THE RUBAi NEW-YORKER. 
ftXisccIXirocmts. 
AN INSURANCE STOR Y. 
f _ 
JAMES FERGUSON AND DEACON JONES. 
An intelligent, quick wilted farmer, about thirty 
years old, was James Ferguson. He owned a hun¬ 
dred acres of land nearly paid for, and had a snug 
set of buildings on the farm, beacon Jones was 
his neighbor, sixty-five years old, possessed of rare 
judgment and shrewdness, which qualities had 
brought him prosperity in the way of broad acres. 
He owned three good farms beside the one he lived 
on; a married son and daughter lived on two of 
them and a tenant worked the third. 
The Deacon's judgment was greatly respected by 
all who knew him, and especially by Mr. Ferguson. 
The genial old gentleman always welcomed James 
to his house, and when asked, would discuss any 
matter of business with him or give such advice as 
a father would to a son, This kindliness on his part, 
had already saved James from embarking in two or 
three bad business ventures. Not three months be¬ 
fore the conversation occurred which we are about 
to relate, James asked him for advice in buying a 
patent right an agent had recommended in glowing 
colors. The Deacon soon convinced James that 
agents only represent oue side of a question, 
and persuaded him to look at the other side of this 
one for a while. Then he brought out his slate and 
pencil and set James to figuring expenses and loss 
of time and cost of patent, and soon showed him 
that the profits were too visionary to be depended 
upon. 
In truth, the Deacon had a very shrewd way in 
his discussions. First, he would allow a man to tell 
his own story to suit himself, and then by a scries 
of questions and suggestions, lead him along until he 
had involved himself by admitting sufficient to 
overthrow his own theory. A few words then from 
the Deacon, clinching all the points that had been 
made, would usually conclude the discussion, with 
the man convinced against himself. 
At the time of which we write, in the latter part 
of October, j 3 7 <j, a good deal of discussion occurred 
in the neighborhood about lire insurance. A young 
man from a neighboring town had lately held a 
meeting at the school-house, and made a speech 
full of tinkling words and sounding figures, urging 
the farmers and others to join a Mutual Insurance 
Company recently organized in the county. He 
told them of great profits made by stock companies. 
He pointed to the reports of a few such companies 
that were rich, and claimed their wealth was made 
by exorbitant charges for insurance. He figured 
that the farmers could save many thousand dollars 
by joining his company, formed on the Mutual 
plan, and did not conclude until he had shown, in 
his own estimation, that insurance as conducted by 
these companies, was little less than downright 
robbery. 
Ferguson and the Deacon were both at the meet¬ 
ing. The former was deeply impressed by what 
tile young man said, and went home about resolved 
to place his insurance in the proposed company. 
The next night he visited Lhe Deacon, to sec what 
he had to say on the subject. A ftcr the usual greet¬ 
ings, the discussion of the weather, and the pros¬ 
pect of the prices of wheat, of which both had some 
to sell, James broached the insurance question, by 
saying he was a good deal interested in the address 
of young Jones, and asked the Deacon what he 
thought about it, 
” Well," said the Deacon, “ I thought he was 
pretty wordy and smart, but I was not convinced 
as to the soundness of his arguments." 
“ Why," said James, “ I thought they were very 
strong and convincing.” 
“ What arguments, James, struck you so favora¬ 
bly ? ’’ asked the Deacon. 
“ Why, the whole speech,” said Ferguson. “ He 
showed how the farmers of this county could save 
thousands of dollars, by a Mutual Insurance Com¬ 
pany. You know he told us that some companies 
made $20,000 a year, and some make even more. 
That they report having millions of dollars assets, 
and they make it all out of us farmers and others. Be¬ 
sides, they pay their officers great salaries for doing 
almost nothing at all. It is too bad, Deacon, that 
they should gouge us so, and 1 feel that we ought 
not to stand it, don’t you ? ” 
“No,” replied the Deacon very quietly, “I was 
not convinced by what he said that I had been 
much cheated by the companies that insure me. I 
have never yet paid as much for the insurance of 
my buildings as 1 should want to charge another 
person, if I were to be the insurer. It seemed to 
me while this young man was talking that he dealt 
too much in general statements, and did not come 
down to details. You scern also to be running off 
in the same way. I guess I will bring out my slate 
and pencil, for we will want to do some figuring 
before we get at the bottom of this thing.” 
