Evolution of a Plan for Intra-Association Shifting of the Capital Obligations among Members

Abstract

T HE material presented in this paper represents a case study of a new feature recently developed in the financial structure of one of California's more successful cooperatives of the non-stock type, the Poultry Producers of Central California. This feature constitutes a scheme for voluntarily redistributing the financial contributions of members in accordance with variations in their financial needs without disturbing voting rights. It is superimposed on a successful revolving finance structure. This Association was incorporated in 1916 on the capitalstock plan, with $10.00 shares. It began business in January 1917 with a paid-up capital of about $10,000, of which about $5,000 had been expended in organization. The marketing agreement provided that in addition to deductions for expenses there be a one-cent deduction from the returns on each dozen eggs handled for the purchase of additional stock. By the end of 1923, when the change was made from the capital-stock plan to the non-stock plan, nearly $450,000 had been so deducted. Even before the end of 1923 it had become clear that the membership turnover was gradually undermining the cooperative character of the Association. There was no plan for retiring the shares of such members as ceased to produce eggs. These persons seldom retained sufficient interest to keep the Association informed of address changes; hence it was becoming burdensome to keep track of them in order to send notices of meetings and the small annual dividend checks. More important was the prospect of a continued increase of inactive names on the list of stockholders. Therefore it was decided late in 1923 to reorganize on a non-stock basis with a revolving finance plan under which the deductions and repayments would be continued perma-