A Stake in the Land

by Peter A. Speek

Almost all immigrant settlers interviewed on the subject of co-operation were in favor of it. "Co-operation helps us!" were words often used in answer to the question why they favor co-operation. This "help" should not be understood in the material sense only. Co-operative action, though it begins in economics, extends to and ends in the creation of ideal, socio-psychological values. The co-operator works and fights in the spirit of solidarity. He satisfies his wants through concerted action. His psychology is more complex and his aims become higher than those of a private individual.

Co-operation is a child of necessity. It cannot be created by outside suggestion or mere preaching. When there is a need and conditions are favorable the co-operative movement comes into being. Unquestionably the need for co-operation is greater in the rural districts than in the cities, and yet the rural conditions in many respects make the development of co-operation more difficult. The main obstacles, according to the rural co-operators themselves, consist in the lack of business connections and markets, in the absence of knowledge of efficient business methods, and in credit difficulties. It is hard to find an able and trustworthy business manager for a co-operative store in a village.

Notwithstanding all difficulties, the co-operative movement among farmers and especially among immigrant settlers has lately begun to grow with extreme rapidity. For instance, in 1917 in the state of Wisconsin there were agricultural co-operative associations in the following numbers: 380 creameries, 718 cheese factories, 98 feed and produce associations, and 124 live-stock concerns. [20]

One of the first difficulties in the way of establishing a co-operative association is its incorporation proceeding. Most of the states up to this time have had no special laws covering co-operative associations. In such cases they have to be incorporated under the laws relating to private companies or those covering charity and public-welfare associations.

A number of states have enacted laws for the promotion and protection of co-operation among farmers. The Wisconsin law, Chapter 368, Laws of 1911, makes provision for the establishment of organizations conducting business on the co-operative plan. No member is allowed to own shares of a greater par value than one thousand dollars. No member is entitled to more than one vote. Dividends on the paid-up shares are allowed to be no more than 6 per cent per annum; 10 per cent on the net profits has to be set aside as a reserve fund. When this has accumulated up to 30 per cent of the paid-up shares, 5 per cent goes to the educational fund to be used for teaching co-operation. One half of the remainder of the profits has to be paid as a uniform dividend upon the amount of purchases of shareholders and upon the wages and salaries of the employees, while the other half has to be paid to the nonshareholders on the amount of their purchases.

In case of productive associations, such as co-operative creameries, or elevators, dividends have to be paid on raw materials delivered. In case an association is both a selling and productive enterprise, the dividends may be divided on both goods purchased and material delivered. All concerns which do not comply with the provisions of the above law are prohibited to use the term "co-operative" as a part of their corporate name or the designation of their business.

According to the Nebraska law, Senate File No. 88,

the words "co-operative company, corporation, or association" are defined to mean a company, corporation, or association which authorizes the distribution of its earnings in part or wholly on the basis of, or in proportion to, the amount of property bought from or sold to members, or of labor performed, or other service rendered to the corporation. A co-operative concern has the power "to regulate and limit the right of stockholders to transfer their stock, and to make by-laws for the management of its affairs, and to provide thereon the term and limitation of stock ownership, and for the distribution of its earnings."

The California law, Civil Code, Secs. 653M to 653S, provides for organization of agricultural, viticultural, and horticultural co-operative associations which shall not have a capital stock and shall not be working for profit. Each such association shall determine by its by-laws the amount of membership fee, the number and qualifications of members, conditions of voting, the methods of business, and the division of earnings.

There is no question that every state must have special legislation for co-operative associations quite distinct from that relating to private business concerns. A co-operative association must have the legal power to regulate and limit the right of shareholders to transfer their shares, to make by-laws for the management of business, to limit the share ownership, to decide on the proportion and method of distribution of its surplus earnings. It must limit dividends on shares to the prevailing rate of interest and provide a certain percentage for a reserve fund until the latter has accumulated up to a certain proportion of the capital invested. A part of the remainder should be retained for educational and other social-welfare purposes, the rest proportioned to the amounts of goods purchased, products contributed, or services rendered. The co-operative law should provide for one-member-one-vote. Irrespective of the number of shares owned, or the goods purchased, or the products contributed, or the services rendered, only one vote should be granted to each member.