HARDWOOD RECORD 



31 



vcai- period, say that we spend $4,000,000,000, 

 "the.v will spend .$400,000,000. These tigui-es are 

 appalling in their significance. 



The committee o£ the national board, which 

 prepared the "'uniyersar' schedule, has this to 

 sa.v : "The committee believes that it would Ik' 

 wise to let the property owner see how his rate 

 is computed in every case. We believe that it 

 would be in.iudicious, not to say unfair, to a 

 property owni'r to refuse to let him see how his 

 rate is cimipnted. « » * i( dip schedule is 

 corri'<'tly made, there will be as much profit for 

 the underwriter in the poorer classes, at the 

 higher rate of premium, as in the better classes, 

 at the lower rates of premium." 



Mr. liissell. vice pn-sident of the Hartford 

 I'ire Insurance Ciuupauy. says: "No mathe- 

 matical basis t'vists or can exist. Rates are and 

 necessarily must be based on .iudgment. Insur- 

 ance rates as now made are those figures which 

 (having due regard to competition ever present 

 and readily intensified! the general underwriting 

 opinion believes to be fairly remunerative." 



.Notice that he does not say fair to the prop- 

 erty owner or accuratel.v measured by cost, or 

 scientiHcally arrived at in the interest of the 

 public, but "fairly remunerative." 



It is useless to talk to us about insurance 

 rates being unprofitable unless the insurance 

 companies place before us the statistics which 

 show that they are unprofitable and allow us to 

 nialce a thorough investigation, and find out what 

 charges are included under the different heads, 

 and determine whi'ther those charges arc proper 

 or improper, whether they ought to be left in. 

 or ought to be taken out. whether they produce 

 too much revenue or too little revenue. The 

 companies, for example, report their loss expe- 

 rience in their annual statements, but we do not 

 know what items have been put into that loss 

 experience that ought to have been p\it else- 

 where. They enter up an expense account which 

 absorbs the rest of the premium, but we have 

 no access to tlie details. We want to see those 

 delails. and wc are entitled to see them, because 



.MoFFKTT. Cl.XCIXX.^TI. TKl'STKK 



the insurance companies claim that the proper 

 owner "makes the rate." Well, then, if we make 

 Ihe rate we oi;ght to know what it is that we 

 make it out ol. aud if it is up to us to correct 

 it wo cannot correct it until we do know. As 

 the insurance companies maintain the utmost 

 secrecy on that subject, and shroud it in the 

 densest myster.v. we believe, that as partners we 

 are entitled to" a showdown. The companies are 

 organized to keej) us in ignorance. The organ- 

 ized force of the public is the state : the state 

 has the aulbority. the money, the continuity of 

 effort, and the disinterestedness, which are neces- 

 sary to gather and classify and maintain a cor- 

 rect and efficient record, and we want the state 

 to do it. 



We do not want to make the insurance busi- 

 ness unprofitable. We want to make it safer 

 than it is now, less costly to the buyer, and 

 adequately profitable and stable to the under- 

 writers. The extortionate rates which have been 

 exacted are not retained by the insurance com- 

 panies to strengthen their power of indemnity 

 and to make more secure our hazard of loss. 

 They spend that money for "twisting." "Twist- 

 ing" is the word. They pay an agent or broker 

 or dependent relative a large part or all of this 

 excess to twist the business from some other 

 company. The interest of the buyer in this 

 transaction is totally ignored. 



Why should the insurance companies wish to 

 maintain secrecy, while at the same time they 



wish to make us believe that tliey are doing the 

 right thing and doing it upon a scientific basis V 



The proper rate would buy rather than force 

 the improvement of the risk and help to lcs.seu 

 Ihe fire loss, because it would pay lo make the 

 improvement. If the difference in the rate be- 

 fore improvement and after improvement is 

 suflJcient to pay for the improvement in a short 

 time, nobody could afford to neglect the im- 

 provement. Let me give you some examples 

 from personal experience. Through my connec- 

 tion with the Policyholders' Union, an organi- 

 zation handling insurance problems expertly for 

 a large numlier of customers, I was brought in 

 contact with a large number of cases, in which 

 the difference in rate between sprinklered and 

 unsprinklcrcd properties would pay for the equip- 

 ment in three or four years' time, and yet 

 through the opposition of the insurance agents, 

 and the hesitation on the part of the owner 

 to divert Ihe capital from his business the equip- 

 ment was not put in. 1 undertook to put in 

 such equipment and take my pay out of the sav- 

 ings, allowing a small margin of profit for my 

 service and risk. In the last year I put in about 

 .fL'OO.OOo worth of such equipment in properties 

 covering .f4, 000. 000 of insurance, and the saving 

 in the rate on that amount of insurance was 

 over .$63,000 per annum. These equipments will 

 pay for themselves out of the savings in a little 

 less than three years of elapsed time, and 

 thereafter this $6a,000 will be retained by my 

 customers for their own business uses, instead of 

 being diverted to New England and old England. 

 IIS insurance premiums. I have under way |4IJII.- 

 000 worth of such equipment, and the savings, 

 dollar for dollar, will equal those made last year. 

 We were able to bring about this saving, in spite 

 of the opposition of the agents, through estab- 

 lishing competitive conditions in the risk. 



Imagine this condition multiplied by the possi- 

 liilities of the situation and you will see the fire 

 loss in the United States cut down .$100,- 

 00(1,0110 within three years, without the neces- 

 sity of any change in the building ordinances. 

 In addition to this saving would be the reduced 

 cost of fire departments aud water service, the 

 elimination to a great extent of the confiagra- 

 tion hazard, the exposure hazard and the inter- 

 ruption of business caused by fires. 



