The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-02-08

The old maxim, "Whom the gods wish to
destroy they first make mad" seems in the
course Of realization by the weakness at pres
ent displayed in the management Of the sys-
tenn Of insurance. And this is especially true
with reference to fire underwriting in New
York. The law has thrown, as far as it is pos
sible to control the matter, safeguards about
the business for the protection Of stockholders
as well as of the insured but reckless expen-
ditures and improvident management threaten,
with the first train of connected disaster, to
seriously impair the capitals Of many Of the
companies which now boast solvency, and
compel them incontinently to wind up their
affairs
Among others Of the moro prominent weak
nesses is the lack Of moral courage displayed
by the companies in refusing to pass their
dividends when prudence demands it. Stock
holders are clamorous for return upon their
investments. Competition, creating the spirit
Of pride to appear as well as others, induces
the companies to crafty their wish, and in this
way insurance companies frequently obtain
the credit of entire solvency upon the reputa-
ton Of having declared a dividend, while in
truth an inherent weakness exists which must
sooner or later develop in their destruction.
II is, indeed. the old story Of the struggle to
keep up appearances, and partakes too much
of the nature of improvidence to justify its
practice.
The agency management is also another of
the weaknesses prominent, in many instances,
in the insurance system. Too much latitude is
given to agents residing at remote places, and
by far too much reliability is placed in the con-
duct of the business entrusted to their care
They virtually control The companies funds
without the proper degree of restraint They
write recklessly and frequently at inadequate
rates OF premium, from which losses occur that
might have been provided against by more
cautious management This is serious and
growing evil, encouraged by rivalry and en-
dangering the lives of those companies which
permit its indulgence
But underlying all ths-and perhaps we may
regard it as the root of the evils of which we
complaints the wasteful expenditure of the
moneys derived from the insurance business
in the enormous expenses employed in the
machinery Of its workings From president
down to Office boy the idea Of economy rarely
exhibits ITSELF The genius of display seems to
be the prompting spirit, and extravaganza and
waste the natural consequence. This crops
out in gorgeously furnished Offices, protuse
llberality in costly entertainments, and the
thousand and one minor extravagances that
might be properly dispensed with /; and when,
finally as has been the case on more than
one occasion, officers are tempted into per-
sonal use OF the funds under their control,
through cashiers whose tenure of position de-
ponds upon their favor, the result is only to be
measured by the possibility Of detection and
exposure.
The only remedy we can see that Is likely
to check, the downward tendency of the
insurance system, under the present weakness
so prominently displayed in its manage ment,
is vigorous determination fox retrenchment
and reform. This should be exercised by
boards of directors who should no longer trust
to the infallibiity Of grand array OF figures
as returned to the department at Albany, but
inspect and closely examine for themselves the
books Of the companies in which they are inter-
ested, insisting upon prompt retrenchment
Of expenditure, ands in other respects whole
some reform.