1. Qualifications.—Any person who may be a user of any of the prod ucts handled by the association and who resides in the territory commonly served by the association may become a member of this association by pur chasing at least one share of the capital stock thereof and by meeting all other requirements of the board of directors. S e c . 2. Term ination o f m em bership. — Membership may be terminated in the manner provided on the certificates of stock. S e c . 3 . R estriction s. —No member of this association shall be entitled to more than one vote regardless of the number of shares of stock of the association held by him, nor shall any member of the association hold shares of the associa tion of a par value greater than $1,000. Interest shall not be paid on out standing or paid-up capital stock in excess of eight (8) percent per annum, which shall be noncumulative. A rticle 5.— M eetin gs S e c t i o n 1. F isca l yea r. — The fiscal year of this association shall commence on the first day o f------------------------------- and end on the last day o f ________________ S e c . 2 . A nnual m eetin g. —The annual meeting of the stockholders of this as sociation shall be held in the town o f __________________ _ State o f ____________ _ on the la st-------------------------in ----------------------- of each year, a t _______________ _ if not a legal holiday, but if a legal holiday, on the next business day following. S e c . 3 . Special m eetin gs. — Special meetings of the stockholders of the associa tion may be called at any time by order of the board of directors and shall be called by the president whenever ten (10) percent of the stockholders make such a request. The request shall state the object of the meeting. S e c . 4. N o tice o f m eetin gs. — Notice shall be given by the secretary of all meetings of the stockholders by mailing a notice thereof to each stockholder not less than ten (10) days preceding the date of the meeting. When stockholders petition for a special meeting, notice of the time, place, and purpose thereof APPENDIX A.----ARTICLES OP INCORPORATION AND BYLAWS 25 shall be issued within ten (10) days from and after the presentation of the* petition and such special meeting shall be held within thirty (30) days from and after the date of presenting the petition. Sec. 5. A b sen t m em bers votin g.—Voting by proxy shall not be permitted, but absent members may vote on specific questions, other than the removal of di rectors, by ballots transmitted to the secretary by mail, and such ballots shall be counted only in the meeting at the time at which such vote is taken; pro vided wording of the motion or resolution upon which such vote is taken, and a copy of the same is forwarded with and attached to the vote of the stock holder so voting. Sec. 6. Quorum .— Twenty (20) percent of the stockholders shall constitute a quorum for the transaction of business at any meeting of the association except for the transaction of business concerning which a different quorum is specifi cally provided by law or by these bylaws. All members voting by mail shall be counted as present in determining a quorum for the consideration of a specific question on which votes may have been cast by mail. Sec. 7. O rder o f business.—The order of business at the annual meeting and at other meetings of the association, as far as applicable, shall be: (1) Roll call, (2) Proof of due notice of meeting, (3) Reading of disposal of minutes, (4) Annual reports of officers and committees, (5) Election of directors, (6) Unfinished business, (7) New business, (8) Adjournment. A rticle 6.— D irectors and officers Section 1. D irectors. —The board of directors of this association shall consist of seven members, each of whom shall be a stockholder of this association. At the first election of directors to succeed the incorporating directors, the members shall elect two directors for 1 year, two directors for 2 years, and three directors for 3 years, and thereafter each director shall be elected for 3 years. Directors shall hold office until their successors have been elected and qualified and have entered upon the discharge of their duties. Sec. 2. E lection o f officers.— The board of directors shall meet within ten (10) days after the first election and within ten (10) days after each annual election, and shall elect by ballot from among themselves a president, vice president, sec retary, and a treasurer (or a secretary-treasurer), each of whom shall hold office until the election and qualification of his successor unless earlier removed by death, resignation, or for cause. Sec. 3. Vacancies .—Any vacancy in the board of directors, other than from the expiration of a term of office, shall be filled until the next regular or special meeting of the stockholders of the association by the remaining members of the board. Sec. 4. Quorum .— A majority of the board of directors shall constitute a quorum at any meeting of the board. Sec. 5. Com pensation.—The compensation o f the directors and officers may be fixed at any annual or special meeting of the stockholders of the association. Sec. 6. R em ova l. —Any director of the association may be removed from office for cause, by vote of not less than two-thirds of the members present, at any annual or at any special meeting called for the purpose, at which a majority of 26 C O O P E R A T IV E G A S O L IN E A N D O IL A S S O C IA T IO N S the members shall be present. The director shall be informed in writing of the charges preferred against him at least ten (10) days before such meeting and at such meeting shall have an opportunity to be heard in person, or by counsel, and by witnesses in answer thereto. A r t i c l e 7 . — D u ties o f directors Section 1. M anagem ent o f business.