Only give us a correct record of fire losses, 

 according to hazard, and rates will be based 

 upon cost of insuring the property, and not 

 upon "what the traflSc will bear" as a business 

 proposition. ' 



We are not afraid of state-made rates, if they 

 are based upon adequate information and ex- 

 pert analysis and .iust administration, but we 

 do not a(ivocate state-made rates at this time. 

 We are talking about state supervision, which 

 will provide the necessary conditions, under 

 which just and equitable, permanent and uni- 

 fin-m results may be obtained. We do not want 

 r;ites made by politicians, either insurance poli- 

 ticians or other. We want the hazard to meas- 

 un' Ihe rate, and we believe that competition 

 will do the rest. I beg to suggest that your 

 association, through some committee, thoroughly 

 invistigale the proposition, and that througli- 

 out the dift'ireut states here represented the local 

 state organizations ma.v be made acquainted witli 

 conditions that exist and be invited to co- 

 operate for their correction. 



Following Mr. Holt 's compreheusive dis- 

 cussion, he was tendered a vote of thanks by 

 the association, and resolutions etnbodying 

 the salient features of his talk were referre(l 

 to the Committee on Resolutions, by i)ro|)er 

 procedure of the session. 



The report of the superintendent of the 

 Bureau of Information, which was read by 

 Manager W. W. Schupner, followed : 



Report of Bureau of Informatiou 



A complete or comprehensive report of the 

 ivork of the Bureau of Information, and the re- 

 sults of a compilation of a great mass of intri- 

 cate details, should include also the individual 

 expressions or opinions of those who have reaped 

 the benefits. During the year just closed this 

 one department of the association has compiled 

 more (jata, revised more reports, and kept in 

 closer touch with the needs of its subscribers 

 than in any previous year. It naturally follows 

 that the collated experiences of the subscribers 

 are reall.y essential in portraying the bureau's 

 usefulness and ability to meet growing and 

 changing conditions, and unquestionably, a dis- 

 cussion here by those who depend upon tlie 

 reliability and efficiency of the bureau would do 

 more to acquaint the convention with the system 

 than mere detailed report of a year's office work, 

 and more especially if those subscribers who 

 have used the bureau during its fifteen years of 

 existence participated in the discussion. 



It does not take much of an imaginative mind 

 to appreciate the difficulties the bureau has had 

 to meet and overcome the past year. That the 

 periocJ has been a trying one for many of your 

 customers is clearly demonstrated b.v financial 

 litatements and numerous confidential communica- 



tions received in the course of revising and re- 

 revising our reports. These conditions have not 

 been loial, but appear to have obtained quite 

 generally, and the confidence imposed in the 

 bureau by the trade, for proper discretion in 

 using such data, has enabled the subscribers to 

 secure information which could not otherwise be 

 olitained. 



This is one of the bureau's best arguments to 

 uonsubscribers, that of trade confidence, and 

 while the growth in members has been small, 

 the character and quality of the service has per- 

 ceptibly improved. 



Our reports in the Bureau of Information have 

 increased from 15,500 in 1904 to 'JT.OOO, the 

 number of reports on file today. This increase 

 has been slow but substantial, and fully up to 

 the requiremeuts of the members, aud the per- 

 centage of new reports accumulated during the 

 past few years means more than the figures 

 would indicate. The scope of the bureau's work 

 has grown so that it now reaches practically all 

 the territory covered by our members in their 

 wholesale trading, and. as the field is more com- 

 pletely covered, the increase in number of re- 

 ports may not be so prominent as will be the 

 bettered service. It requires little consideration 

 to appreciate that new subscribers today have 

 at their command a much larger fund of infor- 

 mation than did the pioneers who. in the begin- 

 ning, so unselfishly devoted their time and effort 

 to create for the bureau the reputation for effi- 

 ciency it has now gained. This fact must not 

 be overlooked by prospective subscribers, because 

 it means that, with approximately 27,000 reports 

 at their command, inquiries can be responded to 

 more promptly and with more accurate detail 

 than even four or five years ago. 



While we still have to argue with man.v lum- 

 ber buyers on the advisal>ility and neces.sity of 

 furnisliing us signed statements of assets and 

 liabilities, the continual and i)ersistent campaign 

 of education in this respect is making the trade 

 m(i<-b more responsive, and is encotu'aging. 



LCIIKIST. .MEMI'HIS. 'lltUSTEE 



Wholesale buyers are beginning to appreciate 

 more and more that there is a reciprocal value 

 to a signed starement, and that after all a man 

 who asks credit, buys on open account, or gives 

 notes and' sometimes renews tliem. is not a law 

 unto himself, but is obliged to make a showing 

 if he wishes to obtain credit and to continue 

 business upon the right basis. .Some of .your 

 customers fail to appreciate that demanding a 

 statement when credit is asked is not a refieetion 

 on their character, honesty or business ability, 

 but that it is done for the purpose of enablitig 

 business men to conduct their business intelli- 

 gently, that credit is given a customer because 

 of the confidence reposed in him, and that credit 

 is asked unless cash accompanies the order. 

 Someone has said, "A merchant's capital is the 

 sum of his net available resources, plus his 

 credit." In our correspondence we aim to con- 

 vey three fundamental credit facts : tliat a 

 statement of assets and liabilities shoidd he com- 

 prehensive and correct : that large assets are not 

 always necessary to the creation of credit ; that 

 anyone serving his own interests best should 

 recognize the value, apart from actual assets, of 

 a sound, un(|uesrioned reputation as a credit 

 risk, wliich includes unquestioned moral charac- 

 ter and fair business methods. 



Today's comlitions and the custom of doing 

 business at loug range demands more complete 

 information in these respects, and tlie Bureau 

 of Information, as a special confidential agency 



