Richmond daily register. (Richmond, Madison County, Ky.) 1917-1978, 1921-06-14

Class "a" stock. Now you will de
duct $4,000 from the proceeds of that
wheat. They may deduct, for ex
ample, $40 out of the proportion one
man would otherwise receive for his
common stock $40 worth to match the
$40 that they have retired against
him for the preferred stock. So over
a period of five years you retire $780,.
900 worth of preferred stock and is
sue 100000 of common stock. You
take the preferred stock from the pub
| lie and issue common stock to the
growers in exact proportion to the
value of wheat.
So that, after your term of five
years, you have received the money
from the public when you needed it;
you have paid the public good and
plenty for the use of their money, and
you have paid it out of your crop.
1t has proved a brilliant success.
With the prune growers, we decided
the first thing we needed was 1,200,-
900. We allotted the proposed expendi-
lures and called meetings. We con-
ferred with a group of bankers and
rich men of the city. We said, I'VE
want to spend $4,000 and put in a
plant here at Napa. We are going
to sell $4,000 of preferred stock. If
there are any good plants in Napa
we will consider buying a plant rather
than put up new one. 1t is up to
you bankers. We don't want to make
anybody's investment bad; we want
to preserve capital"
A Brilliant Success.
At Napa we sat in with the bank
ers and told about the preferred stock.
They brought lawyers in and we
showed documents. Before we fin
ished, those bankers were figuring
how much they could get for them
selves. We got the keen men in the
whole vicinity interested. I will tell
you the general result. We not only
sold $1,200,000 of per cent stock
at par, plus cumulative dividends, at
at cost of postage stamps and the
cost of attending the little conferences
the car fares-but in addition we
scattered lot of this preferred stock
around. The banks and merchants
had it. They felt like partners in the
association. The. said, Here, this
cooperative marketing association is
a good thing. 1 believe in it; have
preferred stock" They would tell
other growers, you must joint the
associations; 1 am not talking bunk
to you; own some stock in the grow
ers' Warehousing corporation. This
shows what L think about it; it is the
soundest thing in California" They
do wonderful amount of propaganda
because they are the investors in the
physical property. That is the char
acter of plan of financing adopted bv
the Washington wheat growers and
adopted by the cotton growers.
Group after group in the whole North
west and California is adopting this.
1t is the best method of financing phys
ical property that 1 ever heard of
in connection with a cooperative
enterprise.
A MEMBER-Would dividends he
paid on the common stock?
MIR. SAPIRO-Yes, a dividend of &
per cent per year on all common stock.
The first year all you have to pay is
per cent on $50. The second year
you have to pay per cent on $50
plus per cent on $4,000. Each year
the marketing association pays the
warehouse association a dividend on
each class of stock. At the end of
five years you renew the marketing
association contract. You then have
to make Il new contract between the
marketing association and the ware
housing corporation providing for the
use of the plant. The only payment
then is the cost of doing business, the
reserve cost, and per cent dividend
on common stock.
A MEMBER-You have got the
plant?
MR.. SAPIRO-AbsoIutel
Double Interest Explained.
A MEMBER-I haven't seen any,
thing in your California growers that
is exactly like this. Take the ware
housing facilities in the State of Ken
lucky. Some of our growers are not
only growers, but own the principal
amount of stock in the warehousing
facilities now. Have you anything
like that?
MIR. SAPIRO-Yes, we have an ex.
act parallel. A great many of the
elevators and the warehouses that now
are handling wheat and that we are
were owned by farmers
either in whole or in part and in some
instances they were completely owned
by farmers.
What we do with the farmers is
this: We go to them and arrange for
a transfer of the elevator to a sub
sidiary corporation which we organize.
We give them preferred stock. If it is
going to cost $4,000 we give them
$4,000 of preferred stock in a lump,
then they distribute that to them
selves.
But some of the growers sometimes
bring out a point which your ware
housemen might bring up-they will
say, why, l used to make profits out
of the auction system. If l sell for
the value of the physical property
lose the so-called auction profit"
That means the farmer is just paral- |
telling the elevator system where they
said, I'VE are doing two kinds of bust
ness-first, doing an elevator of stor-
age business, that is what our plants |
are built for; second, doing a sort of !
semi-speculative business by buying
and selling wheat. If we turn over the |
plant to you we get no more buying |
and selling profit, all we get is the |
value of the plant for storage pur-
poses"
That is correct. You must give up
thu so-called auction profit. You must |
give up the profits made as dealers. !
You give up the small profit in order !
to get a greater one. You help to
establish a stabiliZing system and |
make more from that as farm
ers than you do as spectators.
But whenever farmer feels that |
ne cannot afford to give up the slight |
profit from auctions and make more |
from getting better prices as grower. /
you cannot do anything with him.
A MEMBER-There is one thing that |
struck some of us. You have in this |
State probably 100 warehouses. Those
LOO warehouses will probably average |
100 farmer stockholders to the house.
which means 10000 stockholders in
The whole group. Now those stockhold-
ers have been picked men. They were
picked for their influence either as
arge growers or as individual men in