— The board of directors shall have gen eral supervision and control of the business and the affairs of the association and shall make all necessary rules and regulations not inconsistent with law or with these bylaws, for the management of the business and the guidance of the officers, employees, and agents of the association. They shall have installed an accounting system which shall be adequate to the requirements of the business, and it shall be their duty to require proper records to be kept of all business transactions. Sec. 2. E m p loym en t o f m anager .—The board of directors shall have power to employ and to dismiss a business manager, and such other employees as may be necessary or desirable, and fix their compensation. The business manager shall have charge of the business of the association under the direction of the board of directors. Sec. 3. B on d s and insurance.—The board of directors shall require the mana ger and all other officers, agents, and employees charged by the association with responsibility for the custody of any of its funds or property to give ade quate bonds. Such bonds shall be furnished by a responsible bonding company and approved by the board of directors, and the cost thereof shall be paid by the association. The board of directors shall furthermore provide for the adequate insurance of the property of the association; and in addition shall provide for adequate employers’ liability insurance for all employees. Sec. 4. M eetin gs. —The board of directors shall meet at least once every month at the principal office of the association at a time to be set by the board. Special meetings of the board shall be held upon call of the president or upon written request of three members of the board. Notice of all meetings of the board of directors shall be sent to each member thereof. Sec. 5. A u d its. —At least once in each year the board of directors shall obtain the services of a competent and disinterested public auditor or accountant, who during the thirty (30) days preceding the annual meeting shall make a careful audit of the books and accounts of the association and render a report in writing thereon, which report shall be submitted to the members of the association at the annual meeting. In addition, the board of directors at not less than four of their regular meetings shall examine and inquire into the accounts of the association for the purpose of ascertaining the financial condition of the asso ciation with a view to taking appropriate action in regard thereto. A r t ic l e 8.— D u ties o f officers Section 1. D u ties o f p residen t .— The president shall (1) preside over all meetings of the association and of the board of directors, (2) call special meet ings of the association and of the board of directors, (3) perform all acts and duties usually performed by an executive and presiding officer, and (4) sign all stock certificates and such other papers of the association as he may be au thorized or directed to sign by the board of directors, and he shall perform such other duties as may be prescribed by the board of directors. Sec. 2. D u ties o f vice presiden t .— In the absence or disability of the presidentr the vice president shall perform the duties of the president, provided, A P P E N D IX A .— A R T IC L E S OE IN C O R P O R A T IO N AND BYLAW S 27 however, that in case of death, resignation, or disability of the president, the board of directors may declare the office vacant and elect his successor. Sec. 3. D u ties o f secreta ry. —The secretary shall keep a complete record of all meetings of the association and of the board of directors and shall have general charge and supervision of the books and records of the association. He shall sign all stock certificates with the president and such other papers per taining to the association as he may be authorized or directed to do by the board of directors. He shall serve all notices required by law and by these by laws and shall make a full report of all matters and business pertaining to his office to the members at the annual meeting. He shall make all reports required by law and shall perform such other duties as may be required of him by the association or the board of directors. Upon the election of his successor, the secretary shall turn over to him all books and other property belonging to the association that he may have in his possession. Seo. 4. T reasurer.—The treasurer shall have custody of all money belonging to the association and shall keep a full and complete record of all receipts and disbursements thereof, except such receipts and disbursements as the manager may make in the conduct of the business as authorized by the board of direc tors. The treasurer shall pay out no money except on the order of the presi dent and secretary. He shall make a report of the financial condition of the association at its annual meeting and at such other time as the board of direc tors may require. Upon the election of his successor, the treasurer shall turn over to him all money, books, and other property belonging to the association that he may have in his possession. The treasurer shall perform such other duties as he may be authorized to perform by the board of directors. The treasurer may be required to execute a bond, to be paid for by the association, to protect the association from losses occasioned by him. Article 9.— D u ties o f tnanager Section 1. I n general.