TH! PRI'NClPLES OF OPERATION 0i? FARMERS' COOPERATIVE!» AS VWWE‘D IY MICHIGAN FARMERS Thais hr the Degree 0% M. A. MICMGAN STA?E COLLEGE J. Howard Kauffman 1948 UN I n i, m WIN/1T“ . 31293 105904 4521 4.? --_ l 5‘ l l I :’ N R‘ \ § O) ‘ 1 THES.’ E This is to certify that the thesis entitled THE PRINCIPLES OF OPERATION OF FARMERS' COOPERATIVES AS VIEWED BY MICHIGAN FARMERS ‘ presented by Y . Howard Kauffman has been accepted towards fulfillment of the requirements for M. A. __degree in__S_og_i_glggy and Anthrop. 7'2 ./ z ‘ ‘3’. ,5! / Hg W 4 . / Carl/Q; Major professor Date May 26) 191-18 "-796 I y . . . . . 4' vb tr > .I .I. p | r . EFL. . . [Ell ku.luvbl£|u.£dt‘:f|l lull-Ill - I...» L. ; IE; lik-’ TVE FRIMCIDLP3 OD OPTRATION OF FARYTRS' COOPPRATIVFS AS VIEJED FY NICVIGAN FfiRMVPq By J. HOWARD KAUFFMAN A THESIS Submitted to the School of Graduate Studies of Michigan State College of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF ARTS Department of Sociology and Anthropology 1948 T"“5815 ACKWOTLFDGMRVT The author wishes to express his appreciation to all those who have assisted in the preparation of this thesis. He is in- debted to Dr. Charles P. Loomis, Head of the Department of Soci- ology and Anthropology and Director of the Social Research Ser— vice, for the opportunitv of participating in this research project. Dr. Edgar A. Schuler, Assistant Director of the Social Research Service, assisted in the general supervision of the project. Dr. Duane L. Gibson had major responsibility for the direction of the project, and gave much helpful criticism.and guidance in the writing of the thesis. Walter E. Boek assisted in the preparation of the schedule, and made a major portion of the interviews. Acknowledgment is also due the Michigan Association of Farmer Cooperatives, at whose instance and with whose financial aid the project was undertaken. The five hundred farmers, who were interviewed during harvest time, manifested cooperation by I giving time and serious thought in answering the questions which were asked of them. 2.04078 TABLE OF CCT‘T‘NTS‘ SEREEEE Eia I. Introduction to the Study ... ....... .............. ........ ..... 1 Origin of the study ....... ..... . ....... ...... ........ ..... 1 . Development of the schedule .................... ...... ..... 4 . Selection of sample areas ............ ..................... 6 . Sample selection and interviewing ................ ........ . 10 Cooperative activity in Michigan ................... ...... 10 The nature and validity of the sample .......... ..... ...... 14 Procedure in analyzing data ........ ....... . ............. . 19 Other studies on membership relations ..................... 20 Importance of the study ............ ................ ....... 26 \OOONJOVJ'IJI'WI’DH II. The Principles of Cooperation ..... ..... ......... ....... ...... 28 . Cooperation and cooperatives ............ ......... .... ..... 28 . The Rochdale principles ........... ........ .. .............. 51 . Legal recognition of the principles ............... ........ 54 . Observa+ions regarding the principles .....................' 58 . Summary statement of purpose ..... ............ ... ......... . 41 \nkwmr-a III. Factors Affecting Opinion Responses Regarding the Principle of Democratic Control ................ ..... .. ................ 45 . Membership status . ...................... ...... ...... ..... 44 . Amount of business done ........ ........... .... ....... ..... 45 . Age ................... .......... .. .............. . ....... .. 46 . Education ............... ...... ............................ 47 Attendance at meetings .................................... 48 Length of membership ...................................... 50 Type of cooperative a member .............................. 51 Officers versus non-officers .............................. 54 Status as member of the Farm Bureau ....................... 55 Summary ................................................... 56 OWCDNOxW-EWMH H IV. Factors Influencing Opinions Regarding Principles Pertaining to the Disposition of Earnings ............................... 58 1. Are cconerative earnings "profits"? ....................... 58 (a) Membership status ................................... 59 (b) Length of’mevbership ................................ 60 (0) Age ........................................ ........ 62 (d) Education ........................................... 65 (e) Attendance at meetings .............................. 64 (f) Farm Bureau membership status ....................... 65 (g) Summary ............................................. 66 2. flho should receive the earnings? .......................... 67 (a) Membership status ................................... 68 (b) Amount of business done ............................. 69 (c) Age .......... ..... ...... .. ...... ................... 70 (d) Attendance at meetings .......... ....... . ........ .... 71 V. VI . VII. (e) Type of cooperative a member .......... (f) smug-W ......OOI......OOOOOOOOOCOOO.....OOOOOOOOOOOO 5. Should earnings be withheld to increase capital? .......... (a) Membership status .......... (b) Amount of business done ............ ..... (c) Aae ................ (d) Summary ................................ Factors Influencing Opinions Regarding the Principle of Open and VOluntary VembGTShip cocoon...090000000000...- 1. Should membership be restricted? ............ (a) Membership Status 000.00.... (b) Amount of business done .... .....O...OOOO (C) Ace .............0.0.0.0....0..........OOOOOOOOOOOCOO (d) Education...OOOOOOOOOOOOOIOOOOOO (e) Attendance at meetings .................... (f) Summary ................... 2. Should members be bound by contracts? ..................... (a) Membership status ............ ...... ........ . (b) Type of COOperstive a member ... (0) Education .................. (d) Amount of business done ............... (e) Swmaw ......OOOOOOCOOOOOO. ... 0000000000 5. C‘hould new members be added by share dividends? ........... (a) Membership status ............... (b) Age .................. (c) Size of farm ................... (d) Type of cooperative a member .......... (e) Attendance at meetings ................ (f1 Reasons for joining ........ (3) Summary .................... Factors Influencing Opinions Regarding the Principle of Buying 000......‘000 and Selling at Market Prices ......OOOOOOOOOOOOOOOOO0.0.000... 1. Should cooneratives buy and sell at market prices? ........ (a) Membership status .............. (b) Amount of business done ...... (0) Age ............. (d) Education ...................... (e) Attendance at meetings ..... (f) Summary . Factors Influencing Opinions on Minor Policies and Practices 1. Opinions regarding officers .......... (a) Membership status ............. (b) Age ........................ (C) Edtlcation00000000000000.00000.0.0000000.000.000.000. (d1 Amount of business done ................ (e1 Summary ..................... O O 78 7a 79 81 82 a2 85 84 85 86 88 89 9O 91 92 95 97 98 99 100 102 105 105 106 107 108 109 110 111 115 115 114 115 116 117 118 2. Should cooperative earnings be taxed? ..................... (a) Membership status ................................... (b) Amount of business done ........... ............ ...... (cl Ase ................................................. (d‘ Education ........................................... (e) Attendance at meetings .............................. (f) Officer status ........ ....... ....................... (g) Summary ............................................. 5. Does it cost too much to join? ............................ (a) Membership status .................. ..... ............ (b) Amount of business done ... ......................... (c) Farm Pureau membership .............................. (d) Summary ............................................. VIII. Factors Influencing Farmers' loyalty to Coonerative Organi- zations C...000............OOOOOOOOOOOOIOOOOOOOOOOOOOOOOOOOOOO 1. Questions indicating loyalty ................. ..... ........ (a) Membership status ................................... (b) .Age .00.... ..... ...OI.....OOOOOOO......OOOOOOOOOOOOO. (c) Education .................. ...... ................... (d) Amount of business done ............................. (6‘ Attendance at meetings ....... ........ ... ...... ...... (fl Officer status .................. ......... .... ...... . (0) Length of membership ................................ (hl Tvpe of cooperative a member ........................ (i) Q21)m.mar‘r 0.........-...........OOCOICOOOOOOO0000...... TY. Summary and Conclusions .............. ....... ................. 1. Summary of findings ....................................... 2. conCIUSions ......OOOOOOOOOOO......OOOOOOOOOOOOOO0.... ..... Bibliofitranhy 0......000.00.00.00.000.......00....OOOOOOOOOOOOOOOOO. Appendix A .... Appendix B .0......OOOOOOIOOOOOCOOOOOO. OOOOOO ......OOOC... ...O....OOOOOOOOOOOOOOOO.........OOOOOOOOO0.0.000... 119 120 121 125 125 1221 124 124 126 127 128 129 150 152 152 154 156 158 159 140 141 145 145 144 147 147 156 162 167 169 CHARTER! INTRODUCTIQT TO M STUDY 1. 921813an Although the story or the development or modern cooperative economic enterprises covers a period or more than a century, tarmars' cooperatives in the United States are a comparatively recent dcvclopnsnt. Nearly all of the farmsrs' cooperatives nos in existence have had their origin sithin the past thirty years. The disadvantageous position of agricul- ture relative to industry during the 1920's and 1930's greatly accelerated the increase of memberships in farmers' cooperatives throughout the United States. During the period traa 1915 to 1945 the estimated number or mbsrships in farmers' marketing and purchasing cooperatives in- creased from 651,186 to 5,010,000} Especially in the North central Region, cooperatives have bccans more or loss institutionalised sco- ncsnic associations among farmers. The great increase in support of cooperative organizations in rural commitiss does not, however, signify a triumph of the cooperative movement over all opposition. Both from within and without there are persistent opposing and disintegrating forces. From within there is the svsr-prcssnt problem or maintaining favorable membership relations. lith regard to the members themselves, a constant program of education and vigilance needs to be undertaken to insure the success and permanence of cooperative sntcrpri scs. 1. Grace wan-tan. Wfim' Wmm Matias, AM. farm credit Administration, U. 3. Dept. of Agriculture, 1947, p. a. 8 One important method of maintaining this vigilance is the use of quantitative measurement of the opinions and attitudes of the members who canpose the cooperative organisations. No organisation can hope for permanent success unless its members understand its purposes and princi- ples of operation, unless they are satisfied with its services, and unless they can attach themselves to it vith a feeling of loyalty. To objectively determine the extent and intensity of general understandings, of satisfactions and dissatisfactims, end 'of loyalties and disloyalties is a major problem. Managers, directors, and other officers of coopera- tives constantly are making subjective evaluations of the successes and failures of their undertakings. This is accomplished through manager- member contacts afforded by business transactions, through membership neetings, and through a study of the financial and mmbership records of the business. Frequently, however, msmbers' opinions on particular issues are not easily determined by such media. Even more difficult to deter- mine are the more general, underlying attitudes which are built up over a period of time, ad which influence a member's opinion on specific issues. Realization of these difficulties has led cooperative leaders to seek a more objective msamemsnt of the opinions and attitudes of the cooperative members. i‘he developasnt of quantitative research techniques has rendered it possible to reliably measure opinions and attitudes by objective msthods.z By using a carefully mded schedule of question" it is possible for an impartial interviewer, maintaining the anonymity of the interviewee, to obtain data thich reveal attitudes unlikely to be expressed, either a. See George L. Lundberg Socig, Reagan, Longmans Green and Co. 194.2, Chapter VIII. ' ' ' 3 directly or indirectly, to officers of the organization. Discovery of the nature and extent of adverse opinions and attitudes held by members should enable the officials of an organization to improve the services of the organisation, and, in the case of cooperatives, to take steps to better educate the members concerning the purposes and values of the organisation. his desire to gain more objective information concerning the status of membership relations among Michigan cooperatives prompted the Michigan Association of farmer GOOpsratives to finance a research project which would wovids the information desired. The study involved the personal interviewing of five hundred Michigan farmers, in order to obtain their opinions regarding their relations with, and participation in, Michigan famers' cooperatives. The present chapter deals with the technical methods and procedures used in the conduct of the research project. (mly a part of the data obtained, however, is used in this thesis, viz., those items which contribute to the analysis of the farmers' opinions and attitudes toward the principles of operation of soaperatives. Sub- sequent chapters devs10p this particular aspect only.3 Further statements regarding the purpose and scOpe of this thesis will be made in Chapter 11. Early in 1947 the Michigan Association of Farmer Cooperatives, with offices in Lansing, Michigan, approached the Social Bessarch Service of Michigan State college with a request that the Research Service conduct a study of membership relations among Michigan farmers" cooperatives. ihe Social Research Service agreed to conduct the survey and to report the subsequent findings to the Association. Preparations for the survey 3. for an analysis of other data obtained in this study, see Walter 3. Book, Personal Attributes _a_n_d_ Socig risnce g; Correlates g; mticipgtion _ig Farmers' Cocperatives in Michigg, unpublished master’s thesis, Michigan State College, 1948. 4 were made in the months immediately following. The develOpment and pre- testing of the schedule was carried out during the spring months of 1947. The five hundred interviews were made by field workers from July 10 to 1 August 20.‘ The data were subsequently coded, punched into International Business Machine 'cards, and tabulated. The initial report of the find- ings was made to the annual meeting of the Michigan Association of farmer cooperatives on October 30, 1947. s. uniomt 213p; gchsggle As stated above, the purpose of this study was to obtain reliable, first-hand information concerning the nature and extent of participation by farmers in Michigan cooperatives, and concerning the attitudes and opinions which farmers held relative to cooperative policies and prac- tices. The more specific objectives of the study were to obtain answers to the following questions: (1) How high does cooperation stand as a method of doing business? (a) What do farmers think about the operation and policies of cooperatives? (5) What do farmers think of the price, quality and service of cosperativss as compared with other businesses? (4) What do farmers know about the principles and methods of Operation of cooperatives? (5) here do farmers get their information about cooperation and cooperatives? (6} How aware are farmers of the state- wide and national problems which cooperatives face? It was decided that the survey should be conducted by means of per- sonal interviews with the farmers, using a pro-arranged schedule of questions. Many opinion studies are carried on by the use of mailed 4. The interviews were made by Dr. D. L. Gibson, Walter E. Book, and the writer. The latter two were both graduate research assistants in the Department of Sociology and Anthropology, Michigan State College. 5 questionnaires, a less costly procedure. This technique is used exten- sively in market research. certain distinct advantages are obtained, however, by the use of the schedule and personal interview'method, nota- bly the following: (1) By interviewing according to a pre-arranged random sample, the undesirable factor of "selectivity" of returns is avoided. (8) The interviewer is present to answer any questions concern- ing the interpretation of a particular question, or the purpose of the questionnaire, in general. (3) The method helps to insure that a logical answer will be given to all questions in the schedule. In general, two types of questions were used in the schedule: (1) Questions calling for the recording of objective facts, such as the age, education, and membership status of the farmer, and (2) Questions call-- ing for a statement of the farmer's opinion on various aspects of coOpsr- ative operation. The data obtained thus permits the cross tabulation of different types of farmers with varying opinion responses. Awmajor por- tion of this thesis is devoted to the analysis of the varying Opinion responses in the light of different age groups, membership status, edu- cational levels, stc., of farmers. A.comp1ete record of the problems encountered, and steps taken, in the construction of the schedule will not be given in this treatise. Suffice it to say that various methods were undertaken to overcome the inherent weaknesses of particular types of question responses. Differ- ent types of questions used permitted responses of the "YesANo”, mnlo" tipls choice, free response, and simple rating types. In some cases, alternate forms of the same question were used in order to overcome psychological factors influencing opinion responses. ‘Efforts were made to avoid all “leading" forms of question statement. The 6 schedule underwent eight revisions before the final form was drafted. Four pare-tastings were made to enable the discovery of poorly worded phrases, words which were not generally understood or posed ambiguous meanings, and entire questions concerning issues about which the average farmer had insufficient information to answer intelligently. The entire schedule of questions, as it appeared in final form, is given in Appendix B, together with the number of each of the responses given to each question. Subsequent chapters will note the particular questions with which this thesis deals. 3. Sanction fimflm. The problem of the selection of sample areas, in order to obtain a representative sample of the opinion of Michigan farmers, was a major one. Tims and money did not allow taking interviews throughout the entire state. Therefore, in order to obtain data which could be considered fairly repre- sentative of Michigan cooperatives, it became important that the sample areas selected be as nearly average, or representative of average, of all Michigan camnunities as possible. The following determinants were used as guides to the selection of representative areas: (1) Areas where cooperatives have been Operating for less than ten years should, in general, be avoided. (2) Areas in which unusual happenings dominate the present scene, such as the formation of a new cooperative, or the recent failure of a cooperative, should be avoided. (3) The areas sel- ected should be where neither the most successful nor where the least successful cooperatives exist. (4.) The sample should be confined to areas where several cooperatives exist, preferably several types of coopera- tives. (5) The sample areas should include a cross section of the 7 different types of farming in Michigan. (6) The areas should have a wide geographical spread in the southern part of the lower peninsula, which would be south of a line drawn from Bay City to Muskegon. (7) lastly, the sample should be confined to areas where the greatest amount of infor- mation could be obtained with the least thme and expense. Time and funds available were major determinants in deciding on five hundred as the nump ber of farmers to be included in the sample. The:map on the following page shows the location of the sample areas. Five localities were selected, with one hundred farmers to be interviewed in each locality. In general, these areas meet the requirements of the deternunants stated above. The areas are geographically diverse, member- ships in at least seven different cooperatives were found in each area, and all major types of Michigan farming were represented, including dairying, grain, fruit, vegetable crepe, livestock; and general farming. Each area had at some time in the past experienced a cooperative failure, or near failure. The five areas, by names of counties in which located, and by names of trading centers located within or near the areas, are as follows: (1) Berrien and Cass Counties: Eau Claire and Dowagias. (2) Branch County: Goldwater, Quincy, Bronson, and Batavia. (3) Lenawee and Mbnrce Counties: Blissfield and Deerfield. (4) Ottawa, Allegan, and Kent Counties: lMoline, Dorr, Byron Center, Burnips, Hamilton, Hudsonville, Jamestown, and Vriesland. (5) Huron County: Elkton and Pigeon. An examination of a land classification map reveals that the soil types found in these areas are, in general, somewhat above average for '71 I Isle loyele Stathgf Michigan location of sample areas i !' I .J / I K gI' I . . - 1: I '. HOnIonoqon If 3| Barogo r' I . 1 I__ I o'I i I | IGogeB'ic 'I i IJ jMarqueIIe '_ _____ _I' Luce I L e—-— —-—-— ' I ‘ Iran I I I ' ‘ K“ I'""". I I Alger ...-"I- I E ChIppewa .0 ! I'D..- k—- n I i h F'— _-'_ . I \.. I ! ic ”I30 I [_I-_ _ 51c oolcroft IMackInac L _______ _I \.. I I IDeIIa I I L. I , I r“ 5 i I I o I P . I "' 5° I ’ O I I (95 I .' EmmeI iChebquanI. P S; ‘ i ! ' I I. o ! ! . Q x-_.-.J I I Charlevoix I I Presque Isle Q - 1L _I'ét—sezo Montmorsncyi Alpena _ .... 1"- AnIr'Irn - . 65 0 I I I o O \o° I l ' 0 _ ._ ........ I ......... I .......... _\,.°_ __ I \KaIII—aska ICravaord Oscodo IAIcona . Grand I I i i Bun"! Traverse I I ! I I I - l - ...... I_._._-__._-_ _-_J_-_-_-_I'_._-_-_.'_-_-_-_- MonIsIeeIWexford :MIssaukeef-‘Ioscommon;Ogemavv IIosco i i i i I i i I I ! ..... ....-.J..- T.-.J.-__.I.._-_i_ ' - I._._- Mason IL ke .Osceola .Clare .rGlOdWIn 1Arenoc ' I I I I I . . .- . Ke ez_ to Areas by i I I I he H . . . - ' uron Major Trading Centers I ! I ! Isa- _______ '_-_-_-_.I._.-_-_--- .. ._-_-_. Oceana IINevIIaygo IMecosIo I—lsabella I.-MIdland I . 5 , I I I I I I ! I I I . Inc—oi: Tamar" Area 1: Eau Claire I I I I f”1_. ' ------- ' L_-_-_.-j___I ____ r--~' ‘1-' I 4’ ji IMonIcaIm {GraIi0I_ |Saqinaw ' I Area 2: Goldwater, %+ L L ! i I rqu . e '— T'—‘ ""1 - . L- Bronson, Quincy 9% 'K”' - I I ' -J 1 r-J I I - r----'----—r _____ _I' I IF“-'----‘Ir--------°I--.----- IGencsee Lapeer L-_-____ A 5 31' f1 1d OHOWOI Ilon'Io .CIinIon lShiawosseeI i I'SI.C|aIr rea : 198 e . . I ' , I | I I I i ! Deerfield 4 ' - ' ' I .I I I i r--..L._._- .4. . I ' I -Oakland TMacomF ..... 1" -.L-_ _n;-_qn—nLun¢ — L- I I Area 4. Mollne Dorr Alleq' iBorry Eaton ilnqhom iLiv inosIoni I I e ’ , ' I I I I ‘ Hudsonville, James- I E i i E ! , I . . I . I town, Burnips _______ .--l--- _"L _____ r.l__.___L ....... JHT-_--Hms_. Van Buren TKaIamazooi Calhoun IJacksan IWOshIenow IWOY'W S“ ' . I I ' l Area 5: Pigeon, -1 I l I i I ! i I I . . Elkton L _______ 4, _______ _-_ __.I__J..__-_- --.L-_,--—,_._.L-_ ‘ Hillsd Ie Lenawee Monroe 9 the state of Michigan.5 Huron and Lenawee counties, in particular, re- present two of the most fertile areas in the state. The other three areas enjoy a soil fertility which is at least average for the more fer- tile lower part of Michigan. This fact may raise some question as to the possibility that the sample is biased towards the more prosperous parts of the state. It is possibly true that this bias does exist, but this does not necessarily indicate that the data obtained should be biased either for or against cOOperatives. It would be difficult to prove a hypothesis that the most successful cooperatives are found in the most prosperous farming areas. Several of the largest and most suc- cessful cooperatives in Michigan (notably the large cooperative at Hamilton) are located in areas of relatively poor soil. It is conceiv- able that farmers in relatively poor areas may be quite likely to enter into cooperative enterprises in order to improve their economic conditions. A major item with respect to the survey was the maintaining of a general anonymity of the sceperatives under surveillance. The comicil of the Michigan Association of Farmer 000peratives recommended that primary emphasis should not be placed upon the particular problems of any one or more cOOperatives, but rather upon the broader membership relations problems faced by cooPeratives in general. The sample in- cludes memberships in over thirty Michigan cooperatives. No one cooperative claims as members more than 12.4 percent of the total sample. ' 8. Map included with J. O. Veatch, fifli cultural Ian____<_i_ Classifica- t__i____on an___<1 Lan_____d_ m__ of Michigan, Agricultural Experiment Station, Michigan State College, Special Bulletin 231, October, 1941. 4. Ema—L30“ 103 ES. W- hch sample area included about five hundred to eight hundred farm- ers. Since only one hundred interviews were to be made in each sample area, it was necessary to select at random those famers which were to be interviewed. This was dcne by the use of county road maps produced by the Hiohigau State Highway Department, on which was located each farm residence. By selecting every fifth, sixth, seventh, or eighth farm slag a road (the number depending on the total farms in the area) , the exact location of each of the one hundred farmers to be interviewed was determined before entering the area. this permitted a completely random sampling of farmers of all economic levels. Naturally, not all farmers selected would be members of a coopera- tive enterprise. This feature was desired, because it would permit the opinions of members to be cmpared with the opinions of. non-members. Strict anonymity was maintained with respect to the farmer interviewed. his was made clear to the farmer in order that he would feel free to express his honest opinions. Interviews were confined to the heads of households. In cases where it was impossible to contact the head of a household while the interviewers were in the area, substitutions were made. In general, at least three attempts were made. to secure a pro- spective interview before a substitution was made. Only six farmers, 1.2 percent of the total sample, refused to be interviewed. The time required for each interview usually covered from one-half hour to one and ale-half hours. 5- Wmmm the Michigan Association of Farmer Cooperatives stated that for the 11 year 1944-45 there were in the state of Michigan 255 cOOperative associa- tions which sell farmers' products and buy needed supplies for farmers. 'Ihese associations did an estimated 161 million dollars worth of busi- ness. The estimated increase in purchasing power that the farmers realized through their cooperative memberships was placed at four million dollars.‘s The same source estimates the number of farmer memberships to be 135,600. Since many farmers hold membership in more than one coop- erative, the actual number of farmers who are members of cosperatives is somewhat less. As of 1937, the St. Paul Bank for COOperatives estimated that, on the average, between '70 and 80 million dollars worth of crops and live- stock were marketed each year through Michigan cooperatives. This represented over one-third of the estimated total value of over 3200 ,000,000 of crops and livestock marketed annually in Michigan.7 This source also indicated that, for the same period, Michigan had about 190 ,000 farmers, and more than a third of them were marketing farm prod- acts or purchasing farm supplies through cooperative organizations. The 1945 census of agriculture, however, gives 175,268 as the number of farmers living in Michigan. Whether this decrease in the absolute number of farmers has tended to increase the proportion of farmers who are cooperative members is problematical. M any rate, it should be safe to assume that between one-third and one-half of all farmers in Michigan at 6. Data obtained from the program leaflet for the Third Annual Meet- ing of the Michigan Association of Farmer Cooperatives, October 30, 194?. This number does not include the associations organized to loan money, provide insurance, and render special services like telephone, irrigation, the '7. R. 0. Dorsey, 3m Co-cpg _i_x; Migglgan, St. Paul Bank for Coop- eratives, St. Paul, Minnesota, 1939, p. 1. is?! 12 present actually belong to one or more cooperatives. Since 395 ('79 percent) of the 500 farmers in the sample were coop- erative members, it appears that the sample areas have a much greater proportim of sceperative members than is true for all of Michigan. This fact should not destroy the validity of the sample, however. There are, of course, areas in Michigan where no cooperatives exist. Farmers in these areas would probably know little about cooperatives, and therefore would have no basis upon which to form opinions regarding cooperative policies and procedures. ihe inclusion of such farmers in the sample would decrease the value of the study, since the main objective is to gather the opinions of farmers who actually participate in cooperative activity, or have learned about soaperatives through their contacts with others in the community. It is significant to note that 98 percent of the sec farmers included in the sample stated that they have had some dealings with sceperatives. Dairying rates highest among Michigan farm enterprises. About 50 percent of all dairy products are marketed sceperatively. The value of sceperatively marketed dairy products accounts for nearly one-third of the total value of all commodities marketed and purchased coOperatively. next in order of value of business comes grain, followed by farm supply, fruit, and livestock cooperatives.8 Compared with other states in 1937, Michigan ranked fourteenth in cash farm income, but in preportion of farm products sold cooperatively Hichigan ranked ninth.9 , the oldest cosperatives operating in Michigan at the present time s. H. 3. Ierulem. MWWfiM’ Egan- i227: 31% Michigan, Michigan State College, Special Bulletin 315, May 9e Barfly. 21’ Me, Do 1e 13 date from the 1880's and 1890's. They are principally grain elevators and dairy and cheese associations. Table 1 presents a distribution of the number of cooperatives existing in Michigan in 1938, according to the period of organisation. Table 1. Nmber of Michigan Farmers' Marketing and Pin‘chasing COOpera- tives operating in 1938, classified according to the period of organisation. 'NumMer of‘ Period of Organizatigg Goopgrativeg 1900 or before 8 1901-10 14 1911-15 ‘9 1915-20 131 1921-25 38 1926-30 12 1931-38 51 Total 309 The period of greatest seeperative development came during the World we: and immediately following. By 1921 there were nearly as many coopera- tives in Michigan as there are today. The number of cooperatives reached a peak in the mid 1920's, but since that time mergers and failures have gradually reduced the total number of cooperatives. TheiMichigan Association of Tanner Cooperatives was organized in 1944 as a division of the Michigan ram Bureau. Its membership (as of August 31, 19‘?) consists of 179 local and centralised cOOperatives throughout the state. .According to the annual report of the chairman of the board of directors, "the major function of this association has ban, and still is, to carry on the state level the defense of coOperatives 10. Eli. p. as. 14 in the tax battle...'n Other services, such as cocperative education, research, and matters pertaining to public and patron relations, are also rendered to its patrons. The Association represents a united ef- fort, at the state level, to influence state and national policies affecting sceperatives, and, in general, to promote the welfare of coop- erative enterprises on all levels. 6. The naturg g; validity p; the gamplg certain interesting and pertinent observations can now be made con- cerning the sample upon which this study is based. of the 500 farmers interviewed, 395 were found to be present members of one or more farmers' cosperatives. 105 were not members at the present time. Of the latter, '70 had at some previous time been a member of a cooperative. Only 35 farmers, seven percent of the total sample, had never been a member of a cooperative. 0f the 395 present members, 42 were \maware that they were members. when asked whether they were at present members of a coopera- tive, these 42 “unaware" members answered "No”. Subsequent questions in the schedule, asking whether they were members of, or did business with, certain specific cooperatives, revealed these memberships which had not been stated earlier. These 'maware" members are included with the other members in this study, inasmuch as they are officially included in the membership rosters of their respective sceperatives, as well as the total cooperative memberships for the entire state. Any mention of the Opinions of Michigan cooperative members should naturally include the Opinions of "unaware" members. Any adverse effects which the opinions of such a group 11. Annual Rgmrt, Michigan Association of Farmer Cooperatives, Lansing, Michigan, August 31, 1947, p. 3. 15 may have on the opinion data for all members is merely a reflection upon cooperatives in general for permitting the existence of such a state of unawareness. The distribution of ages by ten-year class intervals is given in “b1. 8 e Table 2. Age distribution Of the sample farmers by ten-year class inufl‘1.e M isroent of Igterval Ngber Tot}; Under 30 years 56 11.3 30 to 39 " 117 23.5 40 to 49 " 117 23.5 50 to 59 F‘ 117 23.5 60 years and over 90 1.8,; Total 407* 100.0 ‘ Note: Ages not obtained for three farmers A comparison of the ages of members and non-members revealed an insignificant difference between the two groups. Calculation of the mean age for both groups by class intervals as above gives a mean age of ap- proximately 46 for members and 48 for non-members. This difference may be due to chance factors in sampling, or to errors in calculation of the mean by the arbitrary use of class intervals. There is a significant difference between members and non-members with respect to the size of farm Operated. Members farmed, on the average, considerably larger farms than non-members. its average educational level of members was somewhat higher than that for non-members. A large percentage of the farmers in the sample were owners of their on farms. fifty-nine percent owned all the land they farmed, and 27.3 percent owned part of the land they farmed. Only 13.7 percent of the sample were renters owning no land. 15 With respect to length Of membership, the cooperative members can be divided into three fairly equal groups. One third of the present members joined a cOOperative prior to 1931. Que third joined during the period 1931 to 1940. he remaining one third first joined a cOOperative in the period since 1940. Twenty-nine of the farmers interviewed (7.3 percent of the members) had at some time in their lives been officers, directors, or managers of a cOOperative. 