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ISADOR LUBIN, Commissioner


No. 606




For sale by the Superintendent of Docum ents, Washington, D.C.

Price 5 cents-



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%..

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 ,




Steps preliminary to organization_________________________________________
First organization meeting________________________________________________
Articles of incorporation__________________________________________________
Constitution and bylaws__________________________________________________
Cooperative principles________________________________________________
Rochdale methods_________________________________________________
Share capital_____________________________________________________________
Amount of capital needed_____________________________________________
Interest on share capital______________________________________________
Voting power_____________________________________________________________
Surplus savings___________________________________________________________
Reserve fund_____________________________________________________________
Educational fund_________________________________________________________
Savings returns or purchase refunds_______________________________________
Record of purchases______________________________________________________
Price policy______________________________________________________________
Importance of operation on cash basis____________________________________
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
A ppendix D.— Suggested forms for records of cooperative gasoline and oil







No. 606



Oc t o b e r , 1934

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





•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





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:

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



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
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
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.



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.”
Membership.— Limitations, duties, and responsibilities.
Capital.— 'T otal amount authorized, interest to be paid, value of the share,
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.
Surplus savings.— Distribution to interest, reserves, education, savings
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^


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



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)____________________
1 double tank-car unloading rack______________________________________
39. 00
3 storage-tank connections ($7.65 each )______________________________
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.



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_____________________________________________________


2 5-gallon tank-wagon delivery buckets ($3 each)____________________

7 80.00
6. 00



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 )_________________________
1 %-hp. automatic air compressor_________________________________________ 120.00
2 8-bottle service sets ($3 each )___________________________________________
1 radiator filler pail-------------------------------------------------------------------------------1.05
1 radiator hydrometer---------------------------------------------------------------------------Total________________________________________________________________ 1


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.



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
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.



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.



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



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
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
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 ),



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.



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
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.



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.



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



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
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
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.



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
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.
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.



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
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.



velopment o f trained and capable leadership for the cooperative oil
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 _______________________________

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




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



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
Notary public.
My commission expires.






-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


Section 1. A u th orized capital stock.—The capital stock of this association
is $__________ divided into______________ shares of the par value of $__________
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
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.



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



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
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





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,




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
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:



(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
(2) By paying not to exceed eight (8) percent interest on the capital
(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
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


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:
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
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:
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.




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-



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—•
Where the bylaws of the association provide that patronage dividends,by whatever name known, are payable to the members and nonmembers alike,.



and a general reserve is set up for the payment of patronage dividends to
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


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 . .

Current assets:
Cash on hand_______________ $ ________________
Cash in banks_______________ ______________ $ ________________
Accounts receivable________
Less reserve for bad d eb ts. _ ______________
_____________ _
Trade acceptances receiv­
____ _______ _ .
N otes receivable____________
Drum s_______________________
______________ $ ________________
Investm ents______________________
Deferred charges:
Prepaid expenses____________
Prepaid insurance___________
D eposits__________________________
M eters_______________________
- _____________
Contingent assets________________

Fixed assets:
Real estate____
Cars and trucks.
Less depreciation reserve.
Total assets.

Current liabilities:
Accounts payable_______________________
Federal tax on gas and oil______________
State gasoline tax_______________________
Trade acceptances______________________
Notes payable__________________________
Accrued liabilities:
Other liabilities:

Capital liabilities:
Capital stock_____________________________
Surplus and undivided savings and profits. .
Net savings for current year_______________
Total liabilities.





Statement o f operations o f Cooperative Oil Association , period ending ________ 1 9 __


ning in­




Cost of


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___________________ $ ________________
Drivers’ salaries_________________________
___ ______ _____
Truck expense (including fuel and oil) _ _ ..........................
M anager’s salary and expense__________
Office salaries____________________________
_____________ _
Directors’ fees and expense_____________
Interest, taxes, and insurance:
Interest___________________ _______________
Depreciation and repairs:
D epreciation___________ ________ ________
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





Stockholder ledger
Name: John Smith.
Address: Mullinville, Kans.
Cert. no. 1001; number of shares, 1 ; date issued, Jan. 1, 1934.
= = S H



Mar. 1, 1935........ Hhenk _
June 1, 1935____ Check___



OR 30—
CR 50__







Jan. 2, 1935......... Stock divi­ j i
Jan. 2,1935_____ Savings re­ J 2.........

1 50

Stock account showing shrinkage and loss in handling


G allons



ing oil


G allons

G allons

P ou n d s


B eginning in ven tory _
Purchases „,
T o ta l q u a n tity bou gh t __

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


n et sa v in g s

Interest on capital stock____________________________________________ $
Savings returns______________________________________________________
Reserve for perm anent surplus_____________________________________
Undivided surplus___________________________________________________