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), (b), 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 nonmembers' 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 (6) 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. 
Akticle 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. 
