COOPERATIVE ORGANIZATION BY-LAWS. 7 



stated that truly cooperative organizations having capital stock now 

 generally allow each member one vote only, regardless of the number 

 of shares he may own. 



FINANCING AND PERPETUATING NONSTOCK ORGANIZATIONS. 



One advantage of the stock form of organization is that the sale 

 of the shares provides the required capital. A nonstock organiza- 

 tion must provide whatever capital it requires in some other way. 

 Where only a nominal sum is necessary, this may be secured by means 

 of a membership fee. If any considerable amount is required, that 

 method may not prove feasible, because a large membership fee 

 may make it difficult to secure members. Where a greater amount 

 of capital than can be obtained from membership fees is required, 

 it will have to be borrowed either from the members of the associa- 

 tion or from an outsider. When it is desired to secure all of the 

 capital from the members, the organization can make it a member- 

 ship requirement for each member to loan the association a certain 

 amount, or it may rely on loans being made voluntarily by members. 

 One advantage of requiring all members to participate in such loans 

 is that it creates a vital interest among them in the success of their 

 organization, as they become directly concerned in its financial 

 affairs. Moreover, reliance upon loans made voluntarily by the 

 members necessarily introduces an element of uncertainty. This 

 would be diminished or removed if each member assumed a fixed 

 obligation to contribute his share of capital when called on. Where 

 the money is borrowed outside of the membership, some security for 

 the loans is usually required. In such case a joint note of the mem- 

 bers or individual notes of the members may furnish the necessary 

 security. The latter method is preferable, because it limits the 

 liability of each person to the amount of his note. 



When a supply of money is required for only a short period, as 

 during crop-moving times, the plan of having each member give the 

 association a negotiable, promissory, demand note for a certain sum 

 and then using the notes as collateral in obtaining loans, has been 

 employed with success. These notes may be used for three years, 

 and at the end of that period, when the member's patronage of the 

 association may have increased or diminished, new notes may be 

 taken for a respectively larger or smaller amount and the old notes 

 may be canceled. This is simply a method whereby the member 

 loans a small portion of his credit to the association and does not 

 actually pay out any money, unless the association should be unable 

 to repay the loans thus secured. If the amounts of the notes are 

 based on the amount of business likely to be transacted with the 

 organization, each member will loan his credit in proportion to the 

 use he expects to make of the organization. Obviously these notes 