0f the total sample, 233 (46.9 percent) were found to be members of the Michigan Farm Bureau. Of the 264 farmers who were not members of the Farm Bureau, 85 had at some time been members, but had drapped their memberships. The 395 members represented an aggregate Of 602 cOOperative member- ships, cr an average of 1.52 memberships per farmer. A distribution of memberships by major types of cOOperatives, according to comodities handled, is given in Table 3. Table 3. Distribution of memberships of sample farmers by type of cOOp- erative. Number of Percent 'of Total :11}; Mghipg Membergps Combination elevator and supply 292 48.5 Petroleum products (supply) 36 6.0 Fruit and vegetable marketing and supply ’ 65 10 .8 Milk and cream marketing 83 13.8 Livestock marketing 95 15.8 Rm'al Electrification Ass'n 27 4.5 All others _1 ,6 Total 602 100 .0 This distribution indicates that the sample represents a considerable diversity of types of cOOperative enterprises. From this it can also 1'7 be inferred that the sample represents a diversity of types Of farming. compared with the prOportional distribution Of marketing by types of cooperatives for all of Michigan, the sample is weighted heavily in favor Of grain elevators, and not heavily enough to represent the large preportion of memberships in dairy associations in the state.” Wool and potato cOOperatives are not represented in the sample, but the value of cOOperative marketings of these commodities taken together does not represent more than two percent of the total annual value Of all commod- ities marketed cOOperatively. Lastly, the sample does not represent credit cOOperatives. It is possible that some farmers included in the sample may have held memberships in credit cOOperatives, but, in general, these memberships were not determined. By way of summary, certain statements should be made with respect to the validity of the sample. The technique Of random sampling used with- in the areas would seem tO indicate that the sample is representative of all farmers in the sample areas. For representativeness on a larger scale, the following can be said: (1) A total of over thirty individual cOOperatives are represented in the sample. (2) The sample is geographically diverse over the heavily populated part of the state. (3) A wide variety of farm enterprises is represented. (4) All major types Of marketing and purchasing cooperatives are rep- resented. In addition, the determinants for area. selection, mentioned in part 12. Larselere, pp. 211., p. 5. 18 three of this chapter, were designed to aid in the selection of areas which were average for Michigan. Therefore, it may be assumed that generalizations draun from this study are representative Of other areas in Michigan to the extent that their cOOperative setting reasonably con- tours to the determinants upon which the sample areas were selected. It should be noted that this study can speak only for those farmers who have Opinions concerning cOOperative enterprises. An Opinion is an expression on a controversial issue.13 Farmers who have had little or no experience with cOOperatives are not aware of the issues, and there- fore haye no Opinions. Any expressions Of such farmers would not be based on knowledge, but rather on rumor or heresay, and therefore would be detrimental rather than contributive to an Opinion study. There may be some question concerning the amount of consideration that should be given to the Opinions of non-members in a study dealing principally with.membership relations. Certain data herein will be analysed on the basis of the total sample, rather than by distinguish- ing between the Opinions Of members and non-members. Such a procedure would seem.tc be justified from a number of standpoints. Firstly, non- members are pgtential.membars, and their willingness to join is directly dependant upon their attitudes and Opinions. Secondly, the non-members probably exert an influence upon the thinking of their member associates in the community. Thirdly, the Opinions of nonamambers are to a certain extent a measure of membership relations, since the attitudes of‘non- members frequently originate from the attitudes of members with whom they associate. Therefore, expecially since the non-members in the sample have considerable knowledge of cOOperatives, it seems advisable 1:5. William Albig, 13,pr 2911.193, McGraw-Hill, 1939, p. 1. ..hs“. 19 that the Opinions of non-members, rather than being discarded, should be frequently considered alongside that of the members. Wide awake cooper- ative leaders will be interested in the Opinions of non-members as well as members. 7. Procedure _i_n_ analzging dat; he data used in this thesis are presented largely by the use Of tables. As a rule, the responses to specific questions are given in per- contages, rather than in the actual numbers. This facilitates comparing the responses of different groups. A major problem in analyzing the responses is the determination of the significance of differences between sample percentages. It is impor- tant to know whether a difference in responses between two groups is possibly due to chance factors in sampling, or whether the difference is great enough that it could be expected that for all other samples that might be drawn from the same population the results would be substantially the same. A difference between two percentages is said to be reliable if there is little likelihood that the difference is caused by chance. In this study, the principle measure of reliability used is that of the calculation of the standard error of the difference between the two percentages. By dividing the actual difference between two percentages by the standard error Of the difference, a 't-score' is obtained, by which the probability ratio 1: determined. For the” purposes of this study, a probability ratio of .05 or less will be considered significant. In a few instances the Chi-square test for reliability of percentage differ- ences will be applied tO a series of sample percentages to determine_ significance.14 The general procedure used to analyze the data is to examine the responses to each Opinion question according to age groups, different educational levels, size of farms Operated, length of membership, etc., of those responding to the question. A major purpose of the analysis is to determine which groups are more, and which groups less, favorable toward certain principles and practices in the Operation of cooperatives. 8. Other studies 9; membership relations is a part of the introduction to the present study it is pertinent to note previous studies that have been made in the field of membership relations of farmers' cOOperatives. Following are brief discussions re garding the purpose and sccpe of the major studies that have been made: 1. (he of the earliest studies was conducted by the Pennsylvania State College and Experiment Station. This involved a study of the membership problems of 15,000 members in a centralized milk marketing organization in the Pittsbm-g’h‘district. Schedules were taken by inter- view from 902 members. A major purpose was to find out what factors in management were influencing favorable or unfavorable attitudes. Some data was compiled concerning members' reasons for joining, benefits received, sources of information about cOOperatives, and differences between those members who reported benefits received, and those who reported no benefits received.” 14. For an explanation of these statistical measures see 1?. E. Orcxton and D. .T. Cowden, Applied Genera], Statisticg, Prentice-Hall, N. Y., 1946, pp. 332-338. 15. 3’. K. Stern, Membership Problems in, 3; Milk Marketing 0r i- sation, Pennsylvania State College, State College, Pa., Bulletin 256, May, 1960. 21 2. The membership problems in Iowa farmers' elevators were studied in 1930-31 by Iowa State College personnel, and subsequently reported by Frank Robctka. The study was designed to discover the ailments of the cOOperative elevators to see what could be done to improve the membership situation. Data were Obtained from officers and managers, and from coop- erative records. No data or Opinions were gathered from the rank and file membership. A very informative analysis is made of membership trends, and of the tendency to lenses in the observance of strict cOOperative principles and practices. The main breakdown of data is by companies (elevators) .16 3. Under the auspices of the Farm Credit Administration an analysis Of certain data obtained from 4’? anonymous centralized and federated coop- erative associations was reported under the title Membership Relations 9_f_ Cooperative Associationsp by J. W. Jones. Data was obtained from the records of the activities of the associations. A number of statements and conclusions are advanced concerning the importance of member partic-"‘ ipation, and how member participation can be increased.” 4. Also sponsored by the Farm Credit Administration was a study Of Iowa l‘armers' Creameries. The main source of information for this study consisted of detailed reports obtained from half of the 87'? cOOperative creameries in the state. An analysis is made of the problems of estab- lishing relationships with members, as to financing, control, patronage, 16.4 Frank Robotka, WM and Regppicnphipp _ip_ Iowa. Farmers' Elevators, Iowa State College, Amos, Bulletin 321, July, 1934. 17. .T. W. Jones, Membership Rpgtions p; cOOperative Agscciations, Farm Gredit Administration, Washington, D.°.. Bulletin No. 9, October, 1936. 22 and member participation, on a basis that is consistent with sound coop- erative prin ciples.""8 5. A study of the attitudes of farmers toward cOOperative marketing of Livestock was published in 1939. Three htmdred twenty-six representa- tive Ohio farmers who ship livestock through cOOperative organizations were personally interviewed with a view toward finding out their knowledge of cOOperative marketing, their information concerning it, and their Opin- ions and attitude toward cOOperative livestock marketing. Particularly useful is the Opinion data regarding the advantages of cooperatives, and the criticisms the farmers made of their Operation.19 6. A financial study of Michigan farmers' cOOperatives was made in 1937. The St. Paul Bank for Cooperatives, assisted by the Michigan State College and the Michigan Agricultural Experiment Station, collected data on all Michigan cooperatives, from which E. E. Larzelere prepared an analysis of the financial management of farmers' cOOperatives. The gen- eral purpose was to (1) study the nature and volume of business, and the capital structure of marketing and purchasing cOOperatives, (Bl compare the financial condition of Michigan cOOperatives, and (3) to develcp selected management ratios for the use of managers and directors. Chapters III and VI contain material pertaining to cooperative principles and methods of Operation, particularly concerning the acquisition of capital and the distribution of earnings. The study, however, does not 44 18. flank Robotka and-Gordon C. Langhlin, Cogmrative Organization 9; Iowa Fmrl' Creameries, Farm Credit Administration, Washington, 13.0., Bulletin No. 14, April, 193?. 19. George F. Banning and Earl B. Poling, Attitudes ppm m Comrative Marketing, 0hic.Agricultural Experiment Station, Wooster, Ohio, Bulletin 606, September, 1939. II 23 undertake to determine the farmers‘ appraisal of the successes or fail- ures of cooperatives, nor their understanding of the policies and practices of their organizations.20 7. A report by Anderson and Sanderson in 1943 analyzes data gathered by interviewing a total of 1612 farmers in New York State. This report is based on three separate studies of several milk marketing associations and the Grange League Federation made by M. E. John, Duane L. Gibson, and J. Edwin Losey. Extensive data was gathered, classified, and analyzed in the three studies, and a summary of the findings is given in the re- port mentioned here. Specific items discussed in the summary report are: extent, length, and nature of memberships, reasons for joining and drOpping out, attendance at meetings, cooperative knowledge possessed by members, and Opinions and attitudes concerning cooperatives. The studies were de- signed to explore the essential of satisfactory membership relations, rather than the essential of economic gain. The latter essential was the subject of most previous studies of farmers' cOOperatives.21 8. The North Carolina experiment station published in 1937 the results of a study of the organization, practices, and membership participation of two North Carolina Farmers' cOOperatives. Three hun- dred fifty-nine farmers were interviewed in six North Carolina counties. Fifty-three percent of those interviewed were members of the two 20. H. E. Iarzelere, Financial Manggement Analysis _o_f_ Farmers' Coogratives _i_xp Michigan, Michigan State College Agricultural Experiment Station, Special Bulletin 315, May, 1942. 21. W. A. Anderson and Dwight Sanderson, Manpgrship Relations _i_n_ Cooperative Orggizations, Department of Rural Sociology, Mimeograph Bulletin No. 9, Cornell University Agricultural Experiment Station, Ithica, N. Y., April, 1943. 24 cooperatives. Questions were asked calling for both factual and Opinion responses. Comparisons were made between the responses of members and non-members with respect to mnagement, policies, membership control and support, and criticisms and suggestions.22 9. M. I. John used an attitude scale in analyzing the factors in- fluencing farmers' attitudes toward a cOOperative milk marketing cOOper- ative in the Philadelphia area. Interviews were made with 1236 dairy farmers within the area. Information was gathered concerning farmers' participation, personal characteristics, attitude toward the cOOperative, and amount of information concerning cOOperatives. This study differs somewhat from other studies that have been published because of its use of a Thurstcne type of attitude scale in measuring intensity of favor- ableness and unfavorableness toward the cooperative. General attitudes are related to age, size of dairy, tenure status, religion, specific attitudes, etc., and are shown by the use of numerous tables and charts.‘23 10. In paragraph seven mention was made of a particular study by D. L. Gibson as forming part of the basis for the report by Anderson and Sanderson. The Gibson study involved the personal interviewing of 7'72 dairy farmers in three counties in the state of New York, during the years 1936 and 1937. Comparisons were made between the membership relations in the Dairymen's League, the Sheffield Producers' cOOperative, and five local cOOperative associations. An extensive analysis is made 28. 3. L. Clement, 3p; Organization, Practices, and Membership Particimtion 2; Two North Carogina Farm Copmratives, Agricultural Experiment Station, Raleigh, N. C., Bulletin 311, July, 1937. 23.‘ M. R. John, Factorg Inflpgncing Farmers' Attitudes Topard g. Coomrative Marketing Organization, Pennsylvania Agricultural Experiment tation, Bulletin 457, November, 1943. 25 of the nature and extent of participation, the knowledge which farmers had of their organizations, and the Opinions members had of the organi- zations and their accomplishments.“ 11. Iinslly, attention should be called to three previous studies made in Michigan, in addition to the financial study made by Larselere. Clayton and Horner surveyed the cooperative situation in Michigan in 1925.25 Data was obtained by personal visits to each of the coOperatives existing at that time. An analysis was made of the operations of the coOperatives, and various interpretations were given. Topics treated were the types and distribution of Michigan cooperatives, legal and economic aspects, and management problems. 1 second study was made ten years later, in 1935, by W. O. HedrickXZ6 This was limited to a study of coOperative elevators, and treats specifically their organisational structure, service records, supplies handled, and business volume. Direct comparisons are made between the elevator situation in 1935 and the situation in 1925 at the time of the Clayton and Homer study. The third study was made by G. N. Motts and reported in 1942. Fruit and vegetable cooperatives in Michigan were surveyed and analyzed in this study. Special attention was given to the history, operating methods, organizational and financial structure, management problems, and 24. Duane L. Gibson, m bership Relation; 2; Farmers' Mil; Margt- _i_ng Orggpizations inNew York State, Unpublished Doctor's Thesis, Cornell University, 1940. 25. C. F. Clayton and I. T. Horner, Farmers' Coomrative Eming and Selling Organisations E Michigan, Agricultural Experiment Station, East Lansing, Michigan, Special Bulletin 171, 1928. 26. I. O. Hedrick, g Decade _o_f Michigan Cooperative Elevators, Agricultural kperiment Station, East Lansing, Michigan, Special Bulle- tin NO. 391, may, 1938. 26 efficiency of these OOOpOl‘fltiVBS.27 None of these three studies includ-‘l ed a survey of membership relations and attitudes by personal contacts with the farmers supporting the cooperatives. Many other lesser studies of cooperatives have been made throughout the United States. The Farm Credit Administration in particular has carried out studies in states in addition to those mentioned above. In general, they all follow the plan of analyzing statistical data obtained fran official reports of cOOperatives, rather than giving attention to farmers' opinions and attitudes as measured by personal interviews. Occasional reference to the studies mentioned above will be made in the analysis of data in the following chapters. Wherever possible, com- parison will be made between the results of this study and the results obtained on similar questions in the foregoing studies. 9. Immrtancegf the study In the studies made by the Farm Credit Administration very little attention was given to farmers' opinions regarding the cooperatives. In the studies conducted by the state colleges and experiment stations in Pennsylvania, Iowa, Ohio, New York, and North Carolina considerable effort was put forth to gather data direct from the farmers. This included not only factual data, but responses to questions revealing general attitudes and specific satisfactions and dissatisfactions. A large part of the data, however, was aimed at measuring the satisfactions or dissatisfactions with with respect to the economic aspects of cooperation. Very little was done to determine farmer attitudes toward the basic principles of Operation. 2'7. G. N. Motts, E3311: _a_n_d Vggetablg CoI omativeg _i__n Mchi Agricultural Experiment Station, East lensing, Michigan, Special Bulletin 317, J1me, 1948. than! 27 Although the econanio aspects are not to be minimized, greater importance in the long run must be attached to farmers' understanding of the basic principles of cOOperation. Their loyalty must be based on this under- standing if it is to endure. Robotka emphasizes this point by saying that, loyalty of the ”dollar and cents" type provides a poor foundation upon which to build, because it will evaporate like a mist the moment the organization ceases to be the best bidder, thus destroying the stability of the organization.” If we are to Judge the enduring qualities of cOOperatives we must pay particular attention to the farmers' understandings of the organi- sational framework upon which cOOperatives are built. This study is designed to help meet this need. In conclusion, the present study occupies a position of considera- ble importance because: (1) It represents the first scientific Opinion study undertaken among Michigan farmers' cOOperatives. (2) It pm-ports to go beyond other previous studies by measuring the farmers' under- standing of the basic principles of cOOperation. 27. 717ml: fiobotka, Membership Problems and Relationships in Iowa Farmers' Elevators, p. 178. CHAPTER II THE PRINCIPLES OF COOPERATION 1. Coomration and coopgrating COOperation is a social process, and as such is universal. Sanderson says that , Whereas competition and conflict are forms of Opposition and are dissociative, cooperation is a form of composition, or placing to- gether, and is associative. Literally, cooperation is working togeth- er. It occurs among individuals and groups. The individual who will not cOOperate in a group cannot be an efficient member, and will tend to dissociate himself from it. COOperation is, therefore, essential for any permanent social organization, and it is a pine ,gp_a_n_g_n_ for organised society.1 In the economic world, however, cOOperation has come to refer to a such more narrowed concept--that of a more or less institutionalized form of business organization. Most "cOOperative societies" have arisen to meet the economic needs of their founders. A ”cOOperative society" merits its name on the basis of including in its system a greater number, andgreater intensity, of cooperative functions than is found in the or- dinary business form. The words of Kercher, Kebker, and Island are enlightening at this Juncture: lhe significant factor, then, that vitally distinguishes a cOOper- ative society from cOOperation in general or from a noncOOperative business enterprise is that, in a cooperative society, cOOperation is consciously established and maintained as a foundation principle. This principle becomes the source of, and also in turn is strengthened by, settled rules of action governing the conduct of the affairs of the organized group in question and to a considerable extent the relation- ships mid the motives of the individuals within it. But these rules Of action have no miraculous origin. They are the results of a long his-1 tory of trial and much error in cooperative enterprises. Their origins are frequently reminders of an extensive graveyard of departed cooper- ative adventures. But as tested behavior patterns they are today of l. Dwight Sanderson, Rgal Sociolggy 931 53913; Social Organizatign, Jam “19y & 3011’, Ne Ye, 1942, De 624e 29 vital importance in a positive sense. In reality they come to be sub- sidiary principles or policies that serve to sustain cooperation as the basic principle of a given enterprise. They are, in effect, guardians of the integrity of a cOOperative society.2 These organizational and procedural rules which have been develcped through the years have come to be conxmonly termed the "principles of cOOp- eraticn'. With variations, the principles of cooperation are followed by all cooperative societies. In fact, the legal definitions of what is, and what is not, a cOOperative society have been given chiefly in terms of the principles of cooperation. The ginciples of cOOperation are not to be confused with the w of cOOperation. The purpose of a cooperative is to handle products for its members in a manner which will prove most advantageous to them as patrons, as distinguished from the main objective of the ordinary type of business organization, which is to obtain profit for its owners from the Operations of the organization itself.3 Specifically, the objective of cooperative associations is to enable the members to obtain some price or service advantage, in the purchase or sale of the goods the organiza- tion handles. which could not be obtained through other existing business organizations. The m c_)_n_ ficpgzatig ktegEige in m defines a cOOperative in the following terms: A cooperative enterprise is one which belongs to the people who use its services, the control of which rests equally with all the members, and the gains of which are distributed to the members in preportion to the use they make of its services.‘ 2. L. C. Kai-char, V. W. Kebker, and W. C. Island, Consmrs' 2992- gatives _ip_ 5_h_e_ North Central Stateg, University of Minnesota Press, Minneapolis, 1941, p. 4. 3. F. 3. Clark and L. D. H. Weld, Lighting agiLultural Products, Hamillm, Ne Ye, 1932, p. 526e 4. In Kercher, Kebker, and Leland, pp. 341., p. 7. 30 m the basis of Motions performed, there. are three main types of cooperatives, (1) consumers' or purchasing, (2) producers or marketing, and (3) credit cOOperatives, Consumers', or purchasing, cOOperatives perform buying functions for their patrons. Technically there is a difference between consumers' and purchasing cooperatives. Consumers' cooperatives deal more particularly in goods for consumption, such as food and clothing, and are usually not formed by farmers. Purchasing cooperatives deal chiefly in producers' goods, such as farm supplies. Many marketing cooperatives also carry on purchasing functions for their farmer patrons. Producers', or marketing, cOOperatives perform selling functions for their patrons. There is also a slight technical distinction between producers' and umrketing cooperatives. L producers' cOOperative may re- fer to an enterprise in which the members cOOperatively own and use the means of production, such as a mall factory, or farmers' threshing out- fit. A marketing cOOperative refers to an enterprise where producers, or middlemen, Join together in selling their produce. The marketing cOOp- erative not only performs the selling function, but also owns the market- ing facilities. The cOOperatives under consideration in this study are strictly the purchasing and marketing type. Most of them perform both functions. Mu- tual insurance companies are sometimes referred to as cOOperatives, but there is considerable disagreement on this issue. Membership in mutual insurance companies are not considered herein, although most of the farm- ers had insurance in one or more mutuals. farmers generally do not recognise mutual insurance companies as cOOperatives. In this particular survey not one farmer mentioned membership in a mutual insurance company 31 when asked to name the cooperatives of which he was a.memher. The Michigan Farm Bureau does not come under the categories of pur- chasing or marketing cooperatives, since it performs no buying or selling functions. Consequently, membership in the Farm Bureau is not considered when speaking of cOOperative membership in this study. However, most of the farmers who belong to cOOperatives, also are members of the Farm Bureau, not owning any stock, of course, but paying annual membership dues. 2. & Rgchdale Einciples The most important and most generally recognized principles of cOOp- erative action are those commonly referred to as the ”Rochdale principles of cOOperation". They had their origin in the cOOperative adventures of the early nineteenth century in England. It remained, however, for twenty- eight povertybstrickmn flannel weavers of Rochdale, England, to refine and supplement these principles, as well as to prove their worth in ac- tual Operation. The Rochdale Society of Equitable Pioneers was founded in 1844 as a grocery store, with a capitalization of twenty-eight English pounds. Its success was both immediate and enduring. By the end of its fiftieth year, 1894, the membership was 12,000 and the annual volume of business was $1,600,000. By 1863 there were 426 societies in England similar to the Rochdale Society.5 Although there is general agreement on the nature of the Rochdale principles, there is considerable variation in the statement of these principles and in the order of importance in which they are placed. Nest writers select three or four which they regard as of major importance. 3. Ellis; Cowling, Coomratives 3;; America, Coward McCann, N.Y., 1938, pp. 87.40e 32 A few illustrations show the diversity of Opinion attendant upon these selections. Clark and Clark list the main principles as (1) one vote per mem- ber, regardless of the amount of stock he may own, (2) a limited rate of dividends on stock and limitation of the nmnber of shares one member may on, (3) the division of exposes and profits on the basis of business done with the association, and (4) the ”cOOperative spirit" of loyalty to organization is fostered.6 A . lllis Cowling denotes three main principles: (1) democratic con- trol, (2) fair return on capital invested, and (3) patronage dividend»? Sanderson lists (1) dividends on capital limited to a fixed rate, (2) each stockholder has one vote, and (3) earnings divided among patrons on the basis of amount of business done with the cOOperative.8 The three main principles listed by Converse and Huegy are (l) dem- ocratic control, (2) cash sales, and (3) sales at prevailing market prices.9 Kercher, Ksbker, and Leland record the principles according to the listing made by the International Cooperative Alliance: (1) open and voluntary membership, (2) democratic control, and (3) limited interest rate on capital and return of surplus earnings to patrons in proportion to patronage.1° Bakksn and Schaars also list these principles as given WI: and 0. P. Clark, ginoipieg guargeting, Macmillan, N. Y., 1942, p. 410. 7. Cowling, 21. £13., p. 45. 8. Sanderson, 23. 2.1.3." p. 523. 9. P. D. Converse and H. W. Huegy, mmgw, New York: Prentice-Hall, 1946, p. 396. 10. Isrcher, Kebker, and Leland, 93. 311., p. 5. Me‘s-u. . 35 by the International OOOperative Alliance.n Kercher, Kebker, and Leland record "three other principles regarded as very important by the International coOperative Alliance but not required to qualify a society for membership in the Alliance”: (1) political, racial, and religious neutrality, (2) cash trading, and (3) promotion of cOOpera- tive education.” Iard I. Fetrow, in a bulletin published by the Farm Credit Admin- istration, lists the three main principles as (1) democratic control, (2) payment for capital limited to a conservative rate, mid (3) sharing the benefits and savings of coOperation in direct prOportion to the patronage of the individual member.” A logical sumnarization of these variations in statements of the cooperative principles would seem to take the form of the following pattern: um inci ea: (1) Democratic control, by one vote per member. (2) Interest on capital invested limited to a fixed rate. (3) Surplus earnings returned to patrons on the basis of patronage. mm: (4) Open and voluntary membership. (5) Sales and purchases made at prevailing market prices. (6) Sales made on cash basis only. 11. H. H. Bakken and M. A. Schaars, m Ecppmcs 211W Marketigg, New York: MoGrsw-Hill, 1937, Chapter VII. 12. Kercher, Kebker, and Leland, 21. 91.1., p. 6. 13. Ward I. Fetrow, 339g ginciplgg 2;, W Cgomggtig, Washington D. 0.: Farm Credit Administration, Circular L24, 1945, p. l. 95313}; secondary Einciples fregpentlz mentioned: (7) Prasotion of cOOperative education. (8) Political, racial, and religious neutrality. (9) Fair treatment of labor. (10) Adequate reserves should be carried for depreciation, expansion, and unforseen‘ difficulties. These ten principles represent the main body of rules of action for cOOperatives which follow the Rochdale plan. As noted above, Clark and Clark suggest the principle of fostering a ”cOOperative spirit” of loy- city to the organization. ”The 'cooperative'," they say, ”is a less tangible element, . . . a spirit which combines patience to wait for re- sults with a willingness to stick together through adversity.” The co- operative spirit is necessary to overcome the tendency for the cooperators ‘to undervalue the possible future benefits of cOOperaticn once the glamour of a new enterprise wears off. It is necessary to keep members from be- ing drawn off by temporary advantages offered by competitors, and from other acts of disloyalty which would tend to weaken the organization.“ The fostering of the ”cooperative spirit" is very definitely linked with the principle of promotion of cOOperative education. One of the main objectives of member education is to strengthen the bonds of coOperation by building up this spirit of loyalty. 3. _Iggglrecogition _q_1_‘_ 3h; Eipciples It is probably true that no cooperative society follows all of the Rochdale principles one hundred percent. lIhere are, no doubt, hundreds of combinations of principles and rules followed by cooperatives today. 14. Clark and Clark, pp. cit., p. 412. 35 Sane enterprises follow so few of the principles that it becomes diffi- cult to determine whether they are truly cooperatives or not. As a result, serious difficulties accompanied cases of litigation which arose . This condition led state and federal governments to define by law the basis on which an organization could be adjudged cOOperative, or non-co- Operative. A brief emery of these laws reveals present-day legal think- ing in the United States concerning the principles which should be followed by cooperatives. The significance of the cooperative form of‘business enterprise lies in the fact that it differs markedly from the ordinary business structure. Cooperatives were largely overlooked by the national government until the second decade of the twentieth century. Meanwhile laws (particularly the Sherman Anti-Trust Lot) had been passed regulating the forms of the rapidly expanding corporate businesses. We to their peculiar nature, various aspects of the cooperative form came into conflict with the anti- trust laws. To correct this situation in favor of cOOperatives the Clayton Act was passed in 1914, but was of little help. It stipulated that cOOperatives had the right to exist and Operate, but said nothing about the methods they could use. Furthermore, the law applied only to non-stock associations}5 The Copper-Volstead Act of 1922 gave to cooperatives complete ex- emption from prosecution under the anti-trust laws. Before a cOOperative may claim this exemption, however, it must show that it observes the following principles: . (I) The association must be composed of farmers and must be Operated 15. Tom G. Stitts and W. 0. Weldon, ggicultural Coomration and National Le islation, Washington D. 0.: Farm Credit Administration, Circular Ana, July, 1940, p. 5. 