Now James knew that the Deacon seldom de¬ 
cided any business question without first consulting 
his slate and pencil. His discomfiture in the patent 
right question a few weeks before had all come 
through those little figures which the Deacon had 
so carefully made, and added and subtracted on his 
slate. But he too had brought a memorandum, 
taken at the speech, of the figures which the young 
orator had liberally given. They were all large 
ones, running up into the thousands arid even mil¬ 
lions of dollars. They wore a very formidable 
look, and he thought they could not be answered, 
so he was very glad when the Deacon got up, went 
to his desk, and getting the slate, drew out a table, 
put on his spectacles, and asked James to come up 
and prepare fur details. 
“ Now, James, you say some of these companies 
have made $20,000 and more a year, out of the farm¬ 
ers and others that they insure.” 
“ Yes, Deacon, their reports say they did, and 
the lecturer said-thai these reports arc sworn to by 
the officers.” 
“ Well, that is a good deal of money to make in 
a year,” said the Deacon, 11 or it would be if one man 
made it all, or it was all made out of a few men. 
We will put that down here in this corner, against 
tlic companies. Now how many men wereinsured, 
out of whom all this money was made ? ” 
This was an unfortunate question for James. The 
young orator had not told them, and he had not 
thought of it before ; so he was obliged to answer 
that he did not know. 
“ You see,” the Deacon continued, “ if there were 
20,000 men insured, then it was only a dollar made 
from each one, and this was not a very great rob¬ 
bery. If they had 40,000 men insured," said he, 
alter figuring a little, "it would be only fifty cents 
a year, and 1 don't believe they ought to take the 
chances of 40,000 risks at much less profit than this 
on each. I remember inquiring once at the office of 
a company that insured farmers in a good many 
States, and they told me they issued very often 
50,000 policies in a year. I suppose some issue 
more, some less, but anyway, it is evident that 
when you bring the figures down to each one of us, 
they will not show such evidences of extortion as 
thev appear to in speech. 
“ But $20,000 would be a great deal for one man 
to make, even if he made it from 40,000 people. 
Now did the young man say whether these com¬ 
panies were any of them owned by one man, or 
how many were interested in them ? " 
“ No, he did not,” said James, very much cha¬ 
grined that he had not thought to ask. 
“Then I do not see,” said the Deacon, “as we 
have got much figuring to do on this part of our 
subject; he didn't furnish us much data to work 
from. If, as 1 suppose, there are one or two hun¬ 
dred stockholders in these companies, it would only 
give each one a profit of from $ 75 to $200 apiece, 
and that will not make them rich very fast, will 
it?” 
James had to assent to this proposition, and felt 
that his line of argument was being rapidly de¬ 
molished by the Deacon's mode of coming down to 
details. So after a few minutes, thought he remem¬ 
bered another point. 
“ Why,Deacon,” said he, “you needn’t tell me 
that these stock companies have not made more 
money than you talk about. They have got mil¬ 
lions and millions of dollars, and they have made it 
out of the insured,too! ” 
“ Hold on there, James do not go too fast,” said 
the Deacon. “ Let us look into that a little. It is 
true they have in their hands a great deal of money, 
but it is not true they have made it out of the in¬ 
sured. In the first place, to form one stock com¬ 
pany, under the laws of our State, the men inter¬ 
ested have to pay in at least $200,r no, and some of 
the companies have one or two millions of dollars 
thus paid in by the owners. Tilts money is called 
the Capital Stock, and is all ptid in by the stock¬ 
holders, before a policy is issued. That part of the 
money owned by the companies, called their capi¬ 
tal, has not been made out of the insured, for it was 
in the company before the insured paid a dollar. 
Then you will notice another thing; you see we 
pay our insurance ill advance -one, three, or five 
years. Now the laws of this State say that this 
money which we pay in, docs not belong to the 
company at all, for the company has not, yet earned 
it. They must hold it in trust until the policies run 
out, and pay all the losses we may have while they 
run, before they can call it theirs. All this money 
is called a liability against the company. It is a 
debt, just the same as money deposited in a bank is 
a liability against the bank. This fund, called the 
unearned premium fund, amounts to many hundred 
thousand dollars in each company's hands, and if 
any company should stop issuing policies, so as to 
stop more of this money coming in, they would at 
once begin rcduc ng it, by paying the losses as they 
daily occur, on policies not yet expired. This would 
continue until every policy ceased by limitation, 
and I am confident it would use up a large part 
of this fund. 
“Now, if you should add this debt for deposits to 
the capital paid in by the stockholders, you will sec 
that the companies lack a great many million dollars 
of having made out of the insured, all the assets 
they report on hand." 
