INSURANCE COMPANY OF NORTH AMERICA. INCORPORATION. WITH this review of the early schemes of under- writing in Philadelphia, there can be formed some idea of the extent in which individual capital was interested in ventures by sea, and how favor- ably was received on its announcement, the plan of organization in which those seeking the uncertain profit of underwriting, could become shareholders in a reputable institution, and leave the direction and character of their ventures to a. Board composed of responsible and intelli- gent gentlemen. The new Board of the Insurance Company of JN"orth America met the day following their election, 11 December, 1792, at the City Tavern, that well-known place of resort in those days, which was situated on the west side of Second street, north of Walnut, on whose site was after- wards erected the Bank of Pennsylvania, now in its turn displaced by the Government Warehouse, which covers the entire lot between Second street and Dock street, and G-old and Lodge alleys. All the Directors were present, and Mr. John Maxwell ^Tesbitt was unanimously chosen President, and Mr. Ebenexer Hazard, Secretary; and the Directors divided themselves by lot into committees- of two. Gen. Stewart, Mr. Moylan and Mr. Ball were appointed a com- 36 A HISTORY OF THE mittee to petition the Legislature for a charter, and prepare a bill for that purpose; and the Secretary was directed to prepare a draft of a marine policy for their consideration. Messrs. Ross, Pettit and Miller were a committee to make a table of the lowest premiums as a guide to the sitting' committees; and Mr. Ross, Major Moore and Mr. Leamy, a committee to provide suitable offices for temporary accommodation of the Company, and were authorized to make such arrangements, with the approbation of the President. On Friday, 14 December, the Board met at six o'clock, P. M., in their own offices in the brick building ~So. 119 (now 213) south Front street, which they leased to 1 May, 1794, at £100 per annum, from Mr. Thomas Mackie, who occupied the building, which was owned by Mr. John Mifflin. On the day following, 15 December, their first Policies were issued. G-en. Stewards committee, under their instructions, pre- pared a petition to the Legislature, and three copies of the Memorial were made, each signed by all the Directors respectively for the Governor, the Senate, and the House. Messrs. Stewart, Moylan and Miller were appointed to carry it to the Governor; Messrs. Moore, Leamy and Cramond, to the Senate, and Messrs. Barclay, Eoss and Pettit to the House. Its text is important as showing in a formal manner the substantial reasons for the char- tered establishment of such an institution, and is as follows: To the Honorable the REPRESENTATIVES of the FREEMEN of the Common- wealth of PENNSYLVANIA in General j4j[[embly met. The petition of the INSURANCE COMPANY OF NORTH AMERICA. 37 Directors of the Infurance Company of North America, in behalf of the faid Company, MOST RESPECTFULLY SHEWETH That your petitioners, attached to the public welfare, behold with the greateft fatiffaction the commercial purfuits and interefts of the United States becoming daily more numerous and important; but they have long regretted that, for want of fufficient number of underwriters of responfi- bility in the principal cities and towns of the United States, commerce is burthened with the charge of commiffions to European correfpondents for effecting infurances, and large turns of money are confequently drained from the country. That thefe confiderations have induced a number of the citizens of this Commonwealth to raife a fund for the purpose of infurance and to affociate themselves under the name and title of The Infurance Company of North America, upon the principles contained in a plan which they have the honor with this memorial to fubmit to your perufal. That your petitioners humbly conceive that confiderable benefits will refult from this affociation as well to the citizens of this commonwealth in general, as to the mercantile part of this community in particular, by retaining in the State the money invefted in- their capital stock and the large turns that muft otherwise be drawn from the country for premiums of inturance, by relieving commerce from the prefent tribute paid to foreign underwriters, and by fecuring the aflbred through the means of an ample capital stock from a poffibility of lots, which in the manner of making infurances heretofore practifed both frequently happened through the failure of individual underwriters. The whole number of mares into which the capital (lock of the com- pany is divided, being already fubfcribed, the affociation are prepared to enter upon the profecution of their intended object; but in order to eftablish a greater confidence in the minds of perfons who may incline to do businefs with them, and to enable the affured, in cafe of difputed loffes, to have more convenient recourfe to law, as well as to enable the company to prosecute their undertaking with greater ease and effect, your petitioners are advifed to apply to the Legiflature for an act of incor- poration. Your petitioners, therefore, confiding, from your experienced patriot- ism, that every opportunity to advance the opulence, the ease, and independence of the citizens, will be cheerfully embraced, pray your aid in the premifes, and permifsion to bring in a bill of incorporation for the purposes aforefaid. 