78 DEPARTMENT OF AGRICULTURE

 3. Place no limit on number of shares an individual
or other corporation may own.

 4. Place no restrictions on transfer of stock.

 5. Distribute all net profits as dividends on capital
issued, whether the stock was paid for in cash-at par or
below par-in service or given away, or the profits may be
capitalized.


 COOPERATIVE CORPORATIONS

 There are five fundamental principles of cooperative
corporations:

 1. Ownership of association by the producers of the
commodity handled, if agricultural.

 2. Return on capital invested restricted to specified
rate of interest.

 3. All net profits returned to members in proportion
to patronage.

 4. One member one vote regardless of the number of
shares owned.

 5. Option must be given the Association on all shares
 offered for sale and all transfers must be approved by the
 Association.

 There is a policy often pursued that gives the coopera-
 tive concern an additional competing power but which is
 not an essential requirement in cooperation I refer to the
 policy of retiring all outstanding stock from a sinking fund
 provided from the profits, as the business will justify. The
 California Fruit Growers' Exchange did this and many other
 concerns following cooperative methods This eliminated
 all dram from the treasury for interest on money invested,
 which is quite an item in old line business. Many are
 orgamzed without capital stock