ORGANIZATION OF COOPERATIVE GRAIN ELEVATOR COMPANIES. 31 



only, the responsibility to a great extent will be divided among the 

 membership. A suggested form of loan note is presented in the 

 Appendix. (Form No. 9.) 



In some communities there is a deep-seated prejudice against the 

 giving of notes for any purpose, and it may be difficult to secure 

 from the members the individual loan notes here suggested. Where 

 this condition exists it may be less difficult to get all of the members 

 to sign one contract in common whereby each member guarantees 

 the credit of the association up to and including some definite 

 amount to be placed opposite his signature. For this purpose the 

 form for a loan guaranty (No. 10) in the Appendix may be used. 



SPECULATIVE TENDENCIES, 



A weakness on the part of farmers' elevator organizations which 

 possibly is responsible for more failures than all other causes com- 

 bined is the lack of an effective safeguard against well-meaning spec- 

 ulation. Managers buy grain with a definite margin of profit in 

 view. In manj^ cases this margin is determined by bids or offers in 

 hand on which grain may be sold. Between the time of purchase and 

 the time when sale conveniently can be made, market changes take 

 place which affect the bids or offers on which the purchase price was 

 based. Should the effect of these changes be too narrow or liquidate the 

 expected margin a temptation is presented to hold the grain for a 

 reaction which may not come. Should the effect of market changes 

 be to increase the visible margin, the manager may feel that the mar- 

 ket trend is upward and be inclined to speculate with the excess mar- 

 gins in the hope of increasing them still further. Not infrequently 

 the tendency upon the part of managers to speculate in this way is 

 encouraged by directors in the organization who are glad to receive 

 the benefits of successful speculation but who are not slow to shift 

 responsibility when the manager is found on the losing side of the 

 market. 



Steps should be taken by members, directors, ' and managers to 

 agree upon some definite policy, which policy should be strictly 

 adhered to. If cars can not be secured with which to take care of 

 time shipments and purchases can not safely be hedged, it is an inop- 

 portune time to permit purchased grain to accumulate in the elevator. 

 The risk of loss through declining markets should not then be 

 allowed to shift from the individual member to the organization. 

 Grain should remain on the farm or in storage until such time as a 

 price that is fair to the farmer can be fixed, and the handling charge 

 can be definitely determined. The directors should be directly 

 responsible for the preparation of a daily statement by the manager 

 or bookkeeper which should be filed in the office of the company and 



