Insurance Company of North America.

Episodes of history in the stories of the United States and the Insurance company of North America as bound up together in national achievement, 1792-1917 online

. (page 1 of 8)
Online LibraryInsurance Company of North AmericaEpisodes of history in the stories of the United States and the Insurance company of North America as bound up together in national achievement, 1792-1917 → online text (page 1 of 8)
Font size
QR-code for this ebook







==^ 3D









In the Stories

of the United States

and the Insurance Company

of North America

as Bound up 'Together

in National



Commemorating the

One Hundred and Twenty-fifth

Anniversary of the formation of

"The President and Directors of

The Insurance Company

OF North America"

December 10, I7Q2

nl ,

I 9 16

Copyright, 1916 by


Philadelphia, Pa.




The Insurance Company of North

America is more than the oldest American joint stock
insurance corporation. Its early history is closely inter-
woven with the history of the government itself and
reflects at every step the early struggles of the fathers of
the Nation to make the great Republic we have to-day.

The North America has therefore veritably
grown up out of and with the country itself; its archives
teem with entries and records concerning great historical
names and transactions connected with places, property
and events that occupied the thoughts and inspired the
hopes of the makers of liberty and their successors, the
makers of the country.

It has been thought appropriate to record in
episodes, swiftly told, the origin and development of both
the Country and the Company, for the interest it might
have to the army of loyal agents that represent "The"
North America everywhere, who may care to know its


The Organization, i 792-1 793.
Early Developments, i 794-1 799.
Expansion and Permanence, i 800-1 816
Era of Nation Building, 181 7-1 841
The Era of Gold and Wars, i 842-1 866
Recuperation and Progress, 1867-1891
Into the Twentieth Century, i 892-191 6
Personality in Achievement
Stabilizer of Nations: Insurance







The very first joint-stock fire insurance company of the
United States was, as it is yet, the Insurance Company of
North America. Its history began with the history of
the American Government itself. Its birth is one among
that small group of great events in the last decade of the
Eighteenth Century that served to change the map of the
world geographically, politically, socially, and in methods
of organized efficiency. The new republic was to create
the model of political freedom and this in turn was to
create individual liberty. So the Insurance Company of
North America was to be the model of that new form of
protection against fire and marine hazards which was to
revolutionize crude underwriting and provide the very
cornerstone of modern commercial progress as the basis
of business credit.

The Insurance Company of North America had its
birth in the very same room in Independence Hall, Phila-
delphia, where the immortal Declaration of Independence
had been signed for the struggling Colonies sixteen years
before — 1776. It was in the year 1792, the same year
that General George Washington, after having been a sort
of military rebel president, was re-elected President of the
free and triumphant states.

Those indeed were stirring times. Washington had
been first installed as President in 1789 and had gone
through Philadelphia from Mount Vernon for the inau-
guration in New York. On this trip (it then took two
days to make the journey from Philadelphia to New York
in the speediest coaches) he stopped at Trenton and there
heard "The President's March," which was played for



the first time in public and is now so familiarly known as
"Hail, Columbia!"

When "the President and Directors of the Insurance
Company of North America" was projected, it was doubt-
less named so peculiarly by its first president, John Max-
well Nesbitt, who had served on the organization com-
mittee, as ten years previously he had assisted in the for-
mation of "The President, Directors and Company of the
Bank of North America." Because there is no other in-
surance company of a similar name, those in the pro-
fession speak of the Insurance Company of North America
as "The" North America.

Our forefathers were unusually far-sighted, but even
in the later Colonial days did not seem to foresee the great
security of incorporated indemnity with its ample capital,
though the plan was popular in England at the time.
Hence, when merchants sent a ship to sea laden with a
valuable cargo, they sought private underwriters for their
protection. That is, they went to individuals who might
risk as much as £200 each on a "bottom," and, as there
were probably fifty private underwriters in Philadelphia,
the total indemnity — however valuable the cargo — only
approximated $50,000.