36 for the mutual benefit of its members as producers of farm products. (2) The association must conform to one or both of the following: (a) No member shall have more than one vote, regardless of the amount of stock he owns or capital he contributes. (b) Dividends on stock or membership capital cannot be in ex- cess of eight percent per year. (3) The association shall do no more than half of its business (in value) with non-members.16 Other federal laws grant certain exemptions and privileges to co- Operatives which operate on similar principles. Cooperatives enjoy exemption from taxes which are levied on the incomes of business cor. porations. This is based on the assumption that cOOperatives are non- profit organizations. That is, the earnings are not business profits, but are savings to the members, to be returned to them. In the same way, federal laws prohibiting the payments of rebates and discounts in ordinary types of business provide that agricultural cOOperatives may pay patronage dividends. The Bank for COOperatives, established under the Farm Credit Administration requires that similar principles be followed before a cOOperative is eligible to receive loans. In all cases, the cooperatives must show proof that they abide by the principles stipulated as necessary for differentiation from the ordinary business unit, if they are to receive the benefits of the laws. In general, the federal government upholds the principles of dam- ocratic control, limited dividends on stock, and patronage dividends. In the case of marketing cOOperatives, the principle of Open and 16. 1314, p. 6. 57 voluntary association is limited to the inclusion of producers only. Cmcerning the other lesser principles, the government takes no legal stand. Most states have also passed laws affecting cooperatives. Although most of the statutes were designed to encourage cooperatives, some state laws actually prohibit the exercise of certain Rochdale principles. Isrbasse points out a number of the cooperative principles, the free ex- ercise of which has been curbed by state statutes: In nine states in the Union, each share of stock of a cooperative must have a vote. In fourteen states, proxy voting must be permitted. In thirteen states a dividend must be paid to stockholders in propor- tion to stock ownership before profits or savings can be allocated to patrons in proportion to patronage. In six states cooperatives must pay a bonus to employees. In eight states a "patronagg dividend" must be paid to non-members of cooperative societies. In the main, however, both state and federal legislation in the United States have tended to clarify and accentuate the importance of the major cooperative principles. It is probably true that the present lens have kept many cooperatives from degenerating into stock companies, or other non-cooperative forms. Subsequent chapters in this study deal with the more important of the Rochdale principles of coOperation. Chapter III gives the analysis of the farmers' opinion regarding the principle of democratic control. Chapter IV is devoted to the principles connected with the disposition of earnings. The principle of open and voluntary association is dis- cussed .in‘ the fifth chapter. Selling at market prices is treated in Chapter VI. Chapter VII records the farmers' Opinion on certain less important policies connected with cooperative operation, including 1'7. I. P. Warbasse, goblgms gm, Island Press, N. Y., 19‘2e Fe 180. (a 38 the tax problem. lastly, Chapter VIII is devoted to analyzing the com- parative loyalty of different types of farmers. 4. Observations regarding the ginciples The Rochdale principles have undergone very little change in the one hundred years since they were set forth. This fact seems to take on a special significance in the light of the present age of commatively rapid social and economic change. Is there something unique about the nature and quality of these principles? Are these principles necessary for the accomplishment of the economic aims of cooperation? Did these principles arise out of purely economic considerations, or did certain socio-psychological characteristics of human nature cause their advent and subsequent continuance to the present day? Why cannot the ordinary forms of business units accomplish the economic aims of coOperation? It may be said that the economic exigencies of a society call forth the type of business unit which will best satisfy these exigencies. More- over, the business unit which evolves must be in harmony with the value systems of those whom it serves}8 To a large sector of western society, the corporate unit is satisfactory, both from the standpoint of meeting the economic exigencies and because it conforms to the value system. If it were not so, the corporate form would not be so much in evidence. The existence of the cooperative form of business enterprise bears witness to the fact that a certain segment of society has differing eco- nanic exigencies, or differing sets of values, or both. It is quite apparent that both factors are found in the cooperative movement. The movement was born of dire economic need, which existing 18. Bakken and Schaers, pp. cit., p. 118. sh L. ‘Illui 59 fans of business organization were not meeting. Cooperation continues because these economic exigencies continue. In fact, the growth of co- operatives seems to be stimlated in periods when the exigencies are the greatest. Secondly, the advocates of cooperation stress several values, or ethical principles, which must not be compromised. Those which are par- ticularly pertinent are: (1) That the earnings of a business enterprise should be returned to those who contribute to the business, in proportion to their contri- buticns. (2) flat individual interests should be subordinated to the interests of the, group as a whole. . (3) That wastes in production and distribution should be allowed no place in the economic order. coOperators hold that other business forms do not guard against the destruction of these values. Society is fraught with selfish men who use the existing forms to advance their own interests at the expense of others. Many industrial units tend to exploit the consumers rather than serve them. John Daniels expresses this point of view, and adds that tls “whole laborious process of production and distribution . . . is Justi- fied not for its own sake as an end in itself, but as a means to the end of satisfying the wants of consumers.“-9 ‘Ihe cooperative form guards against this tendency for the exploitation of consmners for the sake of large profits. The principles of operation, therefore, are those measures which identify the cooperative enterprise as the guardian 19. John Daniels, Cocmaflgx gm Way, Govici, Frieda, N. Y., 1938, De age of values which other forms have compromised. Many cOOperative practices, such as keeping good financial records and encouraging production of high quality products, have not come to be considered as principles of cooperation. This is true because they do not distinguish cooperatives from other forms Of business units, and because they are based merely on economic considerations. In contrast, the basic principles of cOOperaticn appear to be rooted more in socio- psychological, than in economic, considerations. This may explain why the minciples have persisted for so long a time. The inertia of human nature is greater than that of economic practices. Thus it appears that it is of primary, importance that the principles be preserved in essentially their present form if cOOperaticn is to be of continuing use as a means of meeting the economic exigencies. Many students of cooperation emphasize the importance of the Roch- dale principles. Cowling points to the early develOpment of cooperatives in America as proof of this point: The cooperative movement in America began in the 1840's and consist- ed largely of consumer stores Operated by the working classes. They did not adhere to the strict set of Rochdale principles. They sold at prices which would defray expenses and pay interest on capital. 1857 was high tide for these stores. Although many had failed, about 400 were carrying on a successful program of merchandising. By 1890 there were only three stores left in the New Eigland Protective Union which had been set up in 1847, and the movement passed out Of existence. Thus America's first great consumers cooperative effort was a fail- ure. Its leaders had made a stab in the dark. The story of the Rochdale Pioneers was an untold tale. The saving device of avoiding price were by charging market prices and Jaying refunds to the consumers was then an obscure hglish invention. . Anders One, in discussing the principle of democratic control says that, All our experience goes to show that a graduated voting right leads so. Cowling, 92. cit., p. 83. 41 to degeneracyo-to the defection of the cooperative concern into the ranks of the ordinary profit-seeking enterprises governed by a dom- inant minority. . . The cOOperative undertaking would lose itself if it became necessary, for any reason, to introduce multiple vot- ing. . . The cOOperative type of enterprise stands or falls with democracy. The challenge is directly up to each cOOperative--more particu- larly, to the cOOperative officials. The principles must continue to be practiced. Members' understanding and acceptance of these principles must be fostered by a constant program of education and vigilance. 5- EFL—Wm“ a: name... Chapter I set forth the nature and mechanics of the survey of Mich- igm farmers which provided the data for this thesis. chapter II has dealt with the meaning and importance of the principles Of cooperation. Before proceeding with the analysis of the data, it is well to marine the scepe and purpose of this thesis. The Rochdale principles have been set forth as reliable, time-proven guides to cOOperative action. To a large estent the success of coopera- tives directly depends on how well these principles are followed. How well these principles are followed is, in turn, dependent on the atti- tudes of the members who compose the cooperatives. Attitudes are tendencies to act. Where attitudes are discovered to be favorable to the principles, it will be assumed that the farmers have a clear under- standing of the principles, and will tend to act in harmony with them. Where unfavorable attitudes are discovered, it will be assumed that there is lack of understanding and a tendency to work against cOOperation. To measure the degree of favorableness and unfavorableness is the ever-present, 21. Anders Orne, CtOperative Igeals g1 Pregame, Oo-Operative Union, Ltd., Manchester, 1937, p. 2. 42 vital problem of coOperatives. Only by such measurement can a true picture be had of the stability of the cooperative system. With this vital problem in mind, this thesis proposes the follow- ing: (1} To examine the attitudes of Michigan farmers toward the basic principles of cooperation as practiced by cOOperatives with which they are familiar. Deviations in the farmers’ views from those principles will be considered as due to lack of knowledge and experience rather than to any discovery of new and better principles. (2) To determine the _e_;_t_e1_1_1_;_ _o_f_ Ederstanding or lac]: of understand- ing among Michigan farmers of the basic principles of cooperation. This will permit reflections upon the need of educating members to the coop- erative principles. (3) To measure the m 21 m and enthusiasm for the cOOper- ative method of doing business for farmers. WIH PAWS MG OPINION REWSES REGARDING THE PRINCIPLE 01‘ DEMOCRATIC OCIN'JBOI. The principle of democratic control is exercised by permitting each member to cast only one vote regardless of the number of shares of stock he may on, or the amount of business he may do with the coopera- tive. Bekken and Schaars state that the origin of this principle is political in nature. Man, not money, is the important point of emphasis in cooperation.1 Equality on the basis of human individuals is to be given the preeminence over equality on the basis of property rights. In its economic sense, democratic control is designed to prevent a concen- tration of property rights in the cooperative from becoming a concentration of power which might be wielded to the harm of those with less property rights. Not all cooperatives have adOpted voting equality on the basis of membership. In the United States as a whole (data for 1936) , 86 percent of the marketing and purchasing associations voted on the basis Of one vote per lumber. Twelve percent voted by one vote per share of stock. The other two percent voted otherwise, chiefly on the basis of patronage. In Michigan 90 percent voted by mbership and nine percent by shares of stem.8 What do the Michigan farmers think about the voting principle? 1. EM“ and Smwlg 21o me. p. 155e s. A Statistical Handpgog g; M' ficpgrativgg, Farm credit Administration, Washington, D. 0., Bulletin No. 26, November, 1938, p. 54. 1. Wm; lash of the 500 farmers was first asked whether each member of a cooperative should have Just one vote, or one vote for every share of stock owned. Secondly, he was asked whether he thought that a cooper- ative should be set up so that the more business a man does with it, the more votes he should be allowed to cast. Table 4 indicates the responses on the basis of the total sample, and on the basis of whether a member Table 4. Percentage distribution of sample farmers by membership status and by Opinion on method of voting. Non- Questions and Total Members members replies If?” H.394 N=105 Should voting be by memberst f or by number of shares owned? One vote per fiber 75.4 75.3 75.2 m. '0“ p0: .1181. 20.0 20.6 18.1 Don't know _5‘; 5,], 9:! Total 100.0 100.0 100 .0 Should voting be by membership or on basis of patronage? By amount of patronage 14.0 14.7 11.4 ms vote per member 84.4 84.3 84.8 Don't lmow he _1,_,9_ 3,8 Total 100 .0 100 .0 100 .0 or not. The outstanding fact to be observed from these results is the uniformity of Opinions held by members and non-members. Apparently the democratic principle is equally well understood and approved by mem- bers and non-members. Whereas about '75 percent of the farmers favor the ma-men—one-vote principle over voting by shares, about 85 percent favor one-man-one-vote over voting on the basis of patronage. 45 2. Amount 9; businesg gone Each farmer was asked to estimate the amount of business he had done with cooperatives during the previous year. On the basis Of this infor- mation the farmers were put into six groups, ranging from 1L8; than £190 3315099. 9311933. Approximately 75 percent of each group favors one-vote- per-member over voting by shares owned. A slightly greater proportion of the 32000-52999 group were found to favor the democratic principle than Table 5. Percentage distribution of farmers by amount of business done with cOOperatives during the previous year, by Opinion on method of voting. Less than 3100- 8500- Wicca-Warme- $5000 Qnesticns $100 $499 8999 $1999 $2999 a over and replies N=65 Nae; Nam Na”; N357 Ns96 Should voting be by membership or by num- ber of shares owned? One vote per member 75.4 75.0 75.6 75.9 79.0 75.0 One vote per share 15.8 21.5 22.2 20.7 17.5 21.9 Don't know 12.8 3,? 2,§ 5,1 3,§ 5,; Total 100 .0 100 .0 100 .0 100 .0 100 .0 100 .0 Should voting be by membership or on basis of patronage? Basis of patronage 12.5 14.8 16.7 9.9 12.5 17.7 One vote per member 81.5 82.7 85.5 89.2 87.7 81.5 Don‘t know 6,2 2,§ ,,, ,9 ,,, |1,,0 Total 100.0 100.0 100.0 100.0 100.0 100.0 is true of the other groups. With insignificant variations, roughly 85 percent of the farmers favored voting by membership over voting by pat- ronage. In this instance the 81000-51999 group was most strongly in favor of the democratic principle, while the $5000-and-over group was least favorable to democratic voting. No general conclusions, however, can be drawn since the percentage differences in no case are statistically 31911:!» Mt e 46 It might be expected that those doing a greater amount of business would be less likely to favor democratic control. On the other hand, those who do more business may tend to have a better understanding of cooperative principles . The results of this survey show that those doing greater amounts of business with cooperatives are more likely to be mem- bers of cooperatives, and attend meetings more regularly. Thus the uniformity of responses between these six groups may be the result Of a synthesis between two Opposing tendencies. 3. £82. is revealed in Table 6, no generalizations can be made as to the effects of age on the Opinion responses. When comparing voting by mem- bership and by shares owned, 82.1 percent of those under 50 years of age Table 6. Percentage distribution of farmers by age groups by Opinion on method of voting. Questions Under 50 50-59 40-49 50-59 60,over and rep1ies . N=56 N811: N-117 N811? =90 should voting b by member- ship Or by number of shares owned? One vote per member 82.1 74.4 75.2 75.0 72.2 One vote per share 14.5 25.9 18.8 19.0 22.2 Dm't know 7 5,6 1,7 6,0 6,0 5,6 Total 100 .0 100 .0 100 .0 100 .0 100 .0 Should voting be by member- ship or on the basis of patronage? Basis of patronage 8.9 14.5 17.1 16.2 10.0 One vote per member 89.5 84.6 82.0 82.1 86.7 Don't know 1,8 ,9 ,2 1,7 5,5 Total 100 .0 100 .0 100 .0 100 .0 100 .0 ‘47 favored voting by membership compared with 72.2 percent for those aged so or over. Percentages for the other age groups ranged in between these extremes. This shows that the older members of the sample tended to be less favorable to the democratic principle. When considering voting on the basis of patronage, however, this tendency did not exist. In the latter case, the middle-aged groups tended to be less favorable toward the democratic principle. These percentage differences may be due to shame factors in sampling, however, since none of the differ- ences are large enough to prove significant. he table does not show age group data for separate categories of members and non-members. Such a breakdown did not reveal any signif. icaut differences in the responses of the different age groups within the separate member and non-member categories. Tor all practical purposes, the age factor does not have any influence on the attitude of the farmers toward the democratic principle. hm It might be supposed that farmers with different levels Of academic education would react differently to questions concerning the principle of democratic control. Table 7 shows that there is considerable varia- tion in the responses of the various educational level groups. This is true only whmi voting by membership is compared with voting by shares, and not when compared with voting on the basis of patronage. In the latter instance, no appreciable differences in responses between educa- tional level groups is evidenced. In the former instance, however, a significance does exist. Seventy-eight and seven-tenths percent of those farmers having eight or less years of schooling favor the 48 Table 7. Percentage distribution of farmers by educational levels by Opinion on method of voting. I”: g o; Sghogung legteg Questions light or Nine to More than and replies less Twelve Twelve IISE N‘liz N028 Should voting be by membership or by number of shares owned? , One vote per member 78.7 72.6 60. 7 (me vote per share 16.7 22.5 59.5 Don't know §,6 5,9 ,., Total 100 .0 100 .0 100 .0 Should voting be by membership or on basis of patronage? Basis of patronage 14.5 12.7 17.8 One vote per member 85.6 85.9 82.2 Dai't lmow 1,9 1.4 ,,. Total 100 .0 100 .0 100 .0 one-vote-per-mcmber method, whereas only 60.7 percent of the college level farmers favor that method. The Chi-square test reveals a prob- ability ratio of slightly less than .05 in this instance. 'hy more educated farmers should favor a less democratic voting procedure is not clear. It may be that general education does not necessarily educate in the understanding of cOOperative principles. or it may be that through their possibly greater acquaintance with corpo- rate business forms, the more educated have come to favor less democratic controls. At any rate, these results would indicate that cooperatives cannot depend on their more educated members to support the democratic principle as strongly as other members. 5. Attendance gm All of the 555 fenders who were aware of their memberships were asked how frequently they attend the cooperative meetings. Forty-three 49 and nine-tenths percent stated that they attend most of the meetings, 28.6 percent said that they attend . few of the meetings, and 27.5 percent attend no meetings at all. If the 42 ”unaware members", who my probably do not attend meetings, are taken into account also, it appears that somewhat over 60 percent of all cooperative members seldom or never attend the cooperative meetings. 01' those who attend most of the meetings, 78.7 percent favor the Table 8. Percentage distribution of ”aware“ members by frequency of attendance at meetings, by cpinion on method of voting. Most of 4 few of None of Questions than them than and "pig‘s; kHz] §§ Na; 9] N397 Should voting be by membership or by number of shares owned? One vote per member 78.7 77.0 69.0 One vote per share 19.4 22.0 21.7 Don't know 7;,99 . 1,0 9.5 Total 100.0 100.0 100 .0 Should voting be by membership or a basis of patronage? Basis of patronage 12.9 12.9 22.7 ms vote per member 87.1 87.1 74.2 Don't know ,,, ,,, __6_,,], Total 100.0 100 .O . 100 .0 one-vote-per-msmber principle. Of those who attend no meetings, only 69.0 percent favor one-vote-per member. Thus attendance at meetings appears to have affected the cpinions of the farmers in the sample. The difference is not quite great enough, however, to be asetmed reliable for all samples that might be taken. lhcm asked to choose between voting by membership and voting on the basis of patrmaga, 87.1 percent of those who attend a few or most of the meetings were of the opinion that one-vote-per-msmber was best. of 50 those who never attend, only 74.2 percent favored that principle, while 22.7 percent favored voting a: the basis of patronage. The difference between these percentages is statistically significant, so it may be assmed that attendance at cooperative meetings influences farmers to support the democratic principle over voting on the basis of patronage. It is interesting to note that of those who never attend meetings, a much greater number (9.3 and 3.1 percents) replied "don't know“ to the questions than was true of those who attend meetings. 6. Length 91 mbership Table 9 reveals the opinions of the "aware" members when grouped according to the period in which they first Joined a cooperative of .which they are now a member. Seventy-six and three-tenths percent of those who joined prior to 1931 favor the democratic method of voting over voting by shares. Seventy-two and two-tenths percent of those Table 9. Percentage distribution of ”aware” members by period in which first Joined a cooperative of which now a member, by cpinion on method of voting. Before 1931- Since 1931 1940 1940 Nelle N=109 N=125 Questions and replies Should voting be by membership or by number of shares owned? me vote per member 76.3 72.2 77.6 One vote per share 22.0 23.2 17.6 Don't know 1,7 5,6 5,8 Total 100.0 100 .0 100.0 Should voting be by membership or on basis of patronage? Basis of patronage 18.6 13.8 14.4 One vote per member 81.4. 86.2 83.2 Don't know ,,, ,., 2,5 Total 100 .0 100 .0 100 .O 61 who Joined from 1931 to 1940, and 77.6 percent of those who Joined since 1940 are of the same opinion. compared with the other two groups, the 1931-1960 group is less in favor of one-vote-per-msmber over voting by shares, and more in favor of one-vote-per-member over voting on the basis of patronage. It must be realised, however, that these percentage diff- erencu are not substantial, and may be due to chance factors in sampling. It cmnot be said that length of membership has any appreciable influence on the farmers' opinions regarding the principle of democratic control. 7. Suriname—mm Grain and certain fruit marketing cooperative associations are noted for their frequency of violations of the democratic principle. According to the 1936 data for this nation as a whole, only 78 percent of grain Table 10. Percentage distribution of cooperative members by type of cooperative a member, by cpinion on method of voting. Live- lleva- Fruit Questions stock tor 8:. Milk 8: 011 & me. In and replies mktg. supply cream gas -- supply t 339;, N223 N§3 17:36 17:66 Should voting be by mem- bership or by number of shares owned? Que vote per member 81.1 77.7 78.3 61.1 59.4 (he vote per share 16.8 18.2 18.1 38.9 39.1 Don't know 2,; 4.1 3,6 ,,, 41,; Total 100 .O 100 .0 100 .0 100 .O 100 .0 Should voting be by mem- bership or on basis of patronage? Basis of patronage 8.4 13.4 16.7 36.1 32.3 One vote per member 91.6 85.9 83.1 63.9 66.2 90“" “9' ...ua. .231 Jsfi .24. ..LE 1'0th 100 .0 10° .0 10° .0 10° .0 190 .0 52 cooperatives observed the one-man-one-vote principle. Twenty-one per- 3 When classified accord- cent used the method of voting by stock owned. ing to the types of cooperatives (on basis of comedities handled) of which they are members, how do the M1 ohigan farmers respond to the dam- ocratic principle? It should be recalled that many farmers are members of more than one cooperative, and therefore their opinions cannot be attributed to their experiences with any.ggg_type of cooperative. This situation would tend to mitigate the extremes of differences which would other- wise appear in the table. For this reason the results in the table can be considered .quite conservative. In spite of this, there are signifi- cant differences in the responses. Percentages in favor of membership voting over share voting varied all the way from.8l.1 in the case of livestock marketing cooperatives to 59.4 in the case of fruit marketing and supply coOperatives, a range of 21.7 percent. An even greater range (87.7 percent) is manifest in the replies to the‘huestion of one-vote- perdmember versus voting by patronage. In this case, livestock marketing cooperatives are again most favorable, with 91.6 percent for democratic voting. Elevator and supply cooperatives follow with 85.9 percent,:milk and cream.next with 83.1, fruit marketingrnext with 66.2, and oil and gas coOperatives last with only 63.9 favoring one-vote-perdmember. There is not enough data available to determine the reason for these differences between types of cooperatives. Certain observations can be made, however, which are pertinent to the situation. Sixtybfour of the 65 farmers listed with the fruit marketing group are members of the Ian Clair Fruit Exchange. This cooperative uses the method of voting 3e Statistig W, pa 550 53 according to number of shares owned. The psychological tendency for people to think that “our way is best" may be a factor contributing to the cnparatively large number not favoring the democratic principle. It is remarkable, however, that nearly sixty percent of the Eau Clair Iruit Exchange:mambers voiced apposition to the method in practice. This is augmented by the fact that 13 of the 18 farmers in the sample who criticised coOperatives as being “run by a clique”, or as favoring certain persons, were located in the Ian Clair area and the Elkton area where, until recently, the cooperative elevator operated on the one-vote- per-share method. Farmers in the Eau Clair area, when answering "one- vote-poromember' to the question asked, would frequently add, "that ain‘t the way they do it here, but they gggh1,to do it that way.“ On the other hand, sane farmers, when answering "one-vote-per-share", would comment with, “I guess that's the way they‘gg it here, isn't it?”, indicating than! tendency to accept without thought the method practiced. The oil and gasoline supply cooperatives also seem.to be weak in their support of the democratic principle. Ii'his may not be typical for all of Michigan, however, any more than the opinions of members of one fruit cooperative could be representative for all fruit cooperatives in Michigan. 1.possible reason for the attitude discovered in this study is that 77.8 percent of the memberships in oil and gas cooperatives in this sample are members of the Berrion County Farm.Bureau Oil Co., also located in Eau Claire. Many farmers in that area are members of both the fruit cooperative and the oil and gas cooperative, and therefore their opinions may be biased on account of their membership in the Fruit Exchange. Additional evidence should be sought, however, before this can be considered conclusive. 8. Officers versus non-officers Twenty-nine of the ”aware“ members were found to be present offi- cars in their respective coOperatives, or had at some time in the past been an officer. As a measure of the general understanding of the co- operative principles, it should be of interest to compare the opinions of those who have been officers with the opinions of those members who have never been an officer of a cooperative. Ior purposes of definition, an officer is one who has been either a manager or a member of the board of directors. In this study, several of the officers were not only members of the board of directors, but had also served as president, vice- president, or secretary of the board. When comparing voting by membership with voting by shares, 4.4 per- cent more non-officers than officers favored the democratic principle. When cuparing voting by membership with voting on the basis of patron- age, the officers were slightly more favorable to the principle. In Table 11. Percentage distribution of “aware" members by whether or not they had ever been an officer, by cpinion on method of voting. Questions Officers Non-offi cars and replies N=§9 3323 ionic voting be by membership or by number of shares owned? One vote per member 71.4 75.8 One vote per share 28.6 20.2 Don't know 3.. 4,0 Total 100.0 100 .0 Should voting be by member ship or on basis of patronage? Basis of patronage 13.8 15.8 (no vote per member 86.2 83.3 Don't know ”,,,“, _4...‘ 9 Total 100 .0 100 .0 56 neither case is the percentage difference great enough to be sigxificant. Apparently the factor of status as officer or non-officer does not affect the cooperator's opinion on the matter of democratic control. 9. Status a; member 91 11;; Farm Bnpeau Of the total sample, 233 farmers (or 46.7 percent} stated that they were present members of the Farm Bureau. In addition, 85 farmers said that they had been members of the Farm Bureau at some time in the past. One hundred eight-one had never been a member of the Farm Bureau. Table 12 compares the opinions of those who are present members with those who Table 12. Percentage distribution of farmers by whether a member of the Farm Bureau or not, by opinion on method of voting. item Bureau Questions Member Non-member and replies N8233 3:266 Should voting be by membership or by number of shares owned? m. vote per member 77.6 73.3 the vote per share 80.7 19.5 Don't know 1,7 2.2 Total 100 .0 100.0 Should voting be by membership or on the basis of patronage? Basis of patronage 14.8 13.9 One vote per member 83.0 83.8 Don't know 2,8 3,3 Total 100.0 100.0 are not present members. Farm Bureau members were slightly more favorable to the method of cne-voto-per-member. However, due to the insignificance of the percentage differences, it cannot be said that membership in the farm Bureau was a factor influencing the opinions of farmers regarding the democratic principle of voting. 56 1mm: Approximately three-fourths of the farmers in the sample favor the one-vote-per-member method of voting in preference to the one-vote-per- share method. Approximately 85 percent favor cne-vote-per-member over voting on the basis of amount of patronage. The opinions of members of cocperetives and non-members were found to be virtually the same regard- ing the principle of democratic control. No significant differences of opinion were found to exist between different age groups, or between groupings on the basis of the amount of business done with the cooperative within the preceding year. Length of membership did not appreciably in- fluence opinion responses. No significant differences were found between the replies of those who have been officers of cooperatives and those who have not been officers, or between those who are members of the Farm Bu- reau and those who are not members of the Farm Bureau. Three factors were found to significantly affect the farmers' opin- ions, namely, education, attendance at meetings, and type of cooperative a member. It was discovered that the greater the number of years of formal education that farmers had, the less favorable they were toward the democratic principle. Those who never attend cooperative meetings do not support the democratic principle as well as those who attend some or most of the meetings. lastly, it was found that those farmers in the sample who are members of oil and gas, and fruit and vegetable coopera- tives were not as favorable to the one-vote-per-member principle as were those of the livestock marketing, elevator and supply, and milk and cream cooperatives. Among the considerable number of studies of membership relations of farmers' cooperatives, the writer has discovered none which have attempted 57 to determine membership opinion regarding the principle of democratic control. Therefore it is not possible to compare the results obtained in this study with any other source which would permit comparison. CHAPTERIV FACTORS INFIUE‘ICING OPINIWS REGARDING ENCIPLES PETAINING TO 'IHE DISPOSITIQ‘I OF EARNINGS 1. Are cooperative earnings "pgofits"? Most cOOperatives attempt to Operate their businesses so that they may obtain a certain surplus of income over expenses. This surplus usually results from the practice of selling and buying at market prices, which allows cooperatives to obtain margins similar to other businesses. The accumulation of a surplus is desirable as a protection against unfor- seen losses. can this surplus of income over expenses be called a £9,111? Oppo- nents of cooperation answer in the affirmative. They say that it is as much a profit as is the surplus accruing from the Operations of any other type of business. Preponents of cOOperaticn, however, do not consider the surplus a profit. lhey say that the earnings of a cooperative are savings to the members and are incidental to the greater objectives of better marketing and purchasing services. Bakken and Schaars say that in} a corporation: . . . Operations are designed primarily to earn profits and second- arily to provide only those goods and services which may bring profits. The cOOperative is . . . interested in savings or gains, but these are secondary to the performance of efficient services.1 If it were economically safe, a cOOperative could just as well cp- erate without showing earnings. It could pass on the price advantage imnediately to the farmer in the form of higher prices for his saleable goods, or lower charges for his purchases. Refunds would then be 1. Bakken and Schaars, 92. cit., p. 14. 