similar problem not very long before. But the discovery was made that in Atchison's case it would be necessary to apply to the state legislature for authority to issue bonds at a higher rate, and it was too late to take that action, because the legislature had adjourned. There seemed, moreover, to be insurmountable obstacles in the way of resorting to the other suggested solution. So there was nothing left for the bondholders to do but to appeal to the Kansas courts.

This was done, and within twenty-three days after July 1st, the date on which payment of the bonds should have been made, the Supreme Court of the state of Kansas declared that Atchison could not officially fix the amount of taxes for the citizens to pay for the running of the city during the next few years unless it included taxes to take up the defaulted bonds in annual instalments, with 4 per cent. interest added

The effect of this Supreme Court decision was to bring about a radical change in the attitude of Atchison's officials and to turn them back upon the second suggested solution of their problem. Immediately they communicated with the holders of the old bonds, asking if, instead of receiving their payments in annual instalments, they would not be willing to take in exchange new twenty-year 5 per cent. bonds, which would be provided with a sinking fund large enough to enable the city to retire them before maturity.

One response to this communication brought out the moral of Atchison's experience, which has been related here in a good deal of detail because it is unique. In it the suggestion was made that in the light of all that had happened when the old bonds matured it could scarcely be expected that investors would place entire confidence in the city's attitude toward its financial obligations. More assurance on this point was needed to get people to accept new bonds, no matter how satisfactory their general terms might be.

Atchison was able to point to such things as a low total and per capita debt, a high market value of taxable property back of its bonds, and a substantial amount of assets owned. Yet a single administration left room for doubt about its moral

responsibility in safeguarding outstanding bonds. This might happen in almost any American city once in a while. The interesting thing for the holder of munic pal bonds is to know what guarantee has against such actions.

The officials of Atchison were made by a mandate of the highest court of their state to see the error of their ways and it t less than three weeks. That is the r portant point of the story. It will dourtless turn out that the city's credit has been saved. And the unique record for safety of municipal bonds as a class—a recuro which has demonstrated their peculiar fitness to be treated as the groundwork permanent investment - has been save from an unseemly blemish.

The other city is Fargo, N. D., one: the same general class as Atchison, with about an equal number of inhabitants, and an equal amount of wealth in propert values. Its part in the tale is briefly tod as suggesting another element that enter in an important way into the security municipal bonds.

Late in 1912 the mayor of Fargo made the extraordinary announcement that the city had declared a dividend of 6 pe cent. At first no one seemed to understand what was meant, but the expla tion was offered soon afterward that, du ing the year, the city had saved ab $10,000, which it had been decided to refund to taxpayers in proportion to the last assessments. This dividend was pa in cash a few months ago, and it stands 2 an exceptional achievement in efficiere and economy of city administration.

It is, of course, not to be expected that Fargo's example can be followed genera by other cities under similar circumstances But if the declaration of actual dividend to taxpayers does not become a part of the routine proceedings of our "city fathers" there are plenty of other ways of putting economy and efficiency in evidence, and thus giving additional investment prest to the whole class of bonds that are backby taxes, the kind of "earnings" wh must be paid, as the Kansas Suprem Court emphasized by the decision whe it rendered with such swift justice in te case of the Atchison bonds.

installed in mills furnish a comparison which proves their value. In the ten In the ten years between 1877 and 1887, mills without sprinklers insured in one company had 759 fires, with a loss of $5,707,000, or $7,500 to the fire. In the same period there were 206 fires in mills outfitted with automatic sprinklers with a total loss of $222,480, or $1,080 to the fire. Even at that early date the automatic sprinkler reduced the fire loss to one seventh.

The proof was so plain that insurance on "sprinklered risks" can now be purchased cheaply everywhere. The saving in rates is so great that brokers in many cities are offering to install sprinkler

systems in old buildings without co to the owners. All they ask is to paid the same rates the insurance cor panies have been receiving. The cos of installation is paid for in three c four years by the additional premiums.

It is on account of their tireless i spections that the Factory Mutuals hav been so successful. There were ninetee of them in 1880, insuring two hundre. million dollars' worth of property cormonly considered extra hazardous. The are still nineteen and they are now insurir. considerably more than two billion dollar worth of the same kind of propert 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 sto companies organized in New York an doing business in the year 1871, the are only 20 left. Of the 71 that hav since been organized, only 24 are st living. This leaves 44 of a total of 1 - 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 pla and makes a careful survey. To survey, which is worked out in map for in considerable detail, he attaches a of the changes necessary to bring it to the standard, which is now very h Enclosed stairways, elevators, and shafts, as well as automatic sprink are required. As a result mill owne when contemplating new structures, usua submit their plans first to the Mut for suggestion and approval. And wh changes are necessary in old build: the difference in insurance rates is usu sufficient to make it worth while. It owners of buildings were compelled: meet similarly stiff requirements in o to obtain insurance at all, so much a would be exercised that the annual loss would shrink to only a small part what it is now.

Before the Mutuals were organized fire in a mill usually meant a total No one had taught the mill owners enclosed stairways and shafts and

simple changes in construction would reduce the fire hazard. The president of an insurance company at that time remarked, in refusing to insure a cotton mill, that he would insure any cotton mill to burn up, but that he would not issue a policy against its burning at any rate of premium. Woolen mills and paper mills were almost as bad. But now the percentage of total losses to fires is less than one per cent., and the cost of insurance is about one twentieth of what it was.

