CKOP INSUEAISrCE : RISKS, LOSSES, ETC. 3 



late spring frost followed by drought causing his crop to be a total 

 failure. Finally, in the territory where Z is farming, climatic and 

 other conditions prove highly favorable during the greater part of 

 the season. Until within two weeks of harvest time, Z figures that 

 he has a 35-bushel crop in prospect. At that time, however, a hail- 

 storm passes over his farm and destroys 60 per cent of his crop, re- 

 sulting in an actual yield of 14 bushels an acre instead of 35 bushels. 



Limiting consideration to the returns for the single year and speak- 

 ing this time first in terms of actual income rather than prospective 

 income, farmer X, who grew and harvested an 8-bushel crop, had 

 neither a profit nor a loss. He reaped an amount which at the price 

 received was equivalent to his entire costs chargeable to the season's 

 crop. On the other hand, farmer Y, who, because of frost and 

 drought reaped no harvest whatever, suffered a loss equivalent to his 

 entire expenditure of labor and capital chargeable to the year's 

 operations. Farmer Z, with his 14-bushel yield, in spite of the 

 damage to his crop by hail, realized a profit. 



If, however, the matter is considered from the point of view not of 

 actual income but of prospective yield and income, as was done in 

 the first illustration, the situation changes. Had it not been for 

 drought, excessive heat, untimely frost, hail, or some other cause 

 or combination of causes, X, Y, and Z would each have reaped a 35- 

 bushel yield. In a certain sense, therefore, all may claim to have 

 suffered loss. This becomes more apparent in the case of farmer Z, 

 who had in immediate prospect a 35-bushel yield when he suddenly 

 suffered a 60 per cent damage by hail, in consequence of which he 

 claimed a loss of 21 bushels an acre. He actually reaped a harvest 

 of 14 bushels an acre, while his cost of production was only the 

 equivalent of 8 bushels an acre. Nevertheless, if Z had carried hail 

 insurance on his crop he would have been entitled to indemnity, under 

 the prevailing plan of settlement, equivalent to 60 per cent of his 

 insurance an acre. It must be conceded, therefore, that Z suffered a 

 recognized form of loss, even though the loss related to wheat in 

 prospect rather than to wheat already in existence and in spite of 

 the fact that his hail-damaged crop yielded him a material profit 

 over and above his cost of production. The fact that the loss or 

 damage suffered by Z on his crop was sudden and spectacular does 

 not make it materially different from the losses or damages suffered 

 by X and Y. In each case it was wheat in prospect and not wheat 

 in actual existence that was lost. At the time of planting the pros- 

 pects of a perfect yield may have been equally good for each of the 

 three men. The prospects of X were early reduced by certain natural 

 causes ; those of Y were entirely eliminated also in the early part of 

 the season ; while those of Z continued good until near harvest time, 

 when they were suddenly reduced. 



