MANAGEMENT 285 



sufficient supply to last him for the season. If the price of wheat 

 should rise, the price of flour would probably rise also, and he 

 would gain ; but if the price of wheat should fall, he would lose 

 in this process of buying wheat in advance. In order to eliminate 

 this speculative risk, he pursues another method. He sells or 

 agrees to sell in advance the same quantity of wheat which he 

 has bought. By this method he avoids all risk. If the price of 

 wheat goes up, he gains as much on what he sells as he loses 

 on what he has bought ; if it goes down, he gains as much on what 

 he has sold as he loses on what he has bought. By this method, 

 also, he knows where he stands, and he can go on with his business 

 of manufacturing flour, giving all his attention to the problems 

 involved in his own business, and leave to the professional spec- 

 ulator the business of studying the market and prognosticating 

 the course of prices. There are, of course, a good many con- 

 spicuous cases of farmers who have gained by holding their 

 crops for a rise in price, but these cases are canceled by those 

 of farmers who have lost by the same process. Taking one farmer 

 with another, one year with another over a period of time, the 

 chances are that not enough is gained by holding crops in this 

 way to pay the cost of storing, insurance, interest on the money 

 tied up, etc.; and therefore the farmer who sells as soon as the 

 crop is harvested will do just as well in the long run as the 

 farmer who tries to hold his crop for a rise in price. This con- 

 clusion, however, assumes that it is a crop the market for which 

 is woll organized and for the handling of which middlemen are 

 well equipped with warehouses, elevators, etc. In such cases 

 the chances are that the middleman will do the storing and 

 the handling cheaper than the farmer can do it. In all cases, 

 however, where the market is not highly organized, and where 

 middlemen have not equipped themselves to handle the crop 

 efficiently and easily, this advice does not apply. In all such 

 cases as this, there is a wide opportunity for cooperation among 



