adjusted by each company to reflect its loss experience. The bylaws now in common use among farmer companies permit an annual assessment sufficient to pay losses and operating expenses and to make reasonable allowance for a reserve or safety fund. Costs in the various sections of the country reflect regional differences in property hazards and in operating methods of farm mutuals.

Some farmer mutuals vary their rate from year to year to reflect their current experience. Many, however, charge the same rate each year, keeping the right to levy additional assessments if needed. Ordinarily this is not necessary. Many companies have operated for years on an annual assessment of 50 cents or less per $100 of insurance. They have built up sizable reserve funds as well as paying losses and

expenses.

Charging a flat rate for risks of all types is most common, but there is an increasing tendency to vary the charges on buildings of different types according to degrees of hazard. The most common basis of distinction is the use of property-whether dwelling or barn. This distinction is based on the common belief that a barn involves a greater fire hazard than a dwelling. Spontaneous combustion from hay storage, using lanterns in the barn, smoking in the barn, accumulations of dust, and using gasoline engines are factors involved. A fire in a barn is likely to go unnoticed until it has developed to sizable proportions. In contrast, an incipient fire in the house is much more likely to be discovered and checked before it gets out of hand.

Use of fire-resistant roofing is another common basis of differences in rates, particularly for dwellings. Studies show that sparks on the roof are among the most frequent causes of dwelling fires. Fire-resistant roofing helps greatly in reducing the number of such fires and the amount of damage they cause.

Presence or absence of lightning rods is another basis frequently used in

setting up classes of farm property for rating purposes. In several Midwestern States, some of the companies organized to insure rodded property only. Or they divided all insured property into two classes, rodded and unrodded, and charged the rates on each type of property in proportion to losses.

Most farmer mutuals have relatively simple classification systems, if any. However, a few have set up quite complicated systems of charges and credits for various characteristics of property. These may include lightning rods, roofing material, type of chimney, wall material, exposure to other property, use of building, adequacy and availability of water supply, use of spark arresters on chimneys, and emergency fire protective measures such as fire buckets, hose, ladders, and fire extinguishers.

A simple classification system is normally adequate for a company operating in a small area where one type of farming is prevalent and nearly all farmers follow the same practices. Even charging the same rate for all property involves no great injustice, since all properties in the community have about the same fire hazards.

For companies operating in a wider area, where property varies considerably in use and in construction, there is more advantage in systematic classification of insured property. Charging a farmer for insurance in proportion to the hazard involved encourages him to improve his property to get a lower rate. Thus losses may be avoided to the common benefit of the farmer, the company, and the community.

Inspecting Property.-Farmer mutual insurance companies almost always make a thorough inspection of property before writing insurance. In some cases property is reinspected periodically or whenever considered necessary during the policy term.

Property inspection provides a basis for evaluating property for insurance. and for judging its hazards in order to classify it properly. It also provides

a means for discovering and providing for elimination of needless and easily remedied fire hazards. Some companies refuse to insure property on which such a fire hazard exists until the hazard has been removed. If a policy has already been written on the property before the hazard is discovered, insurance may be suspended until the owner has made the necessary improvement.

The experience of many companies has proved that inspection pays dividends in reduced loss costs. Repairing a dangerous chimney, discovered through property inspection, may save loss of a dwelling. Inspections made periodically during the policy term or at least whenever insurance is renewed also help to keep insurance in proper proportion to value. A farmer may have torn down an insured outbuilding and neglected to report the fact to the insurance company. Meanwhile he pays assessments which cover that building along with the others, and the company invites possible complications in loss adjustment if a loss should occur. A farmer may also have built an addition to an existing building or may have built a new outbuilding. He needs fire insurance on such additions just as much as on his other property.

Farmers sometimes change the use to which a building is put. A building insured as a granary may later be used as a machine shop or shed. The increase in hazard may make the company unwilling to insure the building at all, or willing to insure it only at a special rate. The shift in use of the building may automatically suspend existing insurance.

General changes in property values as a result of changing economic conditions also make periodic inspections necessary to keep insurance values in proper relation to current property values. If insured values are too high in proportion to current property values, serious complications may arise.

