xt79zw18n369 https://exploreuk.uky.edu/dips/xt79zw18n369/data/mets.xml   Kentucky Agricultural Experiment Station.  journals kaes_circulars_004_567 English Lexington : The Service, 1913-1958. Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Circular (Kentucky Agricultural Experiment Station) n. 567 text Circular (Kentucky Agricultural Experiment Station) n. 567  2014 true xt79zw18n369 section xt79zw18n369 wd   5 HOW KENTUCKY 5
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  FARM CREDIT
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?§§i   5 ARE CONTROLLED 5
FII]; R
OZ QF  G; l ; WENDELL C. BINKLEY
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    ``A’ Eu>0N 0. SMITH
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CONTENTS Lam]
PAGE brim?
lacts
Introduction ..............................,............................................... 5 V1-
Farm Credit Cooperatives Today and Yesterday ................ li “'hl(*l
Federal Land Bank Associations ............,,...................... (5 Assm
Production Credit Associations ...................................... 9 ASSOC
` l·Iow·
The Cooperative Form ol Business Organization ................ l2 y it ml
The Annual Membership Meeting ........................................ 13 g l€m$·
Attendance ........................................................................ 1¢1 that
The Business Meeting ................................,..............,...... le}- MIC']
Entertainment and Other Non—business Features ........ 15 Cvillll
\`Vho Influences the Annual Meeting Program? .......... 16 ` lll lll
Cooperative Directors—the Policy—Making Body ................ Iii gesgl
Election ol l)irectors ........................................................ 17 I the ii
Characteristics and Tenure ol Board Members .......... 19 i be CC
Board Meetings and I-low They are Conducted .......... 21) _ those
` Director Compensation .................................................... 21 [O th
The Salaried Manager ..,.......,................................................. 21 rl
Characteristics and Qualifications ................,................. 22 Ol lo
Conditions ol Employment .............................................. 23 l““'€
Determinants ol Management Decisions ...................... 25 llllllcl
Perspectives—I-Iow Managers View Their _]obs .... 26 l’*“`[l‘
Knowledge ................................................................ 213 *2 lx
Evidence ol Managers` Knowledge ................................ 215 mill!
Knowledge ol Cooperative Principles ........,....,.... 26 "mm
- Knowledge ol` Legal and Tax Status ...................... 31) I"
Evidence ol I-low Managers View Their jobs .............. 32 OCC"}
co ·
Members and Membership Education ..............,................... 3·l · mil];
How Memberships are Acquired ............,....................... 3el an e
Membership Education Program .................................. 35 situa
Rural Youth Education .................................................. 37 raise<
Conclusion and Highlights ...................................................... 38 (i°°l)'
atten
ol th
7 T
Land
and li

 PREFACE
i This report is designed primarily [or use by managers and
directors of local farm credit cooperatives and personnel of the Federal
I Land Bank and Federal Intermediate Credit Bank. It attempts to
· bring to the attention of these key decision-makers some important
l facts and questions of policy.
y The accomplishments of the cooperative farm credit system of
which the Federal Land Bank Associations and Production Credit
Associations are an integral part, have been important. The local
associations have made signihcant improvements in their operations.
. However, if a report such as this is to be useful to their management, ,
it must focus attention on possible improvements and unsolved prob-
lems. \iVhen we draw attention to such situations we do not imply
that they are necessarily "bad," nor that improvements have not been
attempted or made. The determination of desirable policy involves
evaluation of many [actors beyond the scope of information collected
in the study.
i The situations described, questions raised, and alternatives sug-
_ gested in this report may appear unduly critical if the purpose and
the intended audience are not kept clearly in mind. Our intent is to
be constructive. To do this, we believe that we must call attention to
those perplexing unanswered questions which appear to be important
to the future of such cooperatives.
The report is based primarily on information supplied by managers
of local credit; cooperatives} In some cases these managers may not
 _ have possessed complete information, particularly on activities in
` which personnel of the Land Bank and Intermediate Credit Bank
participated. Information supplied by managers was checked, as [ar
A as possible, with that supplied by personnel of the respective super-
vising banks. Throughout the report we have attempted to call
attention to the source of our information and its possible weaknesses.
