The leader., 1902-09-17
COTTON INSURANCE AND AN
EXTRA SESSION.

to be the leading topic OF discussion
with the State press. 1t has been
plainly shown, it seems to US, that since
the decision of the Supreme Court
constituting this portion of the law
and the consequent refusal of the
principal insurance companies to
longer write insurance under the
blanket policies, the only wise and
feasible measure of relief is through
an extra session and the repeal of the
"valued policy" clause.
1t was given out several weeks ago
that Governor Longino had assured
the committee of the business mems
convention that if majority of the
members of the Legislature would
signify their willingness in advance OF
an extra session, to repeal the "valued
policy" clause, he would call it to-
gether. 1t is now reported that favor
able replies have been received from
a majority of the legislators. and still
the Governor seems to hesitate about
taking action. If the Governor would
call the Legislature together in extra
ordinary session and limit its power to
legislate except upon this subject
(which he has the constitutional au-
thority to do by proclamation) it is
difficult to see how any but beneficial
results could follow to the business
and farming interests of the State,
with majority of the legislators al
ready committed to repeal.
The following letter, written by Mr..
J. w. McGrath, the senior member of
the firm of John McGrath & Sons, OF
Brookhaven, to members of the Legis-
lature, comparing the COST of insurance
on cotton before the decision Of the
Supreme Court on the "valued policy
clause, and since, emphasizes the
Importance of early legislative action.
It also shows how the additional cost
falls at last on the shoulders of the
cotton producer
BRooKHAvEN, Miss, Sept. 81, 1902.
The writer gives the following as an
estimate of what the relative cost OF
cotton insurance would be to this
firm under the new requirements of the
insurance company (insuring by marks
and numbers) as compared with the old
style policy.
We handled last year about 10000
bales of cotton, nearly all of which was
bought from wagons and shipped out
through the compress at Brookhaven,
Miss. The cotton season opens Sep
TENDER 1st and we commence taking out
policies of from $500 to $1,000, increas-
ing from day to day as the receipts get
larger until our total insurance
amounts to $4,000. This would insure
about 800 bales, and is about all the
insurance that we require to handle
the 1900 bales received during the
season.
We sell all our cotton in lots of from
50 to 100 bales even running grades, de-
| livered free on board shipside New
Orleans. By selling promptly we are
able to get rid of the cotton rapidly and
| hold our stock on hand down to less
than 300 bales. This stock of 300 bales
consists of "incomplsted marks"-that
| is, several different grades numbering
less than 50 bales in each class. Not
enough for shipment.
We avoid speculation by selling as
much cotton as we buy each day. If
we purchase 100 bales of assorted
! grades we sell that day 100 of a certain
class against it. The next day we
sell against the days purchases an
other class, and 80 on during the sea-
son.
Our insurance rate is per cent. per
annum. Our insurance for the past
year therefore was:
300 bales, at S40.00per bale, $4,000.
$4,000 at 3 per cent.-$360.
$3.50 for 1900 bales is, Sc. per bale.
Under the new ruling of the insurance
companies we will then be forced to
mark and insure each bale we buy.
Our insurance bill will then be
1900 bales at $40.O0-Sl80,0OO.
S480,O00 at 3 per cent. S14,40O.
The shortest reasonable time in which
we could clear this cotton would be ten
days. The short rate schedule Of the
insurance reads: "For 10 days 10 per
cent. of the annual rates."
10 per cent. of S14, 400-$1, 440.
$1,440 for $4,000 bales would be 12c.
per bale.
In addition to this the cotton would
have to be lined out the day received
and marked. The "lining" charges are
sc. per bale, marking 1c. per bale, which
added to 12c. insurance makes the total
expenses 19c. per bale as compared with
Sc. per bale under the old system, an
increase of 500 per cent, to say nothing
of the extra amount of work to be done
by both the insurer and insured.
Mr.. George asked in the Jackson con-
vention how the people were shit" by
the new ruling. Whv, through the
farmer, of course. The merchant,
buyer or broker who buys cotton from
the farmer will be compelled to add a
few points to their cost bill to cover
the extra insurance and additional Ia
Dor and deduct it from the net price
paid the farmer when he delivers the
bale. The producer in this case "pays
the fiddler" and not the consumer.
If Mississippi makes 100000 bales
Of cotton this year, the loss to the far
mers, even when the cotton is handled
in the rapid manner described above,
will be S150,OOO.0O.
(Signed) Yours truly,
j. w. MoGRATH.
The proposition of the Mississippi
Fire Association to furnish insurance
on the former basis is altogether mad
equate to meet the demands of the
situation. This company will furnish
only $1,000 insurance in one block,
enough to cover 125 bales. What is
this to compress or warehouse where
thousands of bales are stored =?