Inspections are valuable as a means of educating the insured members of a company. A farmer may not actually

know what constitutes a fire hazard. Even though he recognizes a fire hazard when it is brought to his attention, he may be unaware of the existence of a particular hazard on his property. If he accompanies the insurance company's inspector on an investigation of his own property, he may learn much about fire hazards and their elimination.

Other Fire Prevention Measures. Special circulars, small periodicals and placards sent out by farm mutuals constantly reiterate means of combating some of the common causes of fire, such as careless use of matches, careless smoking habits, and poor housekeeping. Many companies issue with their annual statements or at other times during the year helpful hints on how to prevent fire. For example, in the fall a company may advise its policyholders to check their chimneys and heating equipment to see that they are in order for winter use. It may advise them in the proper methods of ash disposal. Fall housecleaning is in order at the time in both house and

barn; therefore the notice may carry suggestions as to cleaning up odd corners in basement, closets, and attic, as well as in the barn. It may discuss rubbish disposal as a means of fire prevention.

To supplement their regular inspection service, some of the farm mutuals issue self-inspection blanks to their policyholders. These contain ques

tions about various hazards which exist around many farm buildings. Sometimes the company requests that these be filled in and returned. In other cases the company provides self-inspection blanks only for the use of the farmer as an aid in inspecting his own property.

The National Association of Farmers Mutual Insurance Companies has promoted a National Youth Safety Contest with prizes for the boy and the girl who turn in the best inspection reports and essays on fire prevention. Some of the State associations have cooperated with the National Association in this contest, providing State prizes for the best work offered in the State.

Each contestant must inspect several farm properties in addition to his own home and fill in a questionnaire applying to each. Some of the contestants have secured the cooperation of property owners in the removal of fire hazards. After completing the property inspections, the contestant must write an original essay on fire prevention. Such contests are beneficial for the future as well as the present, since they educate future farmowners to remove as many fire hazards as possible from property.

The efforts of some companies to get spark arresters installed on all insured properties have also brought good results. A few companies provide the spark arrester and its installation for a fee little more than the actual cost of the device. Others provide in a similar way for installation of approved lightning rods. Some companies make electrical inspections. Others provide approved fire extinguishers and some service the extinguishers annually.

Organize Local Firefighting

Some farmer mutuals have cooperated for many years with local organ

ized groups to provide rural fire protection. A Maryland company reported 100 years ago a contribution made to two local firefighting organizations. Cooperation between fire insurance company and local firefighting groups has developed considerably. Some companies contribute a stipulated amount each year to one or more local fire departments. In return fire trucks serve the policyholders of the company or in some cases all farmers in the area. Other companies reimburse the local fire department for all runs made to policyholders of the company.

A few companies scattered over the country have purchased their own fire trucks. Some own several. The company usually arranges for storage of such trucks with local fire departments.

Investment in fire department service or actual ownership of fire trucks seems to have been profitable. There is no accurate measure of the exact amount saved in losses but every available report shows that annual losses decreased as soon as fire protection became available. As rural roads are further improved, the usefulness of organized rural fire protection will increase.

Have State and National Groups

State associations and the National Association of Mutual Insurance Companies are useful instruments in developing local farmer mutual insurance companies. These organizations have contributed much toward preventing unfriendly legislation and securing legislation that benefits local companies. They have also enabled local companies to get a wider view of the problems they have in common with other companies. Through annual meetings at which they discuss their problems and possible solutions, local associations are helped to keep abreast with current insurance developments.

Development of a recommended standard policy for farmer mutual insurance organizations is among the

most important contributions of the National Association. This policy has been widely adopted by local companies all over the country.

In several States, all local farm mutuals are active members of the State association. The secretaries of some State organizations keep in touch with their member companies throughout the year by means of circular letters. The annual meetings of the State associations are important exchange centers for ideas about solving farm mutual problems. The problem of reinsuring risks too large for a local company to carry along, for example, is one that has been threshed out in both State and National Association meetings. Several of the mutual reinsurance associations have developed at least partly as outgrowths of such discussions.

Save Money for Members

For the country as a whole, costs of farmer mutuals have averaged about half those charged by most other types of companies. Yet charges of farmer mutuals have been sufficient to carry the risk assumed, as their long record of successful service proves.

