markets it is customary to buy a quantity of the produce, immediately have it represented by warehouse receipts or bills of lading, and then to offer these, together with a fire policy in a responsible company, to a banker for a loan of about 90 per cent of the market value of the goods, and with the proceeds of the loan to effect a new purchase, again insure the same, and by offering the new warehouse receipts and the new fire policy as collateral security, effect a new loan. By repeating this operation, as we saw in the chapter on "The Functions of Fire Insurance," it becomes possible to transact a business from five to ten times the size that would be possible if all purchases were made on a cash basis. This method of buying on credit exists in all the leading produce markets, and in many instances the property purchased one day may be sold the next. The issuing of a new policy each time a purchase is made, or the assignment of the interest in the policy each time all, or a part, of the property is sold would certainly cause delay and inconvenience for all parties involved, and would prove a severe handicap to the smooth working of modern industrial machinery.

In view of these circumstances many companies make it possible for the insured to purchase a certain amount of insurance, and then to protect creditors by issuing against this insurance certificates properly countersigned by the designated representative of the company. One large marine-insurance company, for example, extends a privilege of this kind extensively to cotton dealers. Having secured a certain amount of insurance, a dealer, upon the purchase of cotton on borrowed funds, can immediately furnish his bank with the requisite amount of insurance, and the company will later acknowledge its liability by letter. The most general practice, however, is for the insured to issue a "certificate" properly countersigned, which certifies that he is the holder of a certain amount of insurance under a cer

tain policy, terminating at a certain date, and that any loss will be adjusted in conformity with the conditions of the policy, and made payable to the party designated therein as payee upon the surrender of the certificate. The following is one of the forms of such certificates:

Loss, if any, in conformity with the conditions of said policy, to be adjusted with

of this certificate.

and payable to

only on presentation of and surrender

Countersigned at Philadelphia, this

day of

19...

.......

Manager

CHAPTER XX

FIRE PREVENTION

FIRE prevention in the United States presents problems of a totally different character from those met with in other countries. In Europe buildings are comparatively low, of limited area, and frequently with wide spaces between them. They are, as a rule, of solid masonry construction, and provided with small window openings. In the United States, on the contrary, business exigencies have not been conducive to the adoption of such precautionary measures. American cities have been built rapidly and as cheaply as possible. Wood, because of its cheapness and abundance, has been used extensively in the construction of floors, roofs, and walls. The congestion of business sections in our large cities has become alarming, and has not been marked by any proportionate effort to prevent conflagrations. Everywhere the tendency has been to regard the needs of the present as much more important than those of the future. Mr. Everitt U. Crosby, at that time Chairman of the Executive Committee of the National Fire Protective Association, wrote, in 1904: "Speaking generally of city districts, intelligent treatment of the individual risk as regards construction and fire extinguishment has been given only in occasional, yet important, instances, and the conflagration hazard has not been provided against. Where municipal building regulations exist, they have been poorly drawn in respect to fire prevention, and sometimes poorly observed. It is apparent the desire for better things must be stronger in

the heart of those most interested before any radical reform can take place."

With such a state of affairs existing in America, it is only natural that there should result an enormous fire waste, aggregating annually over $200,000,000. In our largest cities property owners are complaining loudly of the heavy insurance tax, and fire-insurance companies are confronted with much opposition from policy-holders and legislatures. The total tax is excessive, but any effort to make the same smaller must be directed toward the reduction of the excessive fire waste in the country. In European countries like France and Great Britain, the average loss per hundred dollars of insurance is only one ninth to one sixth as large as here. Fire underwriters are agreed that it is in the field of "fire prevention" that a solution of present difficulties must be found, and for years the engineers of the insurance companies have studied American conditions in detail, and have devised fire-extinguishing facilities which, if generally adopted, would bring about a decided improvement.

Fire prevention has assumed such importance that there has developed a special science which goes under the name of “fire-insurance engineering," and which to-day enlists the services of many capable men, who make it their exclusive business to apply the principles of engineering to the prevention of fire. These men visit all manufacturing and mercantile risks which are insured, and, with the aid of question blanks, carefully examine the construction of the plant, the hazard connected with the occupancy and the materials used, the exposure from surrounding risks, the fire-protection facilities, and all other circumstances attaching to the risk.

Many of these inspectors are employed by insurance companies, large industrial corporations, or large insurance brokerage firms. To lessen the expense, however, it is desirable to have as much cooperation as possible in obtain

ing information, and to this end, so-called "inspection bureaus" have been organized. These have as members a large number of companies, all of which receive the information collected. Such inspection bureaus are usually so organized that a trained inspector can be provided for each district, and an immediate inspection made, when desired. The benefits to the companies consist in lessening the amount of loss through the proper arrangement and betterment of risks, and in guarding against the assumption of dangerous hazards. The owner of the property, however, is also benefited, since he is advised how he may change his plant so as to lessen the danger of fire.

Much valuable assistance is also rendered by the National Fire Protection Association, which was organized for a threefold purpose: "To promote the science and improve the methods of fire protection and prevention; to obtain and circulate information on these subjects; and to secure the cooperation of its members in establishing proper safeguards against loss of life and property by fire." Through special committees this association renders an invaluable service in formulating rules and standards for the guidance of inspectors as well as property owners, regarding the construction and use of various fire-preventive appliances and materials. Laboratories are also maintained by the companies, where, with the advice of the several committees of the National Fire Protection Association, tests are made to verify the merits claimed by the inventors or selling agencies of fire prevention or fire-protection devices, such as fire extinguishers, fire doors, shutters, sprinklers, electrical materials, lighting and heating devices, building materials, etc. In this way the good is separated from the bad, and property owners can be informed as to the standards that ought to be used.

Mention should also be made of the work done along lines of fire prevention by some of the larger companies, and