3. Prepare a chart showing main highways across the United States. 4. Prepare a chart showing main Rural Motor Express lines in your State. (Consult National Automobile Chamber of Commerce, 7 East 42d Street, New York City.) 5. What solution have you for the railroad problem in the United States? REFERENCES 1. ANDREWS, FRANK: "Freight Costs and Market Values. Yearbook of the Department of Agriculture," 1906. 2. : "Grain Movement in the Great Lakes Region." United States Department of Agriculture, Bureau of Statistics, Bulletin 81, Washington, Nov., 1910. 3. : "Railroads and Farming. Some Influences Affecting the Progress of Agriculture," United States Department of Agriculture, Bureau of Statistics, Bulletin 100; Washington, October, 1912. 4. : "Inland Boat Service, Freight Rates on Farm Products and Time of Transit on Inland Waterways in the United States," Bulletin 74, United States Department of Agriculture, Washington, December, 1914. 5. "Comparison of Capital Values Agriculture, Manufactures, and the Railways." Bureau of Railway Economics, Bulletin 39, Washington, 1912. 6. ELLIOTT, HOWARD: "Relation Between the Farmer and the Railroad." Address at the Tri-State Grain and Stock Growers Association, Fargo, N. D., January 17, 1912. (Mr. Elliott was at that time president of the Northern Pacific Railway.) 7. LUBIN, DAVID: "Proposal for an International Conference on the Regulation and Control of Ocean Carriage." International Institute of Agriculture, Rome, 1914. "Is not ocean carriage a public utility? If so should it not be under public control"? International Institute of Agriculture, Rome, December, 1916, No. 35. 8. 9. MCPHERSON, LOGAN G.: "The Farmer, the Manufacturer and the Railroad." North American Review, New York, November, 1907. 10. "Prompt Furnishing of Transportation Facilities. Hearings Before the Committee on Interstate Commerce, United States Senate," February 21, 1908. 11. "Railways and Agriculture," 1900-1910. Bulletin 45, Bureau of Railway Economics, Washington, 1913. 12. SNEAD, RUSSELL H.: "Express Business in the United States." Bureau of the Census. Special Reports, Washington, 1907. 13. "Industrial Commission Report," Vol. 4, 5-109; Vol. 9, LXXXII, XC, CCLXXXV. 14. Yearbook Department of Agriculture: 1899—“Development of Transportation in the U. S."; 1900-"Influence of Transportation on Fruit Industry,' 561-580; 1905 "Handling of Fruit for Transportation," 349–363; 1906 "Freight Costs and Market Values," 371-387; 1908-"Cost and Methods of Transporting Meat Animals," 227-245; 1917- "Federal Aid to Highways," 127-139. 15. "Rural Motor Express." (See Automobile Chamber of Commerce of the United States, New York City.) CHAPTER XIII INSURANCE IN the insurance of his dwelling and other farm buildings, the farmer is in the same position as any other owner of buildings. This risk is very commonly carried by a farmer's coöperative insurance company, or a joint stock company, a large number of which do business in each State and are subject to the laws and supervision of that State. But the growing of crops and of live stock place on the farmer a risk peculiar to the agricultural industry. Insurance in these fields has developed in three general forms, namely, the joint-stock company (the ordinary corporation), the mutual company (a coöperative enterprise), and, in recent years, State insurance. The joint stock companies have long occupied most of the field. Yet discontent with this form of insurance is steadily growing among the farmers. The chief criticism seems to be, not that these companies have failed to pay their losses, not that they have been unduly harsh in their methods of adjustment, but that they have collected too large a toll from the farmer. These companies reply that their charges have been fair considering the service rendered and the coverage afforded, and that they have collected no more "toll" in good years than was needed, on business grounds, to build up a safe and adequate reserve against the bad years. Farmers' mutuals, coming into the field, commonly use the assessment method of paying their losses. Where they have tried a level premium plan, they have committed the error of making it too low, and hence of having heavy unpaid losses in bad years. Where the assessment plan has come into use, as it has very widely, it often operates under two handicaps: the area covered is too small, placing in consequence too much risk on each member; the volume of business is small, making an overhead expense too high. A mutual company operating over an entire State, with risks well distributed, and having a large volume of business, is able to carry insurance to the farmer at actual cost, including, of course, a small overhead expense. But there are no dividends to be declared. In recent years the demand for certain forms of State insurance, particularly State hail insurance, has become very insistent. A good example of this is the Saskatchewan hail insurance conducted by the rural municipalities of that province. Saskatchewan's Experience. In the United States speakers and writers in recent years paint glowing pictures of Saskatchewan's success with state hail insurance. The experience of this province is therefore worthy of some attention. Saskatchewan, justly famous for its farmers' coöperative grain elevators and for other successful coöperative enterprises, is a prairie province, only a small fraction of whose area is as yet under tillage. Out of an area of 155,764,000 acres, only 2,900,000 acres are "in farms." The area in grain is of course but a small fraction of the farm area. Here a law was enacted in 1912 providing a system of insurance of the standing crops of wheat, oats, barley, flax, rye, and speltz against loss by hail. The law was revised in 1915, and again revised in 1917. Let us first examine it before the 1917 changes were introduced. The maximum amount of compensation allowed, in case of total loss, was $5 an acre, and the minimum, 25 cents an acre. A tax of four cents an acre on all lands (except such as might be withdrawn) was levied to cover the