COOPERATIVE MILK-DISTEIBUTING PLANTS. 5 



A number of nonstock organizations have been financed through 

 the sale of certificates of indebtedness. These certificates are sold for 

 cash the same as capital stock. The rate of interest is fixed and date 

 of maturity stated on the certificate. They may be sold to any one, 

 since voting power is limited to members only. Usually the certifi- 

 cates of indebtedness are issued in series which mature in from 1 to 

 5 or 10 years with amortization coupons attached which mature an- 

 nually. These certificates are paid with sums deducted monthly from 

 patrons' checks and for which the patrons are issued new certificates 

 annually. The interest on the certificates is considered an operation 

 expense and is paid from the reserve fund established for this pur- 

 pose. 



FORMING THE ORGANIZATION. 



If the establishment of a cooperative milk plant appears advisable 

 after a very thorough survey has been made of the local situation, 

 the actual work of forming the organization can be taken up actively. 

 Preliminary meetings of the prospective members should be held 

 and the proposed plans of the organization thoroughly discussed at 

 such gatherings. If the successful establishment of a plant seems 

 feasible, an organization committee should be chosen at a called meet- 

 ing of the prospective members. This committee should proceed 

 with the formation of the permanent organization, including the 

 drafting of suitable by-laws, a marketing contract, and plans for 

 financing the proposed plant. 



Subcommittees of the organization committee may be selected to 

 undertake various lines of work. Thus, there may be a subcommittee 

 on membership and a subcommittee to obtain information on the cost 

 of plant and equipment. The latter committee may find it beneficial 

 to inspect the operation of plants already established. First-hand 

 information regarding methods employed, difficulties encountered, 

 and problems to be met in a new plant will be most useful and 

 valuable. 



After the organization committee and its subcommittees have com- 

 pleted their preliminary work, a meeting should be held at which 

 the question of perfecting a permanent organization should be 

 decided definitely. Where it is decided to establish a milk-distribut- 

 ing plant, the various plans submitted by the organization committee 

 should be discussed and approved with such changes as seem advis- 

 able. Temporary directors should be elected at this meeting and 

 authorized to proceed to incorporate the organization. 



INCORPORATING THE ORGANIZATION. 



The committee that works out the organization plans should obtain 

 all information possible relating to the corporation laws of the State 

 in which the organization is being formed, because the plan must fit 



