24 BITLLETIX 1043, U. S. DEPAETZMEXT 0E ACtBICTETUBE. 
lated in the contract. But suppose, on the other hand, that wheat 
falls to SO. 80. The 8 bushels harvested will then be worth only 
$6.40 and the indemnity due will be $5.60 an acre. On the basis of 
this price, even a 12-bushel yield will call for an indemnity, assum- 
ing that damage has occurred from hazards covered by the contract, 
equal to the difference between $12 and $9.60. or $2.40 an acre. To 
the farmer suffering crop damage from causes covered by the con- 
tract in such degree that his actual yield at market price falls below 
the insurance an acre, it makes no difference under this plan whether 
the price is higher or lower. To the company, on the other hand, 
high prices mean few and small losses, while low prices mean numer- 
ous and relatively large losses. 
Turning now to the third and last form of contract previously 
outlined, conditions based on fluctuations in price take on still an- 
other aspect, Under this plan the company in effect reserves to 
itself the right to make settlement in kind on the basis of the aver- 
age yield used in determining the insurance an acre, at the same time 
retaining the option of settling the claim on a basis of dollars an 
acre with the crop valued at market price. 
Assume again that a farmer carries insurance of $12 an acre on 
his wheat, this figure in this instance having been determined by 
taking three-fourths of a 16-bushel average yield and an average 
price of $1 a bushel. Owing to one or more of the hazards insured 
against, the yield, as in the preceding illustration, is only 8 bushels 
an acre. Assume first that wheat following harvest is worth $1.50 a 
bushel. The company, of course, invokes the clause in its contract- 
providing that its liability shall in no case exceed the amount, if any. 
by which the amount insured exceeds the market value of the crop 
harvested. Since the value of the 8 bushels harvested is 812. no 
indemnity is due. But suppose, on the other hand, that the price 
following harvest is only $0.80 a bushel. The company then relies 
on the provision that in no event shall its liability under the con- 
tract exceed the cost at the time of harvest to replace ail or any 
part of the estimated yield with products of like kind and sound 
quality. The company, therefore, tenders the insured the equiva- 
lent of 4 bushels at $6.80. or $3.20. This sum. together with the 8 
bushels harvested, also at $0.80, makes the gross returns to the 
insured $9.60 an acre. 
Had wheat remained at $1 a bushel the indemnity would, of 
course, have been $4 an acre, but with a market price at harvest time 
standing at $1.50 the company pays nothing, and with a market 
price of $0.80 it pays only $3.20. As in the case of the preceding 
plan of contract here considered, the company has fewer losses by 
reason of the rise while such losses as occur are reduced in amount. 