° Finally, the data were collected in l955. Many changes have
occurred since that time, and we regret that it was not possible to ·
compile the report at an earlier date. However, in 1I10st cases this will
. not seriously impair the usefulness of the material. A comparison of
an existing situation in a particular cooperative with the general
situation described by the data will establish whether the questions
raised by the data are pertinent to the situation existing in that
cooperative at the present time. However, we have at various places
attempted to incorporate more up-to-date data supplied by personnel
of the two banks serving these local units.
I The t;n "manager" will be used throughout (I) when referring to Federal _
Land Bank Associations, and (2) when referring to combinations of P.C.A.’s \
{ and F.L.B.A.'s.
I
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 .V I
~ How Kentucky Farm Crednt
· I
  Cooperutwes Are Controlled
I By WENDELL C. BINKLEY and ELDON D. SMITH2
INTRODUCTION
A cooperative can be no better than its management. Its contribu- t
tion is a result ol a vast number of decisions by members, by their
, elected representatives, and by the paid employees of the association.
ln addition, lor those cooperatives which operate under supervision
of public agencies such as the Farm Credit Administration, we must
recognize that management is partly vested in the oflicials of these
agencies which establish policies under which these cooperatives
operate.
_- Since cooperative management involves all of these decision-making
units, an understanding of cooperative problems requires, among
other things, knowledge of: (1) some of the ways that decisions
are made by the various parts ol the management team, (2) who makes
individual types of decisions, (3) how the members ol the manage-
ment team relate themselves to each other in making management
decisions,   the overall structure ol powers and responsibilities in
· the organization, and (5) the legal and social forces that have an
` ellect on management.
The study is based on a survey which was conducted in 1955 and
covered the management of 18 ol the 20 Federal Land Bank Associa»
tions (then called National Farm Loan Associations) operating in
Kentucky at that time, and all ol the 10 Production Credit Associa—
tions operating in Kentucky.3 No rural credit unions or local coopera-
I 2The authors recognize a debt of gratitude to managers of the credit
cooperatives who willingly gave of their time and energies in answering many `
· questions and providing information from their files and records, and to Vllillard
Minton who collected much of the data and made preliminary tabulations. The
personnel of the Louisville Federal Intermediate Credit Bank and Federal Land
Bank have provided many items of infomtation and other services too numerous
V to mention. Vllithout such cooperation the study could not have been made.
3 Two Federal Land Bank Associations were partially consolidated. \Vhile
they maintained their corporate identity, a single olliec was maintained to serve
both associations, and they shared the services of a single manager. The special
conditions in these partially consolidated associations made it advisable to exclude
them from the study.
1
, 5  
1 1
.  

 tive banks existed in Kentucky at the time of the survey, and none
exist presently.
This study has three objectives: (1) to make an inventory of  
existing organizational structures and management practices; (2) to 1
focus attention on important questions relating to the management
of local farm credit cooperatives; and   to analyze the possible
consequences of existing practices to the types of cooperatives repre- _
sented in the survey.
FARM CREDIT COOPERATIVES TODAY AND YESTERDAY 1
Federal Lund Bank Associ¤ti0ns* ·
Federal Land Bank Associations operate under federal charters.
The Federal Farm Loan Act of 1916 established the 12 Federal Land
Banks. It also provided for the establishment and supervision of local
cooperative associations of farmers to carry out local phases of
administration, collection, and related activities connected with the
farm real estate mortgage loans extended by the Land Banks. In
1934, 121 small associations operated throughout Kentucky. Through ‘
consolidations, the number of associations was reduced to only 20 in _
1955 and to 16 in 1960 (see Fig. 1).
The history of Land Bank lending operations in the United States
_ and Kentucky is quite similar. (See Figs. 2-A, 2-B, 2-C, and 2-D.) L
A very large volume of loans resulted from the emergency refinancing ·
ol farm mortgages during the 1930's. Land Bank mortgages were
rapidly retired during the more prosperous period of the 19¢l0's.
partly because of wartime scarcities of machinery, equipment, con-
struction material, and consumer items. A contributing factor was y
the Land Banks’ lending policy, which was extremely conservative in
comparison with going market values during this period. Thus  ·
repayments were not oflset by new loans.
