firm or company to have the investor or lender ask for such a statement of their affairs as shall enable him to form a business. judgment upon their condition. The asking for investment money on mercantile loans from the banker or investor implies, therefore, that such a statement shall be forthcoming.

“The habit of making such statement for more or less public examination will cause the managers to give even closer attention to the meaning of various items which they are carrying upon their books. In this way conservatism is increased by the conditions of doing business, which now demand, on the one side, large loans of capital, and, on the other, business ability and honesty without sentimentalism."

The foregoing quotations from expert sources are given to suggest the scope and the importance to corporations of the professional services of auditors and accountants. Honest and competent officers, directors, and bookkeepers, or other employes whose work is subject to inspection and supervision, should not think they are under suspicion by the body represented by an auditor, but should be glad of the opportunity to have their work examined and approved by one occupying an independent and disinterested position. Often an accountant will recommend to the stockholders changes in the business that the directors have sought in vain, such, for instance, as an increase in capital stock; or he will agree with the bookkeeper that the system of bookkeeping in use may be greatly improved or that it should be discarded entirely and will make the suggestion to the directors and perhaps secure the betterment. The accountant or auditor should, of course, be independent of all personal influences, a man of established character and firm will. It is almost needless to say that the same qualities should belong to a bookkeeper.

§ 66. A CORPORATION'S BOOKS.

The general account books of a corporation are the journal, cash book, sales book, and ledger, which are the books used by individuals and partnership companies in business. There may be also other auxiliary books which have to do with the general

commercial business of private concerns and corporations. All these books are kept under the supervision of the treasurer of the corporation. But there are certain books required in a corporation that are not used by individuals and firm business. These are the minute book, the book of stock certificates, the stock transfer book, the stockholders' ledger, and the dividend book. These books, with the exception of the dividend book, which is usually kept by the treasurer, are kept by the secretary. There may also be, when they are required by the particular circumstances of organization, a stock subscription book, an instalment book, and an instalment scrip book.

$67. The Minute Book.

The minute book is a record of the proceedings of the stockholders and the board of directors of the corporation. Its contents consist of the dates and places of meeting, the names of the members present, the business transacted, resolutions passed, important resolutions discussed and defeated by vote, etc. Discussions and remarks of stockholders or directors are not usually recorded unless they throw particular light on an important circumstance or condition. Important correspondence, contracts, reports, etc., may be "spread" upon the minutes; that is, copied into the minutes. The secretary should keep on file, for reference, other correspondence and documents introduced at a meeting. The first pages should contain a certified copy of the articles of association of the corporation, or a transcription of the articles made by the secretary, followed by the by-laws, recorded by the same hand. The secretary should then certify that the foregoing by-laws are a true and accurate copy of those adopted by the stockholders or directors at a certain meeting specified as to time and place. Several blank pages should be left for entering amendments, and then should follow the minutes of the first stockholders' meeting. The minutes of stockholders' and directors' meetings may then be entered as they occur, care being taken to distinguish them by the headings "Meeting of the Stockholders," "Meeting of the Directors," with time and place.

There should be but little or no space left between the minutes of the various meetings, and then no false minutes can be entered without detection. When necessary, additions to minutes may be made on the page margin. Cross lines in ink may be made over the space left at the bottom of a page in order to prevent false entries. Minutes recorded with pen and ink in a bound book are legally the most satisfactory. Loose-leaf minute books may easily have substitutions made in them so that their value as authentic records is more often open to question. Every page of a loose-leaf minute book should be certified to by the proper officers, and not just the minutes as a whole on the last sheet. Sometimes separate minute books are kept for stockholders' and directors' meetings, but usually only in large corporations. The minutes should always be signed by the presiding officer and the secretary in order to establish their authenticity. The minute book is kept by the secretary of the corporation, and should remain in his possession. Entries should be made by no one else. A properly-kept minute book is evidence in law of the acts of stockholders and directors at their meetings. Therefore the secretary should take great care that the minutes are exact. They should be written into the minute book immediately after the meeting, unless sufficiently elaborate notes have been taken of the proceedings. Sometimes the presiding officer will ask that motions and resolutions aside from routine matters, such as motions to accept, adjourn, etc., be submitted in writing by those proposing them; the resulting documents are turned over to the secretary and form part of his notes, preventing mistakes which might otherwise occur. A meeting of stockholders or directors expresses its will by motions and resolutions which are introduced, discussed, and passed or rejected according to the rules of order adopted by the deliberative body using them. It is often desirable that the introducer and the seconder of a motion or resolution be named in the record of a meeting, but the absence of the names does not affect the authority or force of the action. Actions taken by motions and resolutions are directory or mandatory according to their nature and language, and are binding on officers or agents, if necessary to be carried out by