—Pursuant to the authority conferred by the board of directors and pursuant to its direction, the manager shall have general charge of the ordinary and usual business operations of the association. Sec. 2. D u ty to account.— The manager shall maintain records and accounts so that the true and correct condition of the business of the association may be ascertained therefrom at any time. He shall render annually and periodi cally statements in the manner and form prescribed by the board of directors. He shall carefully preserve all books, documents, correspondence, and records of every kind pertaining to the business of the association that may come into his possession. Seo. 3. Control o f help.— Subject to the approval of the board of directors, the manager shall have control over and may employ and dismiss all agents and employees of the association not specially employed by the board of directors. Article 10.— D istribu tion o f incom e Section 1. M eth o d o f distribution.—At the end of each fiscal year, after paying the expenses of the association for operation and otherwise and after setting aside a reserve for depreciation and after providing for payments on interest or principal of long-time obligations or amortized debts of the asso ciation incurred in the conduct of the business, the board of directors shall apportion the net surplus saving or income, insofar as funds are available, in the following order and manner: 28 COOPERATIVE GASOLINE AND OIL ASSOCIATIONS (1) By setting aside not less th an ________ percent of the savings as a reserve until an amount of not less th an ________ has accumulated in said reserve. (2) By paying not to exceed eight (8) percent interest on the capital stock. (3) By setting aside not less th an ________ percent of the savings as an educational fund. (4) The balance of such net surplus saving or income shall be apportioned among the patrons of the association in accordance with the method stated in the following section. Seo. 2. M eth od s o f distributing savings retu rn s .— Savings returns or patron age dividends shall be paid in cash to all patrons of the association, except that in case of a patron who is eligible for membership in the association and who is not the owner of at least one share of the capital stock of the associa tion savings returns or patronage dividends shall be credited to the account of such patron until the account shall equal the value of a share of stock, whereupon the association shall issue and deliver to such person a share of the stock of the association, who shall, upon its acceptance, be a member of the association. Sec. 3. A pplication o f savings returns to in d ebtedness .—Any part or the whole of the interest on capital stock or savings returns apportioned to any patron may be credited, at the discretion of the board of directors, to the indebtedness, should any exist, of the patron to the association, and in such case the patron shall be notified in writing of the amount so applied. Article 11.— M iscellaneous provisions Section 1. B y la w s pointed .—After adoption, these bylaws preceded by the articles of incorporation shall be printed in pamphlet form, and a copy thereof shall be sent to each stockholder and to each person who may later acquire one or more shares of the capital stock of the association as shown on the books thereof. Sec. 2. A m en d m en t o f bylaw s.—These bylaws may be amended, repealed, or altered in whole or in part at any regular meeting of the association or at any special meeting thereof when notice thereof has been duly given, provided that a majority of the members present and voting, including those voting by mail, at any such meeting shall vote for such amendment, repeal, or alter ation; and provided that notice of the proposed amendment shall have been published to the members at least 30 days before such action is taken. Appendix B.— Petroleum Code, Executive Orders, and Definition of a Cooperative Association The code of fair competition for the petroleum industry approved by the President on August 19, 1933, contained the following rules: 4R tjle 28. The provisions of this code shall not prevent an association, society or corporation organized or incorporated on the cooperative plan under any law of any State, territory or the District of Columbia or of the United States as defined in rule 29 of article 5 of this code from paying patronage dividends to the members or stockholders of such an organization in accor dance with the provisions of the law, the articles of association, articles of incorporation and/or bylaws of such association, society, or corporation, and the payment of such patronage dividends by such cooperative organizations shall not be construed as a violation of this code, nor shall the payment or dis tribution of such dividends be construed under this code as an unfair method of competition; it being specifically understood that such dividends shall not be paid to nonmembers or nonstockholders. R ule 29. All farm cooperative societies, associations, and/or corporations organized under the laws of any State, territory or District of Columbia or of the United States, membership in which is restricted to persons whose chief source of livelihood is farming or other cooperatives organized and existing on July 1, 1933, and which comply with paragraph 12, section 103, of the Revenue Act of 1932,1 and which distribute their patronage dividends to such members only, shall be exempted from certain provisions of this article 5 as hereinbefore specified; provided, however, they shall be otherwise fully subject to the provisions of article 5. Etvecuti/ve Orders R elating to C ooperative A ssociations On October 23, 1933, the President of the United States signed the following Executive