\~Vhile outstanding loans have increased in Kentucky since 1950.
. the proportion of all mortgage loans outstanding in Kentucky held
by the Land Bank of Louisville was lower in 1955 than in 1950.* .
In the years 1956 through 1958 there were increases in Land Bank
loans outstanding, in proportion to all mortgage loans outstanding. ‘
A similar situation prevailed in the nation generally. As the experi- ‘
ence during the 1930`s indicates, this system, operating on the basis ol
4 Prior to january 1, 1960 these were called National Farm Loan A.ssociati0m·. A
Although the data were collected at a time prior to this change, we will refer to
them as Federal Land Bank Associations (F.L.B.A.’s) in the discussion to follow.
5 Loans held by the Federal Farm Mortgage Corporation were repaid cxccpl
for an insignihcant amount by 1950. `
  .

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 BlL.DOL. MlL.DOL.
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_ in l
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2 40 h€l(`
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~ the
1 20 By
Prot
Cl`€<
O . . . . . . . O . . . . .· . . . '
1920 25 50 *55 40 45 50 55 50 i920 25 50 55 40 45 50 55 50
Fig. 2-A.- Federal Bank and Land Fig. 2-B.—- Federal Land Bank and tive
Bank Commissioner Loans Outstand- Land Bank Commissioner Loans Out- [1011
ing, United States. standing, Kentucky. 193;
PERCENT PERCENT P
60 60 dec:
In r
COI'!]
40 40 ·
at t
tl-A,
_ 2O 20 _
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ably
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1920 *25 *50 *55 *40 45 50 55 50 1920*25 *50 *55 *40 *45 *50 *55 *50 I
JV
Fig. 2-C.— Percent of Total Farm Fig. 2-D.- Percent of Total Farm · {ASO
Mortgage Debt Held by Land Bank Mortgage Debt Held by Land Bank ’ ‘
and Land Bank Commissioner, United and Land Bank Commissioner, Ken· Tl1€
States. tucky. {Om
Sources; Agricultural Statistics, Agricultural Finance Review, and Federal Land Bank of _
Louisville. Suu
Ban
long-term, "normal value" appraisals, also provides means for reli- Cha,
* nancing old loans or Hnancing new loans during periods when other
credit sources are retracted. The Land Bank system provides an [foot`
important balance—wheel in the mortgage credit market. Possible . gmt,
increases in the relative importance of Land Bank credit relative to A. RO111
the total mortgage credit market must be sacriliced to some degreti Sli`;
during periods of high real estate prices in order to serve this im- locat
portant social function. However, recent studies indicate that its
potential contribution is not fully realized at the present time.“ ‘  
U]. Thomas Romans, Knowledge and Attitudes of Tennessee Farmers C011- ~ Lmr
cerning Credit Practices and Some Effects on Credit Management and Credit A you
{footnote continued on next page) ‘
 

 Production Credit Associations
To complement the long-term credit facilities of the Federal Land
. Bank system, the Federal Intermediate Credit Banks were established
  in 1923. These banks were authorized to make loans of one to three
I years' duration and to make advances on warehoused commodities
‘ held by farmer—owned cooperatives. However, until the Farm Credit
Act of 1933, local facilities for making short-term credit extended by
 X the Intermediate Credit Banks available to farmers were not provided.
By this Act, the Production Credit system, involving the regional
‘ Production Credit Corporations, was established and Production
 · Credit Associations were authorized.7 ,
0 t The Production Credit Associations (P.C.A.’s) are local coopera-
d i tive associations of farmers, similar to the Federal Land Bank Associa-
V. tions. Of the 10 operating in Kentucky, all were organized early in
_ 1934 (see Fig. 3 for location of operating territories).
Total outstanding loans by these associations tripled in the last
decade in Kentucky, while nationally the increase was somewhat less.
In relation to non-real estate agricultural loans outstanding in insured
commercial banks, gains have been very modest, both nationally and
I at the state level, except during the most recent periods (see Figs.
