Evening star., 1924-07-17
PRINCIPLE Of GRAIN
MERCEREXPLA|NED
Considered More as Distribu-
| tion Machine Than
Profit Maker.
WILL NOT FIX PRICES
Earnings Allotment to Be on
Basis of Business With
Producers.
WILL NOT FIX PRICES
By the Associa ted Press.

By the Associated Press.
sCHICAGO, July 11-The exact
method by which American farmers
eventually are expected to gain con-
troll of the S26,O00,00o stock OF the
Grain Marketing Company, a merger
of five of the country's largest grain
marketing concerns formed with a
view to giving the producers owner
ship and control of seNing and dis
tribution. can not be stated at this
time" Millard r. Myers, representing
several Illinois co-operatives, said
last night in commenting on the
project
1T is enough" he said, Ito know
that the property is to be taken
over on a square deal basis and that
the stock offered to the public shall
be worth the money at which it is
proposed to be Sold
The Illinois cooperative law, un-
der whose provisions the company
was organized, restricts issuance of
common stock to individuals or asso-
Citations engaged in producing the
comm odity to be handled. Another
provision, however, permits the lSsu-
ance of preferred stock which is not
SO restricted. with or without the
right to vote" There is also some
question of the Interpretation of "a
tion that every Stockholder' of a
corporation shall have the right to
vote"
The articles of incorporation pro-
vide for $4,000, 900 of preferred stock
and $1,000,000 of common stock.
Financial men involved in the deal
maintain that a saving of S2,500,000
to S3000,000 annually is possible by
uniting the grain concerns. Accord
ing to H. $. Ballard, counsel for the
w n
has been acting as counsel for the
grain merger committee of the Amer
ican Farm Bureau Fedora ton, which
has indorsed the plan with reserva-
tions. the cooperative laws contain
strict clauses to insure producer-con-
troll of the corporation. Grain pro-
ducers say that the laws probably
will be construed literally during the
period of transition. According to
Mr. Ballard, the provisions of the ma
tional Capper-Volstead act, that each
member shall have but one vote, re-
gardless of the amount of stock he
owns, must govern the new corpora
tion, because it will engage in inter-
state commerce.
In explaining plans for the transi-
tion period, Mr.. Myers said the initial
working capital must come from the
five grain companies whose properties
are to be merged. These companies
hold preferred stock.
"A certain type of preferred stock
can be exchanged for property" Mr..
Myers said land producers will be
given time to absorb it. This will
give the five companies control until
producers have bought half the stock.
There is a truSteeShip of 1o to 100
farmers, and the farmers will have
two-thirds majority on the board of
directors.
Not Stock Promotion.
I'VE at the producers end probably
will take two months to make our ap-
praisal of the properties. We will
make no immediate effort to induce
farmers to buy stock. This is not a
stock selling or promotion PROPOSE
tion, but the bringing together of
grain marketing agencies, which have
abundance of capital and facilities
for handling all the grain that is Of
fered and of working with the farm
ers elevators and other grain mar
keting agencies in solving the prob
lem of orderly marketing. In this
way they can bring to every grower
the worlds best market price for his
grain -
der the act which the new concern
takes advantage Of" Mr.. Ballard said,
does not control price but effects
savings for the producer.
Gray Silver. Legislative representa-
tive of the farm bureau and an in
corporator amplified this statement
by declaring 'it is an instrumentalfty
for distributor rather than business
corporation in the ordinary sense"
The farm bureau is not eligible to
enter such d corporation, although
some of its officers are incorporators
and temporary directors of the new
company. Thus far it has played an
advisory role in connection with the
project.
Control of the company by a small
group will be doubly guarded, Mr..
Ballard said, not only by the one
vote per member of the Capper-Vol-
stead law but by the Illinois co-opera-