order: I, Franklin D. Roosevelt, President of the United States, do hereby order that no provision in any code of fair competition, agreement, or license which has heretofore been or may hereafter be approved, prescribed, or issued pursuant to title I of the National Industrial Recovery Act, shall be so construed or applied as to prohibit the payment of patronage dividends in accordance with law to any member of any bona fide and legitimate cooperative organization, including any farmers’ cooperative, duly organized under the laws of any State, territory, or the District of Columbia, or of the United States, if such patronage dividends are paid out of actual earnings of such cooperative organi zation and are not paid at the time when such member makes a purchase from such cooperative organization. On February 17, 1934, the President issued another Executive order, as follows: Whereas questions have arisen concerning the scope and meaning of Executive Order No. 6355, of October 23, 1933, defining the effect of certain provisions in codes of fair competition upon cooperative organizations; now, therefore, by virtue of and pursuant to the authority vested in me under title I of the National Recovery Act approved June 16, 1933 (48 Stat. 195), it is ordered that said Executive Order No. 6355 be, and it is hereby, supplemented and amplified s l s follows: 1. No provision in any code of fair competition, agreement or license which has heretofore been or may hereafter be approved, prescribed, or issued pur1For the terms of this paragraph, see appendix C, p. 32. 29 30 COOPERATIVE GASOLINE AND OIL ASSOCIATIONS suant to title I of the National Industrial Recovery Act shall be construed or applied so as to make it a violation of any code of fair competition to sell to or through any bona fide and legitimate cooperative organization including any farmers’ cooperative, duly organized under the laws of any State, territory, or the District of Columbia, or of the United States or to sell through any intervening agency to such cooperative organization. 2. No such code of fair competition shall be construed or interpreted so as to prevent any such cooperative organization from being entitled to receive, and/or distribute to its members as patronage dividends or otherwise the proceeds or benefits directly or indirectly derived from any discount, commis sion, rebate, or dividend (a) ordinarily paid or allowed to other purchasers for purchases in wholesale or middleman quantities, or (b) paid or allowed pur suant to the requirements or provisions of any code of fair competition to other purchasers for purchase in wholesale or middleman quantities. 3. The Administrator for Industrial Recovery is hereby authorized to de termine, after such hearings and proceedings as he may deem necessary whether, in any doubtful case, an organization is or is not a bona fide and legitimate cooperative organization entitled to the benefits and protection of this order. D efinition o f a C ooperative A ssociation Pursuant to the second Executive order, above noted, Administrator Hugh S. Johnson issued the following definition of a cooperative association: In any code of fair competition operating under the terms of the National Industrial Recovery Act, cooperative organizations, as determined by the Administrator of the act, to be entitled to the benefits and protection of Executive Order No. 6355 of October 23, 1933, as supplemented and amplified by Executive Order No. 6603-A of February 17, 1934, as a bona fide and legitimate cooperative organization, must comply with the following condi tions, limitations, and restrictions: 1. Be duly organized under the laws of any State, territory, or the District of Columbia. 2. Allow to each member owning one fully paid share or membership one vote and only one in the determination of matters affecting the management of the organization, except as otherwise provided by the law under which such organ ization is incorporated; provided that a central or regional cooperative association, the membership of which is composed of cooperative associations, may provide in its bylaws for voting based upon the volume of business done by the members with the central or regional cooperative, or on the number of members in the member association. 3. Operate on a cooperative basis for the mutual benefit of its members, and all income, after providing for reasonable and adequate surplus and reserves, as determined by its board of directors, and payment of dividends on stock or membership capital of not to exceed eight (8) per centum per annum, cumulative, shall be distributed to members or shareholders on the basis of patronage at stated periods, but not more frequently than semiannually. 4. Transact business with and for and on behalf of, nonmembers to an amount not greater in value, during any fiscal year, than the business trans acted with and for and on behalf of, members during the same period. 5. Permit all members and stockholders to have access to the records for the purpose of determining the salary and compensation paid officers and employees, and that no salaries or commissions are paid except for services actually rendered. 6. Distribute patronage dividends equally to all members, and/or stockholders who have complied with membership requirements, in proportion to their pur chases, and/or sales; may permit accumulation of patronage dividends on nonmember business until it equals the value of a share of stock when same shall be issued; does not distribute such dividend in the form of a refund at the time of purchase; and does not evidence any such dividends by any agree ment or representation to distribute any definite or specified dividend. 