Harry Chase Brearley.

Fifty years of a civilizing force; an historical and a critical study of the work of the National Board of Fire Underwriters online

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FIFTY YEARS

OF A CIVILIZING
FORCE



flARRY CHASE BREARLEY



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FIFTY YEARS OF A CIVILIZING FORCE




Courtesy of J. Ed^ar LiM



TilE SETTING OF THE STORY



Historic Lnder\vr;tcrs" Hall" (156 Broadway as it appeared in hilv, 1866. when
the story 1 egan w itnin its walls. In this building, the National Board maintained
Its offices for thirty-one years (1871-1902), and passed through some critical periods
of its h.storv.



FIFTY YEARS

OF A CIVILIZING FORCE



AN HISTORICAL AND A CRITICAL STUDY OF

THE WORK OF THE NATIONAL BOARD

OF FIRE UNDERWRITERS



BY

HARRY CHASE BREARLEY

WITH AN INTRODUCTION BY

WILBUR E. MALLALIEU

GENERAL MANAGER OF THE NATIONAL BOARD OF FIRE UNDERWRITERS



AND HISTORICAL APPENDICES COMPILED BY

DANIEL N, HANDY

LIBRARIAN OF THE INSURANCE LIBRARY OF BOSTON



WITB TWENTY EIGHT PORTRAITS AND FORTY ONE
ILLUSTRATIONS FROM PHOTOGRAPHS




NEW YORK
FREDERICK A. STOKES COMPANY

MCMXVI



Copyright, 1916, by
Frederick A. Stokes Company



All rights reserved



PREFACE

The United States might well have been named
Terra del Fuego — "Land of Fire." It has an aver-
age of 1500 fires per day, or more than one a minute,
a daily loss of $600,000. A value equal to one-
quarter the total for all the new buildings erected
each year is thus destroyed, and in 1906 this propor-
tion rose to one-half. Every fire subtracts a definite
sum from the national wealth through irretrievable
loss. This country is proud of its petroleum, gold,
silver, and copper production, but its fire-tax — the
direct cost of its fires and the incidental expenditures
resulting therefrom — consumes as much wealth as
these four industries together create. Fire is one of
the great outstanding economic factors of American
civilization, and, in consequence, fire insurance has
become one of our most familiar institutions.

The American public has, in a general way, some
acquaintance with these facts and has grown to look
upon fire insurance as a natural precaution, but there
has been slight appreciation of the magnitude of
loss-statistics or of the vast proportions of American
fire underwriting, with its thirty million policies
and its sixty billion dollars of insurance in force.
The story of the latter undoubtedly ranks in impor-
tance with that of American railroad or banking evo-

[ V ]



PREFACE

lution, yet it is scarcely known outside of professional
circles. It contains some features of peculiar signifi-
cance, features which cast an altogether new light
upon our national development and which the
student of American economics cannot afford to
overlook. It is essentially a story of the past half-
century, and is best understood by examining the
history of a great trade organization which has domi-
nated the field of American fire insurance since the
Civil War — the National Board of Fire Under-
writers.

The history of the National Board reflects, in
many respects, the civic development of the United
States of the past fifty years. This is the logical re-
sult of the peculiarly national character of fire insur-
ance, which is operative in every city, town, village,
and country district. It concerns the individual, as
an individual, in the most intimate phase of his life
— that relating to his home and its contents; it also
concerns his business interests, whether he be em-
ployer or employee. It concerns commerce, indus-
try, and finance in their largest aspects. In all of
these, it is a conservative influence, furnishing a basis
for material progress.

