Savannah morning news. [volume] (Savannah) 1868-1887, 1883-09-06

A Rational Examination of the oues-
ton.

A Rational Examination Of the 9ueS-
ton
Editor Ngraiaq Nssrs A good deal has
been said about cotton insurance lately.
but beyond one or two communications
during the early part Of the discussion
nothing al all has appeared in behalf OF
the companies. After a respite OF some
days let Us look rather more closely into
the merits Of the case, and, if possible,
suggest q remedy for the trouble
Oar cotton merchants are an eminently
sensible and reasonable body Of men, and
VIII doubtless, on q calm review Of the
subject, be perfectly willing 10 accede to
whatever they Sc Is Just and right.
II viii Be admitted that the insurance
companies must have adequate premiums
on the property they protect or they VIII
not accept the risk. 1t IS also plain that
each risk should have a rate pTOpoTuonate
10 its hazard. Now. as has been stated
already. cotton insurance al the old rates.
while il may have been profitable in sa-
Yannah- has not proved 70 be generally
remuneratiye. Two alternatives. there
fore. are presented 70 cotton merchants
one % pay a higher premium, and the
other 10 diminish the imputed hazard by
improving the construction Of warehouses
and the system Of handling cotton. II the
methods suggested by the companies be
carried out rates viii be on an average
about - per cent. lower than they were
last year. In fact. some Of our ware
houses being found 70 approximate 70 the
basis" rate. have a lower ngure attached
10 them already. IN some cases as mucn
as - per cent. lower. The schedule likes
a minimum rate for a properly arranged
warehouse, and then provides certain ad-
diti0ns for each particular point where
there IS defect. This al once places
each separate warehouse just where its
intrinsic merits entitle it 70 be.
But the chief complaint seems 10 he
about the obnoxious average clause,
which is. however. now being little bet
ter understood. In some classes Of
property. such as cotton for instance,
where a certain amount Of salvage" can
be safely counted on. the merchant can
keep all covered by paying the premium
only on a part: say fOur-hfths, or al most.
nine-tenths. II IS not very unreasonable
for the company to wish 70 receive the
premiums on the whole if il covers the
whole, and hence their requiring the aver
age clause. The banks, however, decline
to accept at its face value a policy with
the average clause, on the ground that
they can never tell whether the property
is fully insured or not. and hence. whether
be good for its full amount or only
a portion Of il. The merchant, there
upon, saws that be viii keep MS cotton.
every bale covered, and demands
that the insurance company omit the OBJ
jectiOnable stipulation. Strange to say,
ii never seems to occur 10 him TO blame
the banks for their ungraciOus course.
He cannot see why an insurance COM
pany. perhaps located three thousand
= 4 1.s-
assurance that he viii not allow his ac-
emulation Of cotton 70 exceed the amount
Of his insurance, and yet it looks quite
banks should do the Vine thing, As a
matter Of fact, the position Of the COM
panies is far more reasonable than that
Of the banks. The former il logical in its
method while the latter is entirely jllOg-
zeal. In case the insurance should
prove Inadequate, the Insur-
ance company in the absence
Of average infallibly loses in such degree,
but the bank is safe whether the insurance
be much Or little. For if all the cotton
be destroyed, the company pays the policy
in full. average or no average; and II the
loss be only partial the salvage is divided
between the owner Of the cotton and the
company in the proportion in which they
are co-insurers. Hence there will always
DE EALuEI Ills III ante AIDAAEs ClbA=As VI
that failing, salvage enough to protect the
bank. Let me illustrate BY an imaginary
case: Suppose a factor has in his ware
house 300 bales Of cotton worth If
ty dollars bale, or $4,000. On
this be has only 5000 insurance. and the
policy subject 10 average. ON this policy
be bOrrOws from the bank 5000, giving
as collateral a general warehouse receipt
for 100 bales, OF whatever is agreed upon.
4 fire occurs. and burns up say $1,000
worth Of cotton. OF course the company
viii then pay only $500. but the bank is
more than protected by the $4,000 worth
of cotton remaining. Whatever technical
difficulties may be suggested as rendering
this idea impracticeble, are merely super I
fetal, and can be easily removed. Wher- !
ever the conditions Of average would
be applied there must be salvage,
and this salvage must always be
more than the difference between the
face Of the policy and the amount paid.
The banks. therefore, need incur no risk
Of loss by the average clause. Not 50 the
insurance company, which must always /
suffer if the average clause be omitted, Z
unless the insurance is full or the loss /
total.
With regard to the trouble attendant
upon the average clause, then, let our Z
merchants transfer their luminosity from (
the insurance companies 10 the banks,
who Justly deserve it. The banks refuse
to accommodate their methods Of business /
10 meet the requirements Of this adyanc- .
ing age. even when they depend upon
that business almost for their being. and .
certainly their success upon its prosperity. /
have pointed out the remedy suited to 4
the case-so far as | can see the only I
remedy. The legislative attempts now be- .
ing made for relief are hasty and quite .
Even ifsuccessful, it will be Z
but a very short time before the steps .
taken will be considered ill-advised. If /
the ''deposit law" is repealed this year, 4
shall expect to see it re-enacted with .
great eciqt next session.
Those grand corporations who present
the sufferer by fire with their check for
$50, 900 or SO, 900, the hour he submits his
proofs Of loss are good to have and to deal
with. They are not entirely swayed by
selfish greed. nor are they as unreasona-
bic as seems to be so frequently believed.
CURTIUS. f..
.SacannQh. Sept ), 1888.