22 MANAGEMENT OF DAIRY PLANTS 



while others are operated on much the same plan as a business 

 corporation. 



Capital and Dividends. The joint-stock company differs 

 from the cooperative organization in that it declares dividends 

 on capital stock and that stock is frequently held by people 

 who are not producers. Some creameries operated under this 

 form declare a large dividend on capital stock, but such divi- 

 dend should not at any time exceed the current rate of interest 

 on money loans. Some of these associations, when properly 

 controlled by the producers, stipulate in their articles of incor- 

 poration what per cent of dividend may be declared. Some do 

 not designate such returns as dividends but as interest. They 

 are thus making the cooperative feature more prominent and 

 are also guarding against the possibility of any stockholder 

 obtaining an unfair dividend, as the maximum rate of interest 

 is defined by law. 



Price Paid for Raw Material. Some creameries draw a 

 distinct line between patrons who are stockholders and patrons 

 owning no stock. They often pay a non-stockholder from one 

 to two cents less per pound for butter fat delivered to the cream- 

 ery; at the same time they deduct from his check a regular 

 membership assessment for running expenses and for the sink- 

 ing fund from which dividends and cost of repairs are paid. 



To illustrate, suppose a creamery thus organized and con- 

 ducted received an average of 400 pounds of butter fat daily 

 or 144,000 pounds annually. If its capital stock was $5,000 

 and one cent per pound were deducted for fat received, the 

 dividend declared in that way would amount to $1,440 an- 

 nually, or 28.8 per cent of the capital stock. At the same time 

 patrons might be required to contribute to the sinking fund 

 from which the regular dividend on capital stock is to be de- 

 clared to stockholders. 



Obviously, the price paid for butter fat should be the same 

 for all, whether stockholders or not. When non-stockholders 

 assist in creating a sinking fund from which dividends and cost 

 of repairs are paid, no more can rightfully be asked of them; 

 nor is it fair to the patrons of such a creamery to create a sinking 