“ Why, Deacon," said Ferguson, “ do you mean 
to say that these companies are uot rich ? " 
“Certainly not, James; they are rich, as they 
should be, to have our confidence. We depend upon 
them to help us, if calamity befalls us ; we pay our 
money to them for insurance for years to come. 
The stockholders put their money into the company 
as they do, to win our confidence so we shall put 
ours into it also, and thus create a large fund to pay 
losses with when these occur. 
“ Now, James, tell me who you think has the first 
claim on the money these companies possess—is it 
the stockholders who furnished the capital, or the 
men who have losses under their contracts or poli¬ 
cies ? “ 
" Why, 1 suppose the losses that occur are debts, 
and the law will protect the creditor before the 
stockholders.” 
“ Yes, that is true. If losses should come heavier 
than the company expected, so as to exhaust all the 
money we paid for insurance, then we could call 
upon them for the capital until every dollar of this 
was exhausted. This has occurred many times, and 
the result was that the stockholders stood by and saw 
all their money go to this purpose, leaving them 
without a dollar of their investment. Would you 
like to invest any money in this way ? ” 
“ Well, said James, after considering a few min¬ 
utes, “ I might, if I got large enough dividends.” 
“ That is well said,” replied the Deacon; “ now, I 
notice very few companies pay over ten per cent 
dividends on the money or capital they invest— 
many pay less. As this at the best is only three or 
four per cent, more than they could get by invest¬ 
ing tlicir money in good mortgages where they 
could not lose it, I do not think it a very tempting 
business. Business, where a man stands a chance 
to lose all his money, ought to pay a better profit, or 
interest, or dividend, than business that has no risks 
in it. 
“ Suppose a man came to me, and told me he had 
five thousand dollars deposited in a bank, and offer¬ 
ed to make a contract agreeing that if my property 
burned up within the next three years, that money 
should be mine, and that all he would ask in return, 
was the interest the money itself earned, and three 
or four per cent, besides ? I should consider his of¬ 
fer a very liberal one indeed. More than that, I 
would not want to change my business for his— 
would you ?" 
“ No,” said James, “ but do you mean that is the 
way insurance companies do ?” 
“ Certainly; only a stock company consists of per¬ 
haps some hundredsof men instead of one man, each 
one putting in such sums as they see fit, and they 
insure thousands of men, thus taking thousands of 
risks instead of one only. I don’t think it a very 
safe business." 
“I agree with you,” replied James. “I have 
worked hard for fifteen years and made a few hun¬ 
dred dollars. 1 should hate to put it into such a 
speculation, even if 1 were sure of the ten percent." 
“ Why not?” the Deacon asked very quietly. 
“ Oh, because I should worry over the chances kt 
the business. Your house might burn to-night, or 
John Smith's to-morrow night. Some people are 
awful careless, and then lightning strikes when any 
little thunder shower comes up. The uncertainty 
would make me nervous, and even if I drew a little 
extra profit tw o or three years, I should all the time 
be afraid of losing all I invested.” 
“ Do I understand you, James,” said the Deacon, 
“ that you do not think that the chance of making a 
little money would be any temptation to you to risk 
losing a good deal ?*’ 
“ That is just what I mean, Deacon. 1 am going 
to take care of my money, and take no chances. 
Let other men take their chances if they want to—I 
won’t 1” and he brought his fist down with a great 
deal of energy on the table as he said so. 
The Deacon dropped his head as if in deep thought, 
and remained so some minutes. At last Mr. Fergu¬ 
son, feeling that the conversation had been drawn 
away front the subject he desired to discuss, said : 
“ But that has nothing to do with the matter I 
wanted to discuss with you, Deacon. That is this 
Mutual Insurance Company. You see wc pay a 
good deal of money to these companies to pay their 
agents and officers and clerks, &c., aud as the dan¬ 
ger of fire B very light we ought to save consider¬ 
able by forming such a company, and then when 
one of our number has a loss we could all be assessed 
and pay our proportion, and thus avoid paying more 
than is absolutely necessary. Now what do you 
think of it ?” 
The Deacon did not make any direct reply, but 
began figuring, 
“ How much do you pay now, James, to the slock 
companies to be insured,” he asked. 
James considered a few minutes and then said : 
“ I P a .v §30.00 for every policy.” 
The Deacon wrote the $30.00 on his paper. 
“ How long does your policy run, James?" 
“ Three years.” 
The Deacon figured a few minutes and then, look¬ 
ing up, said ; 
“ James, my policy runs out day after to-morrow, 
I can not see the agent until a week from that day 
to got it renewed. Now 1 want §3,000 insurance on 
mv property for that week. 1 will give you five 
cents each day, if you will agree to pay me $3,000 in 
case I should lose so much. Will you do it?” 
