254 THE MARKETING OF WHOLE MILK 



ment of the preferred stock at par unless needed as working 

 capital in the business. Let the new company enjoy, if it can 

 earn it, an average annual net income from its milk business and 

 available for dividends of one-half a cent a quart of milk pur- 

 chased and handled by it. Provide that if the net income in 

 any one year exceeds that limit by an amount more than suffi- 

 cient to make up the average permitted net income from pre- 

 ceding years, the disposition of the excess shall be determined 

 by a board of arbitration, which, like the board of appraisal, 

 shall consist of three members and be appointed by (for exam- 

 ple) the Chief Judge of the Court of Appeals and chosen from 

 among the leading business men of the state. In this way re- 

 move the incentive to try to make greater profits than the limit 

 fixed by the law. During the war both the government and 

 business had considerable experience in price fixing, and as a 

 result thereof it is generally conceded that the limitation of 

 profits works better than arbitrary price fixing. While the 

 former does, of course, have a deterrent effect in attracting new 

 capital for needed improvements and extensions, still it does not 

 run counter to the economic law of supply and demand, whereas 

 the latter is open to both the objections above noted, and fur- 

 thermore is objectionable because it is impossible to conduct 

 business on the basis of a controlled selling price and of uncon- 

 trolled costs. Require the corporation to file a financial report 

 each year with the state comptroller showing its financial con- 

 dition and the amount of net income realized and to permit an 

 inspection of its books, records, and accounts." 



The plan was to become operative "when two or more 

 of the distributors doing in the aggregate a very substantial 

 part of the fresh milk business in the metropolitan dis- 

 trict joined the new corporation." 



The salient points in his plan were thus outlined: 

 "Sound capitalization, limited profits, full publicity, 

 participation of producers and consumers in the board of 



