UNITED STATES DEPARTMENT OF AGRICULTURE 



I BULLETIN No. 541 



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Contribution from Bureau of Markets 

 CHARLES J. BRAND, Chief 



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Washington, D. C. 



March 23, 1918 



COOPERATIVE ORGANIZATION BY-LAWS. 



By C. E. Bassett, Specialist in Cooperative Organization, and 0. B. Jesnesb, 

 Assistant in Cooperative Organization. 



CONTENTS. 



Importance of by-laws 1 



Adaptation of by-laws to local needs 2 



Importance and advantages of incorporation. 2 



Section 6 of the Clayton amendment 3 



Dealing with nonmembers 5 



Differences between the nonstock and stock 



form of organization 6 



Financing and perpetuating nonstock organi- 

 zations 7 



Section 6 and existing organizations 10 



Section 6 organizations and State incorpora- 

 tion laws 12 



Page. 

 Section 6 and the State antitrust laws ....... 12 



Adopting the by-laws 12 



Caution that the department's views of law 

 are not conclusive 13 



Suggested form of by-laws for a cooperative 

 nonprofit marketing association, formed 

 without capital stock 14 



Suggested form of by-laws for a cooperative 

 marketing association formed with capital 

 stock 22 



IMPORTANCE OF BY-LAWS. 



The founders of every cooperative association should have a 

 definite plan of action mapped out before the organization actively 

 engages in business, as the lack of such a plan has resulted in the 

 failure of many cooperative enterprises. The importance of the by- 

 laws of a cooperative association is readily comprehended when it 

 is realized that the purpose of the by-laws is to serve as a working 

 plan for the organization. The relation of the by-laws to the organ- 

 ization resembles the relation of the specifications for a building to 

 the finished structure. The blue prints furnish the builder with a 

 graphic representation of the work to be done and this is supple- 

 mented by the necessary descriptive material, so that he knows before 

 the building operations are commenced what each room is to be 

 like and how the entire structure will appear when finished. Satis- 

 factory results are not obtained when the plans furnished the builder 

 are incomplete or inaccurate. A person about to erect a building 

 does not obtain a photograph of a structure, the appearance of which 

 pleases him, and expect the workmen to be able to build one like it 

 with no other guide than this photograph. Organizations on the 



37369°— 18— Bull. 541 1 