39 dispensed with. In such a case, the cOOperative would be performing an equally satisfactory service, yet would show no earnings. Other busi- _ nesees could not continue without accumulating profits. An attempt was made in this study to determine the Opinions on, and the extent of understanding of, the question of whether the earnings Of a cOOperative should, or should not be called profits. The first question related to this problem was: We take it for granted in this country that ordinary business is out to make a profit. Do you think of cc-ops as typical profit-making busi- nesses, or not? Expressed in this form, the question does not define what is meant by the word ”profit”. A second question was asked, in which the meaning of 'profit' was made more clear. A comparison of the results of the two questions gives some indication as to how well farmers understand what is meant when cOOperatives are termed non-profit making. The second question was: Many cc-ops call themselves ”non-profit organizations" because they say the amount left over at the end of the year is returned to purchas- ers similar to a discount. Do you feel that cc-Ops that Operate in this manner are right in calling themselves "non-profit organizations"? V The following paragraphs give the responses to these questions on the basis of the factors which influenced the responses. (a) Bubcthip 93.9.2.9: Table 13 shows the percentage differences between the responses of members and non-members. The table also shows that the responses within each group were remarkably different between the two questions. With respect to the total sample, 36.0 percent were of the Opinion that cOOperatives are typical profit-making businesses. lhen the meaning of "profit-making" was further explained in- the second question, only 88.0 percent held to the same position. This indicates .52 I ..1'" 11.! .1. I .. Q14. 60 Table 13. Percentage distribution of farmers by whether a member or not by opinion on whether cooperatives are profit-making or not. Hm- Que stion s Members members Total and repliegsf 118392 N010: N=496 Are cooperative s typi cal profi t-making businesses? Yes 53.8 64.4 56.0 No 48 . 6 28 . 9 39 .8 Don't know 3,6 6,7 4,8 Total 100 .0 100 .0 100 .0 Are cooperatives right in calling themselve s ”non-profit”? Yes 70 .7 47.5 65.9 No 23 . 7 44 . 7 28 .0 Don ' t know {3, g 2 ,8 __§_,_; Tat“ 100 .0 10° .0 100 .0 that to many farmers the concept of “non-profit”, as applying to coopera- tives, is not clear. Less than half. (42.6 percent) of the members said cooperatives were non-profit businesses, but when the fm'ther explanation was made, the percentage agreeing with that opinion increased to 70.7. Twenty-three and seven-tenths of the members still retained the position that cOOperatives are profit-making organizations. the responses of non-members were found to be significantly differ- ent from that of manbers. Non-members were considerably less favorable to the idea that cooperatives are not profit-making businesses. Even after the meaning of "profit” was clarified, 44.7 retained the position that cooperatives cannot be termed ”non-profit". Typical among the comments of those holding this position was, "Of course they make a prof- it; they couldn't stay in business if they didn't.” (b) m g; warship. liable 14 gives the opinions of the ”aware" members concerning the question of whether or not cooperatives are profit- 61 Table 14. Percentage distribution of “aware" members by period in which first joined a cooperative of which now a member, by opinion on whether or not cooperatives are profit-making businesses. Before 1931- Sin ce Que stions 1931 1940 1940 and replies N=118 N=lg9 Nags Are cooperatives typi cal profi t-maldng busine sses? Yes 45.0 61.3 52.8 No 30 .8 36. 7 43 . 9 Don't know 4,§ 1,8 3,3 Total 100 .0 100 .0 100 .0 Are cooperative s ri ght in calling themselve s "non-pr ofit" 7 Yes 73 . 3 68 .8 72 .8 No - so . 5 26. 6 81 . 6 Don ' t lmow 6,9 M - g, 6 Total 100 .0 100 .0 100 .0 making businesses, on the basis of length of membership. When asked the first question, those members who had first Joined a cooperative in the period before 1931 differed significantly in their replies from those who joined more recently. The 1931-1940 group shows the least agreement with the idea that cooperatives are non-profit businesses. Of this group, 36.7 percent agreed with the idea, whereas 30.8 percent of the pro-1931 group felt that cooperatives were non-profit organizations. Those having Joined most recently fell in between with a percentage of 4.3.9. When the second question was asked, clarifying the meaning of "non- prefit', all groups tended to agree substantially on the question. Ap- parently those who have been members the longest have the best under- standing cf what is meant by cooperatives being, or not being, ordinary profit-making businesses. There may be many factors contributing to this situation, and it would be difficult to determine which were most important. It may be that the experiences connected with the organizing 62 of numerous cooperatives in the late teens and early twenties were parti- cularly educative to the non-profit idea among those who Joined at that time. After “non-profit" was explained, however, the responses of all groups were substantially in agreement. (cl £53. The preceding paragraphs dealt with the factors of member- ship status snd length of membership as affecting the opinions on the question of whether cooperatives are profit-making businesses. The tables presented in both cases pointed out the wide variance between the re- sponses to the two questions. The same variance appears within all the sample groupings that might be made, so it should not be important to continue to show the responses to both questions. It can be assmned from the data already shown that farmers are not clear in their understanding of the meaning of ”non-profit”. Therefore it will be well to proceed from this point, and use only the replies to the second question. Any variance between the responses of different groups to the second question can be considered as more accurately representing basic differences in viewpoint, and as resulting less from differences in the understanding of a particular word, or words. The factor of age is shown to have some effects on responses to the question under consideration (Table 15} . Approximately 73 percent of the younger groups feel cooperatives are right in calling themselves non- profit organizations. mily about 60 percent of the older groups are of the same mind. There is a signicant difference between these two sample percentages. Therefore it can be concluded that the younger farmers tend to be more in harmony with the idea that cooperatives are non-profit organisations. Since there is some tendency for older farmers to have been members the longest, there may appear to be a contradiction between 63 Il‘able 13. Percentage distribution of farmers by age groups by opinions as to whether cooperatives are profit-making businesses or not. 60 and Questions Under 30 30-39 40-49 30-39 over and rgplries Nsss Hz; 1 7 11:; 16 N2“ 5 mfg Are cooperatives right in calling themselves ”non- profit"? . Yes 73.3 73.3 63.3 60.4 60.2 No 19.6 24.8 27.6 33.3 27.3 Don't know 7,1. ;,2 9,9 4,3 M Total 100 .0 100 .0 100 .0 100 .0 100 .0 the findings in this paragraph and that of the factor of length of member- ship treated in the previous paragraph. Length of membership was fotmd to have no significant effect on the responses to this question. Appar- ently some factor other than length of membership is partially influencing the responses on basis of age. is noted in the following paragraph, edu- cation is probably the influencing factor affecting responses at different age levels. (d) ldgcation. he factor of education was found to significantly affect the opinions of farmers with respect to whether cooperatives are profit-making or not. Table 16 reveals that 61.8 percent of those farmers who had an eighth grade education or less agreed that cooperatives were non-profit. Seventy-three and seven-tenths percent of those who had some or all of high school, and 71.4 percent of those who went to college agreed. This indicates that those farmers with more schooling tend to believe in the non-profit idea to a greater extent than those with less schooling. Since there is an inverse correlation between schooling and age, it is logical that those with less schooling and those who are older should both reflect loss favorableness to the non-profit idea. 64 Table 16. Percentage distribution of farmers by educational levels by opinion on whether cooperatives are profit-making businesses 01' flats Year; of schooling completed Question light or Nine to More than and replies less twelve twelve N=3§g Nels; N328 Are cooperatives right in calling themselves "non-profit"? Y.’ Glee 73s? 71e4 NO 31s]. 21.5 28.6 Don't know 2,; 3.9 ... Total 100 .0 100 .0 100 .0 A breakdown of age groups by levels of schooling reveals some inter- esting facts (data not presented in tabular form) . Of those under the age of 40, the favorableness to the idea of cooperatives being non-profit businesses is essentially the same at all educational levels. For those farmers forty years of age and older, a significantly greater proportion of those having attended high school favor the idea than those who never went to high school. Seventy-three percent of those who went to high school and 74 percent of those who did not ,. in the below 40 age group, favor the idea. Seventy-six percent of those who went to high school and mi]: 38 percent of those who did not, in the 40 years and over group, favor the idea of cooperatives being non-profit businesses. (e) Attendance g; matings. It might be expected that those coop- erative members who attend the meetings would be found to agree with the idea that cooperatives are non-profit organizations more frequently than would these who do not attend the meetings. The results of this survey indicate that this is true (Table 17) . Seventy-four end seven-tenths percent of those who attend most of the meetings, and 78 percent of those who attend a few of the meetings agree that cooperatives are non-profit 'Jcllllblllillll.ir[ 1.1K 65 Table 17. Percentage distribution of "aware” members by frequency of attendance at meetings by opinion as to whether coOperatives are profit-making businesses or not. Most of row of None of Question than them them and replieg N134, Ngmo N397 Are cooperatives right in call- ing themselves 'ncn-profit"? Yes 74.7 78.0 60.8 No 21.4 ' 16.0 32.0 Don't know 3,9 6.0 7.2 Total 100.0 100.0 100.0 organizations. Only 60.8 percent of those who never attend meetings agreed. The factor of attendance at meetings may therefore be considered to have the desirable effect of increasing the understanding of members concern- ing the reasons why cooperatives should be considered non-profit organi- sations. However, whether members have greater understanding because. they attend meetings, or whether they attend meetings because they have a yoater understanding is a debatable question. No doubt both factors are partly responsible, but the former would seem to be of primary importance. (1') MMMpgpship statqg. The fact that a farmer is a mem- ber of the Farm Bureau significantly affects the possibility that he will favor the ”non-profit" idea. of those farmers who were members of the Perm Bureau 71.4 percent believed that cooperatives were right in calling themselves “non-profit" organizations. Sixty-one percent of those who were not members agreed. The reason why Farm Bureau members tend to be more favorable to the idea is no doubt in part because of attendance at meetings, as discussed in the preceding paragraph.- In addition, Farm Bureau members usually receive published materials from the Bureau, through which they may be reminded of the I"nonaptrofit" idea. 66 Table 18. Percentage distribution of farmers by whether a member of the l'arm Bureau or not, by opinion as to whether cooperatives are profit-making businesses or not. Que stion Member Non-member and replie s H.251 Nil-264 Are cooperatives right in calling themselves “non-profit"? Yes 71.4 61.0 No 23.1 30 .7 Don' t know 3,3 8.3 Total 100.0 100 .0 (g) SW2. The factors of membership status, age, education, at- tendance at meetings, and Farm Bureau membership status were found to have significant effects on the Opinions of farmers regarding the question of whether or not cooperatives should be called non-profit organizations. Embers favored the idea that cooperatives were non-profit more frequent- 1y than non-members. II'hose farmers having joined coOperatives more re- cently favored the idea more than those who first joined more remotely in the past. Younger members, and members with more schooling, tended to favor the idea. These latter factors show consistency with each other, due to the fact that, in general, higher levels of education have been achieved in recent years. Those farmers who attend cooperative meetings and those who are members of the Farm Bureau tend to favor the idea more than those who do not attend meetings and those who do not belong to the ram Bureau. A Although the data is not presented here, several factors were dis- covered not to affect significantly the responses to the question under consideration. These factors were: (1) amount of business done with cooperatives, (2) type of cooperative a member, (3) status as officer or non-officer, (4) size of farm operated, and (3) number of cooperatives iiih'Jil ... India's 67 I. lumber. 2. Who should receive the earnings? The third cardinal principle of coOperation is the policy of re- turning to the patrons the earnings of the business. In theory the members and the patrons are the same persons. In practice this very frequently is not so. There frequently are members who own shares of stock, or certificates of indebtedness, but do not do business with the cooperative. On the other hand, there frequently are farmers who reg- ularly patronize a cooperative but have never joined it. Many practices and policies have grown up around situations where these conditions ex- ist. The ever recurring problem is how much of the earnings should go to the stockholders in the form of dividends on stock, and how much should go to the patrons in the form of dividends on patronage. is men- tioned earlier, the Capper-Volstead Act limits to eight percent the dividend that may be paid on capital investment. A limit of eight per- cent, however, permits considerable variation in the amount that can be paid on stock. It is quite possible that more of the earnings may be paid to stockholders on the basis of shares owned than to patrons .on the basis of patronage. is a rule, coOperatives state in their charters the interest rate which will be paid on capital investment. This rate is not subject to the fluctuations which characterize the periodic payment of dividends on the basis of patronage. This is a factor in eliminating the speculative buying and selling of cooperative shares. In order to determine the farmers' opinions on the question of where the major portion of the earnings should go, the following question was asked: 68 When a comp has a surplus at fine and of the year, who do you think should get most of it: The stockholders through dividends on stock or the patrons through refunds on the business they did? The responses to this question are presented below on the basis of the factors which were found to influence the responses. (a) Membership _spatujq. Table 19 presents the replies of the total sample and of the groupings arranged according to whether or not the farmer belonged to a cooperative. A little over one-half of all the Table 19. Percentage distribution of sample farmers and of farmers by whether a member or not, by opinion on who should receive most of the earnings. Total Members Non-members Who should got most? =499 N=393 N1104 Stockholders 27.5 24.6 38.4 Patrons 37.1 61.2 41.4 About equal 14.0 13.4 16.3 Don't know 1,4 9.8 3.9 Total 100.0 100.0 100.0 farmers felt most of the earnings of a cooperative should be returned to the patrons. Slightly more than one-fourth felt that those who invested the capital should receive a major portion of the earnings. Fourteen percent volunteered the reply that the earnings should be distributed equally between the two groups. The cpinions of members are significantly different from that of non-members. Whereas 61.2 percent of the members think that patrons should receive most of the earnings, only 41.4 percent of the non-mem- bers agree. These results are rather striking. Some cooperatives pay patronage dividends to both members and non-members. In such a situ- ation the non-members profit from patronage dividends, but not from 69 stock dividends. Where patronage dividends are not paid to non-members, the nut-member gets none of the earnings. Thus it might be expected that non-members would be more favorable than members to distribution of earnings on the basis of patronage rather than on the basis of stock ownership. The results of this survey do not indicate this, however. Many non-members are probably not aware that in some cooperatives divi- dends are paid to non-members. Therefore this consideration would not enter, to any great extent, into the responses of the non-members. Non- mubers are frequently rugged individualists, are not cooperative minded, and are not acquainted with the principle involved, and consequently do not favor the coOperative principle of returning earnings to patrons rather than to stockholders. Iith respect to the where, it is important to note that one-fourth are not favorable, to this principle. (bl £0213; businegs 903;. As might be expected, the amount of business a farmer did with cooperatives quite significantly influenced his opinion on the question of who should receive the earnings. Table 80 shows the results when the farmers were broken down into groups according to various amounts of business done during the previous year. As the emmmt of business increases, the percentage in favor of patrons receiving the earnings also increases. In fact, as the groups are here arranged, the percentage increases-at a constant rate of approximately four percent as one goes from the group doing the least business to the group doing the most business. The range is from 46.1 percent for those doing less than $100 worth of business to 67.8 percent for those doing a business of $3000 or more with cooperatives. It is interesting to note that 7.7 percent of those who did little business with cooperatives did not know which answer was best. This percentage is considerably 3113" Jill t | ..sl'r _- '70 Table 20. Percentage distribution of farmers by amount of business done by opinion on who should receive most of the earnings. less than 3100- $500- tmoo- $2000- $5000 $100 $499 $999 $1999 $2999 at over 'ho shogd get most? N363 NIB; N889 N399; =37 N-96 Stockholders 26.2 38.3 29.2 27.0 28.1 17.7 Patrons 46.1 49.4 34.0 39.3 63.1 67.8 ‘Wut .qufll 20.0 18.3 15e7 13e5 8.8 13e5 Don't know 7,7 ,,, ;,1 ,., ,,, 1.9 Total 100 .0 1.00 .0 100 .0 100 .0 100 .0 100 .0 larger than the total for all the other groups of those who replied "don't know". s partial explanation of the percentage differences between groupings in Table so lies in the fact that a considerable correlation exists be- tween membership status and amount of business done. Members were found to favor patrons' getting most of the earnings, in greater proportion than nut-members. Since members do relatively more business, it would be expected that those farmers doing larger amounts of business would be re- vealed as most favorable to distributing most of the earnings on the basis of patronage rather than on the basis of shares owned. (c) .459. The factor of age was found to significantly influence the cpinions concerning the questim under consideration (Table 21). As age increases, the percentage in favor of returning to patrons most of the earnings decreases. An exception is the ”60 and over” group which shows a percentage slightly above the percentages for the "40-49” and ”30-59" groups. Stated conversely, the older a farmer was, the more likely he was to favor having most of the earnings revert to the stockholders on the basis of shares. Since neither manbership status nor amount of busi- ness done shows any correlation with age, these factors cannot be said 71 hble 21. Percentage distribution of farmers by age by opinion on who should receive most of the earnings. Under 30 30-39 40-49 30-39 60 ,over Who should get most? =36 Nng Nsll7 1kg? N-9O Stockholders 16.1 23.9 27.4 32.3 31.1 Patrms 71.4 60.3 33.8 31.3 34.3 About equal 10.7 13.8 17.1 14.3 12.2 Don't know 1,8 ,,, 1,7 1,7 2,2 Total 100 .0 100 .0 100 .0 100 .0 100 .0 to influence the percentages for age groups. Education was not found to significantly affect the responses to the question imder consideration. morefore it appears that, taken alone, the factor of age is important in determining farmers' attitudes concerning the disposition of earnings. The younger farmers apparently support the principle of patronage divi- dends to a greater extent than older farmers. (d) Attendance 25. meetings. The factor of attendance at cooperative meetings is found to be a significant influence in determining who is in favor of returning most of the earnings to the patrons on the basis of patronage. Table 22 reveals that 69.7 percent of those who attend most of the meetings feel that patrons should receive most of the earnings. Table 22. Percentage distribution of ”aware" members by frequency of attendance at meetings by opinion on who should receive most of the earnings. Most of A few of None of them than them Who should get most? N813!) N819], N=97 Stockholders 20 .0 20 . 8 34.0 Patrons 69.7 61.4 30.6 About equal 9.7 16.8 14.4 Don't new 0,6 1.9 1,9 Total 100 .0 100 .0 100 .0 78 Sixty-one and four-tenths percent of those who attend a few of the meetings, and 30.6 percent of those who attend none of the meetings are of the same cpinion. Thus it appears that attendance at meetings is a vital factor in helping farmers to understand and approve of the principle of patronage dividends. However, it is important to note that approximately one-third of those members who attend meetings most faithfully still disapprove of patrons receiving most of the earnings. (a) 2m 2; cooperative _a_ m. Table 23 reveals that the mem- bers of different types of cooperatives differ in their support of the principle of patronage dividends. Milk and cream cooperatives make the best showing, with 72.3 percent of their members favoring the idea that the patrons should receive most of the earnings. Milk and cream cooper- , atives are followed, in order, by elevator and supply coOperatives, livestock cooperatives, oil and gas, and fruit marketing cooperatives. The latter shows only forty percent of its members favoring the patron- age distribution of earnings. Caution should be used, however, in gen- eralizing from the latter two types, since the cooperatives represented in these two types are too limited in number to be very representative. Table 23. Percentage distribution of ”aware” members by type of coop- erative a member by opinion on who should receive most of the earnings. Live- Eleva- Fruit , stock tor as Milk 8c Oil 6c mktg. 6c mktg . supply cream gas supply Ihc shoulg ggt most? N899 Nzggg Hg; N-36 N899 Stockholders 30.3 21.2 14.3 27.8 38.3 Patrons 33.7 67.3 72.3 44.3 40.0 About equal 13.8 11.0 13.2 19.4 16.9 Don't know ...... .91; ...... an 4.2.6. Total 100 .0 100 .0 100 .0 100 .0 100 .0 T 73 It can be asstmed, though, that the cooperatives of these two types, which are represented in the survey, evidence considerable laxity in educating their members to the importance of the principle of patron- age dividends. The same might also be said for the livestock marketing cooperatives represented . (f) m. The factors of mmbership status, amount of business done, age, attendance at meetings, and type of cooperative a member were found to significantly influence the replies to the question of who should get the most of the earnings, the patrons or the stockholders. Those more favorable to having the patrons receive the most of the earn- ings were the members, those doing‘a greater amount of business with coOperatives, the younger farmers, those who attend meetings most regu- larly, and the milk and cream, and elevator and supply types of coopera- tives. Other data not presented here indicate the following: Those oper- ating larger farms are more favorable to the principle. This is under- standable in the light of the results on the basis of amount of business done, since those who do more business tend to be those with larger fame. Officers were found to be somewhat more favorable to the principle than non-officers, although the percentage differences were not quite suffi- cient to indicate the desirable degree of reliability. Farm Bureau members were found to favor the principle in a significantly greater proportion then those who are not members of the Farm Bureau. The fact- ors of education, length of umbership, number of cooperatives a member, and tenure status were found not to influence significantly the replies given to this question. '74 3. Should earnings _b_e_ 14.123211 1:3 gorease capital? If a cooperative is successful in its enterprise, it frequently de- sires to enlarge its facilities and scope of operation. or if a cooper- ative is having financial difficulties, it frequently desires to obtain additional funds to enable it to get back on its feet. In either case it is necessary to add capital to the financial structure. Should the earnings (if there are any) of a cooperative be used to supply this needed capital? If the earnings are withheld from patrons, the patrons are usually given additional shares of stock or certificates of indebtedness to cover the amount withheld. If the earnings are paid back to the patrons in the form of cash dividends, the additional capital must be secured frown some other source. Two possibilities exist, namely, sell more shares of stock directly to patrons, or borrow money from a bank or oth- er credit source. loch of the farmers interviewed was asked to indicate which method of increasing capital he felt was best, borrowing from a bank or with- holding the earnings. The question was asked in the following form: Suppose a co-op needed to increase its capital. Which of these things do you think it should do: Borrow money from a bank 9; pay its patronage refunds in the form of shares of stock rather than cash? (a) Membership status. is shown in Table 24, 79.9 percent of the farmers who responded to this question favored withholding the earn- ings and paying the refunds in the form of shares of stock. Only 12.3 percent favored borrowing from a bank, which indicates a considerable antipathy towards increasing capital by borrowing. A significant difference exists between the opinions of members '75 Table 24. Percentage distribution of sample farmers, and farmers by membership status, by cpinion on how to increase capital. Nane- Total Members members How increase capital? Egg 138993 1181.04 Borrow from a bank 12.3 10.7 19.2 Pay stock dividends 79.9 83.4 66.4 Both 1.4 1.3 1.9 Don't know .911 .44 1.4.2 Total 100 .0 100 .0 100 .0 and non-members on this question. Only 66.4 percent of the non-members favored paying stock dividends, whereas 83.4 percent of the members fav- ored such a procedure. Part of this difference is due to the fact that more of the non-members (19.2 percent as compared with 10.7 percent) favored borrowing, and part is a result of 12.3 percent of the non-mem- bers (as compared with 4.6 percent of the numbers) not being able to decide which would be best. Q10 possible reason for the difference in opinions between members and non-members is that non-members may have a more selfish interest in preferring cash dividends rather than share dividends for their patronage. (b) Ml _qf_ bginess 939;. Table 23 presents the opinion re- sponses of the sample farmers, grouped according to the Amount of busi- ness done with cocperatives, on the question of whether earnings should (be retained in order to increase the capital investment. The 3100-3499 and 3m00—32999 groups favored stock dividends over borrowing by per- centages of 88.8 and 87.3 respectively. Only 67.7 percent of those who do little or no business with cooperatives favored paying stock dividends. Although these percentage extremes indicate significance, it is diffi- cult to establish any generalities from the data. There seems to be no 76 Table 23. Percentage distribution of farmers by amount of business done with cooperatives by cpinion on how to increase capi- tel. Less than $100- $500- $1000- $2000- 33000 $100 $499 $999 $1999 $2999 a over How increase capital? N863 N380 N890 Ntlll N836 =93 Borrow non a bank 13.8 7.3 18.9 16.2 7.1 8.4 Pay stock dividends 67.7 88.8 75.7 76.6 87.5 83.2 Bath as]. see 2.2 Deg ees 8e]- non't know gm, 3,7 3,2 9,3 §,4 6,3 Total 100 .0 100.0 100.0 100 .o 100 .0 100.0 general trend from the groups doing little business to the groups doing much business. It is probable that the low percentage of 67.7 for the 'less than 3100' group is due to the relatively large proportion of non- members in that group. (a) 559,. Of the farmers aged 30 to 39 years, 87.9 percent were of the opinion that the best way to increase capital is to withhold the earnings and issue stock dividends. By way of contrast, 68.3 percent of those 60 years and older favored stock dividends. These percentage differences are statistically significant, and the general trend in- dicates that the younger farmers are more in favor of holding back the cash earnings than are the older farmers. Since most supporters of Table 26. Porcentage distribution of farmers by age by opinion on how capital should be increased. Under 30 30-39 40-49 30-39 60 ,over How increase capi tg? N836 N=lld N837 Nags N=89 Borrow from a bank 10.7 10.3 8.3 13.8 19.1 Pay stock dividends 80.4 87.9 80.3 80.1 68.3 Both ... 0.9 0.9 0.9 4.3 Don't know 9,9 9,9 12:35. _M 2,9 Total 100 .0 100 .0 100 .0 100 .0 100 .0 77 cooperatives advocate retention of earnings when capital is needed, it appears that the older cooperative members will need to be most strong- ly influenced in order to increase the support of such a practice. (d) M. The factors of membership status, amount of business due, and age were found to significantly affect the responses to the question of whether borrowing or retention of earnings is the better way of increasing capital. In addition, those who had more education, those , who attended meetings most regularly, and those who were members of the farm Bureau favored paying stock dividends rather than borrowing in pro- portions slightly gester than for those with less education, those who attended no meetings, and those who were not members of the Farm Bureau. The percentage differences for the se latter, however, might be the re- sult of chance. The factors of length of membership, tenure status, officer status, and number of cooperatives a member were found to have no apparent influence on the responses to this question. Although the percentage differences are not significant, it is interesting to note that the oil and gas, and fruit cooperatives were on top with respect to proportion of members favorable to paying stock dividends rather than cash. The percentages were 94.4 and 87.8 respectively. In general it can be said that few farmers favor borrowing as a policy, and, regard- less of how the farmers are divided into groups, there is no wide diver- gence of opinion on this particular question. CHAPTERV FACTORS DIFID'ENCING OPINIQ‘IS REGARDING THE PRINCIPLE OF OPEN AND VOLUNTARY MEMBERSHIP The principle of open and voluntary membership has been less strict- ly adhered to than most of the cooperative principles. The Rochdale pioneers proclaimed a society wherein no one should be denied membership on the basis of sex, color, or creed. The society was organized to sell to all who would qualify as conemsrs. In the United States, however, where cooperation has been developed largely in the field of marketing agricultural products, many restric- tions have been placed on open membership. In order to be successful, the marbership of a marketing cooperative must usually be more homo- geneous than is characteristic of the membership of a consumers‘ coop- erative. ‘lhe members usually are required to be producers, particularly producers of a certain product which is being marketed cooperatively. In addition, a successful marketing cooperative must avoid receiving as members those who are agitators, irresponsible persons, or chronic trouble-makers.1 ‘mis chapter presents the opinions of the farmers interviewed on the questions of whether manbership should be restricted, whether mem- bers should be bound by contracts, and how new members should be obtain- ... 1. Bhoulg membership he; regtricted? Each farmer interviewed was asked to state his opinion in answer to l. Bakken and Schaars, pp. 211., p. 149. 