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10 MARINE The Vessel, Not The Underwriter, Pays the Loss. An article with the above heading which appeared in the Review of Sept. 2, has attracted considerable attention in marine insurance circles of London, England. The article contained extracts from a letter written by Geo. L. McCurdy of Chicago to Capt George P. McKay of the Lake Carriers' Association. Mr. McCurdy explained te Capt. McKay the methods of the insurance interests which he represents in cooperating with the Lake Carriers to reduce losses by taking means to prevent accidents, especially those resulting from steel vessels stranding in shal- low places, which may be said to be peculiar to the lakes. Mr. McCurdy was desirous of impressing vessel owners with the fact that in all pre- cautions against accident. their interests were being served, as in the end the cost of insurance would be reduced on account of systematic effort to reduce losses. In emphasizing this point he said: '""'We must start with the idea firmly fixed in our minds that the underwriters are simply the custodians of a fund created by the ship owners, who pay the companies 'premiums from which alone may be expected the necessary funds with which to pay for disasters." It. is well known, of course, that on the lakes this view of the subject of insurance is accepted by vessel owners, who will act with the under- writers or anybody else engaged in an effort to reduce losses. But strange to say, one of the London shipping journals--and a very good one too--takes exception to the statement that "'the vessels, not the under- writer, pays the loss." Mr. McCurdy's letter to Capt. McKay has been the subject of a great deal of adverse criticism in Fairplay of London. It would seem, however, with the matter sifted down, that the position taken by the editor of the London journal is prompted by his opposition .to London underwriters who joined the McCurdy-Prime interests last winter in a combination that managed to make rates low enough to cap- ture the great bulk of lake insurance. Fairplay has repeatedly tried to discourage low rates for the lake business, as well as for other lines of 'insurance, similar to that of the lakes, which are offered in London from all parts of the world. Encouragement of the policy living rates in any line of business is commendable but it should not be carried so far as to object to the earnest efforts of insurance agents who are trying to protect their principals after low rates of insurance have been made, and who are trying also to increase the number of safeguards to navigation, so as to pc uae these low insurance rates with satisfaction and profit to all con- cerned. A reader of Fairplay in this country sends the Review copies of the two articles in which Mr. McCurdy's letter to Capt. McKay are criticized. He also sends a communication in answer to them. It is not necessary to reprint the articles, as the communication answering them embodies most of what they contain. The communication follows: Editor Marine Review: It is strange that the Editor of Fairplay should - assume to take exception to the terms in which Mr. McCurdy has enun- ciated the principle which is the simple basis of the whole profession of insurance. It is a fundamental definition that insurance is the science or profession by means of which the burden of losses is taken from the shoul- ders of individuals and distributed among many. The charges assessed upon the total number are measured and adjusted solely according to the need of gathering a total fund capable of indemnifying for such losses, plus only a reasonable profit to those who operate the business. If losses increase they wipe away not only the loss fund but the profit fund, which would make continuance of the business impossible. Consequently the premiums in such case are raised. On the other hand, when losses lessen so as not to consume the whole of the loss fund, the unconsumed _ balance will go into the pockets of the insurance company on the past risks, but public knowledge and competition will play such a part re- eqieie future risks as to force a reduction in the rate of premium in- sured. Every one knows that this is a true description of insurance. It does not need a skilled professional education to see it. Mr. McCurdy, there- fore, was teaching only a rudimentary truth when pointing out in his letter published it the Marine Review that the prevention of careless nav- igation and unneg¢essary loss to underwriters is a matter of