Cooperative Organizations in Agriculture 41 



tive association may or may not have capital stock. If 

 formed as a stock corporation for profit by farmers and 

 managed under the principles of a stock corporation, it is 

 not different from any other capital stock corporation. 

 If, however, it is formed as a capital stock corporation, 

 it may still be cooperative if the law under which it is 

 incorporated defines the methods of voting, the transfer 

 of stock, the limitation in membership, and the distribu- 

 tion of surplus earnings on cooperative principles, or if 

 it permits the members through its charter and by-laws 

 to manage its affairs along cooperative lines. In a coopera- 

 tive organization formed as a capital stock corporation, 

 the capital invested as already pointed out should earn 

 the usual rate of interest, and after operating expenses, 

 depreciation, and a reserve are deducted, the earnings are 

 distributed wholly or in part in proportion to the business 

 transacted through the corporation or in proportion to 

 other service rendered by each member. 



From the legal standpoint, there has been little attempt 

 by the states to define a cooperative organization, nor is 

 it permissible under the laws of many of the states to 

 limit the rights of members or to define the distribution 

 of the surplus earnings along the lines set forth in the pre- 

 ceding paragraphs. As a general rule, any organization 

 formed by farmers is likely to be called cooperative, though 

 it may be incorporated as a stock corporation for profit, as 

 a partnership, or as a non-profit corporation without capi- 

 tal stock. In the absence of legal definition, it is there- 

 fore impossible to secure comprehensive data covering 

 the extent of the so-called cooperative organizations in 

 the United States. 



