The New York herald., 1921-07-17

Could fire destroy the Borough
of Manhattan or Brooklyn in the New
York City of to-day?
Those who are responsible for the
futures OF the great stock fire insur-
ance companies constantly ask that
question OF themselves as they keep in
their minds fairly exact figures show
ing the amount of liability which
would result from an uncomfortable
fire.
New York has more fireproof build
ings than any other city in the world.
To US they mean fire barriers dividing
the city-much as do fireproof division
walls in some manufacturing plant.
The ordinary blaze is smothered before
Il has q chance to assume alarming
proportions, and yet conflagration so
great as to startle the world is always
a possibility. am not an alarmist
and therefore wish to emphasize the
fact that there would have to be most
remarkable conspiracy of untoward
fate and circumstance, before such dis
aster could sweep New York. But
well, that's our biggest problem, just
the same, in New York as well as in
every other city in the country.
1t has been my privilege to observe
fire underwriting from the reconstruc-
ton days that followed the Civil War
to the present when we are reacting
from world struggle that was for the
protection Of our very existence. 1t
has been q pride and satisfaction to
me to know vlat alone OF all the great
modern business agencies, fire lnsur-
ance companies have not increased the
cost of their services to the public in this
period OF high prices. When the war
was on and we were all readjusting
ourselves to the higher costs OF living,
temporary surcharge was made, but
that increase of cost was only 10 per
cent, and it remained in force only
few months. Ours il not business OF
immediate results and we take our risk
today, but our profit, if any, may only
be determined in the distant future.
The average cost of fire insurance.
however, is not only lower now than II
was before the Great War, but it kept
en- going down during the war when
everything else went up from so per
cent. to 800 per cent. Perhaps your
own rate did not change, but it is still
true that the average cost was lowered.
That too, in the face of demand un-
precedented in the history of the busi-
ness due largely to the enormous in
crease in values. Fire insurance at
least was cne business where demand
did not make for extortion or over
charge when the pressure was on.
The fire that gave birth to fire insur-
ance as business occurred IN London
1865. This was bit before my time,
but I have observed CT close range the
results from the Chicago Fire OF 1871,
followed by the Boston conflagration
Of 1872. Disastrous as they were to
the companies CT that day, the economic
effect was small compared with the
destruction in three days time OF
$3.50, COO, 900 Of property in San Fran
cisco in 1906.
Do you recall what happened in 1907
the year after the San Francisco fire?
Was there not a panic that tested US
all? Such an enormous shifting OF
values could not be made without
severe reaction and the economists told
us that the prime factor was the sudden
withdrawal of over $780, 100000 from
investment By the stock fire insurance
companies to pay their losses in San
| Francisco.
Maybe this is a good moment 70
point out that fire insurance only in
IDENTITIES; it does not restore. That
from capital and surplus funds Of stock
fire insurance companies and from the
pockets of their stockholders. To pay
their losses there the companies had
10 cash in on their prime securities.
Further, they had TO call into their
business about S90,000.000 OF new
money as a result of that one con
flagration. Despite all this the fatali-
ties among companies occasioned by
that catastrophe were negligible COM
pared with those following the earlier
Chicago and Boston conflagrations
when wildcat banks and wildcat insur-
ance companies were numerous. There
are few OF that type in existence today;
the insurance laws of all the states are
too rigid and the public supervision Is
too close.
The later conflagrations mentioned
are only three OF score or more during
my lifetime, each of which has taught
its lesson. Their combined effect has
been TO lower the average cost OF fire
insurance TO you'll Sounds like an alb
surd statement, doesn't it? And yet.
literally, il is true. Conflagrations
have taught us TO urge you to erect
better buildings and adequately to safe
guard them from fire by every ap-
proved mechanical device. and by
cleanliness and careful management.
the inducement being to give you
heavy credits in your premium rate
when you follow our counsels. Today
no architect OF any great structure
would dream OF beginning his plans
without consulting the men behind
the whole rating system OF fire irsur-
ance--the engineers who specialize for
US on how to prevent and extinguish
fire and how TO build to resist fire.
All this is back Of the modern science
of rating in fire insurance whereby the
insured practically fixes his own