CROP insurance: risks, losses, etc. 15 
sect pest and takes all available preventive measures against danger 
of loss or damage. Similar safety measures apply to many of the 
diseases that occasion losses among the farmer's live stock. By the 
timely application of vaccines, dipping, or other treatment many 
of the losses that threaten may be avoided. 
As a final illustration of the reduction of risk by individual action, 
or self -insurance, the provision for a reserve against years when 
the income is materially less than the average may be mentioned. 
Many a farmer, who for one or more years has met with success and 
enjoyed a liberal income, recklessly assumes that each succeeding 
year will be equally profitable. On this assumption he expands his 
operations and strains his credit to the limit. A single year of fail- 
ure may cause him to lose not only the results of that year's labor but 
very probably also his capital accumulated from the success of 
former years. 
The reserve against lean years may be in the form of a savings 
account at the bank or a bond that is stable in value and readily 
marketable. A legal reserve life insurance policy with its loan and 
cash surrender features also constitutes a good emergency reserve 
in addition to the protection that it provides for dependents. In 
the case of the farmer with limited capital the suggested reserve may 
be given the form merely of an improved credit status. This may 
need a word of explanation. 
Farmer D, who has already borrowed to the limit and has all 
his property pledged as security for loans, in a given year reaps a 
good harvest and receives good prices for his surplus products. 
Instead of reducing his indebtedness, after selling his crops, he 
renews such of his outstanding loans as expire, paying only the in- 
terest thereon. He then uses all his net income of the year to buy 
more land or other property, paying part cash and giving a mortgage 
on the newly acquired property for the balance. He has added 
to the property nominally his, but has improved his credit status 
little if at all. His margin of safety is no greater than it was be- 
fore and he is about as likely to lose all he has by reason of a bad 
season as he was the year before. 
Farmer E, on the other hand, whose property is also mortgaged 
to the limit before the reaping of a profitable harvest, uses his net 
income to reduce his outstanding debts. His live stock is cleared 
of mortgage and he makes a small prepayment on the mortgage on 
his farm. This man has added nothing to his outward possessions, 
but he has strengthened his hold on that which already was tech- 
nically his. He has increased his margin of safety. In case of 
future need of loans he has security to offer. In other words, he 
has a form of reserve set aside from his prosperous year. 
