his till is full of money from meals on which he makes but 10%, he can pay cash for kegs of beer on which he makes 300%. Just as illogical is it for the fire insurance companies to say: "with few exceptions, every time we do any underwriting we do so at a loss. In fact, we must raise rates 25%. However, our loans on first lien mortgages will not be dearer. "

That these words of the underwriters may be viewed in all their sophistry, it should be remembered that the premium paid in by the assured is used for many purposes other than mere underwriting. You, the assured, pay a million dollars to the insurers, and, in return, receive promissory notes (called policies) collectible in certain contingencies. What happens to that million dollars? Does it lie dormant and unproductive? Patiently useless, waiting on contingencies, which make it refundable? Not for a minute! It goes immediately into real estate, loans on collateral security, "brisk sales on the advance," commercial paper, call money, usury, and other forms of banking-in fact, into the various channels in which clean, liquid gold can flow with profit. However, all these channels for gold have no direct connection with fire or "underwriting," and though these secondary uses of this aforesaid million dollars of premium-money may produce a hundred thousand dollars per year, this usufruct will be masquerading as "investments," and will be invisible in the accounting of your mere premiums. Further, if you, the assured, have been unwarrantably overcharged, so that the great bulk of your premiums is still intact when all your fires have been paid for, the overcharge will not be carried over to the credit of next year's "underwriting" account; no, henceforth and forever, it figures entirely in the surplus funds, its employment swells the "investment" account and that, too, is unconsidered on the day when the guileless policyholder asks whether his premium bills are not much too high. Some apologist or other merely tells him of the "underwriting" results and asks him to reflect in apologetic humility upon the "underwriting" profit "off of 1% for the last 10 year period." For the kitchen accounts have nothing to do with the bar!

46

To return to those niggardly years beginning with 1898; and let the ipse dixit of the Superintendent of Insurance of the State of New York appear.

The Fortieth Report shows "the nature of the receipts" of the Joint Stock Fire Insurance Companies "of the United States and

United States branches of Foreign Fire Insurance Companies of other countries authorized to transact business in this State, for the year ending December 1, 1898." These receipts are tabulated upon pages XCV to C of this Report. The various amounts of income are correctly counted, in accordance with the first rules of elementary arithmetic, and the Superintendent of Insurance gives us the resultant "Total receipts in cash." Since then he has given us every twelve-month the corresponding figures for succeeding years. By plain copying from each of these consecutive reports, the following table is obtainable:

In just the same way, the very next tables in each of these reports show the "Nature of the Disbursements." Each of the main items is given and then the report, still adhering strictly to elementary arithmetic, gives the "Total Disbursements." So that, again, by plain copying the following table is obtained:

As will be shown presently, the balances of shipments of money between offices here and the home offices in Europe are not included in the above disbursements. These balances add about $10,000,000 more, bringing the total disbursements for the years given up to $971,240,341. If we compare these amounts, we find that the "Total receipts in cash" have been in excess of the "Total Disbursements" for the last six years, 1898-1903, inclusive, by more than $83,000,000.

With absolute impartiality, the Superintendent of Insurance for the State of New York, has merely reproduced the individual sworn reports of the several fire insurance companies themselves, each giving under oath "a just, full and true statement of the affairs and condition" of each company on the 31st of December of each year. 145 Joint Stock Fire Insurance Companies are represented in the aggregate of 1903.

In order to understand the full value of these results one must see what items are comprised in these "total receipts in cash" and "total disbursements." For purposes of illustration the last year (1903) is taken. From page C (Recapitulation) and CVI (Recapitulation) we gather the following totals under the several heads:

To this Outgo there should be added the profits of the Foreign Insurance companies, represented by the "balance of remittances to and from Home offices" in Europe. This sum was about $3,000,000, and corresponded to the dividends of American companies, although it became dividends only after reaching London and other home cities. Adding this amount to the dividends, we get the "total disbursement," $185,218,555, and an excess of income over disbursements of every kind amounting to $28,476,718 for the calendar year 1903. By reference to page LXXIII of the same report (New York

