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 many 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 