7. Refuse to allow or permit any organizer or organizers to take more than 3 percent of the capital raised as compensation for their organization services,. 8. Conduct its affairs in the interests of the members, and no cooperative shall be controlled or managed by any noncooperative organization or organiza- APPENDIX B.— PETROLEUM CODE, EXECUTIVE ORDERS. ETC. 31 tlons, person or persons to whom any surplus savings or profits or any excessive or unreasonable compensation for services, are paid; and shall not by contracts, agreements, provisions of bylaws, or articles of incorporation, or otherwise be required to buy commodities from a specified noncooperative concern. 9. Operate in accordance with the various codes of fair competition for the industries in which they operate and as provided in the Executive orders above referred to. 10. In case any of the foregoing conditions, limitations, or restrictions are in specific conflict with the cooperative law of any State, territory, or the District of Columbia, such conditions, limitations, or restrictions are waived as to cooperatives organized and operating under such law. As the petroleum code is subject to modification and interpretation it is suggested those desiring further, up-to-date information communicate with the National Cooperatives, Inc., North Kansas City, Mo. Appendix C.— Provisions of Revenue Act Regarding Cooperative Associations Section 103(12) of the Revenue Act of 1928 follows, verbatim, section 231(12) of the Revenue Act of 1926 and provides as follows, regarding the tax status of cooperative associations: The following organizations shall be exempt from taxation under this title— (12) Farmers, fruit growers, or like associations organized and operated on a cooperative basis (a) for the purpose of marketing the products of members or other producers, and turning back to them the proceeds of sales less the necessary marketing expenses on the basis of either the quantity or the value of the products furnished by them, or (b) for the purpose of purchasing supplies and equipment for the use of members or other persons, and turning over such supplies and equipment to them at actual cost, plus necessary ex penses. Exemption shall not be denied any such association because it has capital stock, if the dividend rate of such stock is fixed at not to exceed the legal rate of interest in the State of incorporation or 8 per centum per annum, whichever is greater, on the value of the consideration for which the stock was issued, and if substantially all such stock (other than nonvoting preferred stock, the owners of which are not entitled or permitted to participate, directly or indirectly, in the profits of the association upon dissolution or otherwise,, beyond the fixed dividends) is owned by producers who market their products or purchase their supplies and equipment through the association; nor shall exemption be denied any such association because there is accumulated and maintained by it a reserve required by State law or a reasonable reserve for any necessary purpose. Such an association may market the products of non members in an amount the value of which does not exceed the value of the products marketed for members, and may purchase supplies and equipment for nonmembers in an amount the value of which does not exceed the value of the supplies and equipment purchased for members, provided the value of the purchases made for persons who are neither members nor producers does not exceed 15 per centum of the value of all its purchases. It will be observed that this section exempts farmers and other cooperative* marketing associations organized and operated “ for the purpose of marketing the products of m em bers or oth er producers , and turning back to them the proceeds of sales, less the necessary marketing expenses, on the basis of either the quantity or the value of the products furnished by them, * * (Italics supplied.) The clear intent of this provision of the statute is that nonmember patrons, if dealt with at all, shall be treated the same as mem bers insofar as the distribution of patronage dividends is concerned. In other words, if products are marketed for nonmember producers the proceeds of the* sales, less necessary operating expenses, must be returned to the patrons from the sale of whose goods such proceeds result, whether or not such patrons are* members of the association. Therefore, a cooperative marketing association may not, without losing its exempt status, make a profit on the business trans acted with nonmember patrons and divert the proceeds of such business from the patrons entitled thereto. However, where a cooperative marketing associ ation has otherwise complied with the provisions of the statute respecting exemption, but defers the payment of patronage dividends to nonmembers,, exemption will not be denied—• 1. Where the bylaws of the association provide that patronage dividends,by whatever name known, are payable to the members and nonmembers alike,. 32 APPENDIX O.----PBOVISIONS OP REVENUE ACT 33 and a general reserve is set up for the payment of patronage dividends to nonmembers. 2. Where the bylaws provide for the payment of patronage dividends to mem bers, but are silent as to the payment of patronage dividends to nonmembers, but a specific credit to the individual account of each nonmember is set up on the books of the association. 