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trade." See Liberty Warehouse Co. v. Tobacco Growers, 276 U. S. 71. Nearly one-half of the existing laws of the nonstock type were enacted between 1914 and 1922.18 This limitation in the Clayton Act proved to be unwise. By the Capper-Volstead Act of February 18, 1922, c. 57, § 1, (42 Stat. 388), Congress recognizing the substantial identity of the two classes of co-operatives, extended the same right to stock co-operatives. The terms of this legislation are significant:

"That persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes: Provided, however, That such associations are operated for the mutual benefit of the members thereof, as such producers, and conform to one or both of the following requirements:

"First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein, or,

"Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum.

17 Nourse, The Legal Status of Agricultural Co-operation (1927), pp. 73-92.

18 Colorado, Laws 1915, c. 57; New Mexico, Laws 1915, c. 64; Oklahoma, Laws 1917, c. 22; Texas, Laws 1917, c. 193; Louisiana, Acts 1918, No. 98; New York, Laws 1918, c. 655; Pennsylvania, Laws 1919, Act 238; Iowa, Laws 1921, c. 122.

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BRANDEIS, J., dissenting.

"And in any case to the following:

"Third. That the association shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members."

Congress recognized the identity of the two classes of co-operatives, and the distinction between agricultural stock co-operative corporations and ordinary business corporations, also, by providing in the Revenue Act of 1926, c. 27, Part III, § 231 (44 Stat. 9), that exemption from the income tax was not to be denied "any such [co-operative] association because it has capital stock, if the dividend rate of such stock is fixed at not to exceed the legal rate of interest in the State of incorporation or 8 per centum per annum, whichever is greater, and if substantially all such stock is owned by producers . . . ; nor shall exemption be denied any such association because there is accumulated and maintained by it a reserve... Such an association may market the products of nonmembers in an amount the value of which does not exceed the value of the products marketed for members." This exemption was continued in the Revenue Act of 1928, c. 852, sec. 103 (45 Stat. 812).

... ,

More than two-thirds of all farmers' co-operatives in the United States are organized under the stock type laws. In 1925 there were 10,147 reporting organizations. Of these 68.7 per cent were stock associations. In leading States the percentage was larger. In Wisconsin the percentage was 80.0; in North Dakota, 87.0; in Nebraska, 91.3; and in Kansas, 92.0. Of the farmers' co-operatives existing in Oklahoma in 1925, 87.6 per cent were stock associations.19 The great co-operative systems of Eng

19 U. S. Dept. of Agriculture, Technical Bulletin No. 40 (1928), Agricultural Co-operative Associations, p. 88. The figures for Oklahoma are obtained from the worksheets from which the table on page 88 was compiled.

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land, Scotland and Canada were developed and are now operated by organizations of the stock type." The nonstock type of co-operative is not adapted to enterprises, which like gins require large investment in plant, and hence considerable fixed capital." For this reason it was a common practice for marketing co-operatives, which had been organized as nonstock co-operatives in order to comply with the requirements of the Clayton Act above described, to form a subsidiary co-operative corporation with capital stock to carry on the incidental business of warehousing or processing which requires a large investment in plant.22 And the fact that even the marketing of some products may be better served by the stock type of cooperative organizations is so widely recognized that most of the marketing acts provide that associations formed thereunder may organize either with or without capital stock.23

20 See Fay, Co-operation At Home and Abroad (3rd ed. 1925), pp. 279–284, 356, 362-363; Year-Book of Agricultural Co-operation in the British Empire (1927), pp. 131-204; First Annual Report on Co-operative Associations in Canada (1928), pp. 65-78.

21 The average investment of a plant in Texas is about $40,000. Hathcock, Possible Services of Co-operative Cotton Gins (1928), p. 5. 22 Nourse, The Legal Status of Agricultural Co-operation, p. 54, note 3.

23 Alabama, Laws 1921, No. 31, §2; Arizona, Laws 1921, c. 156, §2; Arkansas, Acts 1921, No. 116, § 3; California, Laws 1923, c. 103, § 653cc; Colorado, Laws 1923, c. 142, §3; Florida, Acts 1923, c. 9300, §3; Georgia, Acts 1921, No. 279, § 2; Idaho, Laws 1921, c. 124, §3; Illinois, Laws 1923, p. 286, § 3; Indiana, Laws 1925, c. 20, § 3; Kansas, Laws 1921, c. 148, §3; Louisiana, Acts 1922, No. 57, §3; Maine, Laws 1923, c. 88, § 3; Minnesota, Laws 1923, c. 264, §3; Mississippi, Laws 1922, c. 179, §3; Montana, Laws 1921, c. 233, §3; New Hampshire, Laws 1925, c. 33, §2; New Jersey, Laws 1924, c. 12, § 2; New Mexico, Laws 1925, c. 99, § 3; New York, Laws 1924, c. 616, §3; North Carolina, Laws 1921, c. 87, §3; North Dakota, Laws 1921, c. 44, § 3; Ohio, Laws 1923, p. 91, §2; South Carolina, Acts 1921, No. 203, § 3; South Dakota, Laws 1923, c. 15, § 2; Ten

515

24

BRANDEIS, J., dissenting.

