32 
BULLETIN 1237, U. S. DEPARTMENT OF AGRICULTURE. 
deduction of 4 cents will be used to retire the oldest outstanding 
certificates, thus increasing the rate at which stock ownership is read- 
justed. It is estimated that through the use of this device the capital 
stock will completely revolve in approximately seven years. In other 
words, stock issued during any year will be purchased seven years 
later and the amount paid for this stock will be returned to the re- 
spective association for distribution to the growers who contributed it. 
It is the policy of the Fruit Growers Supply Co. to accrue an annual 
dividend of 6 per cent on its capital stock as a part of its operating 
expense. After deduction of operating expenses, it is provided that 
0.1 per cent of the total value of business transacted shall be trans- 
ferred to a reserve fund: then, after the payment of dividends to 
stockholders, the balance of the accumulation are available for refund 
to members on the basis of the amount of business transacted by 
them through their supply company, thereby reducing the final price 
paid for materials to net actual cost. 
The board of directors of the Calfornia Fruit Growers Exchange, 
as representatives of the member stockholders, are also the directors 
of the Fruit Growers Supply Co. (See fig. 8.) The officers are for the 
most part identical with those of the exchange except that each 
General Organization of the Exchange System. 
LOCAL UNITS 
20 
DISTRICT 
EXCHANGES 
PURCHASING 
THE 
rRUIT GROWERS 
SUPPLY COMPANV 
, (ihcobpobatcd) 
CALIFORNIA FRUIT GROWERS 
EXCHANGE 
( iNConoomTCD ) 
DIRECT 
CONTRACT 
SHIPPERS 
ORANGE 
BY-PRODUCTS 
THC EXCHANGE 
ORANiOC PRODUCTS 
COMPANY 
(tNCORPonA res) 
LEMON 
BY-PRODUCTS 
THC CXCHANGC 
LEUOS PRODUCTS 
COMPANY 
- J">ATCO) 
Fig. 8.— The locals are federated into the 20 district exchanges shown. Each district elects a director to 
the central exchange. The individual locals own the stock of the two by-product companies and the 
supply company, but the stock of the supply company is held in escrow by the exchange and voted 
by the exchange directors. The direct contract shippers use all the facilities of the centralized com- 
panies, but since they are not federated into district exchanges they are not represented on the board 
of directors of either the California Fruit Growers Exchange or the Fruit Growers Supply Co. 
company has its individual operating organization headed by a gen- 
eral manager. The supply company, therefore, though a part of the 
exchange system, can not properly be considered a branch or depart- 
ment of the exchange. It is an entirely separate company organized 
by the associations affiliated with the California Fruit Growers Ex- 
change for the purpose of securing the essential supplies required for 
the packing and marketing of their fruit, while the exchange is a 
non-iock marketing organization formed by the same grower-associa- 
tions lor the purpose 01 marketing their fruit in tin orderly manner. 
Approximately 50 per cent of the purchases made by the supply 
company for their members consists of packing-house supplies; that 
