CHAPEK IV. 



ESSENTIALS OF SECURITY IN COOPERATIVE SOCIETIES. 



THE principal elements of safety have been already men- 

 tioned; they may be summarized as follows:— 

 Adequate Capital. — In order to proceed safely a 

 careful estimate must be made of the sum required for perma- 

 nent mvestment. If a cooperative "store" is contemi)lated, 

 whatever actual cash can be collected is enough, provided the 

 members of the society are of the right material, and can be 

 depended upon to purchase their supplies of their own store, 

 each, for a time, at some personal inconvenience. If there be 

 any doubt about this, don't start. If a creamery, or fruit drier, 

 or selling agency be contemplated, carefully estimate the cost 

 of the necessary land, buildings, machinery, etc., together with 

 expense of organization and expense of carrying on the busi- 

 ness until it begins to earn income; when everything that can 

 be thought of has been estimated, add fifty per cent to the 

 amount so obtained; when stock to that amount has been 

 subscribed, it will be safe to go ahead. 



Freedom from Debt. — By this is meant permanent debt, 

 upon which interest is paid and whicli forms a permanent 

 lien on the property of the corporation; temporary loans for 

 the purpose of making advances on produce, and which arc 

 to be paid from the sales of the produce, are usual for market- 

 ing societies, and are entirely safe. State laws should, and 

 probably always do, set a limit to the indebtedness which cor- 

 porations may incur; in California the limit is the amount of 

 subscribed capital stock. In the purchase of the permanent 

 plant it is reasonably safe to incur indebtedness payable in 

 yearly instalments running not over three years, provided 

 the stock necessary to pay the indebtedness has been sub- 

 scribed and partly paid up, the unpaid portion to be used, 

 as paid in, to pay off the indebtedness; but no indebtedness 



(229) 