38 A HISTORY OF THE This with the accompanying form of Constitution, drafted by Alexander James Dallas, were presented in person to the House and Senate on Tuesday the 18th December, and the next day the Memorial was read twice and referred to a Committee consisting of Messrs. Swanwick, Forrest, Turner, Eyerly, and Gallatin to make report thereon. Opposition, however, was soon presented to their project, for on the 29th, "a petition from a number of the mer- chants and insurers of the port of Philadelphia was read remonstrating against the prayer contained in the petition of the Directors of the Insurance Company of North America," which on 3 January, 1793, was read twice and referred to the same committee. This was met on the 12th by "Memorials from a number of the merchants, Ship owners, Insurers, and citizens of the port of Philadelphia, praying that the Company stiling themselves the Insurance Company of North America may be incorporated," which were on the 14th in turn referred to the Committee; and these were followed on 5th February by another petition to like effect. The month passed without any action by the House, nor did the Committee submit their views; and on 28 February, the Directors appointed Gen. Stewart and Messrs. Blodget and Ralston a Committee to memorialize the Legislature of Delaware for an Act of Incorporation, and to draft a Bill for the same; but the Journals of the Delaware Assembly give no evidence that a memorial reached that body. This move of the Directors, and which they did not con- ceal, brought from the Committee on 11 March a favorable report to the House, in which is disclosed the motives of INSURANCE COMPANY OF NORTH AMERICA. 39 the opposition, and consequently merits here a perusal, and is as follows: That they confider the welfare and profperity of the agricultural intereft of the State, as infeparably connected with that of its com- merce and navigation. That no commerce or navigation could be beneficially conducted with- out infurance, no body chusing to commit confiderable property to the ocean, without guarding againft the numerous accidents to which it would be thereby expofed. That infurance cannot be to well conducted by individuals as by an incorporated company, for want of that identity that would enable such a company to be fued in cafe of lots, where juftice could be had much more fpeedily than in fuing every feparate underwriter to a policy, a work of fuch immenfe expence and lots of time, as frequently to defeat entirely the object of infurance. That solidity is alfo to be confidered, which it is impoffible to attain with certainty with private underwriters, whereas this Company's pro- pofed capital of 600,000 dollars in the public funds, will be a sufficient guarantee to thofe who employ them. That already the charges of infurance have been confiderably abated since the establishment of this company, whereby a great faying to the mercantile body is effected, who can afford to give to much more for the produce, as they pay lets for infuring it. That the number of perfons underwriting in Philadelphia, does not at prefent exceed about fifty, and the risques they take, being on an average only about £200, on a single bottom, of courfe only about .£10,000 can now be infured at the different offices here on a single risque, which occafions a drain of money for infurance to Europe, or to the neighboring States, very prejudicial to the body of this one. That it is not in the contemplation of the petitioners to exact or ask for themselves any exclusive privilege of infurance, to that thofe private underwriters, or any others, may ftill go on to infure, as heretofore, for thofe who will employ them; confequently that only a competition on a more enlarged fcale will enfue very beneficially to the carrying on of the businefs in queftion. That in almost all commercial countries fimilar incorporations exist; that in our own there are such for infuring houfes from loss by fire, it 40 A HISTORY OF THE would not be eafy to ftiew why the prefent Company fhould not be incorporated on the same or like principles. For thefe reasons the Committee fubmit the following refolution: Refolved, That leave be given to the petitioners to bring in a bill conformably to the prayer of their petition. On the 30th of March, this report was taken up for a second reading, and the Resolution adopted, and on the 1st of April the bill was reported, but on the llth, the Assem- bly adjourned. The opposition of the private underwriters had thus prevailed effectually to postpone an early incor- poration, for a chartered organization threatened their own continuance in business, and their profits had already been diminished by a reduction in premiums. But the payment by the Directors of a six per cent. dividend on the paid subscriptions on the capital in the following July, threw the opposition on another plan of attack, for the pecuniary success of the Company had been so great and rapid as to lead its opponents to depreciate the chartering of only one such organization, and they hastened to appeal that the Directors of the ^Torth America should not be the only favored ones; and the contest remained on this ground at the following annual session of the Legislature. On 9 December, 1793, the Directors recorded a minute, " That the Directors take opportunities of conversing with the City members of Assembly to gain their interest in favor of our application for a charter," and on the following day the bill was reported to the House among the unfinished business of the former session, and on the llth was referred to the City members Messrs. Hiltz- heimer, Latimer, Swanwick, B. E. Morgan and Kammerer.
