ORGANIZATION OF COOPERATIVE GRAIN ELEVATOR COMPANIES. d 



corporations and still retain a partnership relation between the mem- 

 bers. For organizations made up of a large number of members 

 each having a comparatively small financial interest it is neither a 

 convenient nor a desirable form, and for that reason it has not 

 gained general favor in the farmers' elevator field. 

 Some of the disadvantages of this form are : 



(1) Each individual member of the company usually is jointly 

 and severally liable for the entire company obligations. 



(2) The company can sue only in the names of the individual 

 members composing it or in the name of a person first duly empow- 

 ered, and if it is made defendant in a suit only those members served 

 with process are held. 



(3) The company can not take, hold, or convey real estate by its 

 company name, and every encumbrance or deed of conveyance must 

 be executed in the names of the individual members, or by some per- 

 son first authorized to act as their agent. 



The grain business is attended with some hazard, no matter how 

 well conducted, and few men are willing to assume the partnership 

 liability which usually follows the joint stock company form of 

 organization. 



ORDINARY PRIVATE CORPORATIONS. 



The corporation- for-profit form of organization has predominance 

 in number at the present time, although there is a decided tendency 

 to reorganize under recently enacted State cooperative laws. During 

 the period when the farmers' elevator movement had its most rapid 

 development the ordinary corporation- for-profit form was about the 

 only possible corporate form of organization and it was adopted 

 from necessity rather than from choice. Comparatively few cor- 

 porations were organized which did not attempt with by-law pro- 

 visions to secure some of the cooperative features specially author- 

 ized by later statutory enactment. Among these were the one-man, 

 one- vote principle; limitations upon share ownership; and, to some 

 extent, but not generally, the patronage refund and restricted divi- 

 dend on capital stock, which now are considered the backbone of a 

 really cooperative company. Considering that many of these fea- 

 tures were without legal license and that they depended for effect 

 entirely upon' the mutual consent of the members, it is remarkable 

 that the corporation-for-profit form has endured so well. However, 

 the difficulties usually do not develop until the membership char- 

 acter begins to change, through the retirement of members from 

 active farm life, and the interests of stockholders become those of 

 investors rather than of producers. 



A large majority of the 4,000 or more farmers' elevator companies 

 in the United States have at the time of organization been coopera- 



