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of their members have been compelled systems in old buildings without cod to have automatic sprinklers for more than to the owners. All they ask is to 2 thirty years, and yet it is commonly paid the same rates the insurance com regarded as a recent invention. As early panies have been receiving. The cost as 1887 one mill owner had installed in of installation is paid for in three al his plants automatic systems containing four years by the additional premiums. twenty-five hundred sprinkler heads. It It is on account of their tireless in was not until many years later that spections that the Factory Mutuals har builders in cities discovered the value been so successful. There were ninetee of this simple device. Meanwhile the of them in 1880, insuring two hundrel Mutuals had experimented on hundreds million dollars' worth of property com of types of heads and placed their ap- monly considered extra hazardous. They proval on only six.

are still nineteen and they are now insurin The records of the transition period considerably more than two billion dollar. when automatic sprinklers were being worth of the same kind of properti

They are all much stronger than the ever were and their business has increase more than ten-fold.

Compare this with other fire insuran concerns. Of the 105 fire insurance stod companies organized in New York 2a doing business in the year 1871, the are only 20 left. Of the 71 that hav since been organized, only 24 are sti living. This leaves 44 of a total of 17 - exactly one fourth.

When an application for insurance made to one of the nineteen Mutua! a member of the board of inspect

which acts for all of them, visits the plan 8 100 48 .29 .06%2 .04% and makes a careful survey. To CUTTING THE COST OF MILL INSURANCE

survey, which is worked out in map for in considerable detail, he attaches a

of the changes necessary to bring it AFTER, IT FELL TO 48 CENTS; THEN (IN 1875) WHEN to the standard, which is now very hot THE AUTOMATIC SPRINKLER WAS INVENTED, TO 29 THE AVERAGE RATE SINCE 1880 HAS BEEN

Enclosed stairways, elevators, and 672 CENTS, AND IT IS NOW 472 CENTS

shafts, as well as automatic sprinkel

are required. As a result mill OWBC" installed in mills furnish a comparison when contemplating new structures, usua which proves their value. In the ten submit their plans first to the Mutu years between 1877 and 1887, mills for suggestion and approval. And we without sprinklers insured in one com- changes are necessary in old built pany had 759 fires, with a loss of $5,707,000, the difference in insurance rates is usu or $7,500 to the fire. In the same period sufficient to make it worth while. It there were 206 fires in mills outfitted owners of buildings were compelled : with automatic sprinklers with a total loss meet similarly stiff requirements in ord of $222,480, or $1,080 to the fire. Even to obtain insurance at all, so much a at that early date the automatic sprinkler would be exercised that the annual 11 reduced the fire loss to one seventh. loss would shrink to only a small part

The proof was so plain that insur- what it is now. ance on “sprinklered risks” can now be Before the Mutuals were organized purchased cheaply everywhere. The saving fire in a mill usually meant a total be in rates is so great that brokers in many No one had taught the mill owners to cities are offering to install sprinkler enclosed stairways and shafts and

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simple changes in construction would re

quarters of a century there has not been duce the fire hazard. The president of an a single case of a Mutual failing to meet insurance company at that time remarked, its obligations and, except in earlier years in refusing to insure a cotton mill, that before there was time to perfect firehe would insure any cotton mill to burn preventing devices, no assessments have up, but that he would not issue a policy been levied. Some of the oldest assoagainst its burning at any rate of premium. ciations, like the Arkwright, of Boston,

, Woolen mills and paper mills were almost have never assessed their members. The is bad. But now the percentage of policy of the Mutuals has always been total losses to fires is less than one per to pay losses at once and without question. cent., and the cost of insurance is about Adjustments are easily made, because one twentieth of what it was.

both parties to the contract know exactly The first man to study fire prevention what the risk is. It has never been was Zachariah Allen, a cotton manu- necessary to take a case into court. facturer of Allendale, R. 1. He was After the automatic sprinkler was inin a measure the Thomas Edison of his vented in 1875, the Mutuals entered upon day. He invented the automatic cut-off a period that has made the modern city valve for steam engines and built the possible. Seeing in this little device the first house furnace. He took the first solution of the fire problem twenty-five accurate measure of the water-flow over years before the rest of the world, they esNiagara Falls. When, in 1835, the rate tablished a laboratory for tests and aided on his cotton mill was raised on account materially in bringing about the quick and of the large number of cotton mill fires, safe sprinkler now in use. In fact, their he refused to pay the higher premium own members were so fearful of damage ind set about making his mill proof from leakage that the association agreed against fire. Other cotton manufacturers to assume the damage from leakage, of Rhode Island followed his example and their policies contain a clause to ind made similar changes, but the insur- that effect even now. ince companies refused to make allow- For many years they have acted as inces for the dangers they had removed. one body except in the assumption of Mr. Allen then induced the others to join risk. After the inspectors have reportwith him in carrying their own insurance. ed on a mill, the various companies They formed the Manufacturers' Mutual decide what portion of the risk they are Fire Insurance Company of Providence, willing to assume. The caution with the first of the Factory Mutuals. which they proceed is shown in the large

