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TO THE BUSINESSMEN AND FARMERS OF RURAL ILLINOIS: 



This is a statement of the ownership and tax paying position of the Farm Bureau service 

 companies in Illinois. 



The Illinois Farm Supply Company began operations in 1927. It was organized by term 

 leaders from seven counties. These counties had earlier set up their own local service companies 

 and decided that fhey could increase their effectiveness by organizing a state-wide purchasing 

 company. They supplied S22.450.00 which was the first working capital of the Illinois Farm Sup- 

 ply Company. Soon other counties set up their own local service companies and became mem- 

 bers of the Illinois Farm Supply Company. They, too, sold sufficient capital stock to farmers to 

 meet their needs for fixed assets and enough additional to provide their pro-rata share of the 

 capital needs of Illinois Farm Supply Company. This policy is still in effect. To show how this 

 works, let us consider two recent developments: 



In January, 1948. the Illinois Farm Supply Company purchased a corporation known as 

 Pana Refining Company. This company has continued in operation under that name and is a 

 Federal income tax paying corporation. Then in June. 1948. the Illinois Farm Supply Company. 

 with two other large midwestern co-operatives, purchased the Premier Petroleum Company of 

 Longview. Texas. To finance our share of these and other transactions, the 105 member com- 

 panies bought and paid for S3. 500. 000.00 in additional capital stock of the Illinois Farm Supply 

 Company. To do this, these member companies not only sold this S3. 500.000.00 but also another 

 SI. 000,000.00 in stock for their own capital needs. The extra SI, 000,000. 00 was used to cover 

 improvements and additions to their own local facilities. 



Today, after almost twenty-two years of operations, the farmers of Illinois have directly 

 and indirectly invested in Illinois Farm Supply Company and its 105 member companies SIO.- 

 707,750.00 in capital stock. These farmers are the real owners of the S10,868.700.00 worth of fixed 

 assets at depreciated value. 



These Farm Bureau service companies and Illinois Farm Supply Company poy Federal 

 income taxes. In fact, they pay the same kind of taxes that your business does. All monies paid 

 out in capital stock dividends are subject to taxation. Moreover, all monies retained in the 

 capital structure of the company are taxed. Combined Federal income tax payments of these 

 105 Farm Bureau service companies and Illinois Farm Supply Company and its subsidiaries 

 in 1948 will approximate SI. 000. 000.00. 



Our farmers paid for what they own with cash. The earnings of these operations are 

 distributed to the farmers in cash — S28.942.0 18.00 has been paid out in patronage refunds 

 since 1927 without any strings attached. During this same period in addition these companies 

 have paid dividends on capital stock in the total amount of 52,355.938.00. 



Expansion, either In the county companies or in the Illinois Farm Supply Company, has 

 been financed by money invested by farmers in their local county companies, and these local 

 companies in turn have invested a part of this money in the capital stock of the Illinois Farm 

 Supply Company. THIS EXPANSION HAS NOT COME FROM RETAINED TAX-FREE EARNINGS. 



This open letter is written in the interest of better understanding. We strive to be good 

 citizens, good businessmen, boosters of American free enterprise, and fair competitors. 



ILLINOIS FARM SUPPLY COMPANY 





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608 SOUTH DEARBORN STREET • CHICAGO 5. IlllNOIS • PHONE HARRISON 4774 / Jcf'Tlr/-- 



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