79 the question, "Should coOperatives let anyone join who wants to?” Of these who responded “no" to the question, an additional question was asked: ”What sort of persons shouldn't be allowed to join?" The anal- ysis of the replies to these questions reveal that certain factors had an effect on the opinions given by the farmers. (a) Membership M. The replies to both questions are combined and presented in Table 27. When asked if co-ops should let anyone join who wants to, 31.6 percent of the farmers interviewed replied ”yes". Forty-seven and two-tenths percent of the farmers replied "no”, and then indicated what types of persons should be excluded from membership in Table 27. Percentage distribution of sample farmers, and by whether a member or not, by opinion on whether co-ops should restrict membership. Nan- Question Total Members members and replies N-ppp NI393 N=1_93 Should co-ops let anyone join who wants to? Yes 31.6 49.9 38.3 No, exclude non-farmers 26.0 26.6 23.8 No, exclude non-producers 3.6 6.8 1.0 No, exclude persons wanting only money, not interested in co-Ops 4.0 3.6 3.7 No, exclude dishonest persons 4.8 4.8 4.8 No, exclude persons interested in competitive businesses 2.0 2.3 1.0 No, exclude Communists 0.8 1.0 ... No, exclude foreigners (including Jews) 0.4 0.3 ... No, miscellaneous reasons” 3.0 4.6 6.7 No, no reasons given 1.2 1.3 1.0 Don't know 1,2 ;,3 1,0 Total 102.6* 102.7* 105.5* ‘Thtals exceed 100 due to some farmers excluding more than one group. I”Includes: trouble-makers, "ne‘er-do-well" persons, persons with poor credit standing, persons opposed to the cooperative movement, etc. $113 lllul’llllliflali- 80 farmers' cooperatives. Twenty-six percent of all the farmers would ex- clude non-farmers from membership, 5.6 percent would exclude non-producers of farm.products, four percent would exclude persons not interested in cooperatives except for the money they get out of it, 4.8 percent would exclude dishonest persons, two percent would exclude persons interested in competitive businesses, 0.8 percent would exclude Communists, and 0.4 percent would exclude foreigners and Jews. Considerable interpretation must be given to this set of data. In the first place the question may not have been too well interpreted by the farmers. It is certain that many farmersdid not step to think that “anyone" included city people as well as farmers. Occasionally after a farmer had answered "yes” he would reflect a few moments and then add, "any'ggggggf. It is quite probable that the replies would frequently have been different if the word 'anyone' would have been enlarged upon before the farmer gave his answer. Therefore the fact that one-half of the farmers interviewed did not indicate that farmers' cooperatives should limit their membership to producers of farm_products should not be taken too seriously. There was a definite purpose, however, in asking the question in the fomm.used. The opinion which is expressed “on the spur of the moment" is frequently that which guides the farmer's action. Some people fre- quontly do not step to think. Therefore what a person thinks "on the lspur of the.moment' is important to know. It is an indication of his understanding of the issue involved-~that is, it indicates his aware- ness of the issue in the absence of an explanation. In this sense, the replies to the question are quite enlightening. It probably can be said that one-half of the farmers were aware of the issue and favored 81 restriction of mmnbership. The other one-half might be divided into three classes: (1) those who were aware of the issue, but opposed re- striction of membership, (2) those who were unaware of the issue, and after further explanation would have favored restriction of membership, and ('5) those who were unaware of the issue, and after further explana- tion would have opposed restriction of membership. Members favored restriction of membership to a greater extent than hens-members, although the difference is not great enough to be consid- ered significant. Members and non-members differed little with respect to the types of persons which should be excluded from membership. In further analysis of the factors affecting the responses to the question of restricting membership, no attempt will be made to differ- entiate between the types of persons to be excluded. The percentages for most of these groups are too small to permit significant differences for any factor that might be analysed. In the light of the discussion above, further analysis of the re- plies to the question under consideration will be regarded as revealing m; 9; gwareness of the issue of membership restriction, rather than as revealing differences or similarities of mg-fcmlated opiniops. (b) £21121 _o_f_ business 5139;. The factor of emotmt of business done with cooperatives appears to have a significant effect upon the opinions of farmers regarding- the question of whether cooperatives should permit anyone to Join who wants to. Table 28 reveals the $100499 and the 02000-2999 groups to be the extremes, with percentages of 61.7 and 36.8, respectively, stating that anyone should be allowed to Join. Although the trend is erratic, those who do a greater amount of business tend to favor restricting membership in greater proportions than those doing 88 Table 28. Percentage distribution of farmers by amount of business done by opinion on whether co-ops should let anyone join who wants to. Less than $100- fsbo- 61000.- tzooo- tsooo Should co-ops $100 $499 $999 $1999 32999 as ever let anyone join? =65 Hg; . 1kg N81,}; =57 N=9g YO! 53.3 61.7 55.6 56.8 36.8 42.7 NO 46.1 35.8 43.3 42.3 63.3 57.3 Don't know 3.]. 8,5 1.1 2.9 3.: .33 Total 100 .0 100 .0 100 .0 100 .0 100 .0 100 .0 naller amounts of business. It can probably be seemed that those doing larger wants of business are more aware of the problems involved when munbership is not restricted. (cl 5;. 0n the basis of age groups, the farmers responded with con- siderable percentage differences, but the differences were not sufficient- ly large to be significant. The percentages in favor of restricting mem- bership ranged from 57.1 for the 'under 30" group to 45.3 for the "60 years and over” group. Thus the younger farmers were more favorable to restrictions on membership. A breakdown of age groups by membership status revealed that members and non-members held very similar opinions within all age groups except the '60 and over“ group. or the numbers who were "so and over", 60.8 percent favored restrictions on membership, whereas cf the non-members - who were '60 and over' only 24 percent favored restrictions. (d) Education. The number of years of formal education that a farm- or had was found to significantly affect his opinion on the question of whether cooperatives should restrict membership. Table 29 reveals that 40.2 percent of the farmers in the sample who had eight or less years 83 Table 29. Percentage distribution of farmers by educational levels by opinion on whether co-cps should let anyone Join who wants to. Years of schooling completed Right or Nine to More than Should co-ops lot is es twelve twelve anyone join? N=324 Nays * N228 Yes 58.3 _ 37.3 42.9 No 40.2 62.0 57.1 Don't know ;,§ 0.2 ,.. Total 100.0 100.0 100.0 of schooling favored restrictions on cooperative membership. of those who had some or all of high school, 62.0 percent favored restricting mem- bership. Of those who went to college, 57.1 percent favored restrictions. Those with more schooling are apparently more aware of the issue than are those who had an eighth grade education or less. Farmer-s with college training, however, were less in favor of restrictions than were those with only high school training. Since education and age are inversely correlated, the percentage differences between education groups reflect the percentage differences betwaen age groups. The younger, more educated groups favored restric- tions to a greater extent than the older, less educated groups. In this case the education factor may be considered the more weighty on the. grounds that the percentage differences were greater (21.8 percent) for education groups favoring restrictions than for age groups (13.8 percent). (.1 Attendance 5; meetings. Table 50 shows that those who attend meetings regularly significantly differ in their opinions from those who do not attend meetings. Of those who attend most of the meetings, 57.4 percent favor restrictions on membership. Forty-five and five-tenths percent of those who attend a few of the meetings, and 37.1 percent who 84 Table 30. Percentage distribution of "aware" members by attendance at meetings by opinion on whether co-cps should let anyone join who wants to. Most Few None Should OO-Opa let anyone Join? of them of them of then naps N810], N897 Yes 42.6 53.5 59.8 No 57 e4 45 e 5 37 e 1 Don't know ,,, 1,9 3,1 Total 100 .0 100 .0 100 .0 attend no meetings, agree. Attendance at meetings indicates a much great- er awareness of the problems involved in permitting anyone to Join a cooperative who wants to. (f) M. Approximately one-half of the farmers interviewed were of the opinion that cooperatives should let anyone Join who mts. Mem- bers were more interested in restricting membership than non-members, although the difference was not significant. The factors of amount of business done, education, attendance at meetings, and membership in the ram Bureau were found to sigiificantly affect the cpinions of farmers. Those more favorable to membership restriction were the farmers who did more business with cooperatives, who had more schooling, who attended meetings most frequently and who were members of the Farm Bureau. Also more favorable to restricting membership were the younger farmers as opposed to older farmers, the officers as against non-officers, those who were where of three or more cooperatives as opposed to those who were mnbers of only one or two cOOperatives, and members of elevator cooperatives as against other types. The differences found in these latter instances, however, may have been due to chance factors in sam- pling. 85 Due to the fact that some farmers apparently did not clearly under- stand that "anyone" included city people as well as farmers, it cannot be concluded that one-half of the farmers are really in favor of allow- ing non-producers to Join. Rather it should be concluded that about (me-half of the farmers are aware of the issues involved, and formulated their cpinion against Open membership on the basis of their awareness. 2. Should members _bg bcmg 331 cgtracts? Approximately one out of every ten Michigan cooperatives require their members to sign contracts or marketing agreements.“3 These con- tracts or agreements bind the farmer to sell his produce (usually a single commodity) to the cooperative at whatever price the cooperative offers. Contracts usually cover a single marketing season. cOOperatives which market perishable goods, such as fruit and fresh vegetablea, find contracts particularly advantageous. It enables them to obtain good markets in the large cities, because they can guarantee delivery of specified amounts of produce to wholesalers and Jobbers. But in order to be able to guarantee specified shipments, the coopera- tive must be assured of receiving the produce from the farmers. Con- tracts provide the assurance that farmers will not by-pass the coopera- tive at harvest time in order to sell to another bidder who might offer a temporary price or service advantage. ‘ Obtaining contracts with farmers is not an easy task for coopera- tives. Farmers a. traditionally independent, and a system which binds than to a given course of action is anathema to their system of values. To be sure, not all cooperatives need to have contracts with their 2. Statistical Handbook, p. 63. 86 members. Some types do, however, and failures have sometimes resulted from a situation where the farmers were not sufficiently willing to bind thmselves for the good of the cooperative cause. Just how highly Michigan farmers regard the value of "freedom of action" is partially revealed by the following data obtained from the survey. (a) Membgship 52221130 Bach farmer interviewed was asked the follow- ing question: In general, do you feel that a farmer should be allowed to Join or drop out of a marketing co-op any time he pleases or should he be re- quired to have a contract which runs for an agreed period of time? If the farmer replied ”any time”, no further question was asked on the issue. If he replied that a contract should be required, or that it depends on the situation, he was further asked, "What kind of require- ments for getting in and out do you think would work best?” Table 31 presents the combined responses to the two questions. A total of 84.6 percent of the farmers in the sample are opposed to signing contracts with cooperatives. Two and two-tenths percent did not know which was better. Approximately 12 percent thought that farmers should enter into contracts with their cooperatives, and gave various suggestions as to how contracts should be implemented. Several conclusions might be drawn from these results. In the first place, the farmers seem to have a strong antipathy toward contracts or marketing agreements. Very frequently the farmers gave maximum emphasis to their reply of “any time". This situation points up very strongly what cooperative leaders must contend against when they put forth efforts to get their members to enter into written agreements to market their produce through the cooperative. A carefully planned and well executed 8'7 Table :51. Percentage distribution of farmers by membership status by opinion on whether members should be bound by contracts. Non- Questions Total Members members and replies N400 N=39§ N=l_0_§ Should members of marketing co-ops be allowed to Join or drOp out any time, or should they be re- quired to sign a contract? Any time 84.6 85.8 79.8 Contract, year basis 4.2 3.5 6.7 Contract, terminated for good reason 1.2 0.8 2.9 Contract, no qualifications given 1.8 1.8 1.9 Contract, miscellaneous“ 5.4 6.1 2.9 Depends, miscellaneous" 0.6 0.5 1.0 Don't new 3.3 Jug 5.8 Total 100.0 100.0 100.0 *Includes: two to five year basis, loss of dividends due if member drops out, proper notification should be given before dropping out, etc. "Includes: subject to approval by board of directors, no reasons given. program of persuasion and education must precede the successful organi- zation of cooperative marketing based on contracts. There is evidence to prove, however, that where a great need for contracts exists, farm- ers will usually sacrifice personal liberty in order to meet the press- ing need. It might also be observed that those few who favor contracts exibit a wide variance of opinion regarding the bases for entering into and terminating contracts. Approximately one-third favor contracts on a ' year basis. The others held miscellaneous opinions as noted in the table. It is interesting that a greater prOportion (85.8 percent) of mem- bers than of non-members (79.8 percent] favor freedom in joining or dropping out of a coOperative. The percentage difference is not sig- nificant, however. The percentages in favor of the various types of 88 contractual relationships are so small as to virtually preclude any meaningful analysis. In the subsequent analyses, these items will be combined and presented in one item as Opposed to complete freedom in Joining or dropping out of cOOperatives anytime. (b) gm _o_i; coOperative a member. Members of different types of cOOperatives were found to respond in significantly different propor- tions to the question of whether members should be required to enter in- to formal contracts with their cooperatives (Table 52) . The extremes Table 52. Percentage distribution of 'aware' members" by type of coop- erative a member by cpinion on whether members should be bound by contracts. Live- Eleva- Fruit stock tar as Milk 8: Oil & mktg. 8: Should cooperatives mktg . supply cream gas supply reguire contracts? N095 Neggz N885 N856 N8 65 Y.’ 15e7 8.4 15e6 27e8 20.0 No 86.3 89.5 84.6 72.2 78.5 Don't know u: 2,], ,,, ,., 1,5 Tatal 100 e0 100 e0 100 e0 100 e0 100 e0 Iii—ote: A member may have memberships in more than one ti; of cooperative. are represented by the elevator and supply, and oil and gas cooperatives, with percentages of 89.5 and 72.2, respectively, favoring freedom to Join or drag; out of a cOOperative anytime. Livestock marketing and milk and cream marketing cooperative members are-relatively more favorable to free- dom of Joining or dropping out, while the fruit marketing cooperative manbers are relatively more in favor of contractual agreements. As noted in Chapter 3, the members represented in the fruit mketing and supply type of cooperative are, with one exception, members of the Ian 01air Fruit Exchange. This fruit marketing cooperative makes 89 extensive use of contracts with its members. No doubt many of the mem- bers have come to sea the advantages of this type of procedure, and have come to favor the use of contracts. However, over three-fourths of the members of this coOperativa apparently prefer not being bound by contract. The oil and gas cooperatives, not being marketing cooperatives, really should not be considered when dealing specifically with marketing cooperatives. The attitudes of the members of this type of cooperative are no doubt the reflection of the influence of the Fan Clair Fruit Exchange ,' since over three-fourths of the oil and gas coOperative mem- bers interviewed in this study are located in the Ben Clair area. (c) Education. Table 33 shows that 88.1 percent of those farmers having eight or less grades of formal schooling prefer to be free to join or drop out of a cooperative anytime. of those who went to high school but not beyond, 83.1 percent favor voluntary membership. Sig- nificance lies in the fact that only 57.1 percent of those who attended college favor voluntary membership. Cmversely, nearly 40 percent of this group favor the use of contracts, as compared with 9.1 percent for Table 33. Percentage distribution of farmers by number of years of schooling by opinion on whether members should be bound by contracts. Years 9 1 schooling compleged . Eight or Nine to More than Should cooperatives less twelve twelve reguirg contract? N332; Nzlég N028 Yes 9.1 16.2 39.3 no 88.1 83e1 57s]. Don't know §,8 9,7 3.9 Total 100 .0 100 .0 100 .0 90 the grade school group and 16.2 percent for the high school group. Ap- parently, cooperative leaders looking for support for a system of mar- keting by contract will find the greatest support among those who have college education. It can probably be concluded that the college group, through their possibly greater contacts with heterogeneous types of people, have come to a greater understanding of the problems which arise out of a situation where those persons not similar in mind and purpose with interests of the organisation are included in the membership ranks. (d) Amount .9_f_ business done. Table 34 shows the cpinions of all the farmers interviewed on the question of freedom to Join or drop out, as Table 34. Percentage distribution of farmers by amount of business done with cooperatives, by opinion on whether members should be bound by contracts. Less than 3100- taoo- $1000- $2000- $5000 Should coOperatives $100 $499 ‘ $999 $1999 $2999 a over require contract; N395 N38; N-so Ham Ham H.399 YO. 20.0 18.4 15.3 9.0 14.0 13e5 NO 75.4 83.0 88.3 ”.1 86.0 86.5 Don't kn" 4.1 ...13 4.1 .ms ......- ...... T0001 1.00 .0 100 .0 100 .0 100 .0 100 .0 100 .0 broken down on the basis of amount of business done with cooperatives. Aside from the *1... than $1.00” and 41000-81999" groups which show a significant difference, the data permits no conclusive generalities. If a linear trend were forced upon the percentages favoring no contracts, it would show that those doing more business were less likely to favor contracts than those doing little business. This would suggest that possibly those who do more business, because they have more money at stake, are less apt to be willing to be bound to a contract. Because 91 they sell more produce, they are in a better position to bargain for themselves on the open market than is a farmer who sells only mall amounts of produce. Consequently the farmer who produces on a large scale is not so dependent on formal agreements in order to be assured of a market. In years of bumper crops, the small fruit farmer fre- quently finds it difficult to find a profitable market, whereas if he has a contract with a cooperative he can be assured of being able to dispose of his produce at a fair price. Thus the sma1l farmer will be more likely to favor contractual relations than the big farmer. Data obtained in the survey showed that members tended to do more business than non-members. This relationship quite probably explains why the non-members tended to be more favorable to the use of contracts than members. (.1 my. Approximately eight out of ten farmers interviewed do not favor being bound to a marketing coOperative by a contract or mar- keting agreement. Non-members were slightly more favorable than members to the use of contracts. Those doing less business were more favorable to cmtracts than those doing greater amounts of business. Simificant differences were found between the opinions of the more educated and the less educated farmers, and between the members of the fruit marketing cOOperative and the members of other marketing types. ~ In both cases, the first mentioned group was the more favorable to the use of contracts. No difference of opinion on the question was found to exist between different age groups of farmers. Likewise, no difference was fomd between those who attended matings regularly and those who never at- tended meetings, between officers and non-officers, between members of .. h" 92 the Farm Bureau and non-members, nor between groups based on length of mbership in cOOperatives. It is important to note specifically the opinions of the officers and the Farm Bureau members. Twenty-six (89.6 percent) of the 29 coop- erative officers interviewed favored freedom to Join or drop out anytime. This compares with 86.0 percent for the non-officer manbers. If offi- cers are so strongly opposed to the use of contracts, it is highly probable that contracts will be used only in those cases where it is absolutely necessary. ls compared with 84.2 percent of those not mem- bers of the ram Bureau, 85.0 percent of the farm Bureau members favored ’ freedom to Join or drop out any time. Apparently Farm Bureau members are as "freedom loving" as non-members, despite the arguments in favor of contracts. Results of this survey seem to indicate that the farmers who are apt to be most favorable to the use of contracts are the small operators, more educated, members of fruit cooperatives. This is in line with the fact that a far greater proportion of fruit marketing cooperatives re- quire member contracts than is true for all other types of cooperatives in the United Stetee.‘3 3. Should p31 members he; add“ 391 share dividengl? In each community there are usually certain farmers who deal with a .local coOperative, but who do not wish to Join the coOperative and assure the role of member. Depending on whether or not a cooperative pays patronage dividends to its non-member patrons, these non-members may be “forced" to become members of the cooperative through which thw buy or 3. Statistical Handbook, p. 63. 93 sell. Most coOperatives welcome the additional trade afforded by non- members. Cooperatives usually are interested in having the non-members become members, but quite frequently a cooperative may not wish to add new members. The Farmers' Cooperative Elevator located at Pigeon, Iichigan, members of which are included in the survey sample, is an ex- ample of a cooperative not wishing to add new members. The cooperative is well situated financially and does not need additional capital. con- sequently, no new shares are offered,.and dividends are paid in cash to members and non-members alike. More often, however, a cooperative is interested in building up its capital investment, and frequently uses the method of issuing stock dividends instead of cash dividends. In I case where dividends are paid to nut-members, and the dividends are paid in shares of stock instead of cash, (the non-member who wishes to trade with a cooperative is forced to become a member. The point is often made that a farmer who wishes to receive the advantages offered by coOperation should be willing to give his support to the enterprise by Joining. The point is a good one. However, not all farmers make good cooperators, and frequently these poor coopera- tors are added to the mmnbership list of cooperatives using the stock dividend practice. This is particularly true in comunities where the cooperative is the only business providing the service desired. Is the practice of obtaining new members through paying dividends in shares of stock a good one? Are non-members being "forced" to be- come members by such a practice? Is this a violation of the principle of voluntary membership? The issue has been brought to the fore in 94 the last decade due to tax laws affecting cooperatives. Whether non- members are to receive a patronage dividend is left to the discretion of the directors. However, if a cooperative wishes to qualify for exemption from the payment of federal income taxes, it is necessary to O treat members and non-members alike with regard to patronage dividends. Consequently, an increasing number of cooperatives are following the practice of paying dividends to non-members. Zach farmer interviewed in the survey was asked the following ques- tion: V When a co-cp wants to get new members, which of these ways do you think it should use: Hold back the patronage refunds of new pur- chasers until they have enough to pay for their membership 9;; go out and sell memberships directly to farmers? The replies to this question provide interesting data on how farmers in the sample area regard this aspect of voluntary membership. (a) Membership M. Table 35 gives the percentage distribution of the replies on the bases of the total sample andmembership status. 0f the total sample, 54.7 percent felt that it is better to get new members by selling shares directly to them. Thirty-five and one-tenth Table 35. Percentage distribution of farmers by membership status by cpinion on how new members should be obtained. Total Members Non-members ng obtain new members? N322} Iii-393 N812 5 Hold back refunds 35. 1 39.7 18 .1 8.11 murShip' 54.? 51.5 65s? Both 8.4 8 . 3 2 . 9 Don ' t know _Lé ..Qd. l3 , 3 ' Total 100 .0 100 .0 100 .0 4. Bakken and Schaars, £2. cit., p. 159. 95 percent were of the opinion that it is best to hold back the refunds. Several farmers (2.4 percent) volunteered the reply that both methods should be used. Seven and eight-tenths percent didn't know which method was best. Members and non-members differed widely in their opinions on the question. Thirty-nine and seven-tenths percent of the members would hold back refunds, whereas only 18.1 percent of the non-members prefer this method. Conversely, more non-members (65.7 percent) than membrs (51.6 percent) favor selling memberships directly. ‘Ihis latter differ- ence would be even greater if the “don't know” replies were omitted when making the percentage calculations. There no doubt is a difference of viewpoints from which members and non-members look at this question. Members are no doubt apt to think that those who do business with a cooperative should become members. Holding back their refunds would automatically bring them into member- ship, and at the~ same time benefit the cooperative with increased cap- ital. The non-members are more apt to be of an independent nature, and dislike being forced to choose between becoming members or ceasing to trade with the cooperative. This probably explains the difference in opinions between members and non-members. The significant fact, however, is that even of the members more than half feel it is better to sell memberships directly to the non-members. This indicates that ' there seems to be a strong feeling that a non-member should be allowed to trade at a cooperative, but should, at the same time, be allowed to make his on decision on whether to join or not. (b) 55;. The factor of age was fotmd to affect the responses to the question of how new members should be obtained. Table 36 gives g. the percentage distribution of the responses for the members and also for the non-members. The data indicates that non-members are more influenced by the factor of age than are members. The percentage range for the different member age groups is from 57.1 percent to 49.2 per- cent (a difference of 7.9 percent) in favor of selling memberships directly. The percentage range for non-members is from 78.6 percent Table 36. Percentage distribution of farmers by membership status by age and by opinion on how new members should be obtained. Years of age How obtain new members? Under 30 30-39 40-49 50-59 60.ove,1_v_ Member; N342 N397 N895 N393 N365 Ho1d back refunds 38.1 43.3 41.1 41.9 30.8 8011 memberships 57.1 53.5 50.5 49.5 49.2 Both ... ... 2.1 3.2 6.3 Don't know 5.8 3,; 9,3 5,4 l3.§ 100 .0 100 .0 100 .0 100 .0 100 .0 W N314 N319 N821 N334 N325 Hold back refunds 14.3 36.8 23.8 12.5 8.0 Bell memberships 78.6 57. 9 52.4 75.0 64.0 Both .0. 5.3 9.5 .00 .0. Don' ‘3 in" .....17 ....u. 15.2 1.34.5. 3.121 Total 100 .0 100 .0 100 .0 100 .0 100 .0 to 52.4 percent (a difference of 26.2 percent) in favor of selling direct- ly. Ihen comparing the responses of the '30-39' and "60 and over” groups, the chi-square test indicates significance for the non-members but not for the members, The “30-39" age group was most favorable to holding back the refunds. 'The ‘60 and over” group for both members and non-mem- bers had the smallest prOportion in favor of holding back refunds. Only eight percent of the non-members in this group want their refunds held 97 back. This small percentage, however, is probably affected by the fact that as many as 28 percent of this age group were unable to decide which method was best. he significance brought out by Table 36 is not so much due to vari- ations betwaen the responses of ”hold back refunds" and "sell member- ships“ of different age groups (both for members and non-members) as it is tovariations between farmers having a definite opinion one way or another and those having no cpinion. If the ”don't know” groups had been left out of the percentage computations, there would remain no sigiifi- cant trend from young to old. Consequently, we cannot conclude that there is any definite correlation between age and favorableness to the method of holding back refunds. (c) is; g; m. Farmers operating the larger farms ("big" farmers) were found to be much more favorable to the use of the method of hold- ing back refunds than were the farmers Operating small farms (”mall" farmers). a. indicated in Table 37, 45.3 percent of the farmers Oper- ating farms of 200 acres and over favor this method. Only 19.4 percent of the farmers operating less than 50 acres favor having their refmtds withheld. (This relates to the findings on membership status, inasmuch as a greater proportion of the small farmers are non-members than is true for big farmers. This raises the question of which factor weighs . heavier, membership status or size of farm operated. A separate break- down of members and non-members on the basis of size of farms revealed that size of farm significantly affected both members and non-members, although non-members were affected somewhat more than members by this factor. These data, therefore, seem to indicate that a member is somewhat more likely to favor stock refunds because he is a bigger 98 tamer, rather then because of his membership status. The factors of size of farm and amount of business done are high- 1y correlated, and, as would be expected, it was discovered that those farmers doing more business were somewhat more favorable to the use of the method of holding back refunds than were farmers who do only Table 37. Percentage distribution of farmers by size of farm operated by opinion on how new members should be obtained. ‘ Acre 0 ate Less 200 How obtain new members? than 50 50-99 loo-199 and over - , N893 N3] fl N8] 21 N886 Ball memberships 61.3 53.8 53.8 51.2 Both 6.4 2.8 1.2 ... Don't know 3,2,9 _hg 9,9 3,5 Total 100.0 100.0 100 .0 100.0 mall amounts of business. ansll farmers are more likely to need each little cash advantage, and therefore are more apt to prefer their re- funds in cash. (d) .112. _9_f_ coomrative_a member. As shown in Table 38, consider- able variations exist between different types of cooperatives in regards to members' favorableness toward the practice of withholding refunds frm non-members. 0f the elevator cooperatives, 44.3 percent _of the mem- berships favored holding back the refunds, while 48.9 percent favored selling manberships directly to the non-members. At the other and of the extremes were the members of the livestock coOperatives, with 25.3 percent favoring holding back the refunds and 68.4 percent preferring the practice of selling shares directly. The proportions of members 99 able 38. Porcerntage distribution of “aware” members“ by type of co- operative a member by opinion on how new members should be obtained. Iive- Eleva- A fit . stock tor do Milk 8: 011 a: mktg. 8: How obtain new members? mktg. supply cream gas supply Nags B18291 N383 N=35 N304 Hold back refunds 25.3 44.3 41.0 37.1 31.8 Sell memberships 68.4 48.9 55.4 48.6 54.7 Bath 1.0 8.7 .0. .0. 