26 BULLETIN 860, U. S. DEPARTMENT OF AGRICULTURE. 



The third method leaves the question of surplus open except in so 

 far as it is used as a basis for fixing the real value of shares in 

 the old organization. Under this method a new organization would 

 be formed with a capital stock and proposed surplus identical with 

 that of the old, the effect being to make the true value of shares in 

 the new organization an amount above par exactly identical with 

 the value above par of the shares in the old organization. It would 

 be necessary to place the value of shares to new members at a price 

 above par value which would make their contribution to the surplus 

 equal to that contributed by the old members, or in other words, 

 equal to that which the old members would have received had the 

 surplus been distributed as a cash dividend. 



In point of fairness to the members of the old organization and 

 safety to the new organization the last method would seem to be the 

 best. The chief objection would be the difficulty of convincing 

 members that book value or true value as measured by the surplus 

 should form the basis of price rather than the par value which hap- 

 pens to be printed upon a stock certificate and which may as fre- 

 quently appear on stock certificates representing stock of no value. 



GENERAL SUGGESTIONS. 



SELECTION OF PLANT. 



The selection of the type of plant and the location involves two 

 problems. The first and most difficult is that of deciding whether to 

 purchase an existing elevator plant or to build a new one. It usually 

 is considered advisable to purchase one of the local elevators if one 

 is for sale and if it is found suitable for the purpose. The next 

 problem is to proceed in such manner that an excessive price will not 

 be placed upon the elevator which it is desired to purchase. 



" Good will," which in certain commercial organizations is placed 

 at high value, usually is of minor consideration to a cooperative 

 association, because it depends principally upon a membership for 

 patronage. This fact should be presented fairly and fully to the 

 owners of the property under consideration, and an option of pur- 

 chase should be secured from them. After a company has been 

 formally organized and before any property is purchased the services 

 of a reliable and disinterested consulting engineer should be secured 

 to examine and appraise the property and to determine what repairs 

 and improvements are necessary to make it entirely suitable and 

 capable of efficient operation. The services of such a person are 

 usually well worth the cost whether it is decided to buy or to build a 

 plant. If it is decided to build, his services will be needed in check- 

 ing the estimates and proposals of the different contractors who are 

 invited to submit plans and bids. Not always can the proposal of 