4-A, 4-13, 4-C, 4-D).8
The proportionate share of all short-term agricultural credit sup-
plied by the Production Credit Associations is relatively small, prob-
` ably less than 10 percent when all sources are considered, including
installment commercial loans, open accounts (store credit), and loans
.60 _ by individuals. There seems to be no logical reason why these
  associations cannot become a great deal more important in the future.
Bn. _ The extent to which P.C.A. services expand seems to be mainly
n contingent upon the success achieved in adapting local management,
°l structure of organization, supervision by the Intermediate Credit
i Banks, and their legal framework to the demands of a very rapidly
ill changing agricultural economy and short—ter1n credit market.
ier ·
im (footnote continued from preceding page)
)l€ Costs; Unpublished Master of Science Thesis, University of Tennessee, 1957. i
[0 Romans found that only 30 percent of Tennessee farmers knew the location of
me the nearest N.F.L.A. (now F.L.B.A.) ollice. (Only 10 percent of these farmers
knew what the initials “P.C.A.” represented and, roughly, 25 percent knew the
1U" » location of the nearest office.)
its 7The Production Credit Corporations have recently been merged with the
Intermediate Credit Banks, and their functions have been combined under thc
Intermediate Credit Bank title.
8 Recent loan activity reports indicate very rapid expansion in loan volume.
  LOHHS outstanding in December 1959 in Kentucky 1’.C.A.’s were 56 percent
{ge) greater than 2 years earlier. p
  9  
. 1

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10

  IL. DOL. BIL. DOL.
, 5
0
msunzo COMMERClAL§ 4
snnxs
 0
` wu ,_ -:;gggl:YlO{CREDIT 3
0 (wu `\lN$URED c0MM5nc|A1_
\` BANKS
· \* .1uu1 2
` ‘y“·' ` wu:
0 "' \
 l935 l94O 1945 l950 1955 l960 I { PRODUCTION CREDIT
_ ` •'\u11•1.1 AS? ·
 g, 4-A.— Production Credit Association loans ‘•' Ju V
. , L I
 tstanding and non-real estate agricultural "‘}‘: \
 ns of commercial banks in Kentucky. O -
 5 I935 1940 I945 1950 1955 I96O
 ` Fig. 4-C.-— Production Credit Association loans
outstanding and non-real estate agricultural
‘ loans of commercial banks in the United States.
j Pencewr  
wu 1
ERCENT ·
0 20 /
'Dl`
1, `°
  A
 9 J IO ,'\J:1N.1
g ll JULY 1
. '* .11111.1
0 O ‘
1935 1940 1945 1950 1955 1960 I955 1940 1945 1950 1955 1960
 9-4-B.— Production Credit Association loans Fig. 4-D.— Production Credit Loans as a pro- 1
J Proportion of non-real estate agricultural portion of non-real estate agricultural loans of
 ns of insured commercial banks in Kentucky. commercial banks in the United States.
Source: Agricultural Finance Review, United States Department of Agriculture.
· 1
I 1
11 l
» l
1

 THE COOPERATIVE FORM OF BUSINESS ORGANIZATION . K0 I
A cooperative is a unique fO1`1l1 of business organization. Its pur- i 302;
pose is to beneht eco11omically its 1nembers as patrons, i.e., as users dem
of its services. In a cooperative, in order to achieve these purposes, the mpc
right to control the organi2ation’s policies or mode of operation is Fam
conferred on the patron-members rather than tl1e capital investors - Fedl
(as in tl1e ordinary business CO1`I)Ol`Zlf10l1>. Each 1H€H1I)€1` of a Produc- T
tion Credit Association or Federal Land Bank Association l1as one hc
vote in elections of directors a11d tl1e business matters l1andled at mein-   (
bership meetings. This is true for practically all types of cooperatives nil
in Kentucky. However, i11 certai11 types of cooperatives in other states, [OMC
voting is proportional to so111e 1`ll€ZlSll1`€ of patronage.
