ORGANIZATION OF COOPERATIVE GRAIN ELEVATOR COMPANIES. 19 



almost the universal practice to fix the buying margins for the different kinds of 

 grain with special reference to differences in handling cost. Therefore no further 

 apportionment of expense is necessary, since the net margins will be about the 

 same. Excessive earnings which accrue on some particular kind of grain usually 

 are due to market changes after the grain has been bought from the farmers and 

 are not the result of differences in first-hand buying margins. Exceptions will, of 

 course, have to be made of certain kinds of grain handled under abnormal conditions. 



Sec. 3. Members' share. — Each member shall receive patronage refund based 

 upon the total volume of grain and other products sold to the Association and 

 the volume of supplies and merchandise of all kinds bought from the Associa- 

 tion during the year, which shall be computed by applying the refund rates as 

 determined under division (a), (&), and (c) of section 2 hereof. 



Sec 4. Nonmembers' share. — Each nonmeber may receive patronage refunds 



under the provisions of this article at : the rate which is paid to 



members, provided that refunds appearing to his credit may first be applied 

 to the purchase for him of one or more shares of the capital stock of this 

 Association. 



Sec 5. Disposal of unapportioned share and now/members' unapplied refund. — 

 If nonmembers share in patronage refunds at a rate less than the rate paid 

 to members the difference may be diverted to the surplus of the Association 

 or may be distributed among the members in such manner as the Board of 

 Directors may determine. In like manner any portion of the patronage refunds 

 payable to nonmembers which is not accepted under the conditions of section 

 4 may be similarly diverted or distributed, but patronage refunds payable to 

 nonmembers shall be carried under separate account for a period of [two] 

 years before being so diverted or distributed. 



Note.- — For the purpose of making income-tax returns under the Internal Revenue 

 Laws, the special dividend provided for in this section should be kept separate from 

 the refunds accruing upon, members' patronage. 



Sec 6. Notice of refund due nonmembers. — At least once each year there 

 shall be mailed to each nonmember entitled to refund, a notice which shall 

 state the amount of refund due and the conditions under which the refund 

 will be made, and which shall contain a suitable form of application for mem- 

 bership. 



Sec 7. Capital impairment. — In no event shall dividends on capital stock 

 as provided for in division (&) of section 1, hereof, be paid out of the capital 

 stock, but in case the earnings of the Association in any year shall be insuffi- 

 cient for this purpose, a sum equal to such deficiency may be set aside from 

 the earnings of the following year before any portion of these earnings is 

 made available for patronage refunds. 



Note. — This article may appear to be unnecessarily specific and detailed, but a 

 simple statement that earnings over and above expenses and certain reserve items 

 shall be distributed on the basis of patronage furnished is capable of various in- 

 terpretations and applications, and it is believed that a practical and definite plan 

 should be determined upon and incorporated into the By-Laws in order that it 

 may be applied uniformly at all times. 



Akticxe IX. — Sundry Provisions. 



Section 1. Fiscal year. — The fiscal year of this Association shall commence 



and end on the day of the following . 



Note.- — Whenever possible, the fiscal year should end after the close of one sea- 

 son's business and before the opening of the next. Thus, a grain elevator usually 

 has its fiscal year ending in spring or early summer, when practically all of the 

 work of handling the previous season's business has been finished. 



Sec 2. Indebtedness. — The amount of indebtedness which may be incurred 

 by or in behalf of this Association shall not at any one time exceed [two-thirds] 

 of the paid capital stock. 



