cial survey and for a period not exceeding one year. The object was to encourage the chartering of British vessels in preference to wooden ships, and the effect of the rule was to obtain for Great Britain a large part of our carrying trade.

Foreign underwriters, however, were not satisfied with getting the American business that came to them at home, but began in the early seventies to invade American territory itself. In entering American territory foreign companies were materially assisted by the lenient laws of some of our states requiring of foreign companies, as a prerequisite for admission, a deposit equal only to the minimum capital demanded of domestic companies. They began their onslaught by cutting rates; and the American companies, probably too few in number by this time, or otherwise unable to effect an efficient combination in opposition, were compelled to follow suit. Then began a period of the most active competition between domestic and foreign companies, the result of which, in view of the other unfavorable attending circumstances already mentioned, meant the gradual forcing of American companies out of existence.

In this competition the foreign competitors had the advantage of the much better organization and the much greater financial strength acquired at home during their longer existence, and could, therefore, afford to assume much larger risks based on their home capital. The small American companies, on the contrary, though their assets might be considerably in excess of the assets actually held by foreign companies in this country, were, nevertheless, for the reasons mentioned above, limited to a much smaller aggregate of risks. To distinguish between the efficiency of the two classes of companies in this respect one need only examine the data concerning foreign companies, as given in the Insurance Year-Book. Of twenty-seven leading British marine companies mentioned here in 1902, twenty, or three fourths, confine themselves solely to the writing of marine risks;

while in the United States nearly all companies transacting a marine-insurance business placed their greatest reliance upon the fire-insurance branch of their business. Moreover, most of the early American companies have ceased doing business, and only a few of the remaining ones have had a long and continuous existence. In the United Kingdom, on the contrary, of the twenty-seven companies referred to, eight were organized prior to 1837, three considerably before the beginning of the nineteenth century, all except four have had an existence of at least a quarter of a century, and most of them longer. During this long and, on the whole, prosperous existence, these companies have accumulated enormous assets, giving them an advantage over American companies, a fact which becomes clear when we reflect that the eight principal English companies doing business in the United States to-day have assets at home exceeding fifty million dollars. "The financial position of nearly all the British Marine companies," according to the Insurance Supplement to The Statist, "is of such strength that even an unusually long period of adversity could be faced with equanimity. By a long process of limiting dividends, they have acquired funds so large that policy-holders are most adequately secured, while at the same time the interest earnings are sufficient, or nearly sufficient, to provide for the maintenance of the present rate of dividends. Thus even very moderate trade profits are amply sufficient to steadily increase the financial security.

To show the great and increasing financial strength of the marine-insurance companies, it should be noted that the accumulated funds have increased 38 per cent during the decade 1893 to 1903, the premium income has only risen 14 per cent, and the proportion of the former to the latter has risen from 177 to 217 per cent. Thus the invested funds represent over £2 for every £1 annually received from policy-holders, an exceedingly satisfactory position from all points of view. In fact, the financial position of most of the offices is

so strong that temporary profit fluctuations may be disregarded, and in many cases present dividends could be maintained even if the companies undertook no more business whatever." English companies are to-day our main competitors, but companies of other countries, notably German and Canadian, are entering the ranks against us. Even on the Pacific coast some nineteen foreign companies are doing business, representing England, Germany, France, Italy, Switzerland, China, and Japan.

The American Business of Domestic and Foreign Companies Compared.-The extent to which foreign companies have acquired control of marine insurance in the United States becomes clear if one examines the annual financial reports of the various companies. A few years ago the author made a compilation of the statistics found in these reports for the year 1903; and, since conditions have not changed materially, the results are here presented. This study showed that the total net marine risks assumed by all foreign and domestic companies operating in the United States aggregated approximately $6,877,000,000. The net premiums were nearly $18,000,000, and the admitted assets $112,912,000. Of these amounts the American branches of the twenty leading foreign companies (to say nothing of the large number of foreign companies operating on the Pacific coast) wrote $3,723,000,000 of the risks, or 54 per cent of the total, received $7,160,335 of net premiums, but possessed only $21,788,958, or less than one quarter of the estimated assets. Most of these foreign companies also confine themselves solely to the writing of marine risks, only six of the above twenty companies transacting a fire business in addition to their marine business.

Unlike the foreign companies operating in the United States, the domestic companies depend much more largely on a fire-insurance business carried on in conjunction with their marine business. Only five of the thirty-one domestic

companies in 1903 devoted themselves exclusively to marine insurance, and of these five companies only two could be classed as important. All the other companies combined a fire-insurance business with the marine business, and almost without exception placed much greater emphasis upon the former than upon the latter. Combining the business of all the domestic marine and fire-marine companies, it appears that they carry nearly three times as much fire risk as marine and inland risks, and receive nearly four times as much in premiums from their fire as from their marine and inland business. Moreover, upon inquiry it was learned from a considerable number of companies that their marine business has been and is decreasing in volume, owing to the fact that large foreign marine companies insure entire ship cargoes, leaving only small amounts to be picked up by the smaller companies. Other companies continue to carry each year a small amount of insurance of from several hundred to a few thousand dollars in premiums, for the sole purpose of keeping alive that part of their charter which permits them to write marine insurance.

It appears furthermore that the business of the foreign companies operating in the United States is by no means limited to any particular section of the country. Domestic companies seem entirely unable to meet American requirements. On the Eastern coast foreign companies claim nearly one half of the business. The same is true to an even greater extent in the Lake region; while in the Gulf states and on the Pacific coast approximately four fifths of the business is controlled by foreign capital. Even in our coastwise trade, the one branch of our commerce from which foreigners have been excluded by statute for nearly a century, the largest buyers of insurance place it almost half and half between domestic and foreign companies. Evidence before the United States Industrial Commission shows that the home market soon becomes exhausted, and that it is the

practice of the principal shipping companies to take all the American insurance they can obtain, and to depend upon foreign underwriters for the rest.

Recently there has also been a marked tendency toward self-insurance. The International Mercantile Marine Company, for example, embracing some of the largest steamship lines leaving the port of New York, announced in its report of December 31, 1903, that "the company has inaugurated a system of insuring its own ships to a large extent, it being deemed that this could be done advantageously and safely with such a large fleet as the company commands" (138 ships).

While this is the most notable recent example of selfinsurance, it should be remembered that this method was practiced on a large scale many years ago. As early as 1867 we are informed by Mr. Hopkins, in his work on Marine Insurance of that date, that the Peninsular and Oriental Steamship Company possessed not only an insurance system for its fifty-three large steamships, but also insured its passengers, baggage, and effects, and issued policies on goods. Information from the managers and officers of the largest steamship lines shows that self-insurance is practiced extensively by their companies in one form or another. While the coastwise lines and the smaller transoceanic lines depend almost entirely upon marine-insurance companies for their insurance, it appears that in the case of such lines as the great German steamship companies, nearly all the insurance is carried by the companies themselves. It is the general rule, however, followed by the German lines as well as the International Mercantile Marine Company, that they refrain from insuring the cargo, and permit this risk to be covered by marine-insurance companies.

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