In addition, credit cooperatives operate within a special legal
framework. The Farm Credit Acts of 1916 and 1933 set up tl1e main A
legal provisions which apply uniquely to F.L.B.A.’s and P.C.A.'s. r
Subsequent amend111e11ts and special provisions of the Internal POI;
Revenue Code also affect these cooperatives. In order to enjoy the RPO
privileges of discounting services (1".C.A.’s) and otl1er services pro- A Oj il,
vided by the Land Ba11k and Intermediate Credit Bank, member as- _ men
sociations must accept certain restrictions or regulations on their mode do I
of operation. For example, tl1e Federal Land Bank cannot loan in dew
excess of 65 percent of tl1e appraised "normal value" established by Of ti
` La11d Bank appraisers. Bm]
Ma11agement is tl1e process by whicl1 decisions are H12l(I€ pertaining rjghl
to the way an economic unit functions. Management is a function of hold
one or more human beings. I1Vhen it involves more tl1an one, a may
problem arises as to allocating these decision—making responsibilities Of d
among the various people involved.  » the I
Through tl1eir votes, members of cooperatives jointly detern1i11e and
tl1e rights a11d responsibilities of (1) the individual 111e1nbers, (2) tl1e ,1
elected representatives of these members, a11d   tl1e appointed time
A (salaried) personnel l1ired to perform actual operations of the business. Typj
Tl1is syste111 of rights and responsibilities, enforced and supplemented dum
by law and custom, establishes the scope of allowed action (1I12il12lg€· I On D
ment) ol each person or group of persons con11ected w1tl1 tl1e coopera- l ings)
tive.
Of course, the process by which members establish tl1e limits of i
managerial discretion of each person or group of persons is partly mm
indirect. The elected members of the board of directors are given HOW?
certain discretionary powers. They, in turn, can jointly decide within  
limits what responsibilities (management decisions) are delegated thcp
12

 ` to the salaried manager; he delegates to his employees, and so forth.
Thus in considering management problems in these two types of credit
I" cooperatives, we must consider (I) the systems of delegation which
rs  ‘ determine who performs each management function and (2) the
lc ' aspects of their operations which are supervised or controlled by the
IS  _ Farm Credit Administration, by the Federal Land Banks, and by
YS  I Federal Intermediate Credit Banks.9
c` The purpose of most of the legal restrictions and requirements
le placed on local cooperatives is to protect the interests of patrons or
u` the general public. The signihcance of specihc supervisory powers
ES . and legal constraints will be analyzed in the course of the discussion to y
iS’ ~ follow of various elements of management.
al I
En  Y THE ANNUAL MEMBERSHIP MEETING
  ` The annual membership meeting is an activity of unique im-
if portance in cooperatives. In such meetings, by evaluating performance
le _ reports, electing directors, voting on amendments to bylaws or articles
O` ` of incorporation, and by proposing and voting on various resolutions,
‘S` ·` members determine the way their organization functions. lf members
le do not participate in these management decisions, they, in effect,
H _ delegate to those who do participate the right to control the affairs
ly _ of the organization. In the bylaws which are approved by the Land
Bank and Intermediate Credit Bank, the members are guaranteed the
Ig  n right to indirectly manage their credit cooperatives by the mandate to
)t hold annual membership meetings. In addition, special meetings
H . may be called by petition of the membership or by vote of the board
35 of directors. This right of the 1nember—patrons to control, by vote,
the management of their organization is one of the most important
IC and distinctive features of a cooperative organization.
I6 , The annual meeting of credit cooperatives may be held at any
id time which may be established by the board of directors or the bylaws.
S` l Typically, the Federal Land Bank Associations hold their meetings `
fd during january, February, or March, after the end of the Hscal year
E, on December Sl. The Production Credit Associations hold their meet- I
H` _ ings at periods scattered throughout the year.
)[ t 9 The discretionary powers of a local association are still substantial, but
ly SOll`l€VVl']€lt I`lll1'I`OW€I` than lIld€p€Hd€Ht Ill3.I`l(€tlI`lg OI` pll1`CIlB.SlIlg COOPCHIIIVCS.