direct con- cern to the ship owner. Whoever denies this must be prepared to defend the proposition that the ship owner has no cause to feel any desire for _ the retrenchment of his insurance expenses. Of course it is to the interest of the ship-owner to work for any object that will bring reduction of his insurance charges, just the same as he would work for a reduction of his charges for coal and provisions. Increased losses, by causing an appeal to the first law of existence of the insurance company cause increased premiums, and these come out of the pockets of the ship-owner. Reduced losses by increasing the insurance profits calls in increased competition, _which causes reduced premiums, and the savings herein stay in the pockets _ of the ship-owners. Therefore, increased losses are at the cost of the _, Ship-owner and reduced losses are his gain, provided a sufficient series of years is taken to permit the principle to work itself out. Mr. McCurdy asked the ship-owner not to allow this home trust to _ be obscured by the circumstance of the intervention of the insurance .company. He pointed out that in the long run the insurer gets but a _ moderate profit for his work. It consists of the differences he gets a chance to retain between the great masses of funds flowing into his hands . from the owners as premiums, and flowing back again to the owners as losses. This was an argument teaching the owners from the standpoint of enlightened self-interest not to be indifferent to any Opportunity to train their masters to careful navigation and avoidance of loss. There us not the slightest reason to doubt that the owners who read Mr. Mc- Curdy's article understood and appreciated his meaning. _The editor of Fairplay here sounds a flourish and points out with a su- _pberior air that Mr. Mcurdy has used a word in his description which is legally an inaccuracy. It is surprising, thinks this editor, that Mr. Mc- Curdy should allude to the insurer as but a "custodian" of funds for the shipowners. Of course only "clubs" are that. Underwriters of com- _ panies are custodians only for their stockholders. Witness the fact he _ says, that when winding up annual accounts they keep their profit or stand their loss on the year's operations without dividing either with the ship- Owner. _. True, but whe are the stockholders, in the long run custodians for? REVIEW. The accumulations of companies are publicly held out to assure their policy holders all the more infallibly that the great laws of inflow and out flow which have been described shall ever go on-evenly, free from danger of diversion at expense of the policy holder, to make good any specific errors in management. Therefore, McCurdy's term though technically untrue was in the large view wholly true, for it carried an important and sound generalization. What value is there in anyone's interrupting Mr. McCurdy here and pointing out that at the end of any year's operations the insurance company keeps its profits or swallows its loss, without, for the time being, dividing either with the policy holder? Does the editor of Fairplay suppose that either Mr. McCurdy or the ship-owners whom he was addressing did not know that? Does he suppose that Mr. Mc- Curdy was missing the specific legal facts when surveying the large workings of a natural law? He should rise to Mr. McCurdy's meaning, His assumed correction of Mr. McCurdy's terminology is insignificant and unserviceable. The editor of Fairplay deprecates Mr. McCurdy's concerning him- self with causes of loss and their remedies, and recommends that the underwriter confine his attention to his premium account and let owners find out for themselves, on the spur, if need be, of increased insurance expense, the necessity as well as the ways and means of reducing losses. This is good theory. Apply it strictly and you have a cold business; like relation between assurer and assured; party of the first part--party of the second part. Of course the theory lies at the foundation and should not be dispensed with. Mr. McCurdy is willing to engraft upon it a friendlier relation with his clients. Assuming that the owner wishes to save, Mr. McCurdy is willing to help him to know how. The machinery of an insurance office enables it to know and classify much that is. useful for this purpose. Mr. McCurdy offers his unreserved help and sug- gestions and interests himself to urge the owner, in the light of his own interests, toward these reforms. Instead of the narrow, unsympathetic view of the relations between