From another view-point, fire insurance Is a reflec-
tion of American psychology. Its extraordinary
proportions are an outgrowth of the immense fire-
waste, which, in turn, is largely traceable to charac-
teristic American carelessness; thus it marks the hur-
ried, optimistic spirit that erects temporary buildings

[vi]



PREFACE



of flimsy materials in confident expectation that
growth will soon require their replacement. It is
affected by the reckless waste of resources character-
istic of a new civilization, and its high premium-
rates, compared with those of Europe, are a measure
of the expensiveness of such waste. Its conflagration-
statistics are a significant and sinister comment upon
the easy national tolerance which has permitted one
individual to be a menace to the many, and which has
not exacted efiicient municipal government. In more
recent years, fire insurance has acted as a psychologi-
cal barometer of the changes in the American civic
consciousness in all these respects and has even indi-
cated the exact degree of the progress that is being
made by different sections of the country. Thus, its
premium-rates record the development of our com-
munities from aggregations into organizations.

Again, the National Board history has exemplified
American business evolution. It has shown various
local organizations, arising in response to local needs,
extending their sphere of operation through a natural
process of growth, engaging in fierce competition
with destructive results, and, finally, being nearly
overwhelmed by the chaotic conditions resulting from
the Civil War — an early story of disharmony and
inefficiency with the public paying the bill. Follow-
ing this, it showed the birth of a tendency toward or-
ganization, of an attempt to bring order out of chaos.
Its early years presented an alternation of the centrip-
etal force of common interest and the centrifugal

[vii]



PREFACE

force of personal advantage operating to strengthen
or weaken the central body. By nearly a generation
it anticipated the appearance of monopolistic condi-
tions later seen in many industries, and foreshadowed
their disintegration through natural causes working
from within. It is the story of a powerful body
crumbling quickly from the position of artificial
strength to one that nearly brought extinction, and
then rebuilding itself upon a broader foundation of
public interest.

This National Board history is particularly signif-
icant and valuable as showing how self-interest must
tend toward public service when recognized in its
larger values. It presents a striking example of al-
truism freed from sentiment and operating as a prac-
tical business factor.

Further, it illustrates the growth of the desire for
efficiency and of the substitution of exact methods for
the old-time "rule of thumb." It emphasizes the
necessity for business combination when freed from
monopolistic purpose. It has also showed the trend
away from a struggle for exorbitant profits and
toward a basis of reasonable equivalents. In all of
these respects it proves the existence of beneficent
forces working through the entire field of American
business life.

The relations of fire insurance with the State form
not the least interesting of the history's features, and
this part of the story throws a flood of light upon both
the weak and the strong points of our governmental

[viii]



PREFACE



system. It shows the way in which a highly techni-
cal subject of great complexity and large interests
may be harassed by ill-considered laws passed by
legislators who are often hostile and generally unin-
formed. It ofifers irrefutable testimony as to those
waves of emotional legislation which occasionally
work havoc with prosperity, and emphasizes the
necessity of uniformity in the law-making of the
various states. On the other hand, it is no less a wit-
ness to the decline of legislative corruption, the grow-
ing recognition of corporate rights under proper
regulation, some realization of the public cost of op-
pressive treatment, and the dawn of a desire for a
better understanding between the public and corpor-
ations.

It is generally recognized that the United States
is entering upon an intensive stage of its business his-
tory. The crude, expansive forces of its first few
generations have so far spent themselves that national
thought and genius is becoming concentrated upon
organization, conservation, improvement of method,
and, in particular, the readjustment of social rela-
tions. At a time when many minds are staggered at
the magnitude of these new problems, there is an al-
most prophetic value in the study of a business which
has anticipated by nearly a generation some of the
most vital questions of the day.

The writer desires to make grateful acknowledg-
ment of his indebtedness to officials of the National
Board, to certain of the insurance commissioners and

[ix]



PREFACE

fire marshals, to city officials, to those in charge of the
Underwriters' Laboratories, the National Fire Pro-
tection Association, and the Boston Insurance Li-
brary, to prominent underwriters in New York, Chi-
cago, Philadelphia, Boston, and Hartford, and to
others who have aided him with information. If he
does not mention them more specifically, it is because
their number makes it impracticable to do so.