H However, through participating in election of members of the regional Farm
H Credit Board, member credit cooperatives do indirectly. control ·part of the
policies of the Federal Land Bank, the Federal Intermediate Credit Bank, and
tl the Farm Credit Administration which affect them.
a 13 I
 ’ l
. I
l

 Attendance mth
Reported attendance at annual meetings varied widely. Reports asm
by managers indicated that average 1954 member attendance in the 1 that
P.C.A.’s was 142, and varied from 30 to 450. For F.L.B.A.'s the average OFM
estimated member attendance was 21 and varied from a low of 5 aids
members to a high of 46. However, since average total membership 4 and
was small in the F.L.B.A.’s (220) compared with the P.C.A.’s (1,614), asso'
proportionate attendance by members was not much diderent (9 per- 7 of
cent and 7 percent, respectively). In the 1958 series of animal meetings, Of tl
attendance was 15 percent and 13 percent, respectively. Sum
While members are the only ones entitled to vote, attendance at 1 1
these annual meetings included many nonmembers. Indications are man
that about 60 percent of those attendingthe P.C.A. meetings were mm
members, while about 40 percent of those attending F.L.B.A. meetings Out ‘
were members. Nonmembers attending often include family members, feed
public officials, educators, and others. Presumably, they are invited so mm]
that the annual meeting can serve both business and nonbusiness . NPO
(public relations, information, and education) objectives. \Vhile these NPO
latter objectives may be worthwhile, they may make it difhcult at times to St
to conduct a business meeting in a satisfactory manner. (For discus- ‘ rl
sion of managers views of purposes and evaluation of annual meeting A the
see pp. 31-32. For indications of personnel and procedures used in leml
‘ planning annual meetings see p. 15.) 15 SO
_ atter
The Business Meeting HOW
Although business considerations provide the primary justification jnmif
for holding the annual meeting, characteristically the meeting included [men
a meal, a speech, and sometimes some entertainment as well. Managers
did not indicate clearly, with few exceptions, how much time was
devoted to business. The actual time could 1lOt have been long. A
Managers reported an average of only 2.3 hours for the P.C.A.’s and Pm?
1.9 hours for F.L.B.A.’s for the entire meeting. l`€‘h`€¤
n An annual audit is made of all P.C.A. Hnancial records; F.L.B.A.`S lugs
have an audit once during each 18-month period. These audits are FL}
made by examiners of the Farm Credit Administration as part of its _ $2-50
general supervisory functions.“‘ [1*61)
All P.C.A.'s reported mailing copies of a Hnancial report to mein- A
bers, and 8 of the 10 associations reported distributing additional l‘.C.P
copies at the annual meeting. The secretary-treasurer reported that he, P100
` Assoc
10 However, the audit is not necessarily made immediately prior to the tainn
annual meeting. Typically the financial report presented to the members is bascfl lollO¤
on preliminary figures supplied by the assoeiation’s bookkeeper.
14

 rather than the president, usually presented the report in all 10
ms associations. \Vhen asked how the report was presented, four reported
the that it was rea-d and gave no indication that it was interpreted or that
age other visual aids were used; six read 1t_and interpreted it with visual
[ 5 z aids. 1{eportedly, an average ol 20 m1nutes was devoted to reading
hip and discussing the financial report inthe P.C.A.. meetings. In all such
[4), associations an opportunity was provided for drscussion by members;
mp 7 of the 10 associations reported some participation by members. Part
lgs, of this maylhavebeen attributable to advance drafting of questions to
stimulate discussion in 6 of the associations.
tat The Federal Land Bank Associations, according to reports of
are i managers, distributed copies of the Financial report to members in all
rem , cases, and in all but 4 of the 18 associations copies were bot/1 mailed
Ugg ` out and distributed at the meeting. In most cases (15), the report was
EIS, E read by the manager without comment. An average of about 20
{ SO t minutes was used in presenting and discussing the report. \~Vhile all
mss reported providing opportunity for discussion, only 7 of the 18
msc reported any participation by members. Only 3 reported attempts
mes  ` to stimulate discussion by advance drafting of questions.
