54 BULLETIN 547,. U. S. DEPARTMENT OF AGRICULTURE. 
hedging prevail in about 95 per cent of the elevators. Primary ele- 
vator capacity is not sufficient to hold all grain offered for storage 
during the height of the season. This fact has made it necessary for 
elevators to sell stored grain and to secure protection by hedging in 
the terminal markets. In certain instances elevator managers have 
taken advantage of the presence of the stored grain in the elevator 
and have speculated in futures to the direct loss of their employers 
because of inefficient methods of bookeeping. The adverse sentiment 
which prevails in some producing sections with regard to grain stor- 
age is partially due to such losses. 
An elevator which is financed by a commission firm is handicapped 
in some instances in that it is impossible to take advantage of other 
markets which may from time to time offer better prices than can be 
obtained in the one in which the commission firm is located. Ele- 
vators not dependent in any way upon the commission house can ship 
first to one market, then to another, and in this way promote compe- 
tition among the commission men in securing the best prices possible. 
It must be remembered, however, that the commission houses have 
served a useful purpose in the financing of the farmers' elevators 
in that they sometimes gave financial aid when it was impossible to 
to secure it elsewhere. Elevators are turning more and more each 
year to local sources for their funds, which is a fortunate arrange- 
ment, and it has been demonstrated that the elevator which is able 
to finance its operations without securing any outside help is in a 
position to obtain the best results, As soon as possible an elevator, 
by the accumulation of a surplus, should place its business in such 
shape that but little outside financial assistance is necessary. Where 
outside assistance is needed, it is preferable to obtain it from the 
local bank, using as security the company's surplus, and the general 
moral rating secured by conducting the business on a conservative 
and efficient basis. 
FARMERS' CREAMERIES AND CHEESE FACTORIES. 
The average farmers' creamery and cheese factory has little diffi- 
culty in financing its manufacturing and marketing operations, 
because of the plan of withholding payment to the producer until 
returns are received from products shipped. Manufacturing costs 
are small, and can be met from the returns received from sales. 
Where funds from outside sources are needed, the plant and equip- 
ment in most cases are amply sufficient to cover any loans secured 
and serve as a basis of credit. 
As fast as milk or cream is received it is manufactured into butter 
or cheese, a large part of which is shipped immediately, very little 
being held in storage. Payment to the members is made for periods 
varying from two weeks to a month, on the basis of the average price 