3. Where the bylaws are silent as to the payment of patronage dividends to either members and/or nonmembers, but the evidence submitted shows that it has been the consistent practice of the association to make payment in cash or its equivalent of patronage dividends to members and nonmembers alike within a reasonable period after the expiration of the particular year involved. Where, under the circumstances stated in 1, 2, and 3, above, patronage dividends are not payable until the nonmember becomes a member of the association either through the payment of the required amount in cash or the accumulation of dividends in an amount equal to the purchase price of a share of stock or membership. A p p e n d ix D .— S u g g e s te d F o rm s fo r R eco rd s of C o o p e r a t iv e G a s o lin e a n d O il A s s o c ia t io n s The follow ing form s are suggested for annual statem ents o f cooperative oil associations. They indicate the type o f records that should be kept. Annual statem ents in this form make possible a clear analysis o f the business. Balance sheet o f Cooperative Oil Association , as o f _________________ , 1 9 . . ASSETS Current assets: Cash on hand_______________ $ ________________ Cash in banks_______________ ______________ $ ________________ Accounts receivable________ ______________ Less reserve for bad d eb ts. _ ______________ _____________ _ Trade acceptances receiv able_______________________ ____ _______ _ . N otes receivable____________ ______________ Inventory: Merchandise________________ ______________ Drum s_______________________ ______________ ______________ $ ________________ Investm ents______________________ ______________ Deferred charges: Prepaid expenses____________ ______________ Prepaid insurance___________ ______________ _______________ D eposits__________________________ ______________ M eters_______________________ ______________ - _____________ Contingent assets________________ ______________ Fixed assets: Real estate____ Buildings______ Equipment____ Furniture______ Cars and trucks. Total____________ Less depreciation reserve. Total assets. L IA B IL IT IE S Current liabilities: Accounts payable_______________________ Federal tax on gas and oil______________ State gasoline tax_______________________ Trade acceptances______________________ Notes payable__________________________ Accrued liabilities: Interest________________________________ Other liabilities: Mortgages. Capital liabilities: Capital stock_____________________________ Surplus and undivided savings and profits. . Net savings for current year_______________ Total liabilities. 84 _____________ ..................... ____________ APPENDIX D.— SUGGESTED POEMS POE BECOBDS 35 Statement o f operations o f Cooperative Oil Association , period ending ________ 1 9 __ Commodity Begin ning in ventory Pur chases Total Ending inven tory Cost of sales Sales Gasoline___________ X n r n sn iA D istillate Lubricating oil.......... Grease _ _ .. _ M iscellaneou s Gross operating income________________________$. Other income_________________________i _______ . Total income___________________________________________$. Operating expense: D elivery expense: Drivers’ com m issions___________________ $ ________________ or Drivers’ salaries_________________________ ___ ______ _____ Truck expense (including fuel and oil) _ _ .......................... Salaries; M anager’s salary and expense__________ ______________ Office salaries____________________________ _____________ _ Directors’ fees and expense_____________ ______________ Interest, taxes, and insurance: Interest___________________ _______________ ______________ Taxes_____________________________________ ______________ Insurance________________________________ ______________ Depreciation and repairs: D epreciation___________ ________ ________ ______________ Repairs___________________________________ ______________ Plant supplies___________________________ ______________ Rent or leases________________________________ ________ ___ Advertising and donations___________________ ___ ______ _____ Light, power, water, and fuel________________ ______________ Telegraph and telephone_____________________ ______________ Office supplies________________________________ ______________ Reserve for bad debts________________________ ______________ General and miscellaneous expense: ______________ A udit_____________________________________ Organization expense___________________ ______________ M iscellaneous____________________________ ______________ T otal expense___________________________________________ N et operating incom e__________________________________ T otal____________________________________________________ Less other deductions_____________________________________ Net savings for period Loss Gain 36 COOPERATIVE GASOLINE AND OIL ASSOCIATIONS Stockholder ledger Name: John Smith. Address: Mullinville, Kans. Cert. no. 1001; number of shares, 1 ; date issued, Jan. 1, 1934. DIVIDEND RECORD = = S H Item Date Mar. 1, 1935........ Hhenk _ June 1, 1935____ Check___ Folio Amount OR 30— CR 50__ 34 1 Item Date 50 50 Folio Jan. 2, 1935......... Stock divi j i dend. Jan. 2,1935_____ Savings re J 2......... turn. 1 50 34 Stock account showing shrinkage and loss in handling Item Gasoline G allons Kerosene Distillate Lubricat ing oil Grease G allons G allons P ou n d s Gallons B eginning in ven tory _ Purchases „, _____ T o ta l q u a n tity bou gh t __ Less: E n d in g in ven tory Sales _____ T o ta l q u a n tity m easured Shrinkage (gallons). Shrinkage (percent) _ _ __ _ D is p o s itio n of n et sa v in g s Interest on capital stock____________________________________________ $ Savings returns______________________________________________________ Reserve for perm anent surplus_____________________________________ . Undivided surplus___________________________________________________ , Total. I Amount 5> 0