Origins of a Current Conflict? An Examination of Stock-Nonstock Cooperative Law

Abstract

The earliest state cooperative laws in the United States were stock laws modeled upon the Rochdale experience and were adaptations of basic corporate laws of Incorporation to the cooperative form of organization. They emphasized stock as the basis of membership and the distribution of profits to members in proportion to patronage. After 1911, the dominant form of cooperative law became the nonstock law, which emphasized service at cost and the personal, fraternal nature of membership in a cooperative. Since 1925, both forms of cooperative law have coexisted. The different emphasis placed on capital stock, profit, and membership in a cooperative by the two different legal structures may be one contributing factor to current dilemmas cooperative leaders face in generating and rewarding equity capital.