10 BULLETIN 931, U. S. DEPARTMENT OE AGRICULTURE. 



Section 20 of the act to incorporate the Saskatchewan Coopera- 

 tive Elevator Co., Ltd., stipulates the manner of apportioning earn- 

 ings. In substance it provides that after expense of operation and 

 certain charges have been paid, including the payment of install- 

 ments and interest of loans due the Government, out of the remain- 

 ing earnings may be paid a dividend not to exceed 10 per cent upon 

 the paid-up capital ; 50 per cent of the balance, if any, may then be 

 distributed in several different ways : 



( 1 ) It may be paid to the shareholders in the form of a patronage 

 dividend, proportionate to the volume of business which each has 

 brought to the company. Under this method the earnings of the 

 company are considered as a whole, no account being taken of the 

 variable net profits accruing from the different locals. 



(2) It may be paid to the supporters of the locals on the basis of 

 the aggregate relative net financial results of the respective locals. 

 This method recognizes the differences in operating cost at the differ- 

 ent locals and provides a means whereby the supporters of less profit- 

 able locals may be precluded from sharing fully in the profits of locals 

 which have been better supported. 



(3) It may be paid partly according to each of the above- described 

 methods. In this case the supporters of a particular local may share 

 less fully in the earnings which are peculiar to that local than they 

 would under method 2. 



(4) It may be applied on the unpaid portion of shares ; that is, a 

 certain amount may be placed to the credit of the shareholders for 

 each share held but not fully paid up, thereby lessening the unpaid 

 portion and increasing the paid-up capital stock of the company. 



The remaining 50 per cent of the balance may be set apart as a 

 reserve under what has been designated in the act of incorporation 

 as " the elevator reserve account." 



While patronage dividends may be paid the members of the Sas- 

 katchewan Cooperative Elevator Co. to the extent of 50 per cent of 

 the net profits remaining after certain other payments have been met, 

 including a dividend on capital stock, no such patronage dividends 

 have ever been paid. Under a rule of the Winnipeg Grain Exchange 

 forbidding rebates, the payment of patronage dividends has been re- 

 garded as a form of rebates subjecting the member to suspension, and 

 this is one reason that patronage dividends have not been paid. There 

 is some sentiment for patronage dividends, but so far the directors 

 of the company have felt the need of all earnings which have accrued 

 and have employed them in the further expansion of the business. 



Op to the present time the Saskatchewan Cooperative Elevator 

 Co. has confined its activities to the handling of grain exclusively and 

 has not engaged in handling supplies of any kind. 