Experience has demonstrated, also, that doing business for non-members is usually deemed essential to the success of a co-operative. More than five-sixths of all the farmers' co-operative associations in the United States do business for non-members. In 1925, 86.3 per cent of the reporting oganizations did so. In leading States the percentage was even larger. In Wisconsin the percentage was 89.0; in Missouri 93.2; in Minnesota 94.1; in Nebraska 95.8; in Kansas 96.5; in North Dakota 97.0. In Oklahoma 92 per cent of all co-operatives did business for non-members.25 Of the cotton co-operatives in the United States 93.9 per cent did business for non-members. In Texas, where co-operative ginning has received successful trial, all the cotton co-operatives perform service for nonnessee, Laws 1923, c. 100, § 3; Texas, Laws 1921, c. 22, §3; Utah, Laws 1923, c. 6, §3; Virginia, Laws 1922, c. 48, §3; Washington, Laws 1921, c. 115, §2; West Virginia, Acts 1923, c. 53, §3; Wyoming, Laws 1923, c. 83, § 3.

24 It is to be noted that statutes like the Bingham Cooperative Marketing Act (Acts of Kentucky, 1922, c. 1) which provide solely for the formation of marketing associations restrict the service of the association (with the exception of storage) to the products of members. But such statutes do not purport to repeal earlier laws authorizing agricultural cooperation for other purposes which allow business for non-members. That the legislatures recognize that the problems of cooperative marketing and of other types of agricultural cooperation require different treatment is demonstrated by the retention of general laws providing for agricultural cooperation after passage of the standard marketing act. In Oklahoma, for example, in the same year that the Act of 1917 was amended so as to embody some of the features of the Bingham Act, the 1919 Act was amended in unimportant particulars, thus receiving express legislative recognition of its continued usefulness. Laws of Oklahoma, 1923, c. 167, 181.

25 U. S. Dept. of Agriculture, Technical Bulletin No. 40 (1928), Agricultural Co-operative Associations, p. 88. The figures for Oklahoma are obtained from the worksheets from which the table on page 88 was compiled.

26 Hathcock, Development of Co-operative Gins in Northwest Texas, p. 4.

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members. In Oklahoma, also, all of the cotton co-operatives reporting do busines for non-members.27

That no one plan of organization is to be labeled as truly co-operative to the exclusion of others was recognized by Congress in connection with co-operative banks and building and loan associations. See United States v. Cambridge Loan & Building Company, 278 U. S. 55. With the expansion of agricultural co-operation it has been recognized repeatedly. Congress gave its sanction to the stock type of co-operative by the Capper-Volstead Act and also by specifically exempting stock as well as nonstock co-operatives from income taxes. State legislatures recognized the fundamental similarity of the two types of cooperation by unifying their laws so as to have a single statute under which either type of co-operative might organize.28 And experts in the Department of Agriculture, charged with disseminating information to farmers and legislatures, have warned against any crystallization of the co-operative plan so as to exclude any type of cooperation.29

27 U. S. Dept. of Agriculture, Technical Bulletin No. 40 (1928), Agricultural Co-operative Associations, p. 89. The figures for Oklahoma are obtained from the worksheets from which the table on page 89 was compiled.

28 See e. g., Maryland, Laws 1922, c. 197; New York, Laws 1926, c. 231; Oregon, Supp. 1927, §§ 6954-6976. The New York Law is known as the Co-operatives Corporations Law, and consolidates all prior acts for the formation of co-operative associations. Thus, marketing co-operatives, with or without capital stock, and other agricultural co-operatives, with or without capital stock, and with or without restrictions as to business for non-members, are all organized under the same act.

29 Chris L. Christensen, chief of the Department of Agriculture's Division of Co-operative Marketing, in Department Circular No. 403 (1926), says (p. 2), “. . . the various forms which co-operative organizations have taken demonstrate the adaptability and extensive usefulness of this form of business organization." And at page 3, "A discussion of organization types is of value only when the condi