Dunfire is correct....the third brush serves as the regulator. The way it worked was you were supposed to move the third brush over to the right to increase the generator output at night to keep the headlights bright (?) then remember to move it back in the am when the electrical load was less so you did not boil all of the water out of the battery.
The cutout simply allowes current to flow into the battery when the generator has an output and stops the flow of current in the opposite direction when there is no generator output..
With no output from the generator the voltage in the battery was (or should be) greater than it was at the generator end so the current would flow the opposite direction....draining the battery. -
The cutout was there to control the direction the current flows...like a traffic cop.
Fifth Avenue sells a solid state cutout that is in the rectangular box and has no points to stick, It mounts ontop of the generator like the originals. They are still used on a lot of farm and industrial applications.
Class dismissed. Pass your papers to the front and do not forget to sign your name in the upper right hand corner.
Randy