The Owosso times., 1921-07-22
THE OWOSSO TIMES
GEORGE M. DEWEY, EDITOR.
OwOSSO. MICH. JULY %, 1921
NO MONOPOLY IN FIRE IN
SURANCE, SAYS ELIHU ROOT

Association or nre insurance com
panies for rate making purposes i:
entirely within the spirit and letter
of the law, according to the Honor.
able Elihu Root, prominent American
Jurist and former United States Sen.
ator who has also held the positions
of Secretary of War and Secretary
Of States of the United States.
In his opinion based on the in
surance laws of New York State, Civ
en- to the Underwriters Committee
of Seven, Mr.. Root upholds the le-
galhy of the New York Fire Insur-
ance Exchange, declares that there
is no element of boycott in the ex-
change agreement and says: "Any-
one who talks about the association
being a monopoly is merely giving
a bad name to the thing the law in
tends to accomplish" Mr.. Root thus
contradicts the allegations of "con-
spiracy" and obnoxious monopoly"
which General Counsel Samuel I'm
termeyer of the New York State
Joint Legislative Committee on Hous-
ing introduced in the record of that
committees hearings.
Mr.. Root rendered his opinion fol-
lowing an examination of the insur-
ance statutes of New York, together
with all the documentary evidence
relating to the charges made before
the Lockwood Committee.
"The important thing in such a
case," Mr.. Root says, sis to deter
mine what is the general legislative
policy of the State in the light of
which all the statutes are to be read
and all action under them is to be
judged.
"This seems to me to be clear. 1t is
analogous to the attitude toward
railroads shown in recent National
legislation and toward banking shown
in the Federal Reserve Bank act,
This attitude recognizes the evils Of
unlimited competition and puts be-
fore the interests of would-be new
competitors and seekers for better
prices than other people get, the in
terests of the millions of people who |
need and wish security, certainty and
equality of known and established
rates upon which they can calcu-
late in the transaction Of their own
business.
"The insurance Law of this State
seeks to accomplish this by means of
voluntary associations for the pur-
pose of suggesting, approving or
making rates to be used by more
than one underwater for insur-
ance'. (Sec. 141). These associa-
tions are to be subject to inspec-
ton and supervision by the super
intendent of Insurance, and are ex-
pressly excluded from making the
doing of business with them condi-
tional upon exclusive patronage, thus
leaving the associated companies de-
pendent upon the merit and fairness
Of their arrangements and their at
tractiveness to customers. If the
made are very attract
i've and many companies come into
the association and many insured seek
them for policies, that is merely ac-
complishing what the law contem-
plates, and anyone who talks about
the association being monopoly is
merely giving bad name to the
thing the law intends to accomplish.
81 think the test to be applied here
is the familiar one Chief Justice Mar
shall applied to the constitutional
power of Congress-the appropriate
ness of the means to a lawful end.
The lawful end here is the mainten-
ance of uniform rates. The means
are, first, requiring an agreement
from an agent not to do certain
things which would destroy that uni
formity, and second, to refuse to do
business with him if he persists in
doing those things. 1t is not neces-
sary to argue that uniformity of
rates may be destroyed, by varying
and it is plain that to
prevent such a result all the under
writer's in the association who agree
TO maintain the uniform rates must
refuse to do their business through {
agents who vary the rates through {
,arying the commissions. In such a
,ase the refusal seems to be an ap-
,ropriate means and indeed a nee [
.ssary means to attain the lawful '
md.
apart from the futile proceed ,
ng of a law suit, your recourse is I
o require him to pay what he has
lgreed 70 pay in given event or ,
o rescind the contract as he has !