18 BULLETIN 860, U. S. DEPARTMENT OF AGRICULTURE. 
Sec. 4. Control of help. — He shall have control over and may employ and dis- 
miss all agents and employees of the Association not specially employed by the 
Board of Directors. 
Note. — The principal responsibility for success falls upon the Manager, and his 
power should he limited as little as possible. If he can not be trusted to administer 
the details of all the ordinary and usual business operations, he should be replaced 
with a Manager who is worthy of full confidence. The Manager and the Board of 
Directors should work together, but meddling on the part of individual members 
should not be tolerated. When cooperative elevators become involved in financial 
difficulty the cause is frequently due to speculation, not in futures nor always inten- 
tionally, but simply through failure to know each day the exact status of grain 
contracts, purchases, sales, and hedges. For this reason the daily grain statement 
in section 2 should be insisted upon. 
AETICLE VIII. EABXINGS. 
Section 1. Apportioned. — At the end of each fiscal year the total net earnings 
of the Association which remain over and above all expenses and a reserve for 
depreciation shall be apportioned in the following manner : 
(a) Surplus.— There shall be appropriated for the purpose of creating a 
surplus not less than [ten] per cent of the net earnings until such surplus shall 
equal at least [fifty] per cent of the capital stock paid. 
(&) Dividend on capital stock. — There shall be appropriated for the purpose 
of providing a dividend on capital stock a sum which shall equal but not exceed 
[six] per cent of the amount of capital stock issued and outstanding. 
(c) Educational. — There may be appropriated for educational purposes and 
for promoting cooperation and improvement in agriculture a sum equal to [five] 
per cent of the net earnings. 
(d) Patronage refund. — The remainder of the net earnings shall be appor- 
tioned upon patronage in accordance with the method stipulated in section 2. 
Sec. 2. 21ethod of refund. — The earnings upon grain operations, the earnings 
upon miscellaneous products, and the earnings upon supplies and merchandise 
operations shall be segregated into groups (a), (b), and (c), respectively. 
Additional groups shall be established only as are necessary to provide for vari- 
ous commodities handled on widely varying net margins. Special transactions 
handled on the basis of actual cost of service shall be excluded in computing 
patronage refunds hereunder. 
(a) G-rain rate. — The total net earnings which accrue from grain operations 
after deducting an equitable proportion of all expenses and the appropriations 
provided for in section 1 shall be divided by the total number of bushels of grain 
of all kinds bought by the Association during the year. The result shall be the 
patronage refund rate per bushel to be applied to grain purchased from members. 
(b) Miscellaneous products rate. — Patronage refund rates for other products 
bought by the Association shall be determined in the same manner as provided 
for grain except that they may for convenience be determined upon the basis 
of money value, instead of per unit, at the discretion of the Board of Directors. 
(c) Mercliandise rate. — The total net merchandise earnings which accrue 
from merchandise and supplies operations after deducting an equitable pro- 
portion of all expenses and the appropriations provided for in section 1 shall 
be divided by the total volume in dollars of the merchandise sales during the 
year. The result shall be the patronage refund rate in per cent to be applied 
to merchandise sales. 
Note. — When various kinds of products and supplies or merchandise are handled 
it may be desirable to establish different rates of refund based upon differences in 
margins and haudling costs. In this case those commodities which carry the same 
or nearly the same margins and handling costs should be grouped and refund rates 
established to apply to each group. It will not be necessary except in rare instances 
to establish different rates of refund for the different kinds of grain handled. It is 
