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Bell, Florence C. (Florence Colfax), 1899- / Farmer co-ops in Wisconsin
([1941])

Credit has role in development of cooperatives,   pp. 50-52 PDF (753.4 KB)


Page 51


patrons as dividends. The coopera-
uives used the remainder to improve
their financial position, thus increasing
the equities of the farmer-patrons in
their associations.
  Some Wisconsin cooperatives have a
revolving-capital plan of operation.
Under this plan deductions are made
fom the current proceeds of sales or
from accumulated earnings, and these
'capital retains" are held by the asso-
ciations, which issue stock or certifi-
cates to patrons. After a sufficient
unount of capital has been accumu-
lated, capital retains deducted from
subsequent sales are used to retire the
oldest outstanding obligations issued
in a prior year. Over a period of years
the entire capital structure revolves.
New members and younger farmers
not only acquire an interest in the
association but also provide capital in
proportion to their patronage. The
use of this plan is more than just a
method of financing a cooperative.
The plan involves a principle of equity
which is designed not only to provide
adequate capital, but also maintain the
ownership and control of a co-op's
business in the hands of members who
are actually engaged in the production
of agricultural commodities.
In accordance with the findings of
thei national survey of farmer coopera-
fives, 436 Wisconsin associations, or 41
percent of those covered by the survey,
were using borrowed funds in 1936. At
different times during that year, 62 of
these associations had maximum bor-
rowings of $1,135,000 outstanding
fom the St. Paul Bank for Coop-
eratives; 148 associations, $931,000
from individuals; 187 associations,
$782,000 from commercial banks; and
the remaining 39 associations had
Fample of how the revolving fund plan of
  financing works: Capital supplied by the
  mnebers in I year is returned in a later
  year
                Capital  Capital  Total in
           CaptaaCpialrevolving
               retained I returned  fund
1933   .        . 000..           5,000
1934.            S,000..........  10 000
1935.:.......   5,000 .......  15,000
1936.            5000 ..          20.000
1937 ........   5,000 ......   25,000
1938    .        5.000   15,000   25,000
1939.5,000                5,000   25,000
  I In thisexample it is assumed that the amount retained
is the same each year. In actual practice the amount of
an association's Ibusiness will vary from year to year.
and the amount retained will likewise vary.
peak borrowings of $479,000 outstand-
ing from a number of other credit
sources.
  There were a number of purposes
for which the associations had required
credit in 1936. Of the maximum out-
standing amounts borrowed from all
sources, 54 percent were made for the
construction of physical facilities such
as buildings and equipment, 42 percent
for operating capital, and 4 percent as
"commodity loans."
  The St. Paul Bank for Cooperatives
is 1 of 12 such institutions set up by
the Farm Credit Administration in
1933 in the various farm credit dis-
tricts, exclusively to serve the credit
needs of farmers' cooperative associa-
tions.  From   organization  through
December 31, 1940, the St. Paul bank
had made loans to Wisconsin coopera-
tives aggregating nearly $4,000,000.
The amount of such loans outstanding
at the end of December 1940 was
approximately $1,031,000, indicating
to what extent funds had been loaned,
utilized, and repaid in financing the
operations of Wisconsin cooperatives.
  The services of the banks for coop-
eratives have opened a new and per-
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