State 45th Report), it will be seen that the "paid-up capital" of the American companies together with the "net assets or U. S. capital" of the Foreign Companies amounted, in the aggregate, to less than $80,000,000. So that, despite the fact that 30% of the total disbursements went to "commissions" and "officers' salaries," these companies distributed over 12% dividends on the aggregate capital and carried forward an extra 35% on the whole capital invested in the business! These last six years, then, four of them "starvation years" produced $83,000,000 of excess income over disbursements104% on the entire cash capital, and that, after deducting yearly over 11% for dividends and fabulous sums for commissions and other wild extravagance!

It is no answer to such accusing facts to be told that many companies lie in their graves: some were smothered that the survivors might claim a bigger share of the monopolized spoils; others, conceived in indignation and born in anger, were bludgeoned in their frail infancy; more were choked by their excessive greed, eating poisoned fruit; and still more disappeared, bled to death by faithless servants. Diamonds, to-day, given the cost of production, are extortionately dear, though hundreds of mines succumbed to the Beits and Cecil Rhodeses. So it is with fire insurance.

The average business man, if given time and opportunity further to analyze the various items composing the "total disbursements" of the fire insurance companies under review, would be dumbfounded on seeing the mountain of extravagance, of needless and crying waste displayed year after year. He would be amazed to find that conditions which long ago called for a remedy of an immediate and radical character have been perpetuated and aggravated until to-day they are worse than they ever were. The result is seen in the fact that in 1903 the average cost of fire insurance in the United States was much higher than at any time in the preceding half century. And the burning shame of it all is, that all the waste, all the extravagance, all the greed and folly, all the incendiarism and criminal negligence has to be paid by the honest, the vigilant and the diligent, who do not, and cannot afford to, burn down.

Will conditions improve as far as the public is concerned? Whilst matters are worse to-day than ever before, there is as yet no indication that the necessary radical and sweeping changes which alone can bring alleviation, if not a remedy of the evil, will spring from

the companies themselves. Who among them should seek a change? The stockholders? $10,000,000 dividends last year, plus $28,000,000 added as a surplus. The management? "Officers' salaries,' $12,000,000. The brokers? $42,000,000 for "commissions." The hangers-on? $19,000,000 for "other disbursements." Looking from their point of view, does any sane man believe that the guests at this Gargantuan feast are going to work for a Lenten fare just to benefit the business man? Why, it would be utterly unbusinesslike, wildly chimerical, absurdly altruistic for them to do anything of the kind. The last thing that the fire insurance companies will do will be to write a 1 for every 3 in the disbursement column. Why should they grow perturbed about the outgo? The public always foots the bills! Is it Baltimore you think of? Now that all the policies have been honored and paid for, the total loss thereunder is less than $30,000,000. The stockholders have had to disgorge last year's surplus and may be asked to get along with a beggarly 6% dividend for this year, but in the meanwhile they are buying some new traps to catch back all the loss; and catch it they will!

Is there anyone knowing the actual conditions of fire insurance and of our cities throughout the country, who can honestly aver that, given a sincere desire on the part of the companies they could not halve the insurance bills of the country? If they seriously contemplated such a reform, could they not, for instance, rid themselves of that vampiric horde that exclaims, "You must do business in our State through us, and us only, and our charge is $42,000,000 per year?"

No one, too, who has considered the subject dispassionately can doubt that if the heads of the insurance companies chose to adopt forceful, intelligent measures, strictly within their legal and constitutional rights, they could, by concerted action, within a reasonably short time, so far remove the causes of fire and its extension as to make the chance of conflagrations exceedingly remote, and the yearly fire loss of the country less by a half. For instance, if only half of the $42,000,000 which was squandered last year (mostly to renew policies, which would have been renewed anyhow) had been devoted to improving inspections and to the thorough cleaning-up of risks, every cent thereof could have been saved in reduced fire loss, immediate and deferred. As it is, the inspection of the Joint Fire Insurance offices, in innumerable instances, are of