[x]



CONTENTS

PAGE

Preface v

Introduction xv

CHAPTER

I The Beginning of the Story 3

II Bringing Order out of Chaos 14

III The Stimulus of Adversity 27

IV The Dangers of Prosperity 36

V "Removing the Bone of Contention". . . 51

VI Ebb Tide and Low Water 60

VII The Return of the Tide 70

VIII The Growth of Fire Prevention .... 78

IX The National Board as a Balance Wheel , 84

X An Enlargement of Engineering Activities . 87

XI Baltimore and San Francisco 95

XII Grappling with the Fire-waste Problem . . 104

XIII An Era of Legislative Investigation . . .115

XIV Present Phases of the Work 133

XV Fire Prevention To-day 162

XVI A Visit to the Underwriters' Laboratories . 178
XVII Fire Insurance in its Relation to the Policy-
holder 197

XVIII Fire Insurance in its Relation to Business . 206

XIX Fire Insurance in its Relation to the State 212

XX The National Board as a Civilizing Force . 226

Appendices 233

Index 313



ILLUSTRATIONS

The Setting of the Story Frontispiece



FACING

PAGE



The Beginning of the Story 4

The Historic "Chicago Compact" 5

The Old Quarters at 156 Broadway 22

Mark Howard — James M. McLean — E. W. Crowell —
George T. Hope 23

Henry A. Oakley — George L, Chase — Alfred G.
Baker — M. Bennett, Jr 52

Daniel A. Heald — D. W. C. Skilton — E. A. Walton —
William B. Clark 53

Henry W. Eaton — E. C. Irvin — George P. Sheldon —
Robert B. Beath 92

Henry H. Hall — John H. Washburn — George W.
Burchell — J. Montgomery Hare 93

Alonzo W. Damon — George W. Babb — ^William N.
Kremer — Ellis G. Richards n6

Charles B. Whiting — ^Thomas H. Montgomery —
Henry K. Miller — ^Wilbur E. Mallalieu . . .117

The Executive Committee in Session 136

A Conference in the General Manager's Office . . 137

Field Work of the Fire Prevention Committee

Fire Engine, Water Tower and Fire Boat Tests . . .144

Measuring Diameter of Fire Boat Nozzle ; Measuring Hy-
drant Discharge; Gaging Stream from Three Hose
Lines 145



ILLUSTRATIONS



FACING
PAGE



The Main Room of the Actuarial Bureau .... 154

The Tabulator Room of the Actuarial Bureau . . 155

Card Perforating Room of the Actuarial Bureau . 155

About to Start for a Great Conflagration . . .158

The General Office and Some of the Members of

the General Manager's Staff 159

A Corner of the Quarters of the Committee on Fire

Prevention 159

Practical Lessons in Construction 166

How Carelessness Causes Fires 167

"The Rather Academic-looking Building in East

Ohio Street" 178

The Office of the President 179

Hose Test 179

Studying Fire Hazard 186

Adjusting the Switch and Socket Testing Machine 186

Rubber Strength and Stretch Test 187

Vapor Explosion Test 187

Fire Test of Roof Coverings 188

Panel-Testing Furnace 189

Testing with a Hose Stream 189

The Hydraulic Laboratory 190

The Original "Arson Reward Fund" Subscription . 191



INTRODUCTION

A CONNECTION of fifteen years with an organiza-
tion of the character of the National Board of Fire
Underwriters has offered unusual opportunities to ob-
serve corporations and men who manage and direct
their affairs. It has also encouraged a study of the
history of the organization, and a desire to seek an in-
timate knowledge of the earlier days and a book ac-
quaintance, at least, with men who gave their time and
energy to place one of the now great institutions of
the country on the plane of a profession. Every big
corporation has one big man, and an association of
big corporations has many big men. The acts and
motives of one man or a small group of men are some-
times viewed with suspicion if their business is with
the public, but in this instance a body of big men,
forming an association, holds frequent committee
meetings to advance the objects and purposes of a
business organization, and, in thus helping them-
selves, these men also help their competitors and serve
the public quietly and efficiently. They do this in
order to promote the principles of sound underwrit-
ing and to lessen the loss of life and property by fire.
Such is the National Board of Fire Underwriters.