insurer and client, it will again be observed that Mr. McCurdy substitutes a broader view. He finds a broad com- mercial basis for a common footing. Doubtless he is willing that his competitors should content themselves with the limits prescribed by Fair- play. Mr. McCurdy's initial declaration being the necessity that under- writers should at all times charge an adequate premium, and as this prin- ciple is the very foundation of his remarks, nothing could be more un- warranted than for the editor of Fairplay to assume, as he does, that Mr. McCurdy's plan is to involve "accepting business at insufficient rates." To an impartial observer it would seem that the editor of Fairplay does not strengthen his argument on an interesting subject by insinuations of this sort. Since writing the foregoing I have noticed another article on this subject in Fairplay. The editor in these further remarks plays upon the legal definitions which apply with sharp distinctness to the relations that arise in the case of a single owner taking out insurance for a single year. It seems necessary to inform the editor of Fairplay in order to bring him on to the plane of Mr. McCurdy's remarks, that the majority of owners will continue in business more than a single year. Also that owners are capable of sensing their interest as a body and cooperating as such towards reducing insurance expenses. The further the editor extends, in this way, the borders of his mental vision, the more he too will realize the essential truth of what Mr. McCurdy has laid down. : Draft of Water in Detroit River. Draft of water in the vicinity of Ballard's reef, Detroit river, has been below the 17-foot mark several times during the past week. Following are the gauge readings furnished to the Lake Carriers' Association by Duff & Gatfield: DATE. DRAFT. WIND. OG ra sO) a tiles tre neiaces tens ecmecorchiaracense TY Ses 8} = shite N. W., fresh. Crm mec eesTUld Clit PE bere torneteitessoeeet nee cectseleot 17 ft.4 in N., fresh. O Cty a. Orr Glas ant ions edecsicecce este cescienccseete Velie oeseein N. W., light. Cid Neh hl OOM ever. oher seem oseetecseee stores Wistt. 32 in. N. W., fresh. 6666 BPs Mer sseeeeees seeeeees ceeeeseeeseeees 17 ft. 64 in. W.., fresh. Ce MecmeTIML TH OU Gene gs icas. acon aesusaesosastes il ettap Gn aia W., fresh. OCHA AA: Ghatemir ce soncs cst cseenesdseaetees sacs NGeit. 95. sin, N. W., fresh. Chee MON OOM ee erent sas ceeee scorers: sesc cease 18 ft. N. E., fresh. G68 8 Tp BLogoanss0ncia o9q00000 Hayooseahescoto i etitee ors e111. N. E., light. Cote PeRTUUL GLIA baits tector scsi ssn ocmoeme cence Hefti K., light. OCt past BOP aoe sesresscacge do cpactuceeneiiee woes Ae feels lee atta S. W., fresh. Keen Cel OON cece se cauueshe sociale erie: etences AG pitti in. S. W., fresh. £6, Hag CTs ODP MTL lata ia isla Sebsisiec Neletod st wwitlcge scarce life Ole ints S. W., light. coer cop nl Gi lnteeee oss eat te. oatewacestaee sees ieee: in. N. W., light. OG: 59%), G asptneeeecie steric sn ote sslesbateiccs «se We ity aba N. E., light. Cepcs all OON Miners ade cuieciva de Satie cenes teh eclehissee Lyi vier adn N., moderate. 6666 OP. Mereeeeeesecsesseerrereeeeeenereeeees i ft5 Ae sin. N. E., light. Cee Camp TUL CLE Ora tements ne ecioemc eedsect ins sce ale 17 ft. 10 in. E., light. O ctr MG Rae terse eccaicoceuceesoreseeeidicoten ee Ui iehite Oa alt N. E., light. KceeaC OETIOO Merctecnnse Nace echucpanss ceuwetvesses (ashe oasis S. E., fresh. ir Comm Onpoptidr en citscioeas sscecscekccccacecnceses efit Op eitis K., light. Cee ry ITM TING aea es nap nse esececenc cee css A(t eg dete tile S., light. Octaeeliln Oiaspmi rows tsspocsiateatsieccsce cs ses Mette Oss ott. S. W., fresh. CE CopMMl OOM eccscenss votesesguicsleeccccserenes WetitenOe seins S., fresh. Cipren Calne Tee MMe ccs face sesc cece csiateisseaasee ss (efit Onedn S., fresh. CceeacrreTNTG TT Git isetecCaseccs mawecticeimacie'e liehitaeoi Shit. S., fresh. O Ctrl Ze Grae te rsiccccsccvavckaes cases secae' dette lee citi W., light. Commie ce OOM ca senacst.. satcrasecdiicearcccesees Ovit Oe 21 W., strong. Dr. Nelson P. Hulst of Milwaukee, well-known as superintendent of the Pewabic iron mine at lron Mountain, Mich., has been appointed gen- eral superintendent of the Carnegie-Oliver mines, including those on the Mesabi and Gogebic ranges, as well as the Pewabic. Capt. F. A. Baily has taken command of the whaleback steamer Thomas Wilson, and has been succeeded in the steamer Schuck of the Gilchrist fleet, by Capt Butts, formerly of the steamer V. Swain.