106 Don't know 3,3 5,1 3,6 11,3 12,§ Total 100 .0 100 .0 100 .0 100 .0 100 .0 fits: A member may have memberships in more than one type of cooperative. responding similarly in the oil and gas, fruit, and milk and cream coop- eratives fell in between these two extremes. In. the case of the oil and gas, and fruit cooperatives, somewhat greater proportions (14.3 percent and 18.3 percent, respectively} were unable to decide which practice was best. The net effect of these groups was to reduce the percentages in favor of holding back refunds and selling memberships directly. (e) Attendance 3,; meetings. The frequency with which members attend the cooperative meetings appears to have a significant influence on the responses to the question of whether new members should be obtained through the practice of issuing share dividends. As indicated in Table 39, 49.1 percent of the members who attend most of the meetings be- lieve that it is best to hold back the refunds. Of those who attend a . few of the meetings, 37 percent agreed. Only 33.3 percent of those munbers who never attend meetings approve of holding back refunds. Most cooperative leaders advocate the use of the method of issuing share div- idends to non-members, and have probably influenced members' opinions by having urged the acceptance of this method through the medium of 100 Table 39. Percentage distribution of "aware” members by frequency of attendance at cooperative meetings, by opinion on how new members should be obtained. Most Few None How obtain new members? of them of them of them Ne;_55 31190 N096 Hold back refunds 49.1 37.0 33.3 Sell memberships 43.2 56.0 55.8 Both 1.9 3.9 4.2 Dm't know 5.8 3.0 7,3 Total 100 .0 100 .O 100 .0 meetings with the cOOperative members. (f) Reasons £93. Joining. Each "aware” member was asked to indicate the reason he had for joining each cooperative of which he was a member. Some indicated reasons which can be classified under the general head- ing of ”better financial returns". Some became members because they inherited shares of stock from a-father or other relative. A substantial number automatically became members by receiving patronage dividends in the form of shares of stock. A few gave as their reason that they Join- ed upon being asked directly. Others gave as reasons that they liked the idea of cooperation, thought it was a convenient place to trade, etc. By dividing these members into groups according to their reasons for Joining a cOOperative, some pertinent results can be observed with respect to the question of how members should be obtained. Table 40 presents the responses to the question on this basis. It may be said of those who Joined because of inheritance or share refunds that they did not Join on their own initiative. If any farmers were ”forced” to join, these were the ones. It is therefore important to note that these members were most favorable to the practice of holding back the 101 Table 40. Percentage distribution of "aware" members by reasons for joining by cpinion on how new members should be obtained. Reftmds Better Was Inheri- in financial asked All How obtain new members? tance shares returns to join others" N325 N=E28 N3; 29 Na! 5 Hz: fig Hold back refunds 52.0 50 .8 42.6 28.6 35.2 3.11 mmr.h1p3 48.0 ‘5e3 45.0 “e3 52s]. BOth see 1.6 3e]. eee 4e2 Don't know ,., 2,3 9.3 7,1 8,5 Total 100 .0 100 .0 100 .0 100 .0 100 .0 raced idea to cooperate, because others did, convenience, co-ops were honest, etc. refunds. Q: the surface this may appear to be paradoxical. It might have been expected that those who were "forced" to join would most re- sent the practice which ”forced” them to Join. Apparently this is not true. ' The explanation which seems most logical is this: It is quite prob- able that, when asked this question, the members imediately recalled to mind the method by which they became members. It is also probable that the opinions of many members on this question are not strongly held. That is, they are only mildly in favor, or opposed to, a given practice. Therefore, when an opinion is not strongly held, it is possible that a member may be more influenced by the psychological factor of thinking that "what turned out good for me should also turn out good for others." At any rate, the results of this survey would seem to disprove any idea that those who were ”forced" to Join are more likely to harbor resent- ment toward the cooperative, and specifically toward the practice through which they became members, than those who joined of their own free will. ‘lhe foregoing was designed to provide an explanation for the 102 differences between the various groups. It does not explain the fact that nearly one-half of those who were "forced" to Join were unfavor- able toward the practice by which they became members. This fact must not be lost sight of. The fact that 45.3 percent of those who became members through patronage refunds repudiate that method is, of itself, a Judgmnt against the practice. This is strengthened by the fact that 64.3 percent of those who were asked to Join favor the method of becom- ing members through direct selling. It is also interesting to note that, of the 42 "unaware" members in the sample, 66.7 percent favored the method of selling memberships direct- ly. Twenty-three and eight-tenths percent favored the method of holding back refunds. Although their reasons for Joining were not obtained, it is probable that in most cases they became members through patronage refunds paid in shares of stock. This "xmaware" group of members, there- fore, present a relatively strong opposition to holding back cash re- funds. (a) m. Each farmer was asked for his opinion on which method of taking in new members is better, holding back the reftmds and issuing shares of stock to non-members, or selling shares directly to non-mem- bers. Approximately one-third replied "hold back the refunds." Over one-half favored selling memberships directly. Members favored hold- ~ ing back refunds in significantly greater proportions than non-members. Those who attend meetings were more favorable to this practice than were those who never attend meetings. Elevator cooperative members we more in favor of holding back refunds than members of other types of cooperatives. The larger a man's farm the more apt he was to favor withholding refunds. Those who become members by receiving patronage 103 shares were more favorable to this practice, while those who were sold shares directly were most in favor of direct sales to non-members. In addition, Farm Bureau members were found to favor holding back refunds in significantly greater proportions than those who were not members of the Farm Bureau. Officers were more favorable to this prac- tice than non-officers, although the difference was not quite suffi- cient .to be significant. Older farmers were found to differ signifi- cantly from younger farmers only from the standpoint that the older farmers much more frequently had no opinion on the question. The fac- tors of education, length of membership, and tenure status were found to have no influence on the responses to the question. The important fact brought out by the replies to this question is that a majority of the farmers do not favor the practice of withholding cesh- dividends from non-members and paying them in stock. This attitude runs counter to the beliefs and practice of many cooperative leaders. Two main reasons are usually given in favor of issuing stock dividends to non-members. In the first place, it increases the proportion of patrons who are members. Secondly, it facilitates building up member- ship without involving the time and expense which would be required in making personal calls on non-members to solicit their membership. The main disadvantage in the practice is that frequently persons are brought into the association who do not make good cooperators. This V may be particularly true of those who are independent by nature and do not wish to Join. The case of l‘ulton Lewis, Jr. is of interest in this connection.5 By virtue of having traded at a Maryland cooperative, 5. Angus McDonald, "Fulton Iewis Jr. and the Coops", £91 Ramblic, Sept. 8, 1947, p. 32. 104 Lewis became a member of the Southern States Cooperative through share refunds. In several of his radio broadcasts during 1947, Lewis attacked cooperatives, using as one of his main points of argument the fact that he had been forced to join the cooperative by having cash refunds with- held from him. Another case in point is that of the cOOperative Grange League Federation Exchange, Inc., of Ithaca, New York. At its annual meeting in October, 1947, this organization voted to abandon the practice of paying dividends to non-members. The main reasons given for this action was that membership should be voluntary, and that the practice of issu- ing share dividends to non-members had brought into the cooperative thousands of persons having no particular interest or desire to be classed as members. The action was taken even at the expense of losing exemption from federal income taxes.6 In view of the fact that a majority of farmers feel it is best to get new members by gelling them shares directly, it may be better for é- cooperatives if they would spend the extra time and expense needed to contact non-members directly, and thereby encourage them to join of their own free will. Robotka cements on this point by saying that: There is danger in automatically making members of all those who may happen to patronize the organization. Liembership thrust upon patrons does not automatically make cooperators of them. coOpera- tive success depends upon intelligent, voluntary participation of members in the attainment of predetermined objectives. Patrons cannot be expected to rise to such a status without some discussion of such objectives and of the responsibilities which membership en- tails. 6. James A. McConnell, "Three Long-Range G.L.F. Policies" Mi: flmiculturist, November 15, 1947, p. 2. 7. Frank Robotka, Membership Problems and Relationships _i_n Iowa Farmers' Elevators, p. 152. CEAPTERVI FACTORS INFLUEVCING OPINIONS REGARDEJG GEE PRINCIPE 0F BUYDTG AND SEIIING AT MARKET PRICES Throughout the years coOperatives have found it important to avoid price were with non-coOperative enterprises which compete with them. As was pointed out in Chapter II, the history of cooperation is filled with instances where cooperative failures can be attributed, either in whole or in part, to the failure to observe the principle of buying and selling at market prices. Not only does this practice tend to avoid price were but it also enables the cooperative to operate on a broader margin between income and expenses. A cooperative must have sufficient margin notonly to cover costs, but also to build up reserves as a pro- tection against unforseen difficulties which might arise. Under normal conditions a cooperative will also earn an additional amount which may be returned to the patrons in the form of dividends. Those who do not understand the importance of this principle fre- quently inquire whys coOperative should accrue these additional earn- ings which are returned to the patrons. Why not give the price advantage to the patrons imediately and incidentally avoid the extra bookkeep- ing which dividends require, they ask. coOperative leaders frequently find it necessary to give farmers the answer to these questions. 1. Shole coomratives m a_n_d_ 533,], at market Eices? Each farmer interviewed was asked this question in the following form: Do you feel that farm supply co-Ops should make it a general practice to sell at lower prices in the first place rather than give refunds later? 106 The replies to this question should provide a measure of the extent of understanding which farmers in the sample areas have of the principle under consideration. (a) membership status. Thirty-four and seven-tenths percent of the farmers interviewed replied to the question in the affirmative, 59.3 percent in the negative (Table 41). Six percent replied ”don't know". Table 41. Percentage distribution of farmers by membership status by opinion on whether cooperatives should sell at lower prices or give refunds. Question ‘Tbtal 'Mambers Nondmembers and replies ‘Nté99 ‘N8394 N3105 Should co-ops sell at lower prices rather than give refunds? ‘YCI 54.7 31a0 48.6 NO 59.3 63.4 43.8 Dm't know 9:9 539 2'9 Total 100.0 100.0 100.0 ' Apparently one-third of the farmers do not understand the importance of the principle of selling at market prices. Mbmmers differ significantly from.non¢members in their opinions on this question. Sixty-three and four-tenths percent of the members agree ‘with the principle, whereas only 43.8 percent of the nondmembers agree. There are understandable reasons for this marked difference. If a co- operative sells at market prices and does not pay patronage dividends to the nondmamber patrons, the nondmembars receive no price advantage through dealhng with the cooperative. If a.non¢memher patron does not :receive patronage dividends, he is, of course, interested in getting his supplies at the lowest price possible. If he does not have the in- terest_of the cooperative at heart he could not be expected to favor 107 the principle. 0n the other hand, members sooner or later will receive the price advantage regardless 'of whether prices are higher or lower in the first place. Apparently 31 percent of the members do not real- ise this, for they seem to see something desirable in getting an immedi- ate price advantage. This feeling may be acquired by members who never receive cash dividends, and, possibly viewing their patronage shares as more pieces of paper, tend to look for the price advantage wherever it is most likely to be had. Owing to circumstances, self-interested members and self-interested non-members can both find monetary reasons for opposing the principle. It is likely, then, that the difference in responses between members and non-members is largely due to members' better understanding of the importance of the principle. This comes about through participation, attendance at meetings, and reading cooperative literature. (b) 551123912; business m. The factor of amount of business done with cooperatives was found to have a significant effect on the opinions of the farmers with respect to the question of lower prices versus re- funds. Table 42 reveals a general trend from those groups doing less business to those groups doing greater amounts of business. Those doing more business registered greater proportions in favor of the principle of selling at market prices and giving refunds. The range of percent- ages in favor of the principle ran from 38.5 for the "less than 3100” group to 74.0 for the "$3000 and over” group. Fifteen and four-tenths percent of the "less than 3100" group registered no opinion, a fact which tended to reduce the percentages of those having an cpinion. In general, the trend resulting frm the factor of amount of busi- ness done reflects the trend found on the basis of membership status. 108 Table 48. Percentage distribution of farmers by amount of business done with cOOperatives by opinion on whether cooperatives should sell at lower prices in the first place or give re- funds later. I... then 3100- 3500- 31000- 32000- $3000 Question $100 $499 $999 $1999 $2999 &.ovcr and replies N865 N:§" ; N329 Nam =57 N=96 Should cc-ops sell at lower prices rather than give refunds? Y.’ 46s]. 39.5 41e1 32.7 26.3 23e9 NO 58.5 53.1 53.5 61.8 73.7 74.0 Don't know 115.4 7:4 6:0 5g§ 3:: 2:]. Total 100 .O 100 .0 100 .0 100 .0 100 .0 100 .0 he percentage variation is somewhat greater for the amount-of-business factor, which suggests that the factor of amomt .of business brings additional weight to the variation already present due to the factor of member ship status. (c) 533. Substantial variations were found to exist between the various age groups in regard to the cpinions on the principle of selling at market prices. 'Table 43 gives the percentage distribution by age and by membership status. With respect to the members the oldest and youngest groups appear to give the principle the greatest support, with percentages of 69.2 and 66.7 respectively. The "40-49" age group was the least favorable to the principle, with a percentage of 58.9. A1- though these percentage differences are substantial, they are not sufficient to indicate significance. The non-members reacted to the question in a considerably different manner. The young non-members favored the principle in significantly greater proportion than the older group. Less than one-third of the non-members aged so years and older support the principle. 109 Table 43. Percentage distribution of farmers by age by membership status and by opinion on whether cOOperatives should \sell at lower prices or give refmds. e Qpestion and replies Under 30 30-59 Q49 50-59 60.ove_r_ Should co-Ops sell at Members lower prices rather N=42 Nggg N895 N895 N865 than give refunds? Yes 23.8 29.6 55.8 35.5 25.1 No 66.7 65.5 58.9 61.5 69.2 Don't know 9,5 5,1 5.3 5,2 7.7 Total 100 .0 100 .0 100 .0 100 .0 100 .0 Non-member! :13 ms; 9 Neg; N122 11:25 Yes 28.6 47.4 47.6 54.2 60.0 No 50.0 52.6 52.4 35.5 52.0 Dm't know 21,4 ,,, ,,, 2 5 8,9 Tatal 100 e0 100 e0 100 so 100 e0 10° .0 W the middle-aged members are the "weakest links in the chain" is not clear. It may be that sampling error has somewhat distorted the picture. The non-member differences are more easily understood. The younger members tend to have more education and they do more business with cOOperatives, both of which are shown to affect more favorable cpinions toward the principle. (6) Education. Presented in Table 44 is the percentage distribution for all the sample farmers on the basis of the number of years of school- ing completed. With a percentage of 64.1, the high school group appears to be most favorable to the principle of selling at market prices. Only 50 percent of the college group favor the principle. Due to the lack of significance between these sample percentages, and the smallness of the college group, it would be inadvisable to make generalizations 110 Table 44. Parcentage distribution of farmers by years of schooling canplcted by cpinion on whether cooperatives should sell at lower prices or give refunds. Yegp of gchooling completed Eight or Nine to More than Question and replies less twelve twelve INT-523 III-142 N828 Eould co-ops sell at lower prices rather than give refunds? Yes 35.9 51.0 42.9 No 57.6 64.1 50.0 M't know 635 4e9 7e; Total 100 .0 100 .0 100 .0 fras these data. (e) Attendance 3; meetings. Favorableness toward the principle of selling at market prices was found to be related to attendance at coop- erative meetings. Table 45 shows that 68.4 percent of those who attend most meetings, 66.5 percent of those who attend a few of the meetings, and 55.2 percent of those who attend no meetings favor the principle. Although the percentage differences are not great enough to be sig- nificant, the sample drawn indicates that attendance at meetings did have a favorable effect upon the members. Those who attended most Table 45. Percentage distribution of "aware” members by frequency of attendance at meetings by opinion on whether cooperatives should sell at lower prices or give refunds. Most of Few of fione of Questions and replies than them them 5155 N8101 N396 Should co-ops sell at lower prices rather than give refunds? YO. 29.0 28e7 36e5 No 68.4 66.3 55.2 Don't know 3,9 5.9 8.3 Total 100 .0 100 .0 100 .0 111 regularly had the best understanding of the importance of the prin- inlOe (f) m. lIhe factors of membership status, amount of business done, and age were found to significantly affect the opinions of farmers regarding the principle of selling at market prices and giving the earn- ings back in the form of refunds. Members, farmers doing large amounts of business, and young non-members were found to favor the principle in greater proportions than non-members, farmers doing small amounts of business, and older non-members. Members grouped according to age were not found to differ greatly in opinions. Although the differences were not significant, the high school group was found to favor the principle in greater prOportion than the grade school and college groups. Members who attend meetings were more favorable to the principle than members who do not attend meetings. In addition, two other factors were discovered to affect the opinion re- sponses, although not significantly. Officers were more favorable than non-officers, and Farm Bureau members, than those not members of the Farm Bureau. No significant difference was found between the responses of mmbers of different types of cooperatives. Length of membership did not appreciably affect Opinion responses. . The fact that nearly one-third of the members interviewed have not . come to a full knowledge and understanding of the importance of this principle should_be a concern to cooperative leaders. As long as these persons do not favor the principle they will be a constant source of harmful criticism. They will tend to berate the coOperative for not selling supplies at lower prices than other businesses. Or they may frequently patronize other businesses whenever they find they can 112 obtain a slightly greater immediate price advantage. It should not be overlooked that the payment of dividends has a desirable effect upon the morale of the members, and non-members as well. Robotba shows in his study of Iowa elevators that the payment of patron- age dividends tends to be associated with large patronage and large mem- bership. He believes that a price advantage at the time of sale or purchase is soon forgotten by the member or is regarded by him as Justly due him anyway, but the amount received as patronage dividends consti- tutes a tangible measure of the real benefit of the cooperative to the MMel 1. RobotkaTgp. cit., p. 182 CHAPTERVII FACTORS INFLUE‘TCEIG OPINICNS (N MING? POLICIES AND PRACTI 0E3 1. Qpinions regarding officer! Farmers, and farm groups, have frequently been found to exhibit a rather hostile attitude toward non-agricultural businesses. This may be, in part, a carry-over from the attitudes of the late nineteenth century when agriculture found itself crusading against the so-called ”evils” of the “big" businesses. More recently, however, cooperatives themselves have experienced Opposition from several corners. Associa- tions of mall businessmen have exerted pressure against cooperative enterprises. Chain stores have likewise apposed cooperatives. As a result of this opposition from competing businesses, farmers frequently have assumed a position of isolation with respect to other businesses. Some farmers feel that the officers of cooperatives should not affiliate with a local Chamber of Comroe or businessmen's club. Others feel that such association would tend to better relations between cooperatives and non-cooperative businesses. Some farmers feel that a man without farm experience cannot fully appreciate the farmer's posi-. tion and therefore should not become a manager or officer in a coopera- tive. Other farmers point to cases where cooperatives have been very successfully managed by men who had little or no farm experience. Two questions were asked in an attempt to measure the ”isolationist” feeling of farmers in the sample toward other businessmen. The first question asked of each farmer was: ”Ingeneral, do you feel that the managers of co-ops should have farm backgrounds, or not?” The second 114 question was: ”In general, do you feel that managers or officers of co-ops should belong to local business or service clubs, or not?” The opinion responses to these two questions are analysed below. (a) Egbership stptug. 0f the 499 farmers giving answers to the first question, 78.8 percent said that managers should have farm back- gromid (Table 46). Twenty and two-tenths percent would not require Table 46. Percentage distribution of farmers by membership status and by opinion on policies regarding cooperative officers. Non... Questions Total Members members 2d replies N399 N-595 N=LQ4 Should managers have farm backgounds? YO. 78.8 77e2 85e5 No 33.8 21.8 15.5 Don't know _1,9_ 1,0 1,9 Total 100 .0 100 .0 100 .0 Should managers and officers belong to business clubs? Yes 74.2 74.8 72.1 No 15.9 14.0 15.5 Don't m. mm mm 1.4.4. Total 100.0 100 .0 100 .0 managers to have farm backgrounds, and one percent were undecided. Ap. parently there is a strong feeling that a farm background is a prime requisite for successful cooperative management. The twenty percent who I differ would probably choose as manager one who had a farm background in preference to one who had not had a farm background, all other things being equal- All other things are usually not equal, however, and this twenty percent would probably choose the one with the non-farm back- ground if he had the better personality and business acumen. 115 In reply to the second question, 74.8 percent of the farmers felt that managers and officers should belong to local businessmen‘s clubs. Thirteen and nine-tenths percent were apposed, and 11.9 percent were undecided. In general, the greatest difference in the replies to the two questions lies in the number who did not have a definite cpinion one way or the other. Among the sample farmers, the feeling that coopera- tives should isolate themselves from association with other'businesses apparently is very limited. Non-members were found to be more strongly in favor of requiring managers to have farm backgrounds than were members. Whereas only 77.2 percent of the members favored such a requirement, 85.5 percent of the non-members held that opinion. This no doubt reflects a more independ- ent, less tolerant attitude on the' part of non-members. A farmer who does not wish to cosperate with fellow farmers to the extent of Joining a cocperatiwe might also be expected to have a less cocperative attitude towards the non-farmer. Iith respect to the question of whether officers should affiliate with businessmen's clubs, members and non-members were in essential agree- mte (b) 55;. The factor of age was found to have a slight effect on the responses to these questions, as revealed in hble 47. Larger prcpcrticns . of the 30-59 and 40-49 age groups (83.8 and 81.2 percents respectively) felt that managers should have farm backgrounds. In contrast, 71.4 per- cent or the “under 30" group and 74.5 percent of the "so and over" group held the same opinion. the prcpcrticns by age groups favoring cooperative officers being members of business clubs varied only slightly. The younger groups 116 Table 47. Percentage distribution of farmers by age by opinion on policies regarding cooperative officers. Questions Under 30 150-39 40-49 50-59 00 ,over and replies N-ga H.317 Ne] 17 Nelle ngo Should managers have farm backgrounds? YOI 71.4 83.8 81.2 79.5 74.5 NC 86.8 16.2 17e9 20.7 22.2 Don't know 1.8 ,,, 9.9 ,,, 3:3 Total 100 .0 100 .0 100 .0 100 .0 100 .0 Should managers and officers belong to business clubs? Yes ' 73.2 77.6 74.1 71.3 73.3 No 10.1 15.5 13.8 14.8 10.0 Don't know 19,7 §,9 12,1 13.9 16.7 Total 100 .0 100 .0 100.0 100.0 100 .O appear to have been a bit more opposed to officers affiliating with busi- ness clubs. In general, the factor of age had no significant effect on the responses given by the farmers in the sample. (c) Education. The factor of education was found to have a signifi- cant effect on the responses to the second question but not to the first (Table 48). Although the farmers with college education, with a propor- tion of 71.4 percent, were less favorable to restricting managers to persons with farm experience, the difference was not significant. Farm- ers with college training were substantially more favorable to the idea that cooperative officers should belong to business clubs than were farmers with less years of schooling. Part of the difference, however, was due to the fact that 12.8 percent of the grade school level and 11.3 percent of the high school level groups expressed no opinion either We 117 Table 48. Percentage distribution of farmers by number of years of schooling by opinion on policies regarding cooperative offi- 001‘s. fight or Fine to More than Questions less twelve twelve Ind replies N3523 N3142 N388 Should managers have farm backgrounds? Yes 79.6 78.9 71.4 No 19.5 3L4 25.0 Didn't know 0,9 0,2 5.6 Total 100.0 100.0 100.0 Should managers and officers belong to business clubs? Yes 70.9 78.1 89.25 NO 16.13 10.6 7e]. Don't know 1&8 1.1.5 5.9 Total 100 .o 100 .o 100 .o (a) m 9; business m. Those farmers doing more than $2000 worth of business annually were found to be somewhat more likely to accept as cooperative manager one who has not had a farm background. Table 49 reveals that 73.2 percent of the "tacos-$2999" group and ems percent of the “$5000 and over“ group felt that managers should have farm backgrounds, whereas the percentages for the younger groups were 78.4, 85.2, 78.9, and 85.6. The factor of membership status had some effect on these percentages, since the groups doing a large amount of business contained very few non-members. It can be assmned that the members doing the most business were most likely to favorably receive a “non-farmer" as manager. The factor of amount of business done had very little influence on the responses to the second question. The "less than $100" group, con- taining a large proportion of non-members, had a smaller percentage in favor of officers affiliating with business clubs, but this difference 118 Table 49. Percentage distribution of farmers by amount of business done with cooperatives by opinion on policies regarding coOpera- tive officers. Less than $100- $500- $1000- $2000. 83000 Questions #100 $499 $999 $1999 $2999 a over and replies N865 Nag; N390 N-‘llll N856 N896 Should managers have farm backgrounds? YOI 78.4 85.8 78.9 85.0 73.3 69.8 NO 18.5 13.0 ”.0 14.4 25.0 30.2 Dan't kDOI 331 1.2 ;:1 pp: ;e8 opp Total 100 .0 100 .0 100 .0 100 .0 100 .0 100 .0 Should officers be- lag to business clubs? mus “- YOB 05.6 76.0 70.7 70.9 80.0 76.0 NC 15e0 8.6 12.2 ~15e5 12s? 17e7 Don't know 18,8 14,8 3.1,; 154 2,5 9,5 Total 100 .0 100 .0 100 .0 100 .0 100 .0 100 .0 is probably due to the increased percentage of those having. no opinion. (e) m. Approximately three out of four farmers in the sample thought that cooperative managers should have farm backgrounds. Al- though the difference was not significant, members were not as strongly in favor of this policy as were non-members. The factors of age and education were found not significantly to affect the responses to this question. Those farmers doing large amounts of business were less in favor of demanding that managers have farm backgrounds than were those doing small amounts of business. Data not presented herein indicated that the members of milk and cream and livestock marketing coOperatives were less in favor of restricting managerShips to men with farm back- grounds than were members of the oil and gas and fruit marketing and supply cooperatives. The former were represented by percentages of 67.5 and 66.5 respectively, and the latter by percentages of 88.9 and 87.7 119 respectively. Members of elevator cooperatives fell in between with a percentage of 77.0. Three out of four farmers were of the cpinion that managers and officers should belong to local business clubs. Cements made by many farmers, however, indicated that they held no strong opinion on the ques- tion. Their position is best represented by the attitude of indifference concerning whether the manager or officer was, or was not, affiliated with a business club. Education was the only factor affecting signifi- cantly the responses to this question. Those with more years of school- ing favored the policy of officers affiliating with business clubs in greater proportions than those with less schooling. 2. Shoulg cOOperative earnings _bg taxed? The right of qualified associations to establish exemption from Federal income and other Federal taxes is an important right accorded cooperatives by Federal law. A Federal corporate tax law as early as 1898 stated that the tax did not apply to agricultural organizations op— erated only for the mutual benefit of members. The Income Tax law of 1916 also exempted farmer coOperativas. These exemptions have been con- tinued and made clearer in the income tax laws which are in effect to- duel . The favorable position of coOperatives relative to the tax situ- ' ation has long been the subject of controversy. Other forms of business enterprises feel they are discriminated against-«that tax exemption gives to cooperatives an unfair competitive advantage. More recently the l. T. G. Stitts and I. 0. Weldon, égpicultural Coopgration and National Legislation, Farm Credit Administration, Washington, 13.0., p. 8. 120 National Tax Equality Association has conducted a coordinated campaign to have these exemptions removed. Tex exemption for cooperatives is supported on the basis of the as- sumption that cooperative earnings are not profits, but represent balances due the patrons on the business they did with the cOOperative. Except for the desirability of maintaining an cperating margin of safety, these comings might have been given to the patron as a price advantage at the time of each transaction. The farmer must realize this fundamental nature of the cooperative enterprise, or he will probably not \mderstand the reasons for tax exemption. Not understanding the reasons, he will likely not support a tax exemption program for cooperatives except it be for sol- fish reasons alone. Concerning the tax issue, two questions were asked each farmer inter- viewed. The first question asked was: A business which pays out its earnings only to stockholders has to pay an income tax on these dividends to stockholders. If a co-op pays refunds to members on the basis of patronage do you think it should be required to m an income tax on these refunds? The second question asked was: A business which holds back some of its earnings to build up the business has to pay an income tax on the money it holds back. Do you think that a co-op should be taxed on the earnings it holds back if each patron's share of it is recorded on the books? The responses to these questions are given in the following para- graphs. (a) Membership 238311.510 0f the total number of farmers answering the first question, 84.8 percent were of the opinion that cooperatives should not be taxed on the refunds paid to patrons (Table 50). Eleven percent thought refunds should be taxed, and 4.2 percent did not know which was best. Sixty-five and two-tenths percent of the farmers felt 121 Table 50. Percentage distribution of farmers by membership status by cpinions on the tax issue. Non- Questions Total Members ' members and replies Ns499 N3595 H.104 Should refunds be taxed? Yes 11.0 10.1 14.4 No 84.8 85.5 78.9 Don't now 4.2 5.6 6.7 Total 100 .0 100 .0 100 .0 Should earnings withheld be taxed? Yes 25.8 22.8 27.6 NC 65.2 67s§ 58e1 Don't know M 9,9 14,5 Total 100 .0 100 .0 100 .0 that earnings withheld (hereafter referred to as ”capital retains”) should not be taxed. Nearly one fourth of the farmers would favor taxing" capital retains, while 10.8 percent had not decided either way. These replies indicate that the farmers are not as much opposed to taxing capital retains as to taxing refunds. One out of four would tax capital retains, whereas only one out of ten favor taxing refunds. A somewhat larger proportion of the farmers were not able to formulate an opinion on the question of taxing capital retains than was true for the question of taxing refunds. Apparently the issue of taxing refunds is more familiar with farmers than is the issue of taxing capital retains. Members and non-members differed little on the issue of taxation. As compared with members, a greater proportion of non-members replied "don‘t know“ to both questions. The percentage differences that do exist between members and non-members show that non-members were less favorable to tax exemption than were members. (b) m 91 business dgpe. Table 51 reveals some rather irregular 122 Table 51. Percentage distribution of farmers by amount of business done by cpinions on the tax issue. Less than 9100- (5500- 01000- $2000- 703000 Questions $100 $499 $999 $1999 $2999 a over and replies N=65 N=81 N=90 113111 19:51 N=96 Should refunds be taxed? Yes 9.4 14.8 15.5 7.2 21.1 5.2 No 81.2 77.8 85.4 91.0 77.2 91.7 Don't know 9.4 7,4 5,5 1,8 1,1 5,1 Total 100.0 100.0 100.0 100.0 100.0 100.0 Should capital retains be taxed? lbs 24.6 19.8 52.2 22.5 28.1 17.9 No 55.4 65.4 61.1 71.2 64.9 69.5 Don't know 20,0 14.8 6,7 9,5 7,0 12.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 percentage differences between groups based on amount of business done ‘with cOOperatives the previous year. The ”51000-31999" and "$5000 and over“ groups were the most Opposed to taxes on refunds, with percentages of 91.0 and 91.7 respectively. These two groups were also most opposed to taxes on capital retains. By way of contrast, the "taboo-$2999" group was least opposed to taxing refunds, with a percentage of 77.2. The "less than 8100" group was least opposed to taxing capital retains, with a percentage of 55.4. This figure is lowered, however, by the effect of the large proportion (20.0 percent) of this group who replied "don't know‘. There seems to be no direct relation between amount of business done and opinion on the tax issue. The groups doing the least business and the group doing the most business had the largest prcpcrticns replying “don't know'. It is probable that those doing little business have no opinion because they are not enough aware of the issue. Those of the group doing the most business having no cpinion may be well aware of the 125 issue, but possibly are confused as to whether cooperatives should ask for tax exemption. This viewpoint is, of course, hypothetical and not supported by evidence. (c) e. In general, the factor of age was found to have no sig- nificant influence on the responses to questions concerning the tax issue. Those farmers from 50 to 59 years of age were somewhat more favor- able than other age groups to exemption from taxes on refunds. Concerning the question of taxing capital retains, the youngest farm- ers and the oldest farmers were more favorable to tax exemption than were the middle-aged groups. The percentage differences were not great, how- "01'. (d) Education. The factor of education was found to significantly affect the responses to the question of taxing refunds. Table 52 reveals that 85.5 percent of those with eight or less years of schooling believe that refunds should not be taxed. Eighty-five and nine-tenths percent Table 52. Percentage distribution of farmers by years of schooling com- pleted by opinions on the tax issue. Eight or Nine to More than Questions less twelve twelve 0 re lie 107534 N5 5g N828 Should refunds be taxed? Y0. 