18 BULLETIN 530, U. 8S. DEPARTMENT OF AGRICULTURE, 
ing of the previous award of the company by a very small amount in 
order to throw all expenses of arbitration upon the party which can 
better afford to bear them. Such action, however, is decidedly unfair 
to the company. ‘The addition to the award and the expenses of 
arbitration may not in themselves be serious considerations, but by 
having its original award set aside the company’s reputation for 
fairness in the settlement of its losses is unjustly undermined. _ 
The damage by fire or hightning to a given piece of property often 
appears to the owner much more serious than it really is. ‘For this 
reason a provision to the effect that the company may satisfy the 
claim against it by repairing or rebuilding frequently proves of value. 
RESERVE. 
The question of whether a farmers’ mutual insurance company 
should aim to establish and maintain a reasonable reserve fund is 
closely related to the question of advance or post assessment already 
discussed. The reservé problem, however, leads still further into 
the question of how far the farmers’ mutuals shall imitate the plan 
now imposed by law upon all capital-stock insurance companies and, 
in general, upon larger mutuals; namely, that of maintaining a cer- 
tain reserve proportionate to the amount of business transacted. It 
is frequently held that to build up a reserve fund deprives the mem- 
bers of capital which each member might as well have in his own 
possession until it is needed by the company. The truth of the 
argument, so far as it goes, must be conceded. However, the neces- 
sary additional amount to be contributed by each member in order 
to build up a reasonable reserve is so small that it can not affect 
seriously the business operations or the prosperity of the individual 
members. 
A reasonable reserve in the treasury of the company, on the other 
hand, performs a very useful function by equalizing the assessment 
from year to year. In case unexpectedly heavy losses should be ex- 
perienced it may thus prevent dissatisfaction on the part of the mem- 
bers. In an extreme case it may even save the company from dis- 
solution. The opinion appears to be growing among farmers’ mutual 
insurance men that under a plan of annual assessments a reserve 
of about $3,000 per million of insurance in force is useful as a shock 
absorber in the loss experience of the company. 
AMENDMENT OF BY-LAWS AND ARTICLES OF INCORPORATION. 
The by-laws, as well as the articles of incorporation, should pre- 
scribe carefully the method of their own amendment. A reasonable 
permanency in the company’s plans and methods doubtless requires 
that something more than a mere majority of favorable votes should 