The canny William Penn early saw the weaknesses in
private underwriting and when his friend, James Logan,
urged upon him a cover "notwithstanding thy tender-
ness about insurance," took his advice (1705) but later
(at that time there were no stock companies) wrote:
"J. Askew ensured £100 upon thy letter but the ensurer
broke, and the twenty guineas lost. Ensurers fail much."

In the good old Colonial days almost anyone could set
himself up as a private underwriter, and, if lucky, he might
make a success. There is an old but entirely human piece
of folk-lore that went the rounds years ago about one of
these underwriters who rather late in the "game" at-
tempted to build his business by cutting rates — a practice



some modern underwriters have not failed to follow, and
even, it might be said, have followed to fail. But this
particular underwriter prospered, and as he waxed fatter
his charges increased, until a customer remonstrated, re-
minding him that when he first began taking his "risque"
— risk was spelled in the French way then — his rates
were only half or even less than his competitors. What-
ever the exact text of the reply, no one will fail to grasp
his meaning when he said, " Well, I've got something to lose

Even with such obvious advantages as accrued from
$600,000 in capital guaranteeing the payment of losses, the
"subscribers to the Insurance Company of North America"
had a difficult time getting their charter through the
Pennsylvania legislature, so persistent and potent was
the opposition of the clique of private underwriters and
their friends. After laboring for a year or so, how-
ever, their petitions and special missions did prevail, but
not until there had been some talk of removing the in-
stitution to Delaware.

The North America completed its organization De-
cember ID, 1792, just after General George Washington
had been re-elected President for a second term and while
the capital of the nation was located at Philadelphia, by
congressional agreement, for a term of ten years, to end in
1800, when the City of Washington on the Potomac would
be ready for its reception.

It was at this time that the first census under the
new constitution had just been taken to determine con-
gressional representation and showed that there were only
3,380,000 people, Indians excepted, living in the eleven
states, Virginia having one fifth of the whole number and
Pennsylvania about one ninth. The six largest cities of
that day (Boston, New York, Philadelphia, Baltimore,
Charleston and Salem), taken together, had but 131,000
people — the largest less than 50,000.



The formation of the North America grew out of a
proposition to organize "The Universal Tontine" in
Philadelphia, after similar trials had met failure in Boston
and New York the previous year (1791), and when the
final gathering in Philadelphia (November 3, 1792) showed
that it, too, would collapse, a committee was selected to
devise and report means to "utilize the fund [about
$84,000] already subscribed." Nine days later the com-
mittee reported that the plan for a tontine, based on lon-
gevity and very popular in France, be changed to a society
to be called the "Insurance Company of North America."
Apparently they worked rapidly in those days for the plan
was approved November 19, about 40,000 of the 60,000
shares were reported subscribed by December i and the
secretary, Ebenezer Hazard, a former postmaster-general
under the Confederation of States, called a meeting of
subscribers at the State House (Independence Hall), on
December 10, to elect directors and complete the organiza-
tion. The new board convened the following day at the
City Tavern — the popular assembly place of business
men — and selected officers, also appointing committees
to petition the legislature for a charter, to prepare a table
of "lowest premium rates" as a guide to the "sitting com-
mittee," and to provide a headquarters, while the secretary
was instructed to prepare a marine policy form.

Three days later (December 14) the board met in its
own office at what was then 119 South Front Street and
is now No. 213, and on the following day the first policies
were issued.