The author of this volume was accorded free access
to all files and records, and it is believed that many

[xv]



INTRODUCTION



facts unknown to the present generation are herein
made public for the first time. There is no other
association of its kind or character. There has been
no disposition to overlook the mistakes of earlier
days when underwriters were learning by hard ex-
perience some of the business principles which to-
day are universally recognized.

The general public will doubtless be astonished to
learn that the fire insurance business, through the
National Board of Fire Underwriters and its asso-
ciated organizations, is rendering such important
lines of public service at private expense. The pres-
ent status of the Board as a service organization can
be best understood in the light of an historical record,
where the reasons for the abandonment of legislative
functions are clearly set forth. It is as truly a na-
tional organization as its name would indicate, and
numbers on its executive and other committees, un-
derwriters from the Pacific Coast, the Middle West,
the South and the East, all working together with a
harmony unknown a few decades ago. Its member-
ship gives unselfishly of time and talent to advance
the best interests of the association, and thereby better
to serve the insuring public, the municipality and the
state. It is the sentiment of underwriters generally
that the relation of the companies to municipal or
state government and the public should be predicated
upon mutual understanding and a spirit of perfect
fairness, and it is a pleasure to note the author's recog-
nition of the fact that the interests of the underwriters

[xvi]



J



INTRODUCTION



and of the public are absolutely harmonious when so
understood.

In approving and endorsing the statements made in
the following pages, the volume is recommended to
the reading public in the hope that it will lead to a
better understanding of the purposes and objects of
a business association which has existed for half a
century and which to-day is recognized as an active
force for the development and advancement of the
Nation's welfare.

Wilbur E. Mallalieu,

General Manager,
National Board of Fire Underwriters.



[xvii]



FIFTY YEARS OF A CIVILIZING FORCE



FIFTY YEARS
OF A CIVILIZING FORCE



THE BEGINNING OF THE STORY
(1866 and before)

THE beginning was of a very casual nature.
When J. Milton Smith rose in a meeting of
the New York Board of Fire Insurance Com-
panies and made a motion upon a perennial subject,
he probably was unaware that he was making history.
The motion itself, the starting-point of one of the
really big, really significant stories of American
civilization, is tucked away near the end of the min-
utes of the meeting, where the secretary, in that pre-
typewriter day, had recorded in ink, now faded :

On motion of Mr. J. M. Smith, a special committee of
three, representing companies doing an agency business,
was appointed, to confer with companies of other cities
with reference to instructions to agents on the subject of
uniform rates and commissions.

The president appointed Messrs. Heald, Hope and
Crowell.

This was on April 30, 1866. From the earliest
days conversation among fire-insurance men had

[3 ]



FIFTY YEARS OF A CIVILIZING FORCE

turned to rates and commissions as inevitably as the
talk of farmers turns to crops. Conditions had long
been unsatisfactory. Occasionally, one or another,
with the feeling that "something really should be
done," would make a motion or offer a resolution at
some gathering of the profession; there would be a
momentary ripple, and then conditions would return
to their familiar lines.

But, on this day, something actually happened.
This was due probably to two facts: In the first
place, it u-as April 30, 1866, and, in the second, the
president, after waiting to give the matter careful
thought (as is indicated by the fact that the names
were added in pencil after the minutes were written)
appointed a trio of remarkable men — Daniel A.
Heald, of the Home Insurance Company; George T.
Hope, of the Continental, and E. W. Crowell, of the
Phenix.

The close of the Civil War found the business of
the country in a generally demoralized condition.
In the fire-insurance field there was little short of
absolute chaos. There had been an alarming in-
crease in American fire-losses, which had leapt from
$29,000,000, in 1864 to $43,000,000, in 1865, ^^^
promised a still greater increase for 1866. There
was an unmistakable menace in the growth of the
"moral hazard," that intangible but potent factor of
human character, for the destructive spirit engen-
dered by four years of war was showing itself in a
wave of incendiarism. Companies were weakened

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Online LibraryHarry Chase BrearleyFifty years of a civilizing force; an historical and a critical study of the work of the National Board of Fire Underwriters → online text (page 1 of 22)