as the field grain insurance, a California specialty, was built up at a profit 

 to the farmer, the merchant and the companies. The certainty of collect- 

 ing either from the farmer after the harvest or from the insurance company 

 after the fire, justified the wholesaler and the retailer not only in extending 

 the necessary credit to assist the farmer, but also In selling goods at a 

 lesser profit than if the prairie fire risk had to be taken by them. The ware- 

 house receipt, backed by an Insurance policy, for grain stored in a San 

 Joaquin or Sacramento Valley frame warehouse, where danger lurks in 

 hobo's cigarettes and 110 degrees in the shade, commanded money at a rate 

 of interest enough below the farm mortgage rate to more than pay for the 

 cost of the insurance. This command of money at low rates enabled com- 

 peting grain buyers to do $1,000,000 business on $100,000 capital; this 

 competition securing for the grain farmer enhanced prices. 



The upbuilding of San Francisco on money loaned by savings banks 

 to build business buildings and homes, all secured by fire Insurance policies 

 as collateral, makes the tinder box frame as safe for a loan as is the steel 

 frame, cement floored, fireproof skyscraper. 



To make the collateral security furnished by fire insurance companies 

 positively fireproof in this wooden city of San Francisco, where a fire on a 

 July windy afternoon could start near Van Ness avenue and stop at the 

 bay (Baltimore, a brick and stone city, had this experience in 1904), the 

 companies, by maps and books, keep an exact account, and have a fixed 

 limit of the sum to be carried on each particular building, the amount in 

 each block and the aggregate total liability that will be assumed in the con- 

 flagration district; and to provide for payment of same, the companies, in 

 addition to the paid-up capital and the legal reserve for reinsurance and 

 for all other liabilities, carry in the funds a "net surplus" of, in round figures, 

 $125,000,000 (the Baltimore fire cost the companies about $35,000,000), 

 varying in amounts from $100,000 to $8,000,000 each, and as the limit 

 of liability by the standard companies in the conflagration district is gov- 

 erned accordingly, the statement that the collateral security for loan on a 

 frame building is fireproof is not an idle boast. 



San Francisco is looked upon by underwriters as extremely hazardous, 

 consequently 105 companies find patronage from an area containing values 

 that would not require twenty companies in New York. The amounts of 

 fire Insurance contracts made in California in 1905 was $658,268,711, ^1 

 of which is collateral, either for the security of the insured, his family, or for 

 loans. All of this information is under the law furnished to the Insurance 

 Commissioner, who must have a detailed accounting from the companies 

 of every penny taken in and paid out; consequently this Is no secret. 



The Board of Underwriters being heartily co-operated with by the 

 municipal government, in addition to supporting a fire patrol as an aux- 

 iliary and working in harmony with the Fire Department, at a cost of ovec 

 $40,000 per annum, and also paying a Fire Marshal, has a corps of in- 

 spectors looking after wooden ash barrels, bad stovepipes, defective flues 

 and hearths, and the many weaknesses that will creep into the economy of 

 building and housekeeping of the go-ahead-and-take-the-chances Califor- 

 nlan. These inspectors get good support from the police and Fire Depart- 

 ment and do much more than pen or pencil can show in making San Fran- 

 cisco somewhat fireproof. 



The equipment and personnel of the Fire Department, being equal to 

 that of the best in the United States, combined with the absence of frost 

 to freeze hydrants and snow and sleet to impede getting to a fire, accounts 

 for much of the luck that has so far saved the city, but as the danger of 

 general conflagration exists, the underwriter limits his liabilities to meet the 

 accident that might happen, and in so doing not only is helping to build up 

 the city, but keeps in readiness to replace and to build it again. This 

 rebuilding by the insurance companies and care by the Board of Under- 

 writers applies to the other growing cities on the coast. They rebuilt 

 Seattle and Spokane fifteen years ago and are prepared to replace the town 

 or city that makes the next call. 



12 



