The Farmers' Alliance Exchange of Texas, the central state cooperative exchange of the Farmers' Alliance, opened for business in Dallas in September 1887. The idea had been outlined at the alliance's January 1887 meeting by Charles William Macune. The proposed exchange would help the farmer sell his crop at higher prices and purchase supplies at lower prices. Macune was subsequently elected state business agent of the alliance and in August set forth detailed plans for the exchange. It was to be based on a capitalization of $500,000, raised by a two-dollar assessment on each member. Dallas was chosen as the site for the venture when the city offered a $3,500 cash bonus and a 100-by-150-foot lot in the business section.
In order to bring the individual farmer closer to the prices being paid for cotton on the world market, a system of weighing, numbering, and grading cotton by local alliance agents was devised. Only samples of the cotton were sent to Dallas. Buyers from all over the world could then bid on the cotton on the basis of the samples, with the exchange guaranteeing the weights and samples.
Initially the exchange also supplied goods at a discount on a strictly cash basis. Most of the members were unable to take advantage of the system because they had no cash and were locked in the crop-lien system. In an effort to make the exchange more useful and break this system, the directors of the exchange announced the joint-note plan. The exchange would provide goods to farmers on credit and would accept notes signed jointly by poorer farmers and their more prosperous landowning neighbors as collateral. To pay suppliers, the directors planned to borrow money from area banks with the joint notes as collateral. By March 1888 over $200,000 in joint notes had been forwarded to the exchange, and the exchange began issuing supplies.
As the joint-note program began, the directors of the exchange began construction of a building on the lot Dallas had given the organization. Although Macune opposed it, the directors decided to build a massive and elaborate four-story structure at a cost of $45,000. As the joint notes continued to pour in, Macune made unsuccessful efforts to find banks that would advance money on them. Furthermore, although original plans for the Alliance called for a capitalization of $500,000, the paid-in capital of the exchange was only slightly more than $20,000. By May 1888 creditors were demanding payment, and the exchange faced bankruptcy. June 9 was designated a day for mass meetings, and in 200 counties across Texas, farmers gathered to pool their meager resources in an effort to save the exchange. From the pledges received that day, the exchange eventually realized a little over $80,000. That was enough to prevent immediate collapse, but the exchange was forced to curtail its activities, since bankers and suppliers alike continued to refuse to accept joint notes as collateral. Indebtedness and a lack of patronage after the failure of the joint-note plan forced the liquidation of the exchange in December 1889.