The low cost in farmer mutual insurance companies may be explained in several ways. Their nearness to the insured farmer is one explanation. When they write insurance on a piece of farm property, they write it knowing the property and knowing the farmer who owns it. Personal knowledge of the property as a result of living in the same community gives them an advantage impossible to a large company whose operations extend over a widespread area. There is no doubt that such personal knowledge of property and its owner reduces the possibility of insuring property involving either a physical or a moral hazard. A thorough inspection of property added to this personal acquaintance reduces still further the risk of loss on insured property.

Another explanation of low cost in farmer mutuals is their moderate operating expenses. A large company operating in extensive territory must maintain a home office and perhaps a number of branch offices with fieldmen and numerous agents. A farmer mutual with its only office in the home of a farmer or in a low-rent rural center often escapes much of the expense of office maintenance. Moreover, it does not need to pay high commissions to agents to induce them to seek new business. The man who writes the insurance for a farm mutual is likely to be an officer or director of the company, and his only compensation is a moderate fixed fee. Frequently the sole paid officer of the company is the secretary.

Show Many Accomplishments

Farmer mutual fire insurance companies write about $30 billion of insurance annually through some 1,700 companies. Total annual costs have averaged about 25 cents per $100 of insurance, of which approximately two-thirds has been used to pay losses.

There is no adequate measure, however, for the service performed by the farm mutuals. Their competition has undoubtedly kept the rates of other companies on farm property lower than they would have been otherwise. They have contributed much toward reducing losses through their fire prevention efforts. The fact that their loss costs have averaged relatively low is an indication of the effectiveness of their loss prevention program.

The typical farmer mutual fire insurance company still is one operating in a single county or in adjoining counties with $10 million to $20 million of insurance in force. Improved roads and transportation facilities have enlarged the area which can be served. As a result the trend seems to be toward expansion of territory and increase in volume of insurance. Whether the trend toward bigness in territory and

volume will go still further and whether it will result in a lower cost insurance still remain uncertain. So far the record seems to indicate that the

small local mutual furnishes farmers with efficient fire insurance service that a larger organization probably could not greatly improve upon.

OOPERATIVE or mutual irriga

COOPE

tion companies supply water for about 30 percent of all the land irrigated in the United States. Irrigation districts supply water for about 20 percent; the Bureau of Reclamation, for about 8 percent; and commercial companies, about 5 percent. Individual farm irrigation systems pumping direct from streams, ponds or wells, supply the remainder.

The mutual or cooperative irrigation company is a voluntary association of persons producing farm products under irrigation. Its purpose is to obtain and distribute irrigation water at cost for use primarily on lands of its owner stockholders or members. Since irrigation water is supplied to the members at cost these associations reduce the cost of production and increase returns from farm operations.

The mutual company differs from the irrigation district in that membership is entirely voluntary. Any farmer in the area may come in or stay out as he chooses. Only those who come in contribute to the cost of maintenance and operation of the company, whereas in the irrigation district, every farmer must bear his share of building the irrigation works, whether or not he uses the water.

An irrigation district is a public or semigovernmental institution. It is formed as a result of a public statutory procedure initiated by landholders. within a given area who want an irrigation district formed. An election is held. A majority can vote the minority in, provided the land of the latter will benefit from irrigation. Once the district is organized as a result of ma

jority vote, every landholder in the area becomes liable for his pro rata share of the cost.

Mutuals Started Early

Cooperative irrigation in modern form and of the type now widely used throughout most of the West apparently had its beginning in Utah around 1850. The early pioneer Mormons who settled the Salt Lake Valley soon discovered that irrigation was necessary to their existence. Being in an area without capital and finding it beyond the power of an individual to turn the main streams from their courses and spread water upon the land, the early Utah settlers turned to the cooperative form of enterprise to provide themselves with necessary irrigation facilities. Several of these early mutual irrigation companies are still in existence, having supplied their members with irrigation water on a nonprofit basis for about 100 years.

The Utah projects usually are regarded as the beginning of modern cooperative irrigation (sometimes referred to as Anglo-Saxon type of irrigation) in this country. An earlier form of community irrigation ditches. with many cooperative features developed, however, at a much earlier date in the territory that is now New Mexico and Arizona. According to reliable. history, the Spanish explorers, riding up the Rio Grande Valley and its tributaries, found the Pueblo Indians. already growing crops under irrigation. The early Spanish settlers in this area adopted the Indians' irrigation practices with some variation and handed