Early in 1797 Boston citizens became enthusiastic over the constitution of the New York Mutual and, hopeful of securing lower rates than from the stock companies, they drew up a constitution and in March, 1798, secured a charter. Heading the list of petitioners for the charter was Moses Michael Hays, a well-known Jewish underwriter. Others were Paul Revere; James Sullivan, of the Middlesex Canal and Boston Aqueduct companies; Samuel Salisbury, who had been an incorporator of the Massachusetts Fire in 1795; and William Parsons, the next year a director of the Boston Marine. Policies could not be written till applications for insurance amounted to $2,000,000. Very low rates were advertised. By December the requisite applications were in, and on Feb. 1, 1799, policies began to issue. Evidently many applications were rejected or soon withdrawn, however, for in May, 1800, it was stated that $940,000 was insured, "of which is in the country" - this despite the fact that up to this time no loss whatever had occurred.1

The Massachusetts Mutual Fire survived for seventy-five years the last of Massachusetts eighteenth century insurance companies. In 1855 it reported insurance in force on real estate, $14,100,710, and on Dec. 31, 1871, a surplus of $419,009. But the great Boston conflagration of Nov. 9, 1872, wiped it out, with twenty-five other Massachusetts companies.2

In December, 1794, a mutual was organized in Norwich, Conn., which secured a charter the following May. It still lives and continues to do a small local business. At present its insurance in force amounts to some $130,000, its net surplus to over $16,000.3 In December, 1797, the South Carolina legislature chartered the Charleston Mutual. In 1798 the Georgetown Mutual appeared,5 and in October, 1800, Rhode

1 Columbian Centinel, Jan. 4, Feb. 1, 1797, March 14, April 7, May 19, Aug. 4, Dec. 8, 15, 1798, Feb. 6, 1799, May, 1800; Hardy, Early Ins. Offices, 78-79. 2 An. Reports of Ins. Commissioners of Mass. (1855), 156; (1872), 41; (1873), p. l.

• F. M. Caulkins, History of Norwich, Conn. (ed. 1874), 649; 49th An. Rep. of the Ins. Comsr. (1914), 105–106.

Stats. at Large (ed. 1838), viii, 195. Cf. advertisement of the Vigilant Fire Insurance Office, in Charleston, in the S. C. State Gazette, Sept. 18, Nov. 27, 1795. Bryan, National Capital, i, 337.

Island added to its two stock companies in Providence the Providence mutual Fire Insurance Company, which in 1915 reported assets over $800,000 and an income above $150,000.1

In May, 1787, the Maryland assembly chartered The Baltimore insurance fire-company, the first to be organized on a joint stock basis. Its plan was interesting. Subscriptions of £10,000 or more, current money (equal to $26,666.67), were authorized, in shares of £100. Subscribers were to deposit with the trustees, at the opening of the office, demand notes for £40, £30, £20, and £10 on each share, with security acceptable to the trustees. When losses occurred, the acting trustees were to call on the subscribers to pay to the treasurer, by a specified day within a month, sums in proportion to their holdings and sufficient in all to pay the loss; and process was provided for enforcing prompt payment. Thus no paid-up cash capital was requisite. The trustees, nine in number, must all live in Baltimore, and there the office was to be; but insurance elsewhere might be written. New shares of any amount might be issued, if voted by a stockholders' meeting, called for this purpose, at which sixty-six shares should be represented. Dividends were to be declared only once in five years. The company was established, but found its basis unsatisfactory. To the legislature, in the fall

of 1791, it was represented

"by the stockholders . . . and other inhabitants of Baltimore-town, that inasmuch as the capital . . . consists of notes of hand, convertible into money in cases of loss by fire, and that in the event of failure or bankruptcy among the stockholders, the insured might become considerable sufferers: circumstances which, by affecting the solidity of the funds, . . . operate to destroy the public confidence in the said institution."

The company was therefore rechartered as The Maryland Insurance Fire Company. The capital was now fixed at $30,000 to $60,000 in $300 shares, payable in six per cent stock of the United States or in United States Bank stock; and shareholders in the earlier company were to have six weeks' preference in subscribing to the new. The arrangements regarding the capital re

1 Annual Report of Ins. Comsr. (1915), 90–96.

mained peculiar. The securities paid in were to become legally the property of the company. Nevertheless the depositors were to receive the dividends upon them and have full privileges of holders in most other respects. No stock was issued by the insurance company, and it was the other stock, or rather the limited rights attaching to it, which was transferable. When a loss occurred, the trustees were to assess the shareholders proportionately and to dispose of the stock of delinquents, the purchasers succeeding as shareholders. Thus in effect the stock was deposited as security for payment of assessments; yet it could not be withdrawn. Assessments were limited to the par value of the stock. Yearly dividends were now provided for, as also a triennial "exact and particular" statement, to the stockholders' meeting, of debts and surplus. On this new basis the company continued with more satisfaction.1