In 1789, as soon as General Washington was inaugu-
rated, Congress proceeded to organize the new govern-
ment and such was the difficult financial situation of the
country that it called upon the brilliant financier, Alex-
ander Hamilton, Secretary of the Treasury, to suggest
plans in further support of the public treasury. Hamilton
strongly urged the "Bank of the United States" as a


remedy and in the face of great opposition this was ap-
proved and estabHshed in 1791. Policy No. 10, issued by
"The President and Directors of the Insurance Company
of North America," was in favor of this "Bank of the
United States" and covered $20,000 on money in any
"bottom" from Charleston, S. C, to Philadelphia (the
bank's headquarters) or New York, at one per cent
premium, the name of the company being written in pains-
takingly by the secretary, who signed himself "Eben"
Hazard, on a printed form then in common use by private

In 1792 the French Republic was established and this led
to war between France and England the following year,
so widely felt in the United States. We then had only a
treaty of peace with Great Britain, but with France two
treaties — one of alliance and one of amity and com-
merce. By the terms of the treaty of alliance, the United
States was obligated to guarantee to France her possessions
in America, namely, the French West Indies. When
President Washington heard that war had been declared
between France and England, and fearing the United
States would be called upon to send its fleet to protect the
possessions of France, he issued a proclamation of neu-
trality (1793). This proclamation incited the French to
claim a violation of the commercial treaty and to commit
depredations on American commerce, causing great losses
to shipping and so also to the Insurance Company of
North America. These losses soon ran into large sums of
money and on August 27, 1793, upon the advice of Sec-
retary of State Thomas Jefferson, the claims were thrown
into the hands of the government for adjustment. In the
settlement with France, however, the treaty provided
that the United States should satisfy all these so-called
"French Spoliation" claims with its own citizens.

These, in brief, were the early beginnings of the In-
surance Company of North America, the history of which



is so indelibly interwoven with the commercial develop-
ment of the United States and which is now (December
lo, 1916) entering upon the 125th year of its honorable
career as the first joint-stock insurance company of the
United States.


Governmental. — National capital located in Philadelphia — George Wash-
ington re-elected President for second term — Called Secretaries of Treasury,
State and War, Chief Justice, Attorney-General and Vice-President into con-
sultation resulting in present "Cabinet" — Total national debt about $75,000,-
000 — Kentucky admitted as fourteenth state in 1792 — Ten amendments to
Constitution made effective by states.

Economic. — Postal System now being extended from 75 offices existing in
1790, postage being prepaid by cash deposits and no books, papers or mer-
chandise accepted as mailable matter — The Bank of the United States at
Philadelphia, capital $10,000,000, gave hearty tone to business, restoring con-
fidence and credit — Canal, manufacturing and insurance companies projected —
Steamboat invented by John Fitch advertised to ply on Delaware River but not
well patronized and was withdrawn — Cotton exported to Europe, about
200,000 pounds — Slaves in United States numbered 700,000.

War. — Establishment of French Republic brought on war with England and
involved the United States, which had declared neutrality — American shipping
seized by both France and England, causing heavy losses.

Territorial. — Area of United States entirely east of Mississippi River, com-
prising fourteen states — Boston ship captain named Gray discovered Columbia
River in Oregon and named it in honor of his ship — Population, excluding
Indians, about 3,500,000 — Three fourths of country uninhabited.

Political. — Opposition to policy of Federalists in power caused antis to or-
ganize Republican Party in 1792, forerunner of present Democracy.

Insurance. — Insurance Company of North America formed in 1792 with
$600,000 capital, first in United States — John M. Nesbitt, first president, Eben-
ezer Hazard, first secretary — Heavy marine losses sustained as a result of
French seizures cause still unsettled French Spoliation claims.



The six years following the period in which the In-
surance Company of North America was organized and
began business — the years that closed the Eighteenth
Century and concluded practically the first decade in the
history of the United States — were full of trials and trib-
ulations, and the wonder is that the country was able to
maintain itself with the divisions within and the complica-
tions without. Equally is it a wonder that the North
America survived, so interwoven were its fortunes with
those of the government.

President Washington's proclamation of neutrality
in the war between France and England was resented by
members of the newly organized Republican Party,
who became the violent partisans of France. Everywhere
the French tri-color emblem with the liberty cap (which
latter, by the way, was designed by Lafayette, who fought
in the Revolutionary War with the Patriots), was hung up
in the coffee houses which were the clubs of the day.
"Republicans" greeted each other in the prevailing French
style as "Citizen" So-and-so. The Federalists were not
necessarily English sympathizers but they supported the
government. Under England's "Rule of 1756," which
provided that no neutral in time of war should have a
trade she did not possess in time of peace, that nation be-
gan to seize American ships, and a statement made in the
House of Lords at the time showed that in the short space
of five months, ending March 28, 1794, over 600 American
ships were captured or detained.

