St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1916-08-09

by one subscriber it might be offered
If each risk was widely separated
from all others in zones predetermin-
ed by the association.
The question then arises, Could
timberlands stand the one per cent
premium needed for loss by fire and
management? In a strictly forestry
sense it could not, as is shown in an
article by Professor Lovejoy of the
University of Michigan in the Ameri-
can Forestry Quarterly, that a tract
of timber which has been wiped out
by fire cannot be replaced by growing
a new forest at the same cost as the
current stumpage value destroyed.
While this may be true in his pre-
mise of 100-year crop rotation basis
in forest replacement, it is also true
that there is still remaining in Amer
lea opportunity to purchase addition
al area at approximately the sam
stumpage price. While it is true that
insurance of the timber would eat up
a considerable percentage of the
growth value las overassessed taxes
do at presently, insurance would on
the other hand help the plantation
and reproduction of trees, in bring
ing the expectation value of the crop
from the future down to the present,
and would insure careful superintend-
ence and continuance Of protection.
Such protection would make certain
both profit from growth, and what is
of more moment, the increased value
of stumpage. Such insurance is prac-
tically collecting the present worth of
expectation value and commencing a
new period of crop rotation. Pro-
fessor Lovejoy, by proving how slight
a yearly loss by fire to uninsured for
est property will over a hundred year
period wipe out the profit of growth,
proved the necessity of efficient fire
protection, and how financially pos
Sible and advisable it is to expend
yearly even a much greater amount
per acre than is now commonly DONE
By the same argument, he also prov
ed the advisability of insurance, as
even the best of fire protective meas
ures must necessarily stop short Of
complete protection; lightning will
continue to strike; fires will contin-
ue to be set from unknown causes;
and here and there a forest fire is in
evitable; so that a wise man with a
small valuable tract Of timber in an
exposed position will seek insurance
in orde that this irreducible mini
mum hazard should be forecast
and ade ate provisions prepared to
meet it.
The moral hazard in the insurance
should be reduced by the co-insur-
ance of members, indemnity to be
limited to 80 per cent of the valua-
ton. Reinsurance may possibly be
worked out after the inter-insurance
principles have been proved sound.
Inter-insurance would be of the
greatest immediate value to the small
owner or farmer whose tract is small,
exposed and subject to total loss, as
large owners with largely distributed
risks practically insure themselves.
If large owners will, however, join
with the small ones, contributing
each a small area, then when the as
ISOLATION has proved a success by add
ing new members and increased ter
ritory, with it's result of more uni
form loss, greater reserve and lower
premium, opportunity may be created
for the carrying of a large line Of
insurance on the larger and more
valuable tracts. The small and we'll
distributed risks at the start are more
equitable amongst owners, as a more
perfect classification of hazard and
value can be arrived at and risks
amongst owners can be equaized.
An initial guarantee fund is nee
essary to create an immediate re-
serve until such time as the surplus
of premiums form such a reserve
This should be preferably cash de-
post. AS most land owners are long
on land and short of cash, however,
to start the association and tide over
the first two or three years title to a
small tract of merchantable standing
timber could be transferred as a
guarantee and accepted as security by
the association, and returned when
the excess premiums had become suf-
fcient. Subscribers should be bound
only to the close Of each season and
to the extent Of their original guar
antee, and could withdraw at any
time, except in as far as they were
bound to make good the losses and
costs of management of that particu-
lar year. Management should be vest
ed in a board of directors of five and
the managing attorney-in-fact, who
legally would be the agent of each of
the subscribers, and to his judgment
they would have to trust the initial
complex questions of the relative
hazard, acceptability of tracts, val
uation, and protection required, in
order that all might be put on ap-
proximately the same initial basis.
New England should be selected as
the region to inaugurate such an as
ISOLATION, as it is the most uniform
in climate, and shows the most uni
form statistics, and a more economic
management and inspection could be
affected if subscribers were not to
extended. The managing attorney-in-
fact should preferably be a trained
forester with experience, judgment
and ability. Classification of risks
would call for consideration of the
kind and character of species, expo
sure5 soils, neighboring risks, accessi-
bility to market, market values, CHI
matte, physical and moral hazard,
and many others, and such an asso-