The next company developed from a tontine association, which was itself in part an insurance device.2 Before the Boston association had emerged as a bank, but after the Massachusetts legislature refused it a charter as a tontine association, one of its projectors, Samuel Blodget, Jr., was induced by Ebenezer Hazard, a Philadelphia broker, to help float a similar association in that capital city. On March 19, 1792, subscriptions were solicited for The Universal Tontine. Blodget subscribed fifty thousand of the shares to transmit for sale in Boston, and perhaps some subscribers were secured there. For reasons which have been made clear in an earlier essay, the time was highly inauspicious for flotations, and of the one hundred thousand shares desired, but eighty-four hundred were subscribed (by one hundred and eighty-seven persons). The agents reported early in November no new subscriptions and that "Tontines in general appear to be in disrepute many who have subscribed are dissatisfied and are desirous either that the Association be dissolved or the funds be appropriated to some other use. ." Thereupon the subscribers agreed to convert the

1 Md. Laws (Kilty), May, 1787, c. 22, November, 1791, c. 69.

2 The account in the following pages is based directly on Montgomery's Ins. Co. of N. A.

* Cf. Essay II, chap. 7, and this essay, supra, 70-73. The agents' report is more

organization into the Insurance Company of North America. A constitution was adopted Nov. 19, 1792, the company undertaking "to make Insurances upon Vessels and Merchandize at Sea, or going to Sea, or upon the life or lives of any person or persons, or upon wares, merchandize, or other property, going by land or water." Next day subscriptions were opened; within two weeks two-thirds of the $600,000 capital proposed was subscribed (in $10 shares); and on December 1 organization was effected and $4 per share called in. Incorporation was immediately sought. It was represented to the legislature that with the increase in the national commerce local underwriters of responsibility were too few and that the company would benefit the community at large as well as the mercantile part of it

"by retaining in the State the money invested in their capital stock and the large sums that must otherwise be drawn from the country for premiums of insurance, by relieving commerce from the present tribute paid to foreign underwriters, and by securing the assured through the means of an ample capital stock from a possibility of loss, which in the manner of making insurance heretofore practised hath frequently happened through the failure of individual underwriters."

Corporate powers were desired

"in order to establish a greater confidence in the minds of persons who may incline to do business with them, and to enable the assured, in case of disputed losses, to have more convenient recourse to law, as well as to enable the company to prosecute their undertaking with greater ease and effect."1 Remonstrances from other merchants and underwriters were presented, and followed by memorials favoring incorporation, "from Merchants, Ship owners, Insurers, and Citizens." These slept in the hands of a committee of the House till on February 28 the directors appointed a committee to seek a charter from Delaware- the move which some years before had materially aided in bringing another assembly to terms with the Bank of North America. The stratagem succeeded. The committee reported favorably March 11. The advantages of a corporate organization were set forth - the greater ease of recovery in intelligible when one recalls that John Pintard, secretary of the New York Tammanial Tontine Association, was among those bankrupted and temporarily disgraced by the panic of March and April, 1792.

1 Montgomery, Ins. Co. of N. A., 35–37.

case of loss, the "solidity," the advantage of size. They remarked precedents in other countries and for fire insurance in America, and the fact that no exclusive privilege was sought. They pointed out "That already the charges of insurance have been considerably abated since the establishment of the company whereby a great saving to the mercantile body is affected, who can afford to give so much more for the produce, as they pay less for insuring it" - the last a persuasive touch for the benefit of country members. A bill was accordingly reported April 1, but the assembly adjourned before it could be put through.

The company had not waited to begin business, and in July, 1793, a six per cent dividend was declared on the paid-in capital, followed six months later by another. Such success as this transformed the opponents into would-be competitors. Asserting the advantages of competition and that they had been unable to secure shares in the earlier company, they petitioned for a charter providing "that those who are more immediately interested in commerce may have an opportunity at subscribing thereto." The upshot was the passage of two charters in April, 1794.1

The North America company at first concentrated upon marine insurance. Premiums rose from $213,465 in 1793 to $1,304,200 in 1798, then declining to $103,902 in 1802. The first decade showed a surplus over losses of $536,569 on premiums of $6,037,457. In 1794 plans were adopted for the insurance of the contents of buildings against fire, which existing fire companies were not insuring, and of buildings themselves. At first exclusively on town risks, the fire policies were extended in March, 1795, to risks within ten miles of Philadelphia, and in April, 1796, to any point in the United States. Advertisements were placed in distant cities, such as Boston, but in 1798 the board refused to establish an agency at Charleston. On this branch of the business the surplus of premiums over losses to the end of 1802 was $51,137 on $81,254.

1 Montgomery, Ins. Co. of N. A., 35-44; Pa. Stats. at Large, xv, 41-48,