22 BULLETIN 860, U. S. DEPARTMENT OF AGRICULTURE. 



pany with a deficit at the outset. When capital stock can not be 

 placed without the aid of a paid solicitor it may in most cases be 

 taken as an indication. that the community is not ready for organi- 

 zation. 



In soliciting capital stock subscriptions care should be taken that 

 extravagant statements are not made and that the members are not 

 led to expect the impossible. 



INCORPORATION. 



When by-laws have been adopted tentatively by the prospective 

 members, they will be used by the committee on incorporation as a 

 basis for drafting the articles of association. If no by-laws have 

 been agreed upon, the committee should draft a tentative form 

 which, as far as it is possible to anticipate, will meet the require- 

 ments of the association. 



If possible the articles of association should be drafted with the 

 assistance of competent legal counsel and be made to legalize all 

 matters set up in the tentative by-laws. The most able of counsel 

 must know what an organization proposes to do, the activities to be 

 carried on, and the means to be employed, before he can intelligently 

 draft the articles of incorporation, or charter application, as it 

 sometimes is called. It may be that upon examination by counsel 

 the by-laws will be found to contain provisions that are not legal in 

 the State in which the association is to be incorporated. In this 

 case the by-laws will be changed to conform with the law. It may 

 be that some of the objects expressed in the by-laws, which are ob- 

 jectionable in the form stated, may be attained by different means 

 that will readily occur to the counsel when he has before him a defi- 

 nite and orderly statement of those objects. In this connection it 

 may not be improper to point out that very able lawyers sometimes 

 are not thoroughly acquainted with the objects and economic prin- 

 ciples that control cooperative companies, and they may with the 

 best of intentions advise organization on some plan with which they 

 are more familiar and which offers less difficulties than does the 

 organization of a truly cooperative association. Herein lies the 

 value of having prepared and decided upon in advance a form of by- 

 laws detailing completely and in orderly form those matters which 

 <!i-tinguish the cooperative from the ordinary corporation form 

 which usually appeals to lawyers, bankers, and others who are more 

 familiar with the ordinary form. 



The procedure for securing a charter varies in the different States 

 and for that reason no detailed information can be given here. In 

 general it may be effected by having a minimum of from 3 to 25 

 persons, depending upon statutory requirements, sign the articles of 

 association, whirl) articles or certified copies thereof are filed with 

 certain State and county officers. 