11o]. 12.7 3.6 No 85.5 85.9 96.4 Don't know mg 1,5 , ,, Total 100 .0 100 .0 100 .0 Should capital retains be taxed? Y9“ 31.9 28e9 28.6 No 85.1 62.7 71.4 Dan.” “0' $3 2 8.fi ‘ee Tat“ 100 .0 100 .0 100 .0 124 of those in the high school group agreed. Of those who attended college, 96.4 percent were apposed to taxing refunds. These results suggest that farmers with college education will most strongly support tax ex- emption for cooperatives. They probably have a better understanding of the basis upon which tax exemption is founded. It was shown in Chapter IV that those with more education were most favorable to the idea that E" cooperatives are non-profit organizations. Iith a percentage of 71.4, the college group were also most opposed to taxing capital retains. The percentage differences are not great *fll". 1 "'.v";' .mv enough, however, to be significant. (e) Attendance _a_t_ meetings. Those farmers who attended meetings re- gularly opposed taxation of refunds by a percentage of 87.1. Those who attended only a few of the meetings were slightly more cpposed (92.0 per- cent) . Of those who never attended meetings, only 77.5 percent believed refunds should not be taxed. Apparently attendance at meetings has had a favorable influence on members with respect to their attitude toward the tax question. Concerning the question of whether capital retains should be taxed, a similar reaction was found. Although these who attended meetings were more opposed to taxation of capital retains than were those who never attend, the percentages differences were not quite great enough to render significance by the chi-square test. V (f) Officer statup. Table 55 reveals the responses of officers and non-officers on the question of taxation. Eighty-six and two-tenths percent of the officers, and 85.8 percent of the non-officer members, are cpposed to taxation of refunds. Six and nine-tenths percent of the 125 Table 53. Percentage distribution of ”aware” members by whether ever an officer or not, by opinions on the tax issue. Questions Officers Non-officers and replies =28 N8323 Should refunds be taxed? YO. 6.9 11.1 No 86.2 85.8 Don't know 6,9 3,1 Total 100 .0 100 .0 Should capital retains be taxed? Yes 35.7 21.7 No 60.? 68.? Don't know §,g 9,6 Total 100 .0 100 .0 officers, and 11.1 percent of the non-officers were of the opinion that refunds should be taxed. These data indicate that there is no substantial difference between the cpinions of officers and non-officers relative to taxation of refunds. It should be borne in mind that ”officers" includes not only those who are at present officers, but also those who have at some time in the past been officers. 0n the question of taxing capital retains, officers were found to be more favorable to taxation than were non-officers, although the chi-square test does not indicate significance between the percentages for the two groups. It is of major importance that over one-third of the officers indicated that capital retains should be taxed. This fact will have a . disturbing effect upon the present efforts of cooperative leaders to com- bat the legislative proposals to abolish the exemption. privileges which cooperatives enjoy. Although these officers would hardly be expected to openly attack tax exemption, they cannot be looked to as sources of strength in the present struggle. cOOperative leaders will need to do some indoctrinating at the top of the local structures before they can t ' .‘ WV" V...~[_ 126 present a united front in the legislative tax battle. (a) m. Nearly nine-tenths of the saxople farmers were of the opinion that refunds should not be taxed. Approximately two-thirds felt that capital retains should not be taxed.3 Members were slightly more favorable to tax exemption than were non-members. The factors of age, education, amount of business done, and officer status were found to have no significant effects on opinions regarding the tax questions. Officers were somewhat more favorable to taxing cap- ital retains than were non-officers. Farmers having some college edu- cation were somewhat more opposed to taxation of refunds and capital retains than were those with less education. Those who attend coopera- tive meetings were found to favor tax-free refunds in significantly greater prcpcrticns than those who attend no meetings. The opinions of Farm Bureau members on the tax question did not differ from the opinions of farmers not members of the farm Bureau. 3. Dog! _i__t_ colt 593mm join? The organization and maintenance of a cooperative enterprise re- quires a considerable outlay of cash. Some farmers, especially "small" tumors, may find it difficult to spare the money needed to join and support a cooperative venture. Although they may strongly favor the ~ venture, their own financial position may force them to delay becoming 2. 'lhese results compare favorably with the results obtained in a study of the opinions of Indiana farm families toward retail farm sup- ply stores. Replies to two questions on the tax issue, very similar to those used in this study, indicated in both instances approximately twenty percent less support for tax exemption for cooperatives thmx was found among Michigan farmers interviewed in this study, 0. H. Sandage, _‘I'h_e_ Qpinion 2; Farm m T9_w_arg Retail Farm My Stgge! 3,; Indiana, Farm Research Institute, Urbana, Illinois, December 1947. 127 a mber. The cash outlay required to become a member is in most cooperatives quite small, but not in all cases. The Farm Credit Administration, in its survey of cooperatives in the United States in 1936, reports the amounts of the initial investment required for membership in cooperatives.3 In the state of Michigan 71 percent of the 254 cooperatives reporting re- quired a minimum initial investment of $10 or less. Fifteen percent required investments of between $10 and 3100. Ten percent required in- vestments of $100 or over. Four percent required indefinite amounts of investment. In this study an attempt was made to determine if there were farmers who felt that it cost them too much to Join a cooperative. In order to determine this, the following question was asked each farmer in the sam- ple: Some famers say they can't afford to belong to a co-op because they would have to have too much money tied up in it. Do you agree with that statement, or not? . (e) Mmbership 333%. Le revealed in Table 54, 84.8 percent of the farmers did not agree that it took too much money to Join a cooperative. Seven and eight-tenths percent felt that it did cost too much, and.7.4 percent didn't know. Non-members differed quite significantly from members in their replies to this question. Slightly over half of the _ non-members felt that it does not cost too much to Join. Fifteen and two-tenths percent felt that it does cost too much, while 28.6 percent replied 'dcn't know”. The reason there is such a large proportion of "dm't know’ s“ is no doubt due to the fact that many non-members may not 3. Statistical Handbook, p. 65. 188 Table 04. Percentage distribution of farmers by membership status by cpinion on whether it costs too much to Join. Nan- Questions Total Members members and replies NEE? N8395 N8195 Does it cost too much to join? YO. 7e8 5.8 15.8 No 84e8 92e4 56.3 Don't know 7,5 1.8 928,6 TOth 100 .0 100 so 100 .0 actually lmow how much investment membership does require. No data was obtained which would indicate whether the members and non-members who were of the opinion that it cost too much to join were located near cooperatives which require a large initial investment. Such may have frequently been the case. A cooperative which wishes to obtain new members, and which requires a large initial investment, might do well to consider lowering this requirement. on the other hand, additional educative effort might in some instances convince a non-member that it really does not cost him too much, but that he will actually save money by Joni-118s (b) Mg; business 9.99.9: As would be expected, farmers reacted differently to this question according to the amount of business they am with cooperatives (Table 55). or those doing less than $100 worth of business 63.1 percent were of the opinion that Joining does not cost too much. At the other extreme were the "$5000 and over” group, 94.8 percent of which felt it does not cost too much. The other groups ranged in between. This, of course, reflects the percentage differences between members and non-members since a greater proportion of those doing anell amounts of business are non-members. 12.9 Table 55. Percentage distribution of farmers by amount of business done with cooperatives by opinion on whether it costs too much to Jone Less than 3100- 3500- 31000.. $2000- $3000 Questions $100 $400 $990 $1099 $2990 a over and replies Nzeg N88; N=e0 Nag; Nae-7 N396 Does it cost too much to join? . Yes 20.0 6.2 12.2 5.4 1.8 5.1 No 65.). 81.5 80.0 90.1 94.7 94.8 Don't know 16,9 3,2,3 2,8 4,§ 3.5 2.; Total 100 .0 100 .0 100.0 100.0 100.0 100.0 A separate breakdown of members and non-members on the basis of amount of business done revealed that neither members nor non-members were significantly affected by the factor of amount of business done. Although both members and non-members were somewhat influenced by the factor of amount of business done, the factor of membership status appeared to have the greatest influence. (c) M Bureau membership. 0n the question of whether it costs too much to Join a cOOperative, farmers were found to differ in replies according to whether or not they were members of the Farm Bureau. Table 56 reveals that 95.1 percent of the Farm Bureau members did not feel Table 56. Percentage distribution of farmers by whether or not a mem- ber of the Farm Bureau, by opinion on whether it costs too much to Join a cooperative. ' I B e ' Does it cost too much to Join? Member Non-member 51-255 Nl266 Yes 5.2 9.8 NO 93.1 , 77e8 Don't know 1,: 12.2 Total 100 .0 100 .0 150 that it costs too much to join. Of those not members, 77.8 percent a- greed. This significant difference is probably largely due to the fact that Farm Bureau membership is considerably correlated to total coopera- tive membership as determined in this study, A considerable difference does exist, however, due to the fact that many farmers are members of cooperatives but not members of the Farm Bureau. In general, it can be said that those who are members of the Farm Bureau are much more apt to realise that actually it does not cost too much to join, regardless of the initial investment required. (d) My. Only about one out of twelve farmers were of the opin- ion that it costs too much to belong to a cooperative. An equal number had no opinion, possibly because they (being largely non-members) had no knowledge of the amount of investment required to belmg to a cooper- ative. Nearly all of the cooperative members opined that membership does not cost too much. Non-members reacted quite differently, only somewhat more than half believing that membership does not require too much ini- tial investment. Over one-fourth of the non-members had no opinion on the question. The factors of amount of business done and Farm Bureau membership status were found to significantly affect the opinion responses. Those doing large amounts of business (reflecting a larger proportion of mem- bers) were nearly all of the opinion that membership costs little. A greater proportion of Farm Bureau members than of non-members held the opinion that the initial investment was not too great. The factors of age, education, attendance at meetings, length of membership, type of cooperative a member, size of farm, and tenure status 151 were found to have virtually no effect upon the responses to this ques- tion. Officers were 100 percent of the opinion that membership does not cost too much. Those members having never been officers held this opinion somewhat less strongly. In general, the variances of opinion on this question seem.to lie almost solely within the factor of member- ship status. arm VIII FACTORS INFLUENCE G FARMERS' LOYALTY TO COOPERATIVE (RGLNIZATICNS The foregoing chapters were designed to measure the general under- standing and acceptance of the principles of cooperation. A study of the extent of understanding and acceptance of these principles, however, does not accurately indicate the degree of loyalty with which farmers attach themselves to the cooperatives in their conmunities. A member may have little understanding of the principles and yet may have a strong feeling of loyalty to the organization because he has benefitted (economically through his dealings with it. Q1 the other hand, a mem- ber may have considerable knowledge of the cooperative principles but may be disloyal to the extent that he would frequently buy from another supply house if he could get an imnediate price advantage. It is important therefore that a study of farmers' attitudes to- ward the cooperative principles be supplemented with a measure of farm- ers; loyalty to coOperative enterprises. This will facilitate arriving at more accurate conclusions regarding the strength of the cooperative associations represented in this study. 1. Qgestions indicgting lcnltz Several different questions were asked each farmer interviewed in order to obtain his reactions to various aspects of loyalty. The first question asked was an attempt to measure his "dollar and cents" loyalty to supply cooperatives: Do you think that a member should continue to buy from his farm supply co-op even though prices may sometimes be a little higher than at other businesses? 133 Smewhat later in the interview, each farmer was asked a similar question concerning marketing cOOperatives: Do you think that a member should continue to sell his products through his co-op even though prices may sometimes be a little lower than at other businesses? In each case the attempt was made to get the farmer's reaction to a situation where only a minimum of price difference existed. It would not be expected that farmers would continue doing business with a coop- erative if prices were greatly out of line. The replies to these two questions were very similar. It was discovered that in most cases a ' farmer would give the same answer to both questions. A calculation was made in order to determine the degree of correlation between the replies to the questions. The method used to determine correlation was the calculation of a Tetrachorio Correlation Coefficient.1 This coefficient gives a value for qualitative distributions oomParable to the Pearsonian "r". The calculation for the tetrachorio correlation coefficient yielded a value of .857, which indicates a high degree of correlation between the responses to the two questions. Consequently it will be valid to con- cern ourselves with only the first question, since in all cases the per- centage distributions resulting from the responses to the first question were quite similar to the distributions resulting from the responses to the second question. Another question designed to determine loyalty was asked as follows: Suppose you belonged to a co-op and so many members drOpped out that the oo-op began to lose money. What do you think you would do? In half of the interviews farmers were permitted to give free re- sponses to this question. In the other half, categorized responses were 1. This method is given in Leone Chesire, Milton Saffir, and L. L. Metals, Computing Diggams for 1h; Tetrachorio Correlatigp Coeggicient, University of Chicago, 1953. 154 used as follows: 30 out and help get new members, vote to continue the co-0p but on a smaller scale, drop your own membership, or vote to dis- solve the comp. Many farmers, however, would not be forced into one of these four categories but gave free responses instead. The combined responses are presented in the tables in this chapter. A final question was asked as follows: If business were poor for a few years which do you think would be more likely to fail: a farmer-owned cooperative or a business which is not cooperative? This question was designed more specifically to measure the farm- ers' faith in the enduring qualities of a cooperative. Loyalty to an organization is to a considerable extent dependent upon the amount of faith a person has in the organization's ability to weather the storms which beat upon it. The question was asked in alternate forms, the second form asking which ”would be more likely to pull through". Alter- nate use of the two forms allowed positive and negative suggestion to offset each other in the total responses. Theresponses to the above questions, as influenced by the various factors affecting them, are given belong (a) worship statug. Table 57 records the cpinion responses to the three questions on the basis of membership status. With respect to the total sample, 61.9 percent of the farmers would continue doing busi- q ness with their cooperatives if the prices were not quite right. Thirty- seven and one-tenth percent would go elsewhere to buy. Members and non- munbers differed somewhat, although not significantly, in their replies to this question. Members indicated a somewhat greater degree of loyalty. 2. For a somewhat different treatment of these questions, plus additional aspects of loyalty, see Walter E. Book, 9p. cit., chapter VII. 155 Table 57. Percentage distribution of sample farmers by membership status by replies to questions indicating loyalty to cooperatives. Questions and replies Toty, Member; members Continue buying if 3499 N8594 N8105 prices are higher? Yes 61.9 65.7 55.2 No 57.1 55.0 44.8 Don't know 1,0 1.5 ,,. 1‘0th 100 .0 100 .0 100 .0 Ihat would you do if N=497 =592 N8105 oo-ops began to lose? , Recruit members m.8 29.5 26.7 Find 03’ c‘u‘. 20.0 me? 18s)- Stick with thank-invest more money 16.5 17.9 11.4 Drop membership 12.9 12.0 16.2 Vote to dissolve oo-op 5.2 2.8 4.8 Vote to reduce operations 5.0 6.1 4.8 Get a new manager 8.9 8.7 9.5 Miscellaneous" 2.4 2.8 1.0 Don't know M 2,9 19,5 Total” 101.5 101.3 103.0 Ihich would be more N8500 N8595 N3105 likely to fail? » Cooperative 8.6 8.4 9.5 Non-cooperative business 74.0 76.4 64.7 Either one 6.0 6.5 4.8 Don't lmow M 8,9 2;,9 Total 100 .0 100 .0 100 .0 Tincludes: reorganize, throw shares away, do nothing, etc. "Totals exceed 100 due to multiple answers. Twenty-eight and eight-tenths percent of the total number of farmers replying said they would help recruit new members if a cooperative began to lose money. Twenty percent said they would find out the cause of the trouble, 16.5 percent would stick with the cooperative to the extent of investing more memey in it, 12.9 percent said they would drop their mem- bership, and others gave various answers as noted in the table. This indicates that between one-half and two-thirds of the farmers stated that 156 they would take some agressive action to get the coOperative back on its feet. There might be some question concerning the number that would actually follow such a course if the real test came. Probably a substan- tial number of farmers would do nothing at all. In spite of this possi- bility, the data indicates that most farmers feel the necessity of keep- ing the cooperative in operation, and they would not be disposed to let it drift to insolvency. The members' replies indicated a bit more loyalty than non-members, although the percentage differences were slight. Approximately three out of four farmers believed that a cooperative would outlast a non-coOperative business in the event of poor business conditions. Six percent thought that either one might fail first, de- pmiding on other conditions. Eleven and, four-tenths percent didn't lmow which would fail first, while 8.6 percent thought that a cOOperative would be the weaker organization. Embers had more faith in the coopera- tive than non-members, with percentages of 76.4 and 64.7, respectively, believing that non-coOperative businesses would fail first. Over one- fifth of the non-members had no opinion as to which would fail first. These data suggest that probably about two-thirds of the famers interviewed can. be regarded as being loyal to their cooperatives. Non- members are apparently nearly as loyal as members. Although nearly all farmers think that cooperatives are a good thing, a substantial number would place their own particular interests above the welfare of the general cause . (b) £53. The factor of age was found to have a significant effect upm farmers' loyalty to cooperative enterprises. As revealed in Table 58, mailer proportions of the younger age groups would continue buying at the cooperative if they could buy cheaper elsewhere. Older farmers 137 Table 58. Percentage distribution of sample farmers by age by replies to questions indicating loyalty to cOOperatives. Questions and re lies Upper 50 50-59 49:5; fi50-59 60,0ver Continue buying if N356 3116 III-117 N-ll? N890 prices are higher? Yes 57.2 52e6 60.6 69.2 68.9 No 42.8 45.7 58.5 29.1 51.1 Don't know .., 1,2 9,9 1,7 ,,, Total 100 .0 100 .O 100 .0 100 .0 100 .0 Ihat would you do if co-ops began to lose? Recruit members 42.8 54.5 22.4 28.1 20.4 Find out cause 14.5 21.6 25.5 17.1 21.5 Stick with them- invest more money 14.5 15.8 17.2 17.1 19.4 Drop membership 12.5 9.5 10.5 12.0 21.5 vote to dissolve co-Op ... ... 6.9 2.6 5.4 Reduce operations 5.4 7.8 4.5 4.5 5.2 Get a new manager 7.1 9.5 8.6 12.8 5.2 Miscellaneous." . . . 2.9 5.4 5.4 1. 1 Don't lmow 5.6 2.9 5.2 2.6 4.5 Total“ 100.0 102.5 * 101.15 100.0 100.0 lhich would be more N356 N3117 3117 N8117 N890 likely to fail? Cooperative 5.4 4.5 8.5 10.5 15.5 Non-cooperative 83e9 8605 75e3 62e4 65e6 Either one 1.8 5.1 5.4 11.1 6.7 Don't know 8,2 5,5 12,8 6.2 14,; Total 100 .0 100 .0 100 .0 100 .0 100 .0 ‘ficludes: reorganize, throw shares away, do nothing, etc. "‘Totals exceed 100 due to multiple answers. apparently are more loyal. Younger farmers, in their efforts to ”get ahead in the world”, are probably less willing to sacrifice an immediate price ' advantage for the good of the general cause. If cooperatives are to main- tain the loyalty of their patrons it will be necessary for them to avoid charging higher prices than at other businesses. It is probable that many farmers, when comparing prices between cooperatives and other busi- nesses, fail to take into account the subsequent dividends they will 158 receive. Neither do they keep in mind the fact that the competition which cooperatives offer tends to keep prices in other stores in line. In reply to the question of what should be done if a co-op began to lose money, 42.8 percent of the "under 50" age group indicated that they would help recruit more members, while 12.5 percent said they would drop outof the organization. In contrast, only 30.4 percent of the "so and over" group would help recruit members, while 21.5 percent would drop out. This indicates a complete reversal of loyalty from the previous question. In this instance the yomiger farmers would lend the cooperative the most support. In response to the third question, significantly greater proportions (85.9 and 86.5 percents) of the yomiger groups evidenced greater faith in the cOOperative form of business, as compared with percentages of 62.4 and 65.6 of the two older groups. These differences are due partly to the fact that greater proportions of the older groups believed coopera- tives would fail first, and partly because more of the older farmrs replied "don't know“. In smarizing the effects of the factor of age, it might be said that the younger farmers have greater faith in the enduring qualities of the cOOperative form of business, that they are more determined to keep the cooperative going, but they are less apt to tolerate disadvantageous prices. ll'he older farmers are more willing to overlook price disadvant- ages in cooperatives, but, possibly due to cooperative failures in their emiences of the past, have less faith in the ability of coOperatives to weather financial atoms. (0) Eucgtion. The factor of education did not have sufficient influence on loyalty to indicate significance. Some variations, however, 159 did exist between the responses of different groups based on the number of years of schooling completed. Of those having not more than eight years of schooling, 65.4 percent would continue buying from a supply co- operative if the prices were a little higher. of the high school and college level groups, only 56.5 and 57.1 percent, respectively, would continue. Regarding the question of what to do if a cooperative began to lose money, a somewhat mailer proportion of the college group than of the other two groups would help recruit new members. The college group would be more apt to retain their memberships, however. The reply given most often by this group was "find out the cause”. Apparently they regard this as the necessary first step before any other action is taken. Seventy and three-tenths percent of the grade school group, 81.8 percent of the high school group, aid 75 percent of the college group believe that cooperatives will outlast non-cooperatives in the event of a business depression. A substantially greater prOportion of the college group (17.9 percent as compared with 9.5 and 5.6 for the grade school and high school groups} believe that cooperatives would be more likely to fall. (4) ppm 9; businesg 999;. The amount of business which farmers did with cocperatives did not seem to consistently affect their loyalty to the associations. Percentage differences between groups based on the amount of business done were quite erratic, and no generalizations can be made. the big farmers indicated in substantially the same proportions as small farmers their unwillingness to continue buying from a coopera- tive if prices were higher. The small farmer is imwilling because each. dollar means more to him. The big farmer is unwilling because greater 140 expenditures are involved. 111 groups indicated relatively the same willingness to help a co- operative get back on its feet if it began to lose money. on the question of which type of enterprise would be more likely to fail, the group doing less than $100 of business differed significantly from the other groups. This group had a smaller proportion believing that non-cooperatives would fail first, a larger prcpcrticn believing that cooperatives would fail first, ands larger prcpcrticn replying ”don't know". This is partly a reflection of the less faithful attitude of the non-members. (e) Attendanpg at meetings. Table 59 reveals that a member's will- ingness to forego a slight price advantage in order to support the coop- erative may be influenced by his attendance at cOOperative meetings. Seventy and four-tenths percent of those who attended most of the meet- ings, 61 percent of those who attended a few of the meetings, but only Table 59. Percentage distribution of "aware" members by frequency of attendance at meetings by replies to questions indicating loyalty to cOOperatives. Most Few None Questions of them of them of them and re lies N=l55 N310; =97 Continue buying if prices ’are higher? Yes 70.4 61.0 56.7 No 29.0 56.0 42.5 Dal't know 0,6 5.0 1,39 Total 100 .0 100 .0 100 .0 Which would be more likely to fail? cOOperative 6.5 6.9 15.4 Non-cooperative 78 . 7 79. 5 70 . 1 Either one 7e? Gog 3e]. Don't know 7.1 6.9 15.4 Total 100 .0 100 .0 100 .0 141 56.7 percent of those who attended no meetings would continue buying if prices were higher. Either the more loyal members attended the meet- ings, or attendance made members more loyal. Those who attended meetings were fomd to have more faith in the ability of a cooperative to endure a business depression. Although the percentage differences are not significant, those who never attend meet- ings had relatively more faith in the non-cOOperative business. I 01 the question of what should be done if a cooperative began to lose money, those who did not attend meetings were found to be somewhat less loyal than those who did attend meetings, although the percentage differences could have been due to chance factors in sampling. (1') Officer m. Those members who have held official positions in cooperatives were found to be significantly more loyal to coOperatives than non-officers, a condition which certainly should be expected. Table 60 reveals that 89.7 percent of those who have been officers would con- tinue to purchase supplies from a cooperative even if prices were some- what higher. This compares with only 61.5 percent for the non-officers. Ten and three-tenths percent of the officers might buy elsewhere if prices were not right, whereas 57 percent .of the non-officers would do so. If a cooperative began to lose money, the chances are greatest (by a proportion of 57.9 percent) that an officer would first of all try to determine the cause. Thirty-one percent would immediately invest more money or get more members. A total of 17.2 percent would drop out or vote to dissolve the cooperative. Thirteen and eight-tenths percent would fire the manager. If farmers can be relied upon to do what they say they would, the 142 Table 60. Percentage distribution of "aware” members by whether ever an officer or not, by replies to questions indicating loyalty to‘coOperatives. Questions Offi cers Non-offi cars and replie s =29 N-525 Continue buying if pri see are higher? Yes 89.7 61. 5 NO 10 e 3 37 .0 Don‘ t lmow : g , l. 5 Total 100 .0 100 .0 that would you do if co-op began to lose money? Recruit members 15.8 50.0 Find out cause 57.9 20.0 Stick with them-- invest more money 17.2 18.1 Drop membership 10.5 10.6 Vote to dissolve co-op 6.9 2.8 Vote to reduce operations ... 5.9 Get a new manager 15.8 8.1 Miscellaneous“ 5.4 5.1 Don't know ,,, 2,2 Total 100 .0 100 .0 Which would be more likely to fail? 6001301381: 1'. 13 e 8 8 e0 Non-cooperative business 55.2 78.6 Either one 20.7 5.0 Don't know 0.5 8.4 Total 100 .0 100 .0 fifcludes: reorganize, throw shares away, do nothing, etc. non—officers would be quicker to recruit new members. Only 20 percent volunteered the reply that first of all they would seek out the cause of the trouble. 0n the basis of the replies to this question, it must be seemed that officers and non-officers manifest relatively equal de- grees of loyalty. "Non-officers expressed more faith in a cooperative's ability to weather unfavorable business conditions than did officers. of the 143 non-officers, 78.6 percent were of the cpinion that non-cooperative businesses would fail first. This compares with only 55.2 percent for the officers. It is no doubt true that the officers are much more a- ware of the difficulties which cooperatives experience in periods of adverse business conditions. Many have no doubt “had their faith shaken in the past, and therefore are less apt to blithely place their trust in the cooperative form of business. (8) m 9_i_'_ membership. Embers who first Joined a cooperative prior to 1951 were found to be more loyal on the matter of continuing to purchase from a cooperative if prices were a little higher. of this group 74.6 percent would continue buying from coOperatives, whereas only approx- imately 59 percent of those having Joined since 1951 would continue pur- chasing supplies from a cooperative if prices were higher. This is partially due to the influence of the factor of age, but is probably also due to a realization among those who have been members for a long time that certain individual sacrifices must be made sometimes in order to insure the continuance of the cooperative. Those who have been members for the longest time are less positive that a non-cooperative business would fail first. This attitude of less faith parallels that of the officer group and the older farmers. (11) 2m _o_f_ cOOperative .a_ W. Qily 44.4 percent of the members of oil and gas cooperatives would continue to purchase supplies from the cooperative if prices were higher. This compares with 55.9 percent for the fruit cooperatives, 54.7 percent for livestock associations, 61.0 percent for milk and cream associations, and 66.5 percent for elevator cooperatives. Apparently the immediate price advantage is uppermost in 144 large proportions of the oil and gas, fruit, and livestock cooperative members. On the other hand, the oil and gas cooperative members were found to be more loyal on the matter of helping out a losing cooperative. A greater prcpcrticn of these members would recruit members, and fewer would drOp out of the cooperative. cOOperative elevator members were next in line for loyalty on this question, followed by the milk and cream, livestock, and fruit cooperative members. The livestock, and oil and gas cOOperative members had the least faith in the enduring qualities of cooperatives, while the milk and cream, elevator, and fruit cooperative members (in order of least to most faith in cooperatives} had relatively more faith that cooperatives would out- last non-coOperative businesses. (1) m. Slightly more than one-third of the sample farmers would not continue to purchase supplies from a coOperative if they could get them for less somewhere else. This compares rather closely with the results obtained from a similar question used among cooperative members in New York, as reported by Anderson and Sanderson.3 Approximately one- helf cf the New York farmers reported that they would continue buying if prices were higher, one-fourth said it ”depends", and the other one- fourth said they would not continue to buy if prices were higher. Smoker, in a study of a local supply cOOperative in Indiana, found that only 52 percent of the farmers reporting would continue to buy from the cooperative 5. Report _o_n Research Project 152. L ”Audit of Farmers' Attitudes", for Grange league Federation Managers' Conference, July 12, 1944. Mimso- graphed. 145 if prices were higher than at other stores.4 IMembers were found to be somewhat more loyal to cooperatives than nondmambers, although the percentage differences were not great enough to be significant. The factor of age had a significant effect upon loyalty. Greater proportions of older farmers would continue buying if prices were higher, but older farmers had lose faith in the ability of cooperatives to withstand a business depression. on the question of what to do if a cooperative began to lose money, the replies of the younger farmers indicated significantly greater loyalty. The factors of officer status and attendance at meetings were found to significantly affect loyalty. Officers were much.more loyal on the question of continuing to buy if prices were higher, but they had less faith in the ability of a cooperative to weather poor business conditions. Those who attend meet- ings were found to be more loyal than those who do not attend meetings. 