INSURANCE COMPANY OF NORTH AMERICA. 41 On the 13th the Directors again memorialised the House, and on the 16th "the petitions for and against read in the last House,'5 were now again read and referred to the same committee, to which were added Messrs. Maffoffin and 0 Jacob Morgan. Another six per cent. dividend in Jan- nary added force to the struggle, and delay yet held the day. On the 20 January, 1794, Messrs. Pettit, Stewart, West, Ralston and Forde were appointed to wait on the members of Assembly to nrge the passage of the bill, doubtless foreseeing the renewed attempt to thwart their plans, for on the 27th " a petition from divers merchants of the City of Philadelphia was read, suggesting the impropriety of incorporating the present subscribers to the Insurance Company of ;North America, and praying, that should the Legislature deem it proper to pass an Act for the incorporation of an Insurance Company, the same may be done in such manner, as that those who are more immediately interested in commerce may have an oppor- tunity of subscribing thereto, under such regulations as the Legislature have heretofore directed with respect to other incorporated Companies." This was read a second time tlie following day and was referred to the Philadelphia members, and on the 31st, they reported favorably. The report of the Committee is long, but forms an interestino- — & document, amplifying the statements presented by the Committee of the previous session as to the value and need of sound and responsible indemnity in a mercantile com- munity like Philadelphia. Portions of it are entitled to a place here. 42 A HISTORY OF THE * * * * As it is impoffible for a merchant, with fafety, to hazard, unprotected, his property, on fo uncertain an element as water, which is fo liable to prejudice or endanger it, it becomes euential to the farmer, miller, or manufacturer, that he mould infure it. Infurance is an undertaking on the part of one or more individuals, in proportion to the turns they. refpectively take or subfcribe, to bear harm- lets the merchant in this export trade. This inturance is effected in two ways, one by private affurers, and thefe give pertonal tecurity only for what they undertake ; the other is by public companies, and these mortgage a public and known capital for their tranfactions. The cheaper infurance is done, the better price the farmer or manu- facturer will obtain ; for this being one of the charges in transportation of the turplus, it mutt, of courte, be underftood or reckoned in the valuation of it. ^!f;***!fi*** Private underwriters only afford a precarious dependence in a country ; it expofes the trade to depend too much on the fears or caprice of a few individuals,; their tecurity alto being pertonal only, is uncertain—and in case of great events or loffes, as has often been experienced, it proves inadequate to the occafion. Public underwriters only would be dangerous as a monopoly, though the security be more perfect from the capital depofited. It therefore retults that a wife government ought to encourage both thete clafles of aflurers; to act in competition with each other with the affured, it remains which he will prefer. !)!******** If, therefore, the public company offers a large and known deposit tor security, in lieu of private refponfibility, it is for the benefit of the public to accept the compromite, inafmuch as a known depofit or mortgage, is better than a precarious pertonal retponfibility, fubject to so many vicifi- tudes. If, therefore, the companies for infarance prayed for be incorporated, it is obvious that all private underwriters are tree as before to underwrite, but a new capital is tuperadded to make new inturances by the company, and that which augments the quantity of any beneficial kind of labor, cannot but of neceffity be uteful. If the profits mould be great, new companies will arite to (hare them, and as no exclusive privilege is granted, the Legislature may always INSURANCE COMPANY OF NORTH AMERICA. 43 countenance fuch new undertakings, when they find the propofals engaging. For these reasons the committee are of opinion it will be advantageous for the community to incorporate, on fuitable conditions, the Infurance Company of North America, as from their meritorious exertions during the late hazardous periods of war and foreign rifque, the commerce of this and other States have been materially benefited by the .exertions of the company; but as a number of the {hip owners and traders of Philadelphia, from local circumftance, have not been able to obtain (hares in this com- pany, and there is reafon to believe that more than one company may be employed at the prefent period of difficulty to American commerce to much advantage, and greatly to the fecurity and emolument thereof; therefore your committee recommend the following