Thank you, sirs. The CHAIRMAN. Without objection you may include the material appended to your statement in the record, if that is your desire. Mr. BOBIER. Thank you, sir. (The material referred to follows:) CERTIFICATE OF INDEBTEDNESS OF MCDONALD COOPERATIVE DAIRY CO., FLINT, MICH. This is to certify that for value received, McDonald Cooperative Diry Co., registered office, Flint, Mich., a cooperative corporation organized and existing under and by virtue of the laws of the State of Michigan, is indebted and promises to pay to the above-named payee the principal sum above stated, at the registered office of said corporation, in the consecutive numerical order of issue of the outstanding certificates of indebtedness of the corporation, at such time and in such manner as shall be determined by the board of directors. This certificate is issued on account of moneys loaned to said corporation through deductions or retains made or withheld by the corporation from the value of agricultural products purchased by the corporation of, or from the sales proceeds derived therefrom and due to, or from patronage dividends issued to, the creditor whose name appears herein. This certificate and all other certificates of indebtedness issued by the corporation are subject to all other debts of said corporation so that in event of liquidation or dissolution, voluntary or compulsory, all debts of said corporation, other than such as are represented by certificates of indebtedness, shall be preferred and have priority of payment and are to be paid in full before any distribution of the assets of said corporation shall be applied toward retirement of the debt represented by certificates of indebtedness. The claims of holders of certificates of indebtedness on account thereof shall have priority over all claims of capital stock so that in case of liquidation or dissolution; voluntary or compulsory, the claims of all holders of certificates of indebtedness on account thereof shall have priority of payment and shall be paid in full before any distribution of the assets of said corporation shall be made upon the capital stock of the corporation. Certificates of indebtedness of the corporation shall be entitled to only such rates of interest as the board of directors may fix from time to time: Provided, however, interest paid upon certificates of indebtedness shall in no event exceed a rate of 4 percent per annum upon the principal amount for which certificates are issued: Provided further, interest upon outstanding certificates of indebtedness at a rate of 4 percent per annum shall be paid before any earnings of the corporation shall be distributed upon a patronage basis. Interest upon certificates of indebtedness shall not be cumulative if unpaid, but when interest is paid upon any certificate of indebtedness, and interest shall be paid ratably upon all certificates of indebtedness except those duly called for payment and not surrendered in accordance with the call therefor, certificates of indebtedness called for payment shall not be entitled to interest after the day held forth in the call for payment of such certificates. This certificate and all other certificates of indebtedness of the corporation are, except in the event of liquidation or dissolution, retirable in whole or in part in the consecutive numerical order of issue in the sole direction of the board of directors upon payment of the principal amount of the certificates so called for retirement and payment. In the event of liquidation or dissolution, all outstanding certificates of indebtedness shall share ratably in assets until the principal amount thereof has been fully paid. This certificate is transferable only on the books of the corporation upon surrender of the certificate properly endorsed and when any indebtedness owed to the corporation by the owner hereof has been fully paid. Upon transfer of ownership of title to the claim represented hereby and surrender of this certificate for transfer and reissue, this certificate shall be canceled and the certificate issued shall bear the same numerical number as the certificate surrendered for transfer. In witness whereof, the said corporation has caused this certificate to be signed by its duly authorized officers and its seal to be hereunto affixed. L. R. LONG, President. MCDONALD CO-OPERATIVE DAIRY CO., IMPORTANT NEWS ABOUT MILK PRICES DEAR CUSTOMER: In the past year and a half you have been confronted by many competitive moves in the packaging and pricing of milk. First it was glass half-gallons. We resisted this move for a long time because we felt that it took you back about 10 years when glass milk bottles were an item of considerable bother and expense to the grocerman. Next came cut-rate milk in cartons bearing new names. This we could not go along with. In this area the name "McDonald" has always stood for the very highest in quality products and dependable service. We will do nothing to sacrifice this position. After a great deal of thought we have arrived at the following rebate formula which we believe is equitable to everyone. We believe you will think so too, because it is a definite arrangement that is controlled entirely by the amount of your purchases from us. The following table is self-explanatory. Percentage of rebate you earn 2 4 5 6 7 72 If there are any questions, consult your driver or call our office. Thanks for your cooperation. Yours very truly, BILL OGLE. ANNUAL REPORT, MCDONALD CO-OPERATIVE DAIRY Co., SUBMITTED AT THE ANNUAL Mr. BOBIER. May I make this one remark, sir? There is a photostat of a certificate of indebtedness attached and I attached that because the Federal courts have held that such a certificate is not taxable in the year that it is issued, but only if and when we pay. The CHAIRMAN. On the ground that it has no value at the time it is issued? Mr. BOBIER. Yes, sir. The CHAIRMAN. Are there any questions of this witness? If not, we thank you, sir, for your appearance and the information you have given the committee. Mr. BOBIER. Thank you for listening. (The following letters were received by the committee:) Hon. WILBUR MILLS, UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Chairman, Committee on Ways and Means, House of Representatives, Washington, D. O. January 16, 1958. DEAR MR. CHAIRMAN: Enclosed are two letters I have received from my constituent, Mr. Clyde H. Shaffer, with respect to the tax hearings your committee is holding. 1 will appreciate it if these letters are made a part of the record. Sincerely, JOSEPH S. CLARK. BREYER ICE CREAM Co., Philadelphia, Pa., January 10, 1958. Hon. JOSEPH S. CLARK, Washington, D. C. DEAR SENATOR CLARK: On March 18, 1957, I wrote to you requesting your aid in scheduling a hearing before the House Ways and Means Committee on the subject of cooperative tax equalization. As I wrote then, the fact that cooperative earnings can be retained free, or substantially free, from income tax, has given cooperatives a definite competitive advantage over the proprietary corporation. Paying little or no income taxes permits the cooperatives to undersell proprietary companies and still retain sufficient money to improve and expand. One form of expansion of cooperatives is through the acquisition of taxpaying companies who then discontinue paying income taxes, causing a substantial decrease in tax revenue to our Federal Government. With proprietary corporations paying 52 percent of their earnings in Federal income taxes and the cooperatives paying practically nothing, the cooperatives can pay almost twice as much for acquisitions than proprietary corporations. The House Ways and Means Committee announced last fall that, beginning January 7, 1958, hearings will be held on general tax revisions. During these hearings the dairy industry, with which I am connected, along with other industries, will seek new legislation to reduce the tax advantage of cooperatives. I hope that you will again see what you can do to help us gain favorable action from the Ways and Means Committee and from your colleagues in the Senate when such legislation comes before you. Respectfully yours, Hon. JOSEPH S. CLARK, Senate Office Building, Washington, D. C. CLYDE H. SHAFFER, President. BREYER ICE CREAM CO., Philadelphia, Pa., March 18, 1957. DEAR SENATOR CLARK: In a letter dated July 26, 1955, to Hon. Jere Cooper, chairman of House Ways and Means Committee, the Secretary of the Treasury, George M. Humphrey, made recommendations on cooperative tax equalization. It was understood that these recommendations would be considered during the 1956 session of Congress; however, they were not considered. 20675-58-pt. 2—16 |