l8 MANAGEMENT OF DAIRY PLANTS 



3. Treasury Stock. — Issued stock which has become the 

 property of the corporation by purchase, gift, etc., is known 

 as "treasury stock." As such it is inactive, since it does not 

 share in profits and has no power to vote. It is considered as 

 an asset of the company and may be sold or held by the com- 

 pany at the discretion of the directors. 



4. Watered Stock. — This is stock that represents more than 

 the full value of money which has been paid into the treasury 

 of the company. Stock is watered by the unscrupulous cor- 

 poration either for the purpose of making a big profit on the 

 sale of stock or for the purpose of deceiving people as to the 

 real earnings being made. Consider, for example, an electric- 

 light company. It has invested $100,000 in the enterprise. 

 The stockholders realize 25 per cent on their investment. In 

 order to comply with certain state laws as well as to conceal 

 from the public the enormous rate of dividend, the corporation 

 issues stock up to $200,000 without correspondingly increasing 

 any tangible values on which that additional stock rests. On 

 such an inflated capital this annual dividend then becomes Z2}4 

 per cent instead of 25 per cent. 



Certificate of Stock. — A certificate of stock is evidence of 

 ownership. It is transferable when properly indorsed by the 

 owner and made payable to the purchaser. It is then to be 

 transferred on the books of the company. 



Dissolution of a Corporation. — A corporation may be dis- 

 solved (i) at the expiration of the predetermined time, (2) by 

 the voluntary act of the stockholders, (3) by law — as in case 

 of fraud or dishonesty in the conduct of business by the direct- 

 ing board or the managing officers, (4) by insolvency. 



When a corporation is dissolved, the debts of the company 

 are first to be paid. The balance of the assets will then be 

 divided among the stockholders in proportion to their holdings 

 in the company. 



MUTUAL COOPERATIVE CREAMERY ASSOCIATION 



This form of creamery organization was originated in Den- 

 mark in 1882 by Stilling Anderson of Copenhagen. The asso- 



