Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1916-05-26

"!tSalNGION. ID. C.. May 25.-One
of the most interesting of the war
developments In a business way la the
iact that II induced the United States
government to go into the insurance
business. Uncle Sam has been under
writing policies for eighteen months
IN this line a fair try-out, and TO JUS
tify the people of the country in ask
ing how he is getting along.
Uncle Sans record bears investiga-
ton very well. AS an insurance man
he has been almost successful enough
TO have his biography printed among
those of the poor but daring captains
OF industry who saw their chances and
made their fortunes. The Federal in
surance bureau has balance on the
million dollars.
ot course. that balance may not last
long. All insurance is moro or less an
uncertain business. and the govern
ments insurance business is the most
uncertain of all Its very uncertainty
Is the reason that the government is
in II. II was too uncertain for any
body else: too uncertain for all the
private companies to handle together
The official name OF the new bureau
is the Bureau OF War Risk Insurance
Like the rest OF the Federal depart
ments and bureaus, the War Risk In
surance Bureau was never intended for
profit-maker. 1t was established as
an emergency measure, to relieve an
acute and critical situation. II did its
work so quietly and we'll that few
people realize now how critical that
situation really was.
When the war broke out, American
business was faced by the problem OF
protection for American shipping.
There was a brisk demand for Amer
lean goods abroad, there were Amer
lean goods In plenty to be shipped. but
in between lay the broad Atlantic rep
rescnting 4 whole list of new maritime
perils whose gravity and very nature
were only a matter of guess work. No
merchants were willing to risk large
shipments on those waters without
having them adequately protected by
insurance. American insurance COM
panies were confronted by "A situation
that was rather beyond them to handle.
Situation BndIy Complicated.
There were three factors compli-
eating that situation. In the first place,
the hazards OF voyage had increased
immensely. III the second place. the
volume of shipping increased rapidly
as Europe began to buy. In tho third
place. in the financial disturbance that
swept the whole world. the expedient
OF reinsurance in England, by which
risks may be reinsured in the London
market, was seriously limited. Owing
TO the coincidence Of the August Bank
Holiday, the reinsurance markets were
OF this critical period. and American
companies had to carry the total insur-
ance risk themselves. AS a result. they
cut down on the amount of insurance
they would accept on any one vessel
or its cargo. Small companies limited
themselves TO small amounts, while the
maximum for the biggest companies
stood at 100000 or $4,000. From
this IL followed that tie shippers could
not get anything like the amount of
insurance they wanted, and were forced
to carry large proportion of the risk
themselves.
What insurance was obtainable came
high. 1t was, perhaps. not too high
from the standpoint of the issuing
companies who were facing an UNI
precedented set of circumstances, but
it was high enough to put a serious
obstacle in the way of foreign trade.
had nothing been done to alleviate the
situation. Premiums on vessels and
cargoes passing through the North Sea
ran as high in some instances 80
per cent-a cargo valued at 100000
thus paying $4,000 in insurance to
cover the war hazards of the brief
voyage. Rates to the Far East went
as high as 20 per cent. and even rates
to South American neutral ports
reached 10 per cent-$10.000 on a $780,
600 cargo.
Prompt Action Demanded.
The situation called for prompt ac-
ton. The marine insurance problem
was rated among the mos. serious
brought up by the war. a special con-
ference of business men, called to-
gether by the Secretary of the Treas
ury. decided unanimously that the three
things demanding immediate govern
ment attention were the needs for
merchant marine, for facilities for
financing foreign trade, and for han
ding War-risk insurance. The insur-
ance feature was acted on at once
a bill was passed through Congress
within two weeks, in spite of some
opposition in tho House. American
business interests favored the measure
almost unanimously. as the private
underwriters were obviously embar-
raised by the situation.
The bill provided for the establish
ment OF a Bureau of War-Risk In
surance in the Treasury Department,
and the day after the President signed
the measure, the bureau opened for
business 1t was accepting RISKS two
weeks before IL could set them forth
on It's regular-form policies, because
the policies weren't printed yet. 1t
has issued 1,44+ policies to date, an
aggregate of the risks is over $780,
100000.
Tho immediate effect Of the estab
lishment OF the bureau was the stand
ardizing and lowering OF the rates. Be-
tween acknowledgement ports in the
Western Hemisphere the rate went
down to 81 cents on the 500, where