A few years later the mill owners of staff of inspectors and engineers. They Lowell, Mass., found themselves in a do their work so carefully that only two similar predicament, and decided to in- adjusters are necessary for the whole sure one another. Their study of fire country. The inspectors follow one anprevention led to one of the most im- other at uncertain intervals. Mill-owners portant of modern fire-fighting develop- never know when they are coming and, ments, the first of the high-pressure water if they wish to continue under a low rate systems. We owe that also to the Mutuals. of insurance, they know they must keep By careful construction, their high press their mills up to the mark. All firesure water system, and the quick use preventing and fire-fighting apparatus must of all new fire-preventing inventions, be in perfect order, there must be no the Lowell mills were able to reduce their accumulation of material likely to catch fire losses during a period of thirty-seven fire, and recommendations by inspectors years to an annual destruction from fire must be carried out promptly. If a of only one twentieth of one per cent. of mill-owner is reported lax or slow about the value of the mills.

carrying out the suggestions of inspectors The Mutual idea has grown steadily his policy is cancelled. The Associations during its entire history and has not met act on the assumption that there is no with a single set-back. During three excuse for disastrous fires. Many of the

provisions in the standard building code Not only this, but the example of which the National Board of Fire Under- the mill owners in coöperating in their writers is trying to have enacted in all fire risks is being followed in the aties. cities were originally perfected by the It has caused the formation of mutual Mutuals. In fact, all advances in fire- mercantile companies, known as “interprevention are accredited to the Mutuals insurers,” in which the merchants of by Mr. P. J. McKeon, whose text-book two or three dozen cities band together on fire prevention is used by the Bureau for fire protection. Their purpose has of Fire Prevention of the New York City been partly to prevent excessive rates and Fire Department.

partly to reap the benefit from the use of | Beginning in a few mills along the fire-preventing devices, as local regulations Atlantic Coast, the Mutuals now carry now compel the adoption of many derisks in all the big manufacturing dis- vices developed by the Mutuals. If it tricts of the United States and Canada. were not for the automatic sprinkler Most cotton mills, originally the worst of the modern type of department store, all mill risks, are now insured in the for example, would be so great a fire Mutuals whether they are located in New hazard that it would not be permittal England or the South. Mutual inspectors Yet department store owners, scattered range all through the Middle West as through many cities, have so much faith far as the Missouri River. In the Middle in fire-preventing apparatus that they West, also, their example has been followed are willing to insure one another. The by organizations of manufacturers who owners of modern office and loft building have formed what are known as the would probably be doing the same thing, “Junior Mutuals,” and they also are but they have not had the same incentive. successful.

as a special class of insurance companies, For the most part the Mutuals have known as American Lloyds, has made not written insurance on property in the a specialty of these "sprinklered risks, larger cities. Yet their influence has and insures them at rates that compare penetrated these centres.

favorably even with the cost of mutua The modern mill type developed by insurance. them is finding expression in the modern The story of mutual fire insurance loft building, the most popular type of and its effect upon fire prevention was city structure. The Mutuals proved that summed up in a history of the Arkwrigh: this kind of building with enclosed stair- Mutual Fire Insurance Company of Boom ways and shafts, solid plank or concrete ton, published last year, in commemora floors, and flat roofs is the cheapest and tion of its fiftieth anniversary. It has most durable of structures. It is a safe insured in the course of its existence risk even when full of inflammable cotton $3,680,000,000 worth of property and has in the course of manufacture. The auto- had losses amounting to only $3,118.000 matic sprinkler can be counted upon to stop Premiums returned to policy holders all damage from fire at the point where it amounted to $21,700,000. For the whee starts.

Even office buildings are now fifty years it had returned to its membes following the loft, or mill, type. In an average of 841 per cent. of premium most modern offices it has been found more and, in 1910, with $270,000,000 worth practicable to do away with subdividing property at risk, it was returning St walls. With builders these loft buildings per cent. of the premiums. are popular because their up-keep is The history of the Mutuals is real not expensive. The insurance rate on the history of fire prevention in ths this type is but a fraction of the rate on the country. If our fire waste is to be re old type of office building. The steady duced it must be according to the methods replacing of old structures by these they have established. Eventually the modern loft buildings, developments of standards will have to be adopted. The the Mutuals' regulations, is gradually economic waste of a quarter billion a fire-proofing our cities.

year is too large a drain to continue.