refolutions to be adopted by the House, viz. : Refolved, That a Committee be appointed to bring in a bill to incor- porate the Infurance Company of North America, now exifting in this city, for the purpofes prayed for. Refolved, That a Committe be alfo appointed to bring in a bill for organizing and eftabliflling a new Infurance Company in the faid city of Philadelphia, to be carried on under the firm or denomination of " The Infurance Company of the State of Pennsylvania." Thus was originated the second Stock Insurance Company in the Commonwealth. On the 1st of February this report was read a second time and a committee appointed, viz.: Messrs. Hiltzheimer, Swanwick, B. Morgan and Kammerer, to bring in a bill, which, however, they did not report until the 22d, with one also for the State of Pennsylvania. From this date there seemed to be an effort, by moving amendments to the former, to delay it, and the latter passed the House on the 13th March, while the ^orth America reached its passage on the 14th. The bills reached the Senate in like order, and on the 20th they were both made the order for tlie 26th. The ]^"orth America charter secured the precedence, and on 44 A HISTORY OF THE the 28th it passed with a few amendments, and sent to the House, which concurred on the 1st of April. The State of Pennsylvania bill reached its passage on the 3d of April. The former was signed by Governor Mifflin on the 14th, and the latter by him on the 18th of April. The bare legislative record of this struggle can only afford glimpses of the ardor with which the contest was continued against the new enterprise, first on one ground of opposition and then on another; but the two incorporations, born of the contest, have honorably stood side by side without a memory of the work of 1793, and have passed through together many a crisis of underwriting and still live to show the strength of their Constitutions. Section 4 of the Charter provided for twenty-five Directors, "and that in case any Director shall be chosen a Director of any other Insurance Company and shall act as such," his place was declared vacant. To this condition was due the loss from time to time of some influential Directors, who, becoming interested in new organizations, gave their energies to planting them, at the loss of their official connection with the older corporation. Thus on 13 November, 1794, Messrs. Archibald McCall and Thomas Fitzsimons, being elected to the Direction of the Insurance Company of the State of Pennsylvania, their places were declared vacant; and on 1 August, 1803, Mr. Ball, the former President, Commodore Dale, Mr. Lewis Clapier, and others, became thus ineligible and their places declared vacant, the three gentlemen named having become interested in the new Union Insurance Company just incorporated. On 28 January, 1813, on which occasion the President and INSURANCE COMPANY OF NORTH AMERICA. 45 Mr. Henry went to Harrisburg, sundry amendments were made, one reducing the number of Directors to fifteen, and another granting an enlargement of the field for investment, when an extension was granted to 1 January, 1835. On 3 April, 1833, an extension of the charter was granted for twenty years from the last limit named; and on 11 October, 1839, the same was made perpetual, with a view to write perpetual risks. By Act of 6 April, 1842, consent was given to reduction of the capital to $300,000 the par value of shares being five dollars. On 11 February, 1845, a new supplement authorized an increase in the number of Directors to twenty, without repealing the condition above recited of 14 April, 1794, which was repeated in the supple- ment of 28 January, 1813. By Act of 8 May, 1850, authority was granted to restore the Capital to the extent of five hundred thousand dollars and the par value of the shares to ten dollars. On 27 February, 1854, authority was given the Company " to appoint agents or officers, effect insurances in any of the other States of the "Union or without its limits, and that contracts of insurance effected by such agents or officers, shall be as valid and binding as if the same were effected by the President and Directors." On 14 March, 1871, authority was given to increase the capital to one million dollars and the par value of the shares of stock to twenty dollars; and this supplement repeated the powers of the company in marine, fire, and life in- surances, as recited in section third of the original act. The supplement of 1 May, 1876, to an act to establish an Insurance Department (of 4 April, 1873), permitting any existing company to increase its capital stock by vote of 46 A HISTORY OF THE Stockholders, providing the same be certified to the In- surance Commissioner; the Company accepted at a meeting of Stockholders held 10 July following, and under the con- ditions of the supplement, their action had "the same force and effect as if a part of the Company's original charter or constituting a supplement thereto"; and forthwith the capital was doubled, making it two million dollars. And on the 15 November, 1880, a further increase of one million dollars was made, the shares being allotted to Stockholders at a premium of ten dollars each; the Directors believing that the soundest extension of the Company's means was by an equal increase of its capital and its reserve.