CuS_ · The fact that advance plans were made to stimulate discussion in
jug the P.C.A.’s suggests that directors and secretary-treasurers were at-
l in tempting to get greater member participation. In the F.L.B.A.’s there
; is somewhat less evidence that directors and managers were actively
attempting to obtain member participation of this particular type.
` However, P.C.A.’s and F.L.B.A.'s, as a group, apparently achieved
[ion more active participation in the business affairs by those members in
ded attendance than did most other cooperatives covered 1n the survey.
gets 2 _ _
was ‘ Entertainment and Other Ncnbusnness Features
ang. An annual meeting can be conducted at practically no cost, if
and purely business features are the only activities and if no prizes,
A refreshments, etc., are provided. However, local costs of annual meet-
_A_*S ` lugs reportedly averaged about $576 for the P.C.A.’s and $76 for the ‘
are t F.L.B.A.’s. The average cost per person in attendance was roughly
f its $2.50 for P.C.A.’s and $1.50 for F.L.B.A.’s, or $4.00 and $3.50, respec- i
n tively, for enc/1 member in attendance.
iem- _ Among nonbusiness features, free refreshments were served at all
anal P.C.A. meetings and at 11 of the F.L.B.A. meetings. Half of the
the, Production Credit Associations and five of the Federal Land Bank
Associations provided door prizes. All but one P.C.A. provided enter-
. tht l?lll1m€H[ of some kind, usually amateurs; half of the F.L.B.A.’s
Mscd lollowed the same practice. Eleven F.L.B.A.’s and seven P.C.A.’s
15  
l
l
l .

 served a meal in connection with the meeting. F.L.B.A.’s typically B Whi,
paid the entire cost of the meal; P.C.A.’s usually defrayed part of the  ` Self.,
cost. » be I
The above facts verify the hypothesis that the annual meeting of i pi
farm credit cooperatives, particularly the P.C.A.’s, was much more encc
than a process of reviewing past performance, making business de- Cmd
cisions, and electing directors. Because of the supervision of the ’ F€d(
Federal Intermediate Credit Bank and the Federal Land Bank, it mab
may be possible for these particular organizations to transact their Serv;
business adequately at the annual meeting with a minimum of time sccrt
and effort. In any event, questions arise as to the potential needs . by [
which might be served by the membership meeting, their relative I.·_L_
importance, and the degree to which they may conflict. It is important bcfo
to remember that this is almost the only opportunity for farmer—mem- lega
bers, as a group, to hear a comprehensive report on the business affairs by ti
of their organization and to express their will collectively regarding
its operation.
Wha Influences the Annual Meeting Program? _ I
All but three P.C.A.’s used five or more members who were not _. dm?
members of the board of directors to assist in planning the meeting. :1;;
Only five F.L.B.A.’s indicated that members helped plan the meeting. t 1
A Available data do not show how or to what degree these “nonboard" · Wl
members actually influenced the structure of the program. \Vhen [cli
only directors and employees participate in planning, there is the ESO};
possibility of so planning and organizing the annual meeting that man
membership participation in the control of the organization is, to some · q
extent, limited. Furthermore, it means that one opportunity for limi
effectively involving members in the activities of the organization has lute
been foregone. Observation seems to indicate that member involve- HO"
ment in planning tends to stimulate interest in, and learning about, OMB
the organization and its problems. thm
‘ for 1
COOPERATIVE DIRECTORS—THE POLICY-MAKING BODY Solnf
In selecting directors and delegating powers of decision to them, ill?
members probably exert more influence over the way the organization led;
operates than in all other ways combinedll Therefore, the process by SCICC
11 If we look at this from a national level, the most important influences nisiy the
come through the political processes whereby the laws under which tlicsc _
cooperatives operate are established and revised from time to time. For example. 1
the supervision specified by the law may have been crucial to the success of tlw i mini,]
entire cooperative farm credit system, especially in the early years. sewn
16

 HY which these elected representatives are chosen and the type of men
116 Selected are important to the entire success of the organizations they
represent.
of The duties and responsibilities of directors are somewhat influ-
>f€ V errced by the relations between the local associations and the regional
16* credit banks with which they are affiliated. For example, the District
he " Federal Land Bank establis