HE farmers of Europe are drawn from American banks. When they more highly organized to se- lend this money to farmers they must cure financial credit than are have a way of replacing it if their dethe farmers of the United positors wish to withdraw. The European

States, and they get money at loan associations replace their capital by rates and for longer terms. The indorsing the farmers' notes and by reus governments have given cordial discounting these notes to meet the nition to the farmers' organizations demands of their depositors without in many ways have extended aid to compelling the repayment of loans made novement. As the coöperative credit to their members. In this respect, the iations have already spread over the banking laws of European countries differ inent and are now being organized from our banking laws. For example, eland, we may safely accept the uni- the Bank of France has the legal right al testimony that these organizations to issue bank notes based upon comng from the necessity for a better mercial paper which bears three indorseem of rural credit than the com- ments. In order to meet this legal cial banks offered.

requirement the farmers organized the arm credit differs essentially from small association composed of neighmercial credit. The period between boring farmers. These small units were loan and repayment must be longer. then grouped around a regional or central

farmer cannot make his turn-over bank. The system was now complete quickly as can the merchant. In rural because a chain was constructed to join lit that properly serves productive agri- the farm with the government bank. A ure the repayment of a loan should not farmer presents his promissory note to his lemanded until the maturity of the crop association for discount. His neighbor which the borrowed capital is invested. acts as his security by indorsing this The essential problem in establishing note. This is the first indorsement. The h a system is to be found in the re- loan association then adds its indorsement cing of the money which is lent for and presents the note to the regional se considerable periods. Of course a bank. This guarantee of the association aking association must necessarily accept is the second indorsement. It now only posits in order to secure funds. This is remains for the regional bank to add its le of the coöperative loan associations of indorsement and forward it to the Bank Trope, and 90 per cent. of the money of France, which issues bank notes for it. ich they lend to their members is placed The local loan association discounts the their care by depositors. These deposits farmer's note, the regional bank redise accepted in the same way that similar counts it, and the Bank of France reansactions are conducted by American discounts it again in the form of an issue inkers. They can be withdrawn in the of bank notes. The farmer gets his money me manner that deposits can be with at low rates for long periods and yet the ultimate lender, the Bank of France, credit, it will become a question for our takes little risk, being protected by an bankers to decide whether they will offer original borrower and two indorsements. this creditor, by refusal, compel the In this way, also, the depositor in an organization of coöperative credit assoassociation is enabled to receive his money ciations. It is abundantly proved that from the association before the loan is such organizations are safe and practical. repaid by the farmer. In substance, this It is simply a matter of organizing after element is embodied in every system of models which have been proved by years rural credit in Europe. It is evident that of successful experience. it is the privilege of rediscount rather than

II the coöperative organization which is the foundation stone of this credit system. A modern system of land mortgage Coöperation is the method by which the credit is of greater importance to our special provisions of law are being utilized Nation than an improved system of for farm purposes.

personal credits. Our farmers are facing As our banking laws have not permitted an era of extraordinary expenditures r the issue of currency against farmers' they keep abreast of the times. The notes, no matter how many times in- depleted fertility of our farms must be dorsed, there will have to be modifica- restored; better roads are

restored; better roads are to be contions if we are to organize effective sys- structed; the quality of our live stock is tems of rural credits after European to be improved, and their numbers greatly models. But if these changes are made increased; better methods of tillage are our existing banks can utilize these redis- to be adopted; higher standards of agrcount privileges as effectively as can cultural education are to be accepted; coöperative associations. There are as and, finally, the young man is to be enmany chartered banks in the United

couraged to acquire ownership of the land States per thousand population as there he cultivates so as to avert the growing are in Germany, with its coöperative menace of landlordism. These expendiassociations. At present, neither char- tures in the aggregate will amount to a tered banks nor coöperative associations stupendous sum and their repayment in the United States can lend deposited should be distributed over a long period funds and meet the demands for the return of time. The rate of interest should be of these funds from any other source than reduced to the level of other financia! repayment by the borrower. It is useless undertakings of like magnitude. 12 to argue whether banks or coöperative Europe, money is available for such pu:organizations are best adapted to advance poses at nearly as low rates as the goverrcredit to farmers until it is made possiblements can borrow for national purpose for such business to be transacted suc- This is as it should be. In the true cessfully. The first requisite, and it is sense, the rebuilding of agriculture alor: one on which all persons can unite, is a permanent lines is a national expenditur: change in our banking system which will as vital to the future supremacy of ou permit rediscounting of solvent loans. Nation as is the maintenance of our arr: This power of rediscount should be placed and navy.

. under governmental control. I heartily European experience has conclusive. indorse that portion of the pending cur

demonstrated that land mortgage bono rency bill which places the Secretary of can be sold in large volume at low rate: Agriculture on the Federal Reserve Board. of interest. The proceeds of these bond It is a great forward step in currency re- can be lent to farmers on long-tim: form from the standpoint of agricultural payments at a low rate of interest, with a credit and agricultural equality in the small payment on the principal whics money markets of the United States. ultimately will wipe out the debt. l

Conceding that the proposed revision France, the annual charge for such mone: of our currency laws will give every proper including all principal, interest, and corrfacility for the organization of agricultural mission charges, is less than 5 per cen:

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