c'oopi':rative corporations. 227 



If, upon exanniuitioii of the records, the attorney is able to 

 give an unequivocal "yes" to the first four questions, and 

 satisfactory replies to the last two, the way to the desired loan 

 is greatly smoothed ; if the records do not permit such unequiv- 

 ocal replies to be made, the bank — if a safe one to deposit 

 in — will refuse to loan.* These six questions having been 

 satisfactorily answered by the bank's attorney, the bank itself 

 lias then to consider the amount of property subject to attach- 

 ment, belonging to the corporation, the value of goods in its 

 possession, upon the security of which the proceeds of the 

 proposed loan are to be reloaned to individuals, and the 

 character and ability of those in charge of the corporate busi- 

 ness; if a satisfactory showing is made on these points, there 

 is no reason why the loan to the corporation should not be 

 made. 



In farmers' cooperative societies there is almost no question 

 of the honesty of the president and directors; known to each 

 other as the stockholders are, it is practically certain that the 

 management will be honest. There is, however, danger of 

 mistakes resulting from business inexperience, and it fre- 

 quently happens that banks require a year or two of successful 

 experience before granting loans to cooperative societies, even 

 if known to be properly organized. In this case money can 

 only be borrowed for the corporation on the joint individual 

 notes of the directors or other stockholders. This is a common 

 custom in the case of corporations organized for profit, in 

 Avhich the directors frequently own a controlling interest 

 which makes them willing to become personally liable in 

 transactions wholly under their control, and from which tiiey 

 expect to derive, through their holdings of stock, personal profit. 



*The officer primarily responsible for the orderly conduct of corporate busi- 

 ness and the due entry of the necessary records, is the secretary. A good 

 secretary is invaluable, and should never be changed if it can be avoided. His 

 familiarity with what has been done, and with the necessary legal forms of 

 transacting corporate business, make him invaluable to the business. It may 

 be proper to suggest that the secretary should have no executive connection 

 with the business, or any responsibility for funds or monetary transactions; let 

 him be purely a recording officer, under no possible temptation to falsify or 

 obscure the record. 