“ Why, Deacon, are you crazy ? 1 told you a few 
minutes ago that I would not take such chances. I 
don't know what you mean by asking such a ques¬ 
tion.” 
“Well, if you can not do that, I will make you 
another offer. You have got about th^iamc amount 
of property to be insured that I have on my farm 
over on the cross-road that John is living on. Now, 
I will not pay you any money, but wc will agree to 
this—if you burn up in the week, I will pay you 
your loss, and if 1 burn up, you shall pay me my 
loss.” 
“ But, Deacon, I told you I did not want to go in¬ 
to the insurance business at all. Besides, your son 
has five children, and 1 have only one; he keeps a 
hired man and a girl—I keep neither; so that risk is 
a good deal more than mine. Why Lhen should you 
ask me to take twice as much risk as you do? Even 
if 1 should consent, your own conscience would con¬ 
vict you of getting an advantage over me; I cannot 
understand, Deacon, what you arc driving at." 
“Simply this, James,” said the Deacon, “I am 
having you argue your Own way through the ques¬ 
tion you asked me about the Mutual Company. A 
Mutual Insurance Company is founded upon the 
principle that my proposition is founded upon, and 
which you so indignantly denounce. It is a fact 
that in joining such a company you go into the in¬ 
surance business; you help insure all your neigh¬ 
bors who belong to the company, as well as every 
other person who is induced to join. You pledge 
your property—your farm -to pay a certain portion, 
not only of my losses, if I hcloug to the company, 
but of each and every member of the company. 
You said you thought ten per cent, dividend, to the 
stockholders of a stock company, was none too much 
for them to receive for their risk, and that even that 
dividend was no temptation to you. Yet here you 
put your whole farm in the pool and receive nothing 
in return in the way of dividends, aud save but very 
litlle money indeed. Yuut farm is worth $5,000 iu 
cash. 
“ Now, James, I have figured oqt a little sum here 
for you. $30.00 for three years is $10 a year, or 2% I 
cents a day. That is what you pay a stock com 
pany for laying aside §3.000 with which to pay you' 
if your buildings burn any time in the next tnreo 
years. You have no farther trouble about it—you 
know that if you burn, iu sixty days or less, you 
I will have your money in vourhnnds to rebuild with. 
You do not feel alarmed about your neighbors' care¬ 
lessness—you are uot uneasy lest some of them burn 
—there is no lien on your farm; you paid your 
money and you have got your policy. Don’t you 
think you had better let well enough alone? 
“ M hen I was a young man 1 felt as you do, and 
I joined a Mutual Insurance Company. We Tun 
very nicely for two or three years—we had some 
little assessments and thought we were saving 
money. But after a little we had a very dry sum¬ 
mer, with a hot, showery August. Two or three 
dwellings burned during the Summer, and a couple 
of barns were struck by lightning and burned in 
August, just after harvest. We met in September 
to look trie ground over, and found that to pay the 
losses for the Summer, would cost more than to in¬ 
sure in a good company for ten years. We paid our 
assessments, and went home, sadder but wiser men. 
We concluded that so long ns two or three hundred 
insurance companies were soliciting our insurance, 
the competition between them would keep the price 
down as low as it could be done, and as we could 
get all the insurance w e wanted at a price ranging 
from one-third of a cent a day for the small property 
owners, to five cents a day for the wealthiest men in 
our county, it was nonsense to go into the business 
ourselves. 
“ I made up my mind that when I wanted to go 
into the insurance business, I would buy some stock 
in some company, paying the cash for it, and let it 
take the chances. 1 have never seen the time I 
wanted to invest that way. 1 would never put my 
home or farm into a pool, and say to all the county, 
• If you burn, here is my farm to draw on,’ for I in¬ 
tend to do a farming business and let. some one else 
do the insuring of all my neighbors. 
“ Now, James, it is tlinc to go home. You are a 
farmer—stick to farming. Don’t go into insurance 
or buy patent rights. 
“ One thing more. James, don’t begrudge to other 
men, the little profits they may make in any trade 
you give them. If you want a wagon you had bet¬ 
ter let a wagon-maker make it for you,and make 
something on the trade, than try to make it yourself. 
If you want some sugar, you hud better let the rail¬ 
road bring it and the merchant sc.li it to you, each 
making a little profit, than to take your horse and 
drive to New Orleans after it. The railroad and the 
merchant will make a dollar or two, on nil you will 
use in a year, but it is infinitely better for you to be 
digging away on your farm, raising the stuff to sell 
to get the money to pay them while they are getting 
it to you, than it would be for you to leave the farm 
to co after it. 
