ii8 COOPERATIVE MARKETING 



several parties of the second part, the cash proceeds of all 

 sales of their fruit as soon as received, retaining the broker- 

 age for expenses, as above provided. 



The parties of the second part further agree to pay to 

 the party of the first part as liquidated damages the sum 

 of twenty-five cents a box on all citrus fruits controlled by 

 them, which, through any fault of their own, they fail to 

 deliver to the party of the first part, loaded on cars at ship- 

 ping station of said party of the second part. 



. . . Provided, that any of the parties hereto may with- 

 draw from and cancel this agreement during the first fifteen 

 days of August in any year, by giving notice in writing 

 during said period to the party of the first part. 



As indicated in the above agreement, the operations of 

 the district exchange are so intimately connected with the 

 activities of the California Fruit Growers Exchange that 

 an explanation of most of them must perforce be postponed 

 until the latter organization is described. However, a few 

 points in the agreement call for discussion. First, it should 

 be noted that the agreement is between corporations and 

 not individuals. In fact, the district exchange is a kind 

 of reversed holding company, for instead of the holding 

 company controlling the constituent corporations, in this 

 case the constituent corporations control the holding com- 

 pany.^ Yet in practice the district exchange often deter- 

 mines the disposition of the greater part of the output of 

 its component units, just as an ordinary holding company 

 would do. 



The district exchange is authorized to retain from the 

 proceeds of fruit sales a brokerage sufficient to pay the ex- 

 penses of its operations. Such a stipulation involves several 

 implications. It suggests that the district exchange makes 



1 Of course this comparison with the holding company is merely an 

 analogy, for the district exchange owns no stock in the local associa- 

 tions. On the contrary, the local associations own all the stock of 

 the district exchange. 