While the Republican Party demanded war on Eng-
land, President Washington was bent on peace and sent



John Jay to London to conclude our first commercial
treaty with England. This so offended the French Direc-
tory that they sent our minister out of France and them-
selves again began depredations on American commerce.
Some of these contentions have arisen anew during the
European War of 1914 and are the cause of continued

All these events very naturally had their direct effect
on the marine losses of the North America. Although
its original articles contemplated doing a fire as well as
marine business, it was not until after its charter had been
formally granted April 14, 1794, that consideration of
fire insurance was taken up seriously and even then it was
postponed until fall because of the ravages of yellow fever
in Philadelphia, necessitating several removals of the home
office to Germantown, a suburb.

Fire insurance was then very little known and was con-
sidered beneath the notice of private underwriters; but
two co-operatives or mutuals had come into being — the
second being organized because the first would not insure
houses surrounded by shade trees, which it was claimed
hindered fire extinguishment.

In October, 1794, the directors of the North Amer-
ica prepared " Proposals for Insurance," embracing what
are now termed policy conditions, previously agreeing to
insure "full values" of "goods in store," as against a
proposition to limit acceptance to two-thirds value. On
December 10 its first two fire policies were issued, the
first being $8,000 on dry goods for three years at 30 cents
per $100 per annum, the total premium $64, which
made a term rate of two-and-two-thirds annuals.

Despite the security offered by $600,000 of capital,
the demand for fire insurance was not very brisk, for policy
No. 7 was not issued until December 31, and in fact during
the first fiscal year only seventy-three policies were issued,
despite the fact that in January, 1795, the directors de-



cided on a big stroke of advertising and had 5,000 pro-
posals printed and "distributed to the houses of the in-
habitants of Philadelphia." In March the directors ex-
tended operations by voting to insure brick or stone houses
within ten miles of the city, if located in Pennsylvania.

About this time, too, the United States was getting a
little hard money of its own, copper pieces making their
appearance from the Philadelphia mint in 1793, silver in
1794 and gold in 1795. In those days you could take your
trinkets or bullion to the mint and have them turned into

During his second and last term, General Washington
had not only foreign complications to contend with, but
had to call out the militia to put down the "Whiskey
Rebellion " at Pittsburgh, which with a population of about
2,000 was the largest city west of the Alleghanies. There
was no method of transportation over the mountains then
except by wagon — even the gravity cars on tracks that
long preceded the railways were to come many years later
— and the only way the growers could get their corn to
market was by way of the Ohio and Mississippi rivers.
The Spaniards in 1794 had the Mississippi closed and so
the growers turned their corn into whiskey, easily trans-
ported, and refused to pay the government tax, which
President Washington finally collected at the point of
muskets. A year later our first treaty with Spain opened
the Mississippi.

Much to the regret of the people at large. General
Washington in his celebrated Farewell Address declined
to accept the nomination for a third term and John Adams
was chosen President in 1796, receiving 71 votes in the
electoral college against 68 for Thomas Jefferson, who,
under the law, became Vice-President. It was in this year
that the North America determined "to afford the
public an opportunity to make insurances on buildings
anywhere in the United States," if the premiums offered



were adequate in the opinion of the president and the
"committee of the week." At the close of that year the
company had risks on its books in western Pennsylvania,
New Jersey, New York, Massachusetts, Delaware, Mary-
land, Virginia and North and South Carolina.