losses. That is, a farmer paid $6.40 to secure $800 protection on a quarter section, i.e., 160 acres. The levy of the four cents an acre applied to all lands except those formally withdrawn by written notice prior to June 1. One or more quarter sections could be so withdrawn provided (a) they were fenced in and used by the owner for grazing and hay purposes; (b) unpatented quarter sections on which the settler has less than 25 acres under cultivation; (c) any fenced quarter section having less than 25 acres under cultivation. Each rural municipality enjoyed complete home rule as regards the adoption or rejection of the scheme. A majority vote for the scheme, at a referendum for that purpose, made it operative in the municipality till a further referendum should be had. The moneys collected were paid into a common pool and administered by a commission of three persons, two of whom represented the municipalities, and one the government. Some statistics will show the workings of the law during its first few years. At the first elections after the Act, 115 rural municipalities voted to come under it, representing 20,000,000 acres of land. The first year's business showed losses and administration expenses of $777,697.59, and a net revenue of $788,389.50, thus leaving a surplus for reserve of $10,691.91. NORTH DAKOTA STATE HAIL INSURANCE 207 The second year three municipalities withdrew and fourteen new ones came in, making 126 municipalities under the Act. This year the losses and expenses amounted to $543,665.62, and the net revenues to $896,365.26. After setting aside a tax adjustment reserve fund, the surplus to reserve became $348,391.55. The year 1915 found 127 municipalities under the Act, with 22,000,000 acres of land, of which 5,000,000 was in crops. The year 1916 proved to be the inevitable "bad year" that comes to all hail insurance companies. The strain was too severe for the system to stand. The hail losses were ten per cent of the crop, amounting to a loss of $3,600,000. The revenue was only $1,500,000, or a little over two million dollars short of paying the losses. The Saskatchewan legislature, accordingly, in 1917 made a thorough revision of the Municipal Hail Insurance Act. As revised, the Act provides for a system of management similar to that of the Coöperative Elevator Company of that province. Each municipality votes on the question of coming under the scheme. Each municipality so voting appoints a delegate to represent it at the annual general meeting of the organization. At this general meeting the directors are chosen, the scheme providing for nine in all, three to retire each year. This puts the management completely into the hands of the municipalities. The general meeting, in reality a legislative body on this one economic matter, has power to make provision for a crop acreage assessment in addition to a flat rate if it so desires, but such action on the part of the general meeting cannot become operative in the current year, thus giving opportunity to any dissatisfied municipality to withdraw from the scheme at the intervening election. Thus the principle of state hail insurance has not been abandoned, or even discredited in the eyes of the Saskatchewan farmers. Apparently they have committed themselves for good to this principle. North Dakota State Hail Insurance.-The State of North Dakota may serve as a type of state experimentation with hail insurance. In 1911 a law was passed providing for a State administered system of hail insurance, under the jurisdiction of the State Commissioner of Agriculture and Labor. The insurance fund was derived from a charge of 20 cents an acre on the insured crops. Farmers were offered the opportunity in April or May, when the local tax assessor came around to value their property, to buy hail insurance. The assessor was allowed 25 cents per quarter section and 10 cents for each additional quarter to one owner for all such insurance written by him. But this compensation proved too small, and hence he made little effort to sell insurance. In 1913 the law was revised. The assessor was allowed a fee of one-half cent per acre a very substantial increase. The charge for insurance was raised to 30 cents an acre. The maximum protection allowed was $8.00 an acre. The assessor was required to collect his fee and the entire cost of the insurance in cash from the farmer at the time the application for insurance was written. This proved a very serious handicap, since the farmer's habit is to pay his bills in the fall, after the grain harvest. Consequently the number of farmers taking out State hail insurance was small. In actual operation this law worked as follows: North Dakota State Hail Insurance—1911-1916. Maximum Protection, $8 Number of policies issued.. 1011 Number of losses. Premium receipts. Losses paid: Dollars.. 139 $26,104.64 $64,840.37 $27,214.37 $27,771.72 $20,853.22 $33,113.10 $21,510.03 $57,936.69 $24,890.78 $24,985.39 $18,701.34 $30,161.26 1913 2505 773 761 580 845 443 91 114 95 257 The operation of this law proved both inconvenient and costly to the farmers. Hence the demand arose that state hail insurance be made compulsory and a tax be levied on all agricultural land to defray the cost. This demand involved an amendment to the State Constitution. Such an amendment, following the devious course provided by law, passed the 1915 legislature, the 1917 legislature, and went before the people, for their ratification, in the regular election of 1918 and was then ratified. Mutual Hail Insurance.-Coöperative hail insurance, or mutual hail insurance as it is generally termed, is successfully conducted in many parts of the country. The peculiar problems of this form of insurance may best be seen by taking a concrete example. For our study let us take the Alliance Hail Association of North Dakota, which completed the twenty-eighth year of service in 1918. It is an example of a successful insurance company all of whose officers and directors are practical farmers. It is incorporated under North Dakota laws and is subject to the strict super |