THE I. A. A. RECORD 



Pay Five 





■ 



Facts For The Grain Producer 



By HARRISON FAHRNKOPF .j . 



Director Grain Marketing, Illinois Agricultural Association .;: ..^ , ' • 



Harrison Fahrnkopf 



LETTERS have come to our office 

 calling attention to a comparison 

 sheet sent out from the office of the 

 Illinois Farmers Grain Dealers' Associa- 

 tion. There are set forth various points 

 for comparison between the ILLINOIS 

 GRAIN CORPORATION and the 

 National Farmers' Elevator Grain Com- 

 pany Co-Operative (Rural Grain Com- 

 pany). 



The ILLINOIS AGRICULTURAL 

 ASSOCIATION and the ILLINOIS 

 GRAIN CORPORATION believe that 

 the producer is best 

 served by his or- 

 ganization when 

 that organization 

 uses its time, funds 

 and personnel in 

 promoting its own 

 program rather 

 than talking 

 against the other 

 fellows. The pro- 

 ducer gets little if 

 any service from 

 an organization whose officers and em- 

 ployees spend their time endeavoring to 

 halt the progress of a sound program. 

 This opposition pierhaps is inspired by 

 other than producer interests. 



The ILLINOIS AGRICULTURAL 

 ASSOCIATION is not opposing the 

 existence and operation of the Rural 

 Grain Company. The real issue is con- 

 tract or agreement marketing versus 

 the "voluntary" plan of marketing. 

 The ILLINOIS GRAIN CORPORA- 

 TION is going forward basing its ac- 

 tivities on the need for concentrating 

 the largest possible volume of grain 

 through single selling agency hands. It 

 believes that this can most effectively 

 be done through the medium of the 

 contract or agreement plan. ■. . 



Let's Go Down The Line 



The following "headings" were used 

 in the above mentioned comparison: 



No. I — form of Organization. The 

 ILLINOIS GRAIN CORPORATION 

 was organized under the 1923 Illinois 

 law, known as the "Agricultural Co- 

 Operative Act." This law has many 

 advantages over some of the other acts 

 under which our co-operatives are op- 

 erating. 



A country elevator association organ- 

 ized or reorganized under the "Agri- 

 cultural Co-Operative Act of Illinois" 

 is a corporation organized for the mu- 



tual benefit of its members and is not 

 organized for profit. 



A co-operative country elevator asso- 

 ciation organized under the "Corpora- 

 tion Act of 1872," or "The Co-Opera- 

 tive Association for Pecuniary Profit 

 Act of 1915," or the "General Corpora- 

 tion Act of 1919," is a corporation or- 

 ganized for pecuniary profit. 



1. From a legal angle, the distinction 

 is important and the Supreme Court of 

 the United States during the year 1929, 

 in what is known as "The Oklahoma 

 Cotton Gin Case," made a very un- 

 favorable ruling against a co-operative, 

 because it was not organized under an 

 act "not for profit." ..-■"....•-.- 



2. A country elevator association or- 

 ganized under the Agricultural Co- 

 Operative Act (1923) of Illinois, is 

 not required to obtain a license from 

 the Secretary of State to sell its stock. 

 This is not true of country elevator 

 associations or other co-operative asso- 

 ciations organized under the other acts. 



3. The annual franchise fees of cor- 

 porations organized under the acts other 

 than the 1923 act are based upon the 

 amount of capital stock outstanding, 

 whereas, the franchise fees for a co- 

 operative association organized under 

 the 1923 act are only ten dollars ($10) 

 per year, regardless of the amount of 

 stock issued and outstanding. 



4. A country elevator association or- 

 ganized under the act of 1923 can have 

 different classes of stock and of differ- 

 ent par values, or of no par value. A 

 country elevator association organized 

 under the 1915 act cannot have classes 

 of stock. The 1923 act permits greater 

 flexibility in providing for classes of 

 stock to meet the local condition. 



5. The limit of stockholding in a co- 

 operative association organized under 

 the 1923 act is five {'i'^'c) per cent of 

 the authorized common stock, and no 

 limitation on the preferred, whereas, the 

 limit of the other acts is five ( 5 ) shares. 



6. The liability of directors of a co- 

 operative association organized either 

 under the act of 1915 or of 1919 is 

 possible in certain instances. This is 

 not true under the 1923 act. If direc- 

 tors borrow money or create obliga- 

 tions in excess of the paid-in capital 

 stock and surplus, there is a personal 

 liability on the directors under the other 

 corporation acts. This is not true un- 

 der the act of 1923. 



What Is The I. A. A.> 



No. 2 — Sponsored by. Sponsored by 

 ILLINOIS AGRICULTURAL ASSO- 

 CIATION, which has 58,000 farmer 

 members in Illinois. It is not only the 

 outstanding farm organization in Illi- 

 nois but one of the strongest state or- 

 ganizations in the entire country. It 

 is absurd for anyone to infer that this 

 organization does not represent the best 

 interests of the farmer. ' _ : , : 1- 



No. 3 — Authorized Capital Stock. 

 It is true that the ILLINOIS AGRI- 

 CULTURAL ASSOCIATION holds 

 100,000 shares of preferred "B" stock 

 of no par value. This stock cannot 

 participate in the earnings nor in divi- 

 dends in case of dissolution, further- 

 more, neither can it be voted in excess 

 of the number of shares of common 

 stock outstanding; in other words, 

 where member elevators hold both com- 

 mon and preferred stock, it is never 

 possible for the preferred "B" stock to 

 out-vote. For example, if the average 

 elevator buys $2,000 of stock, which 

 would be 20 shares, it would own 20 

 shares of preferred and if it had 200 

 farmer patrons it would have issued to 

 it 200 shares of common, and altogether 

 have 240 votes as against 200 votes 

 from the Illinois Agricultural Associa- 

 tion. 



Then remember, that the Illinois Ag- 

 ricultural Association admits any farm- 

 er who desires to be a member. Many 

 of these votes cast by the Illinois Agri- 

 cultural Association are represented by 

 the same farmers who enable the ele- 

 vator to qualify for common stock; in 

 other words, the preferred "B" stock 

 should be looked up>on as a double con- 

 trol stock in the hands of the producer. 

 It is merely a plan instituted for the 

 purpose of restraining private or inde- 

 pendent or old line business concerns 

 from getting control of our co-ojjera- 

 tives. Today too many of our local 

 co-oj>eratives are dominated by other 

 interests than those of the producer; in 

 fact, the grain trade now has a con- 

 trolling interest in many of our farmer 



elevators. ■_. ■:■?.:■».;:. ]. 



•■■'.- ■• , . . . _ J 



Another Falsehood Nailed [- 



No. 4 — Voting Control. The com- 

 parison says, giving the Illinois Agri- 

 cultural Association "absolute control 

 without any investment." This is ab- 

 solutely untrue. The Illinois Agricul- 

 tural Association has placed at the dis- 

 (Continucd on page 7) 