0n the matter of continuing to buy if prices were higher, the milk and cream, and elevator cooperative members were found to be most loyal. When questioned concerning what they would do if their cooperative began to lose money, the members of the oil and gas, and elevator cooperatives indicated greatest loyalty. Those members who had Joined a cooperative prior to 1951 were found to have greater loyalty on the question of con- tinuing to purchase supplies if prices were higher, but they indicated less faith in the ability of a cooperative to weather a business depres- sion. The factors of education and amount of business done were found to have little effect on farmers' loyalty. Farm Bureau members manifested 4. Richard E. Smoker, The Elkhart County Farm.Bureau Cooperative .Lssociation and the Attitude of Elkhart County Farmers Toward It Un- jpublished Bachelor's Thesis, Purdue University, 1944. 146 the same degree of loyalty as did those who were not members of the Farm.Bureau. Tenure status had no effect upon loyalty. The data in this chapter reveals that there is still.much to be desired by way of loyalty to the cOOperative form.of business unit. many farmers have yet to grasp the greater import of agricultural coop- eration. Until they do, their wider loyalties will continue to be under- mined by various petty acts of disloyalty. QMFWRIX SUMMARY AND CONCLUQIONS The support which farmers give to a COOperative is directly associated with their opinions of, and attitudes toward, the organiza- tion. COOperative leaders are constantly faced with the problem of creating and maintaining favorable attitudes toward their associations. An objective measurement of these opinions and attitudes is desirable as an aid to determining the degree of success or failure which has attended their efforts. Such measurement is also a guide to the plan— ning of future programs. In this study an attempt has been made to evaluate the opinions of 500 representative farmers in lower Michigan relative to certain coopera- tive policies and principles of Operation. Special attention was Given to four major cooperative principles: democratic control, patronage dividends, open and voluntary membership, and sales at market prices. The three-fold purpose of the study was: to determine the farmers' attitudes toward the cooperative principles; to measure the extent of understanding of the principles; to determine the degree of loyalty with which farmers attached themselves to their COOperatives. The data, gathered by personal interviews with the farmers, have been compiled and analyzed on the basis of various individual factors which inf‘uenced the opinions of the farmers. The following paragraphs briefly review the findings which were presented in the main body of the thesis. 1. §ugmarv g: findings. Three out of four farmers interviewed support the principle of Ed 5133. ill , sits 148 democratic control. Approximately twenty percent favor the method of granting one vote for every share owned, a policy which is followed by ten percent of Michigan's cooperative associations. If forced to choose between one vote per member and voting on the basis of the amount of patronage, all but about 15 percent would favor the democratic prin- 'ciple. These data indicate that a sizable fraction of the farmers have not yet gained the proper understaniing of the importance of the prin- ciple of democratic control. When asked if cooperatives are profit-making businesses, only 40 percent of the farmers said "no“. When further explanation was made of the meaning of "profit", one—third of the farmers retained the opinion that cooperatives are profit-making enterprises. This indicates consi- derable confusion concerning the meaning of "profit—making". There is an extensive lack of understanding of the non—profit ideal, which has been a motivating factor in COOperative effort in all lands. Less than two-thirds of the farmers interviewed held the opinion that most of the earnings of a cooperative should be returned to the patrons. Slightly more than one-fourth thought stockholders should get most of the earnings. Fourteen percent would divide the earnings equally between the two groups. The principle of distributing earnings on the basis of patronage needs to be better understood and more widely accepted among farmers. Cooperative earnings are frequently withheld in order to increase the capital investment. When this is done, stock dividends are issued to patrons instead of cash dividends. Four out of five indicated their acceptance of such a policy in preference to borrowing money from a bank, if additional capital is needed. Only one out of eight preferred bor— 149 rowing from a bank. The principle of open membership is not usually followed among farmers' marketing cooperatives. In this respect marketing coopera- tives differ from consumer cooperatives, which do not deem it necessary to maintain a strictly homogeneous patronage. When asked whether co- operatives should let anyone join who wants to, one-half of the farmers replied in the affirmative. The other one-half indicated their desire to exclude non-farmers, non-producers, dishonest persons, and miscel- laneous types of persons. The policy of reouiring members to sign marketing contracts with a cooperative was strongly opposed by the farmers interviewed. Approxi- mately 85 percent of the farmers apparently viewed such a practice as a violation of their individual rights. They strongly favored the prin- ciple of voluntary association, insofar as the right to join or drop out anytime is concerned. In reply to the question of which method is best by which to obtain new members, slightly more than one-half favored selling shares directly to non-members. Slightly more than one—third were of the opinion that holding back cash refunds from non—member patrons is the better method. This rather small proportion favoring holding back refunds seems to indicate that most farmers would not want to be "forcedn into member- ship by having their dividends withheld. The principle of buying and selling at market prices is not under- stood by many farmers. Approximately one—third of the sample farmers lqeld the opinion that it would be better for COOperatives to sell to pmrtrons at lower prices in the first place rather than give refunds larter. Apparently these farmers did not realize the dangers of price vnars and of operating on too narrow a margin of safety. 150 Approximately three fourths of the farmers believe that managers of COOperatives should have farm backgrounds. The same number see no rea- sons why managers and officers should not belong to local business or service clubs. Five out of six farmers said there is no reason why a farmer cannot afford to belong to a cooperative. One in twelve, however, felt that they cannot afford to be a member. The farmers interviewed were by no means in complete agreement on the tax issue. Five out of six were of the opinion that patronage refunds should not be taxed. Two-thirds believed that capital retains should not be taxed. These opinions cannot be said to be influenced by knowledge of the present tax policies. Sixty percent (in round numbersl -of the farmers said that they didn't know whether or not cooperatives are recuired to pay taxes. Of the other 40 percent, one-half said cooperatives were taxable and the other half said coOperatives were not taxable. These results indicate that cooperative leaders mav need to do some fence repairing in order to present a united front against the present pressures which desire to eliminate tax exemption for coopera- tives. Most farmers declare that cooperatives contribute greatly to their general welfare, and must be preserved at all costs. .he lovelty of scnne farmers ceases, however. when they are no lonrsr able +o get an. imnwdiate price or service advantage. Over one-+hird of the farmers interviewed would not continue buying from a cooperative if they could get supplies at lower prices elsewhere. If a cooperative began to ‘o“‘ nmnaey, most of the farmers stated they would take an active part in Pualping to get it back on its feet. One out of eight would get out of tlna COOperative as soon as thev could. Three-fourths of the farmers there of'the Opinion that, in the event of poor business conditions, a 151 cooperative would survive longer than a non-cooperative business. In general, it can be said that a suhstantial maiority of the far- mers understood and accepted the cooperative principles. Their general attitude may be said to be quite favorable toward the cooperative form of business enterprise. However, the presence of a sizable fraction of farmers who, in each case, did not approve of the principle or policy in Question, is a certain threat to the continued strength of the coop- erative enterprises. The data applicable to each particular principle and practice have already been summarized on the hasis of the influencing factors. This was done at the end of each chapter section, and will not be repeated here. However, it is of major interest to examine, in a general sense, the factors themselves. This permits the comparison of members with non—members, older farmers with younger farmers, officers with non- officers, etc., with respect to general knowledge and acceptance of the cooperative principles and practices. Generally speaking, members were found to have significantly greater knowledge and understanding of the cooperative principles than non-members. This was not true in all cases, however. {embers and non- members supported the principle of democratic control in equal propor- ‘tions. Members supported the principles of distributing earnings on the basis of patronage, and selling at market prices, in significantly greater proportions than non-members. Members were slightly more in favor'of restricting membership. They favored somewhat more strongly the privilege of joining or dropping out of a cooperative anytime. They were slightly more opposed to taxation of cooperative earnings, and indicated 2a slightly greater degree of loyalty. Members were not as insistent as non-members that managers have 152 farm backgrounds. Significantly greater proportions of members believed it was better to hold back refunds rather than increase capital by bor- rowing. Greater proportions of members than non-members fa ored holding back refunds as a method of getting new members, rather than selling memberships directly. The idea that cooperatives are non-profit busi- nesses was considerably better understood by members than by non-members. Members seldom differed from non-members more than 20 percentage points. In addition, the factor of membership status was found not to have any appreciably greater effect upon opinions than did the factors of age, education, and amount of business done. These two facts seem to indicate that membership status did not have any unique role to play as a determinant of the degree of favorableness or unfavorableness toward cooperatives. It is merely one among a number of factors which in- fluence the general attitudes of farmers toward cooperatives. The factor of age frequently had a significant effect upon the opinions of the farmers interviewed. Significantly greater proportions of younger farmers believed most of the earnings should go to patrons, and that refunds should be withheld instead of borrowing to get more capital. Younger farmers were slightly more favorable to the principles of democratic control and selling at market prices. Younger farmers, in greater proportions than older farmers, preferred getting new mem— bers by selling them shares directly. They also were somewhat more favorable to limiting membership. Older farmers were more loyal on the matter of continuing to buy if prices were higher, but younger members had more faith in the finan- cial strength of cooperatives, and would be quicker to help a losing cooperative to get back on its feet. In general, the opinions of the 155. younger farmers appeared to be somewhat more favorable to the cooperative principles and practices. This differs somewhat from the findings of Anderson and Sanderson. In their report on the studies of the attitudes of New York farmers toward their cooperatives, they found no significant difference between age groups in general favorableness toward coopera- tives.1 It is difficult to generalize on the effects of education upon farmers' opinions concerning cooperative principles and practices. In some instances those with least education most strongly supported the cooperative principles. Those with less education supported the prin- ciple of one vote per member (as opposed to one vote per share) in sig- nificantly greater proportions than those with high school or college training. On the other hand, those with more years of schooling were slightly more in favor of giving patrons most of the cooperative ear- nings. They also had the greatest understanding of the non-profit ideal. The college group was somewhat erratic. They were most favorable to limiting membership, but were weakest in support of the principle of selling at market prices. The college group most strongly opposed taxation of cooperatives. Those who completed a maximum of nine to twelve years of schooling (the high school group) seemed to be slightly more consistent than the other groups in their support of the accepted principles and practices. In the studies reported by Anderson and San- derson no significant difference in attitude was found on the basis of schooling.2 1. Anderson and Sanderson, pp. git., p. 27. 2. 31359;, p. 27. 154 The amount of business which a farmer carried on with cooperatives was very likely to affect his general attitude toward the cooperative principles. In general, those who did the greatest amount of business were most favorable to the accepted principles and practices. Signifi- cantly greater proportions of those doing large amounts of business supported the principles of patronage dividends, voluntary membership, and selling at market prices. These "big" farmers were also more favorable to limiting membership, and to holding back the cash refunds and issuing share dividends instead. The principle of democratic control was supported by equal pro— portions of big and small farmers. The big farmers indicated a slightly greater degree of loyalty, and were somewhat more opposed to taxation of cooperative earnings. Since membership tended to be associated with those doing the most business, the opinion differences observed on the basis of amount of business done are in part a reflection of the factor of membership status. The attitudes of the members who attended cooperative meetings were found to be more favorable to the COOperative principles than those who never attended meetings. Significantly greater proportions of mem— bers who attend most of the meetings supported the principles of demo- cratic control, patronage dividends, and freedom to join or drop out anytime. In addition, they had a greater understanding of the non- profit concept, and were somewhat more favorable to the principle of selling at market prices. Those who attend meetings were also found to be more loyal, and more opposed to taxation of cooperatives. These results prove the importance of urging members to attend cooperative meetings. With respect to most of the cooperative principles, those members 155 who had at some time been an officer in a cooperative were found to be more favorable than those members who had never been officers. The percentage differences in most cases, however, were not sufficient to prove significant. Non-officers were slightly more in favor of the democratic principle, they have greater preference for managers with farm backgrounds, and they have more faith in the financial strength of cooperatives. Only two thirds of the officers believed that coopera- tives could be called non-profit organizations. Only one in ten wished to be bound by a contract. Officers were more strongly in favor of 1 J i u I l limiting membership, and of following the procedure of withholding cash refunds. Officers were much more loval than non-officers on the point of continuing to buy from cooperatives even if prices were somewhat higher. In general, the results of this study reveal a strikingly small variation between officers and non-officer members with respect to their understanding and acceptance of the cooperative principles. Those farmers who were members of the Farm Rureau were found to support the copperative principles in somewhat greater proportions than those who were not members of the Farm Bureau. Farm Duresu members were significantlv more favorable to the "non—profit" ideal, to retur- ning most of the earnings to patrons, and to limiting membership. They were slightly more favorable to the principle of selling at market prices. They did not differ from non—Farm Bureau members on the prin- ciple of democratic control, on contract versus freedom to fioin or drop <3ut, on repuiring managers to have farm backrrcupds, and on taxation <3f cooperatives. The factor of size of farm was associated with amount of busip as done. Vowever, the opinions of farmers grouped accordinr to the size 156 of farm operated did not usually vary significantly. This seems to in- dica+e that the factor of amount of business done had a greater effect upon the farmers' opinions than did the faster of size of farm. The factor of tenure status was found to have little effect upon the opinion responses. Apparently the knowledge and understanding of the cooperative principles was eoually well diffused among tenants as among farm owners. Length of membership seemed to have no appreciable effect upon the understardins and acceptance of the principles. In some cases those who joined prior to 1951 and more recently than 1940 evidenced greater understanding than those who joined during the 1950's. The differences, however, may have been due to chance factors in sampling. The farmers in the sample who were members of the oil and gas, and frvit marketing cooperatives were found to be, in general, much less favorahle to the cooperative principles than were the members of dairy, grain, and livestock associations. This was especially true regarding the principles of democratic control and patronage dividends. Members of these two types of coOperativea were much more desirous of the use .0 0; crop contracts. The opinions of farmers representing oil and gas, and fruit coop- eratives in this study cannot be considered representative for all such cooperatives. This is due to the fact that most of these members in the sample were located in the Eau Claire area where the principle of democratic control was not observed in the fruit marketing cOOperative. 2. Conclusions In the light of the purpose of this study, several general conclu- 157 sions can be drawn. In the first place, the general attitudes of farmers tocard cooperatives was found to be very favorable. There was a strong undercurrent of feeling among farmers that cooperatives must be maintained at all costs, in order to keep competing businesses in line with fair prices. A major problem of cooperation is to determine how the coopera- tive form of business may best be operated and maintained. The opinions and attitudes of some farmers are not favorable to the time-proven principles of cooperation. To the extent that these unfavorable atti- tudes persist, cooperatives will continue to eXperience a constant threat to their way of doing business. In general, it can he said that unfavorable attitudes toward the principles of cooperation are the re— sult of the unwillingness of individuals to sacrifice personal interests for the good of the common cause. Such individuals are unconsciously undermining the strrcture which they seek +o preserve. qecondly, it was found that among the farmers in+erviewed the ex- tent of understanding of the cooperative principles is rather limited. Some farmers hold adverse opinions. Some have favorable opinions whiCh are not strongly held. Others have no opinions at all. Presuma- bly one could not expect to find a group of farmers who would be one hundred percent in favor of the principles. however, the results of this study seem to indicate that there is need for increased under- standing and acceptance of the COOperative principles. Thirdly, the study revealed that most farmers attach themselves to cooperatives with a fair degree of loyalty. They have faith that cooperatives can, and will, weather financial storms. A majority said they would not desert a cooperative if it began to have financial dif- ficulties, or if its price offerings were not always advantageous. 158 Approximately one-third, however, said they would cease doing business with a cooperative if they could not get the immediate price advantage which they feel they must have. The study also revealed that there was a remarkable diffusion of ideas and opinions among all types of farmers in the sample areas. The data seemed to indicate that in areas where a large proportion of the farmers are cooperative members one could expect to find no great vari- ation of opinions, with the possible exception of a very few individuals who for some personal reason may have become embittered against coopera- tives. Because a man happened to be a non-member, a big farmer, a renter, or a man with much schooling, did not reliably indicate his degree of favorableness or unfavorableness toward cooperatives. Re- gardless of the factor which was used to break up the total sample into groups, the variations in opinions were relatively small, usually not more than fifteen percentage points. Assimilation apparently proceeds at a great rate. The fact that members did not differ greatly from non-members is significant in itself. This indicates that cooperative leaders cannot wash their hands of the attitudes of non-members by saying "they are none of ours." The strength of a cooperative depends not alone on the attitudes of the members, but on the attitudes of non—members as well. It seems that membership status is merely one among other factors in- luencing attitudes. There seems to be no good reason why all other factors should be considered in the light of the membership factor. In fact, the attitude of a farmer cannot be attributed to any one factor, but is a composite of many factors. To determine which factors exerted ‘the greatest influence would become a major problem in multiple cor- relation. 159 The data obtained in this study by no means exhaust the field of investigation. A number of questions arose which could not be answered with the data at hand. Some such ouestiona were: Do farmers feel that dividends should be paid to non-members? Should credit be extended to patrons? hat is the attitude of farmers on the question of whether COOperatives should advertise? dhat rate of interest is a fair return on capital investment? These and other questions must be left to fur- her investigations in the field of attitudes toward cooperative prin- ciples and practices. Much work could also be done on the determination of the intensity of the attitudes which the farmers hold. dhether the Opinion of a farmer is strongly or only weakly held is not revealed by the "Yes—do" type of response. The continuing need for COOperative education is a conclusion which seems to stand out above all other conclusions. This is by no means a unioue discovery. Nany previous studies of membership rela- tions have concluded with this same observation. At the close of their study of cooperative discontinuances, Cochrane and Elsworth state that: In the case of a large number of discontinuances the members failed to give full support to their cooperatives. They may have been uninformed as to their parts in the joint undertakings or per— haps they did not take seriously the responsibilities that were justly theirs. . . The remedy for the shortcomings of membership would seem to be more education, and then more. A cooperative enterprise does not have some inherent cuality of self-preservation. Constant care and vigilance must be exercised to lceep the enterprise from degenerating into a non-cooperative for”. i'ahv examples couli be cited which illustrate the tendency for coopera- 3. “. ”. oohrane and R. H. Flsworth, farmers "00“ ratlv: “Iq- cudntinuances, 1875—l9fi9, Farm Credit Administration, ”ash1ngton, D. C., 'fiscellaneous Peport No. 65, June, 1945, p. 55. 160 tives to lose +heir identity. One such example is that of the Sodus Fruit Fxchanse in Perrien County, Michigan. Largely because the prin- ciple of one-vote-per—member was not observed, control was allowed to slip into t.e hands of a few who gradually converted the business into a stock company. The members themselves no longer identify the enter- prise as a cooperative. Cooperative education must start at the top. The fact that officers were found not to differ greatly from non-officers is ample proof of this. The managers and directors themselves must have a full under- standing of the importance of the cooperative principles before they can properly discharge their duties as leaders. fhether it be by more co- operative meetings, more printed matter, encouragement of greater par- ticipation on the part of members, or other means, COOperative leaders must put forth every effort to disseminate information which will build for greater understanding among members of the principles upon which cooperatives stand. As long as conditions are relatively stable and a cooperative continues to give its members the economic advantages they desire, men- bership relations will no doubt continue favorable. In times of crises, however, cooperatives are usually compelled to reexamine themselves. 'Jeaknesses are often revealed, and any lack of careful building becomes apparent. In that sense, crises have beneficial effects upon the or— ganizations. It is probable that the present struggle over the tax issue will result in the strengthening of cooperative forces. Wise co— operative leaders plan for the future in terms of all possible crises which may arise. A part of that planning consists in helping the mem- bers to better understand and accept the principles upon which coopera- 161 tives must be built if they are to endure. When this is accomplished, members will wholeheartedly and understandingly give their loyalty and support to their cooperatives, not in prosperity alone, but also in adversity. In the words of Anderson and c‘anderson: The problems of coonerative associations with regard to member— ship relations are not essentially different from those of any democratic movement. They will always be recurrent, but their solution will continue to be advanced only through effective methods of education of members, placing as much responsibility upon them as possible, and by a continual exchange of information between them and their chosen leaders so that there may b mutual confidence be- tween them in their loyalty to common goals. 4. Anderson and Sanderson, pp. cit., p. 52. nIQLIOGRAPWY 1. Books Albig, William, 322113 Cpinign, NcGraw-Nill, New York, 1959. Pakken, H. S., and Schaars, N. A., The Economics of Coopgpatiye Marketing, McGraw-Hill, New York, 1957. Clark, F. E., and Clark, C. P., Epingip1e§ 9f Marketing, Macmillan, New York, 1942. Clark, F. E., and field, L. D. H., Marketing Aor1cu1tural Products, Nacmillan, New York, 1952. Converse, P. D., and Huegy, H. N., The Elements 9f Marketing, Prentice- ”all, New York, 1946. Cowling, Ellis, Cpoperatives in america, Coward NcCann, New York, 1958. Croxton, F. N., and Cowden, D. J., App1ied_anera1_:tatist1cs, Prentice- Hall, New York, 1946. Daniels, John, Cooperation: fin imer1can jay, Covici, Friede, New York, 1958. Farm Credit Administration, A Statistical isndbook of Farmers' COOpera- tiyes, Iashington, D. 0., Bulletin No. 26, November, 1958. Kercher, L. C., Kebker, V. N., and Island N. 0., Consumers' COOpera- tives in the Nprth Central b‘tates, University of Ninnesota Press, Minneapolis, 1941. Lundberg, George A., Social Research, longmans, Green and Co., New York, 1942. “May, Mark A., and Doob, Leonard' 1., Competition and Cgoperat1on, Social Science Research Bulletin No. 25, Social Science Research Council, New York, 1957. Orne, Anders, Cg:op:rativ§ Ideals and Prob1ems, Co-operative Union, Ltd., Manchester, 1957. Sanderson, Dwight, Rural Sociology and Rural Socia1 Orcan17ation, John Jiley and Sons, New York, 1942. Waiimsse, J. P., fng1ems_gf Cooperation, Island Press, New York, 1942. 165 2 ‘ P f3 SSS-11.9.15. Anderson, W. A., and Sanderson, Dwiqht,VemheRsh1p Relations in Coop- erative CroanizationCs, Department of Rural Sociolovv, Cornell Univer- sity As ricu1t1ra1 Fxnerimept Station, Ithaca, Nimeoarqnh Pulletin No. 9, April 1945. Chesire, Leone. Saffir, Milton, and Thurstone, L. L., ngpgfiing Diaorams for the Tetrachorio Correlation Coefficient, "niversity of ChiPOWO, 1955. Clayton, C. F., and Norner. J. T., Fa mers' Coop*""+‘"” '“vipc apCd :e111Rg Crcapivaiinns in "ichilan, Agricul+nra1 Srper1mep+ Sta+1on. Seat Lansinv, spoec1a1 I11.1]1et1r1 171,1928. Clement, S. 1., The Orlerizs+' opC, Pract1ces, and Memberéhip Part1ciration .-- — _..- .-—~—- ..o— -.-——-—— of Two North Carolina Ssrm Cooperatlves Agricultural *xperimept ..--.. Sta+ion, paieSch, Bulletin 511, Tulv 1957. Cochrane, N. V., and Flsworth, R. ”., Sarmers' Coonerat1ve Ciacon+inuapces, _..-- -____..__._-‘._— 1875-1959, Farm Credit Admini“tration, 'ashin"ton, D. C., Niscel- la r1011a Report No. 65, June, 1945. Dorsey, R. 0., Farmer Co-ops in "ich10an, St. Paul Rank for COOperatives, St. Paul, 1959. Fetrow, Hard W., T‘d ree Pr1nc1ples of 5vricu1tura1 Cooperation, Farm Credit Administration, Iasnington, p. 0., Circular 5-24, 1915. Sedrick, V. 0., A Decade of Nich1van Coop_erative Plevators, Agricultural ...—_- __ --...- --. Experiment Station, F'ast Lansing, Spec1a1 Rulletin 291, Nay, 1958. Hennina, George F., and Polinc, Earl 8., Attitudes of Sarmers Toward -..... _.._.. Cooperative MarketinEC, Agricultural Sxperiment Station, Iooster, _-—--_._.- _ .—-_ _. Ohio, Bulletin 606, September 1959. John, N. E., Factors Influencing FarmeCrs' Attitudes Towa_rd a Cooperative Narketino Orsan1zat1on, Avrlcultural Fxperiment Station, State .... ...... ._. -. ---- -_ --— College, Pa., Bulletin 457, November, 1945. Jones, J. I., RRfRerRR1R Rglgtlogg of Cooperat1ve AssociatCions. Farm Credit Administration, Iashinoton, D. C., Rulletin No. 9, Cctooer, 1956. Larzelere, 11'. F., F_1nap01a1}_’anao-emnp* AnaCC'lequ—s of F'armers' ConnerCatives in NicRngan, Agricultural SXperiment tation, Sa.stl Lansing, Special Rulletin 515, Nay, 1942. chConnell, James 5., "Three Ions-Range G. l. R. Policies", Amer1pan Avri- cultggglist, November 15, 1947. lficDonald, Angus, "Fulton Lewis Jr. and the Co-ops", New ReRRRlic, Sep- tember, 1947. . Ct..- .QF‘” 164 Michigan Association of Farmer Cooperatives, fiQNBRl.BSEQ§E, Iansina, August 51, 1947. Notts, G. N., Fruit and veaetabl e Co_perative a _in lichiqan, Aaricultural —— .-.. .—...-.. Experiment Station, East Iansins, Special Bulletin 517, June, 1942. Robotka, Frank, embersh1p Problems an_d Relationships 1n Iowa Farmers' -—_ .... -... §1§ygt913,:10!a State Collewe, Ames, Bulletin 521, July, 1954. # Robotka, Frank, and Laughlin, Gordon 0., Cooperative Crganizat1on of Iowa Farmers' Creameries Farm Credit Administration ’ashington, 3 9 0.0., Bulletin No. 14, April, 1957. Stern, J. K., Nembersnip Problems in a N'ilk Narketins Orga.nizati_on, -..—.—_ __ ___ _— --.-_— Pennsylvania State College, State Collewe, Bulletin 256, Nav, 1950. Stitts, Tom G., and Ieldon, N. C., Avr1cu1tural Cooperation and Nat1onal levislatlon, Farm Credit Adm1n1strat1on, Nlasaington, D. 0., Circular A-20, July, 1940. Stokdyk, E. A., Economic Obiectiveso Farmers' Cooperat1ve_s, Farm Credit “ _—._._ Administration, Ja.s ington, D. C., N'iscellaneous Report No. 90, October, 1945. Veatch, J. 0., Agricultural Iand Classificat1on and Iand TVpes of Michi— -— _qc- —— '-_-._'.-._-—_- ...—— ————..— ga n, Agricultural Experiment Station, East Lansing, Special Bulletin 251, October, 1941. Wansta.ll, Grace Statistics of Fa.rmers' Mark_eting and Purchasin'r Coop— , . _ “*__- eratives, l944-_4§, Farm Credit AdminiStration, Jashington, D. C., Miscellaneous Report No. 108, Nay, 1947. Weldon, d. 0., and T. G. Stitts, Milk Coope_ratives in Four Ohio Na_rkets, .——————..-. —— ._ ._. _ ..- Farm Credit Administra.tion, .Jashington, D. 0., Bulletin No. 16, April, 1957. 5. Unpub11shed §§1e11a1s Boek, Walter 3., Personal Attributes and Social Fxn rien_ce as Correlates __—.____.____ of Participation in Farmer_s' Coopfia -ratives in Nich1¢an, Unpublished ...-... ...-...... -... Naster' s Thesis, 11ch1oan State Collese, 1948. Dieh1,.4ilbur w., Jr., The Use of erp_ Cont_racts by Produce_ra' Cooperative - .— —— .— Associations, Unpublished Master' 9 Thesis, Nichiaan State College, 1926. Gibson, Duane 1., rembersh1p Relatio_ns of Farmers' M11k N'arketing Orqan1— .——.-—-—-—.—..— 1 — ——-———.-..——— -..—- zations in New York State, Unpublished Doctor' 9 _Toesis, Cornell University, 1940. Idichi an Association of Farmer COOperatives Program Ieeflet, Third . . ’ _.._—----- _ ________________ Annual Meeting, October, 1947. 165 Sandage, C. H., The Opinion of Firm F9mi_lie s TOiFFd Retail Farm :upplv Stores in Indiana, Farm Research Institute, Urbsna, Illinois, December, 1947. Smoker, FicnsrdF1., The :Ikhart County F9rm Bureau Cooperative Associa- - ‘_.._.—c—.. - ... ....— -.- tion and the_fitt1tude o_f Elkhart fountx_ Fermers Todaro It, Unpub- lished Pachelor' s Thesi-s, Purdue University, 1946. APP- Y’ TNDICE n APPEEDIX A COOpaRATIVES REPRESFWTED IN T3E SAWPLE The following is a list of cooperatives, members of which were included in the sample. The cooperatives are listed according to the areas in which the members resided, with the exception of the four state-wide cooperatives listed separately. If a farmer was a member of more than one COOperative, his membership will, of course, appear more than once. B Name of Number of ! Cooperative 1‘.-'-.e*1129.r§hina ’ ' Stateiwide Cooperatives ‘ 1 Michigan Milk Producers' Association . . . . . . . . . . . 65 f' Michigan Livestock Exchange . . . . . . . . . . . . . . . 59 Detroit Packing Company . . . . . . . . . . . . . . . . . 54 Rural Electrification Associations . . . . . . . . . . . . 27 Area 1: Berrien and Cass Counties Eau Claire Fruit Exchange . . . . . . . . . . . . . . . . 62 Berrien County Farm Bureau Oil Company . . . . . . . . . . 28 Dowagiac Farmers Cooperative . . . . . . . . . . . . . . . Millburg Growers Exchange . . . . . . . . . . . . . . . . Producers' Creamery, Benton Harbor . . . . . . . . . . . Berrien County Fruit Exchange, Stevensville . . . . . . . Farm Bureau Fertilizer Company . . . . . . . . . . . . . . South Dend Farmers' Public Market Association . . . . . . H ldrdlU\n