COOPERATIVE CORFOKATIONS. 225 



1. Such formal directions for conducting the business as 

 may be prescribed by law; these must all be observed, whether 

 in or out of the by-laws, but as the printed statutes are not 

 always conveniently accessible to the officers, they should all 

 be in the by-laws for reference, which is very necessary, as all 

 corporate business must be transacted strictly in accordance 

 with law. 



2. Such other directions, and limitations upon the power 

 of the directors, not inconsistent with law, as the stockholders 

 may desire. If inconsistent with law they are of course void, 

 and if not properly drawn they may fail of their intended 

 effect. It will be readily seen that good legal advice may be 

 very valuable in preparing by-laws. In general, whatever is 

 v/orth doing is worth doing well. 



In fact, it is desirable to act under legal advice until the 

 corporation is fairly started in business, with all the required 

 legal records made, and all books required by law to be kept 

 opened; after that the common sense of the directors, and 

 especially of the president and the secretary, should be suffi- 

 cient for such simple transactions as cooperative societies 

 ought to engage in. Cor[)orations controlled by trained busi- 

 ness men, act constantly under legal advice in all transactions 

 outside the regular routine of business; cooperative corpora- 

 tions, however, ought to engage only in simple transactions, 

 as to which, when the' routine is once learned, no further 

 advice is necessary. 



The main reason for such care in the organization of a 

 cooperative corporation is the effect which it has on its credit. 

 Many cooperative societies are so situated as to require tem- 

 porary loans during the marketing season, in order to avoid 

 undue pressure in marketing their output. This is customary 

 among the trade, and is perfectly legitimate. Suppose a cooper- 

 ative incorporated society for marketing dried fruits, of which 

 there are many in California. The object of these societies is 

 to prevent undue depression in the local market from the 

 pressure to sell by those in immediate need of money. Nearly 

 all that class of persons may be glad to unite in a cooperative 

 society, but they need a portion of the value of their crop as 

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