210 INSURANCE 



agents to sell insurance to the farmer, but a saving of these costs 

 of many tens of thousands of dollars a year. The farmers, in 

 theory, will come up without solicitation and apply to their own 

 mutual company for insurance a two-cent letter as a reminder 

 being sufficient for the purpose. This theory was indeed even 

 tested by this Association. By taking their agents off the road, 

 the volume of business was contracted to near the zero point. 

 Few farmers took out insurance. But almost the same overhead 

 office expenses had to be borne by the few farmers as by the many 

 in the years of big business, and hence the cost of the insurance 

 was increased, not reduced, by this pseudo-economy. 



One "economy" practised by this company is the payment of 

 low salaries, farmers disbelieving in the theory of high priced 

 officials. In 1896 salaries were cut from $2400 (for two officers) 

 to $2200. In 1903 the president was put on a no-salary basis. 

 Later, however, he was given a compensation of $1200 a year, 

 which covered his services as adjuster also. Stock companies, 

 at the same time, were paying from two to ten times as much for 

 the same class of men. 



Collection of premiums is slow. Farmers give their notes 

 without interest for the full six per cent premium, thus making 

 the insurance just as cheap on time as for cash. From 70 to 95 

 per cent of the premiums is the most that can be collected, and 

 much of this runs two and three years. This is perhaps one of the 

 weak features of a mutual company. Harsh measures of collection 

 would alienate the good-will of rural communities. 



This company has a thorough and complete audit once a year. 

 For the delicate work of adjusting losses only the most competent 

 men are used. For several years this work was done by the presi- 

 dent himself, a large farmer and a man peculiarly well fitted for 

 the task. 



Wide distribution of losses is secured by carrying insurance 

 in every county in the State. Agents are sent out who can speak 

 the various languages of the North Dakota farmers. The chief 

 nationalities now reached are the Germans, French, Russians, 

 Norwegians, Bohemians, Poles; also the Jewish farmers. 



One lesson has been taught by this Association, and that is the 

 folly of making the assessment too low. The heavy loss is sure 

 to come, and it should be provided for. Under the present by-laws 

 (for there is no established policy yet in the matter) there is no 

 provision for a surplus or reserve fund, each year's receipts being 

 applied to the same year's expenditures only. The experience of 