them, in the one degree or the other. When a stockholder or director has objections to an action of the body to which he belongs, he may wish to have his objections recorded in the minutes. He may present his objections orally or in writing, and the presiding officer will decide whether they are pertinent and shall be recorded. If presented in writing, that fact should be noted in the minutes and the document should be kept on file if it is not spread upon the minutes. If the objecting member files objections to an action and does not afterward acquiesce in it or assist in giving effect to it, he may sometimes avoid liability resulting from the action. A mere vote of "No," with subsequent acquiescence, implied or actual, will not relieve him from liability. A member's subsequent attitude toward an action should always correspond with his objections if he wishes to avoid personal responsibility. If liability is likely to result from an action to which he objects, he may demand that his objection be recorded. The minutes of meetings are read by the secretary and are approved or amended at the next subsequent meeting of the body whose actions they record. If no member of the body objects to the minutes, usually the first item of record at the next meeting after the time, place, and members present, is that the minutes of the last meeting were read and approved. If there is a correction to be made, the formality depends upon the apparency or importance of the correction. A member may call attention to a mistake in spelling a name, in a date or some other obvious matter and the president may, without formal action, direct that the change be made. If a more important error is made, especially if there is a question or dispute over it, a motion may be necessary to accomplish a correction. But whether the matter in question was an error or not, if a majority of those present at the current meeting order that a change be made in the minutes of the previous meeting the secretary must make it. The minutes of the current meeting should report the corrections or changes ordered in the previous minutes and the portions of the previous minutes changed should be stricken out by having a red line drawn through them and the matter ordered to be inserted should be copied between the lines in red ink. A marginal refer

ence should be made to the minutes of the meeting when the changes were ordered. Sometimes, in order to maintain its legal existence, a corporation organized under the laws of one state, but having its principal office in another state, must have an annual meeting of the stockholders in the domiciliary state. This is a provision of the statutes of some of the states. In a case of this kind, the non-resident corporation is usually represented in the parent state by a few of the officers or stockholders or a resident director, and a majority of the stock is represented by proxies taken or sent to the meeting. The minutes of the meeting are prepared beforehand by the secretary and are sent with the proxies. The proceedings and actions to be taken have been decided by the majority stockholders, and the reasons for the meeting are to comply with the law as to the necessity of stockholders' meetings at given intervals or to legalize the acts that have been determined on previously by the majority stockholders. The regular officers, or officers appointed at the meeting, have charge of the proceedings, the minutes are read, and the actions they recite are formally taken, and the meeting is adjourned. The minutes are then returned to the secretary, if he was not present, and are recorded by him. This is a common practice in contemporary corporation management.

§ 68. The Stockholders' Ledger.

The stockholders' ledger is used for the stock accounts of the various stockholders. It shows the number of shares originally subscribed for, the transfers made, and the balance of stock held by each member of the corporation. Stock is posted to the debit of the persons to whom it is delivered, and the accounts are credited when the stock is subsequently transferred to other persons. It may and should comprehend, where the law does not necessitate their being kept separately, a stock register, giving the names of stockholders arranged alphabetically, their addresses, and such other matter as is necessary or desirable. The entries in the stockholders' ledger are obtained from the instalment book, where there is one, and from the transfer book or stock certifi