John Adams was inaugurated President on March 4,
1797, and within three days had trouble on his hands when
he learned that Minister C. C. Pinckney had been driven
out of France because the five members of the Directory
of the Republic objected to the Jay Treaty with England.
The President hastily summoned Congress into special
session to resent this action and delivered a strong message,
but later was prevailed upon to try pacification through a
commission composed of John Marshall, Elbridge Gerry
and Minister Pinckney. They were met at Paris with
a demand (i) for an apology from President Adams,

(2) for $50,000 to each of the five French directors and

(3) that the United States pay tribute to France.

This demand for tribute caused an outburst of in-
dignation all over the United States, opposition in Con-
gress ceased, the Navy Department was created in addition
to State, Treasury and War, the original offices, and Wash-
ington was again made Commander-in-Chief, with the
rank of Lieutenant-General. As our negligible navy had
been practically abandoned after the Revolutionary War,
the people now manifested great public spirit, built
frigates and sloops of war and gave their services to erect
fortifications, while the French flags and liberty caps were
pulled down from the coffee houses.

Before the year 1798 ended the country had a gallant
little navy in action, and accompanied by a host of pri-
vateers the seas were scoured for French ships, with such
success that France soon sued for peace.

It was in this same year (1798) that the marine pre-
miums of the Insurance Company of North America
reached the very large sum for those days of $1,304,208,


though on account of the French seizures the loss claims
had mounted into immense figures. The company's
directors were, of course, greatly agitated over the losses
sustained through French depredations and many com-
mittees were named to gather information, resulting in
an agreement "not to insure to French ports unless with
a warranty against capture and seizure by the French."

In 1798 the North America's fire risks were divided
into first and second classes, the limit on the first being
$6,000 at a minimum of "a half per cent per annum" and
on the second class, $4,000 at a minimum of "three-
fourths per cent annually." Wooden buildings were
written and "when two or more wooden buildings adjoin,
a larger premium shall be required than is demanded on a
single wooden building."

On February 27 of the same year, the board declined
an offer of an agency at Charleston, S. C, "to take risks
against fire" and on April 19 offered $1,000 reward for
"discovering and prosecuting" the supposed incendiary
of a Maiden Lane (New York) risk.

As the company was chartered as a "general insurance
company" it had the powers possessed by the British
companies to write all sorts of insurance, including life
insurance. That branch was practically unknown in the
early days of the United States and the North America
went into it rather experimentally in 1794. It was
scarcely life insurance as understood now; it was more a
hazardous accident business that was demanded and which
it undertook to supply. The idea was short term insurance
"against capture by Algerian pirates or Barbary Cor-
sairs" and against death during captivity before ransom,
and insurances on the lives of those going on hazardous
journeys. The premiums ran as high as eight and ten
per cent for the term, but few policies were issued nor did
any losses occur under them. This life insurance experi-
ment was wholly discontinued in 1804.



President Adams did not get through his administra-
tion without a rebellion (1798) in which he, too, was forced
to follow Washington's lead and call out the militia to
collect a direct tax on the people, the first in our history.
Certain Pennsylvania farmers refused to make their re-
turns and drove off the assessors who came to "measure
the houses" and "count the windows," which were then
a means of determining values. Some of the leaders were
arrested but were rescued by John Fries, who was finally
taken by the militia, tried for treason and sentenced to be
hanged, but was pardoned.


Governmental. — Diplomatic struggle with England and France over neu-
trality — First treaty with Spain signed (1795) defining boundaries of Louisiana
and Florida and opening the Mississippi to trade — Naval war with France over
Jay's treaty with England began in 1798 and confined to the sea entirely — Fall
of French Directory puts an end to war and convention of peace signed with
Napoleon I, iSoo.

Economic. — The first carpet was woven — The first cotton factory opened

— The first newspaper was printed in the territory northwest of the Ohio River

— The first geography of the United States was published — Daily papers were

1 3 4 5 6 7 8

Online LibraryInsurance Company of North AmericaEpisodes of history in the stories of the United States and the Insurance company of North America as bound up together in national achievement, 1792-1917 → online text (page 1 of 8)