The first man to study fire prevention was Zachariah Allen, a cotton manufacturer of Allendale, R. I. He was in a measure the Thomas Edison of his day. He invented the automatic cut-off valve for steam engines and built the first house furnace. He took the first accurate measure of the water-flow over Niagara Falls. When, in 1835, the rate on his cotton mill was raised on account of the large number of cotton mill fires, he refused to pay the higher premium and set about making his mill proof against fire. Other cotton manufacturers of Rhode Island followed his example and made similar changes, but the insurance companies refused to make allowances for the dangers they had removed. Mr. Allen then induced the others to join with him in carrying their own insurance. They formed the Manufacturers' Mutual Fire Insurance Company of Providence, the first of the Factory Mutuals.

A few years later the mill owners of Lowell, Mass., found themselves in a similar predicament, and decided to insure one another. Their study of fire prevention led to one of the most important of modern fire-fighting develop ments, the first of the high-pressure water systems. We owe that also to the Mutuals. By careful construction, their high pressure water system, and the quick use of all new fire-preventing inventions, the Lowell mills were able to reduce their fire losses during a period of thirty-seven years to an annual destruction from fire of only one twentieth of one per cent. of the value of the mills.

The Mutual idea has grown steadily during its entire history and has not met with a single set-back. During three

quarters of a century there has not been a single case of a Mutual failing to meet its obligations and, except in earlier years before there was time to perfect firepreventing devices, no assessments have been levied. Some of the oldest associations, like the Arkwright, of Boston, have never assessed their members. The policy of the Mutuals has always been to pay losses at once and without question. Adjustments are easily made, because both parties to the contract know exactly what the risk is. It has never been necessary to take a case into court.

After the automatic sprinkler was invented in 1875, the Mutuals entered upon a period that has made the modern city possible. Seeing in this little device the solution of the fire problem twenty-five years before the rest of the world, they established a laboratory for tests and aided materially in bringing about the quick and safe sprinkler now in use. In fact, their own members were so fearful of damage from leakage that the association agreed to assume the damage from leakage, and their policies contain a clause to that effect even now.

For many years they have acted as one body except in the assumption of risk. After the inspectors have reported on a mill, the various companies decide what portion of the risk they are willing to assume. The caution with which they proceed is shown in the large staff of inspectors and engineers. They do their work so carefully that only two adjusters are necessary for the whole country. country. The inspectors follow one another at uncertain intervals. Mill-owners never know when they are coming and, if they wish to continue under a low rate of insurance, they know they must keep their mills up to the mark. All firepreventing and fire-fighting apparatus must be in perfect order, there must be no accumulation of material likely to catch fire, and recommendations by inspectors. must be carried out promptly. If a mill-owner is reported lax or slow about carrying out the suggestions of inspectors his policy is cancelled. The Associations act on the assumption that there is no excuse for disastrous fires. Many of the

provisions in the standard building code which the National Board of Fire Underwriters is trying to have enacted in all cities were originally perfected by the Mutuals. In fact, all advances in fireprevention are accredited to the Mutuals by Mr. P. J. McKeon, whose text-book on fire prevention is used by the Bureau of Fire Prevention of the New York City Fire Department.

Beginning in a few mills along the Atlantic Coast, the Mutuals now carry risks in all the big manufacturing districts of the United States and Canada. Most cotton mills, originally the worst of all mill risks, are now insured in the Mutuals whether they are located in New England or the South. Mutual inspectors range all through the Middle West as far as the Missouri River. In the Middle West, also, their example has been followed by organizations of manufacturers who have formed what are known as the "Junior Mutuals," and they also are successful.

For the most part the Mutuals have not written insurance on property in the larger cities. Yet their influence has penetrated these centres.

The modern mill type developed by them is finding expression in the modern loft building, the most popular type of city structure. The Mutuals proved that this kind of building with enclosed stairways and shafts, solid plank or concrete floors, and flat roofs is the cheapest and most durable of structures. It is a safe risk even when full of inflammable cotton in the course of manufacture. The automatic sprinkler can be counted upon to stop all damage from fire at the point where it starts. Even office buildings are now following the loft, or mill, type. In most modern offices it has been found more practicable to do away with subdividing walls. With builders these loft buildings are popular because their up-keep is not expensive. The insurance rate on this type is but a fraction of the rate on the old type of office building. The steady replacing of old structures by these modern loft buildings, developments of the Mutuals' regulations, is gradually fire-proofing our cities.

Not only this, but the example of the mill owners in coöperating in their fire risks is being followed in the cities. It has caused the formation of mutua. mercantile companies, known as "interinsurers," in which the merchants of two or three dozen cities band together I for fire protection. Their purpose has been partly to prevent excessive rates and partly to reap the benefit from the use of fire-preventing devices, as local regulations now compel the adoption of many devices developed by the Mutuals. If t were not for the automatic sprinkler the modern type of department store for example, would be so great a fre hazard that it would not be permitted Yet department store owners, scattered through many cities, have so much faith in fire-preventing apparatus that the are willing to insure one another. The owners of modern office and loft building would probably be doing the same thing but they have not had the same incentive as a special class of insurance companies known as American Lloyds, has made a specialty of these "sprinklered risks. and insures them at rates that compare favorably even with the cost of mutua insurance.

The story of mutual fire insurance and its effect upon fire prevention w21 summed up in a history of the Arkwright Mutual Fire Insurance Company of B ton, published last year, in commemora tion of its fiftieth anniversary. It ha insured in the course of its existenc $3,680,000,000 worth of property and ha had losses amounting to only $3,118.000 Premiums returned to policy holders amounted to $21,700,000. For the wh fifty years it had returned to its member an average of 84 per cent, of premi and, in 1910, with $270,000,000 worth property at risk, it was returning per cent. of the premiums.

The history of the Mutuals is rea the history of fire prevention in the country. If our fire waste is to be re duced it must be according to the met he they have established. Eventually the standards will have to be adopted. economic waste of a quarter billion a year is too large a drain to continue.