“ So with Insurance. The companies that insure 
40,000 or 50,000 farmers a year, will gladiv do it at a 
P rofit of a dollar a year from each,and even forless. 
am told they ofteii do not make one-third of this. 
So on the average, all you will save by going into 
the business yourself, will be the few cents yearly 
that they make out of each man after paying all the 
losses that must arise. 
" Keep your property insured—keep out of all en¬ 
tangling alliances—pay- your debts and you will be 
happy. Good-bye, James.” 
And this was how it happened that James Fergu¬ 
son did not join the Mutual Insurance Company. 
OF ASSETS OF TIIE 
ASSETS 
' Jan. I, ISC3, , 
3 05.572.00\ 
lfcSOU. 
.^eof 6 ^ 
t L~ * 
§! 
tj / Jan. 1, 1 
rj /3 302.03a , oo\ yfl 
cy /jqn.i.'Ga.ssba .076 00 ^ \— 
/jan, 1 , ' 00 , S<tOC,OOS Oo' y* 
t-Z) /Jan. 1 . ’ 70 , $ 467 , 764 . 00 ^ 
O, r AssetsJan.' 7 l, 354 t,S 57 . 00 j 'fie 
/ABtet 3 Jan, * 72 , a 623 . 055 .QO \ u* 
/Assets Jan. 1 , ' 73 . $ 716 , 450 . 0 o\ 
O / /Assets Jan. I. ’ 74 . £ 800.070 O 0 \ lO 
^ / Assets Jan. 1 . ’ 75 , $I.C 03 . 366 Qo\ • 
/ Assets Jan. 1 , 1876 , 81 , 0 £B .g 69 . 00 \ 
/ Assota Jan ■ ’77, 81,050.62 2/Oo\ 
/ AaaetaJan. l.»787 81,058, 157.0 q \ 
/Assets Jan, 1,18797$!.098,623.00^ 
/Assets Jan. 1st, 1380, $1,137,549.00\ 
Assets January 1 st, 1881 , 
$ 1 , 261 , 781.00 
7 
Capital, $300,000, Net Surplus. $201,092.58. 
‘HE ATTENTION of Owners of farm property 
mid residences is invited to the above Pyra- 
mid. showing the uniform and sure growth 
during the last eighteen of its as years of existence, 
of a Ore insurance company whose charter limits its 
business to their close of property the Agricultural 
Insurance Company, of Watertown, N. Y. The 
figures represent the amount set apari at the dates 
given for tho protection or Policy Holders. 
Twenty-eight, years of patient toil has made this 
the strongest and largest. Company doing an exclu¬ 
sive Dwelling Business in the United States, if not 
m the world. If now issues i »,000 polices it year. No 
other like Company can allow Buch growth and in¬ 
crease. 
The history of this Company proves that a large 
business, well scattered, managed with prudence 
can to done with a very email profit from each riek, 
and afford perfect security, which will grow stronger 
every year. 
While nine tenths of the “ Mutual " Are insurance 
companies, and many of the Stock companies, have 
failed on account of reckless or extravagant mun- 
ugementor dffing too small » business, the OLD 
AOKJOULTURAL, by economy, energy and pru¬ 
dence, has every year added a substantial amount to 
its Assets, Tor the indemnity of its patrons, and it 
BOW occupies a position in the confidence of the 
public second to no other Company, 
From year to year it spreads the base of its Pyra¬ 
mid and gains strength. 
Extract Eiioat CtranTER. “Articles. This Com¬ 
pany Is formed for the purpose or Insuring Farmers' 
Dwellings, Private Residences. Bams and Outbuild¬ 
ings, with their contents, and other property not 
more hazardous,“ and is strictly confined to this 
class of property. 
'JOHN A. SHEltMAN, President. 
ISAAC MUNSON, Secretary. 
C. Patterson, 60 Liberty St., N. Y.. General 
Agent Eastern New York, Connecticut. New Jer¬ 
sey and Eastern Pennsylvania. I) A. Clark, Bal¬ 
timore. Stale Agent Maryland and Southern Penn¬ 
sylvania. Geo D. Pleasants a. Son, Richmond, 
State Agents Virginia anil North Carolina. A. II. 
» v, Chicago, General Mauager Western De- 
it. Fwjieu & Flynn, Cobuurg, Ont., Chief 
for Canada. 
