would regulate freights, etc., and protect the people? And yet the commissions, whether wisely or unwisely, have been established by law! Next to railroad companies, in the universality and intimacy of their relations with the public, we have insurance companies, and whilst in the nature of their franchises, they differ in many respects from the former, yet there is analogy sufficient to apprehend that the causes which led to the hostile legislation against the one may invoke it against the other. Naturally, the question presents itself, how are insurance companies successfully to conduct business except in the methods now pursued by them? Whilst the response may not properly fall within the purview of this paper, I will venture to make one or two suggestions, which result from observation in the settlement and defense of cases brought against them. First, invest a considerable portion of the large sums now annually expended for adjustments, in active, constant, and rigid inspection of risks, not more with a view to the moral and physical hazard, than to the amounts to be carried. Whenever, without serious detriment, the local agent can adjust and pay a loss, intrust the settlement to him. It is true that the number of disputed claims is insignificant as compared to those paid without question, but one controversy will embitter an entire section, should the assured have the respect and confidence of his neighbors. If to the number of controverted claims are added those in which the settlements have not been perfectly satisfactory, the percentage would be increased. Companies labor under a great delusion when they assume, that because they have taken up the policies of the assured by prompt payment, the settlement is satisfactory. If an attempt, though unsuccessful, has been made to reduce the loss below the amount paid, the assured, in a vast majority of cases, become intensely prejudiced to the entire business. He can never comprehend why, if his friend, the local agent, is qualified to make the contract, he is not also competent to conclude the settlement. Observation will demonstrate that an overwhelming proportion of the controverted claims result from the inefficiency of local agents, and the beneficial effects of careful work done in their selection and education, will immediately be felt in every department of the business. Companies may not secure such close settlements, but a great stride will have been made towards the conciliation of that spirit of active hostility now manifested by the legislator and the juryman. Let the local agent promptly pay every loss which an ordinarily intelligent person would be competent to fairly estimate, and let no person be appointed local agent who is not ordinarily intelligent. Again, let the agent or adjuster who determines the amount to be paid, be liberal in estimating values. To most insurable property, two values may be said to attach, the one such as would be placed thereon by the average citizen, the other such as would result from the close calculation of the cost of every element which is included in the property covered. Where is the man who has erected a house within the estimate of the architect? Where is the man who has constructed exactly at the sum named by the contractor? If the premium at the inception of the contract, which enters the treasury of the company, is based upon the value to which allusion is first made, why should not the estimate by which money is taken out of the treasury of the company, be fixed by the same standard? The honest property owner procures insurance from his friend and neighbor, the local agent, to the amount which he has always regarded as the value of his house. A loss ensues, and a stranger, full of figures and fractions and rules, takes the place of the friendly agent for the purposes of adjustment, and he applies an entirely different rule of estimating from that adopted when the premium was paid. No matter that such is the letter of the contract, public sentiment will never sanction its rigid enforcement! Courts may instruct juries in the most imperative manner, but the ver dicts rendered always evince that even among men consecrated to the discharge of a public service, the prevailing sentiment overrides even the sanctity of an oath. Another cause of this hostile legislation is, that the enormous surpluses and reserves held by the successful insurance companies, after payment of large dividends on the original stock, is attributed by the general public, not only to high rates, but more especially to the fact that the settlements of fire losses demonstrate that in a large percentage of cases, the corporations are, day after day, year after year, receiving premiums on values, which, in the case of fire, will be shown to have had no existence. It is useless to respond that the owner knows better than any one the value of his property, and the amount that ought to be carried! If a fire takes place, the adjuster will, much more readily than the owner, put a value thereon. Therefore the conclusion is reached that these corporations are annually storing away, or distributing among the stockholders, money for which they gave no consideration whatever. It is useless to point to the Chicago and Boston fires, to the immense percentage which expenses and losses have consumed of premiums, etc.; the fact remains, that the companies habitually receive premiums based upon valuations, which they will repudiate if fires ensue. "The mischief," says the legislator, "is manifest; where is the remedy?" The valued policy law is the response! So much for the causes which have led to this hostile legislation! That the evils complained of do not justify the remedy proposed, I will now attempt to show. (2.) The great curse of the world is too much government! The spirit of our institutions has always been ineradicably opposed to what is known as "paternal government." If man has reached that condition of enlightenment and civilization, which capacitates him for self-government, it may be laid down as a fundamental proposition, that the less the law making power has to do with controlling him in his business methods, the better. Protect his life, his liberty, and his property, educate him sufficiently for ordinary purposes, strengthen the family ties by the sanction of law, guard his right to participate in the government, and to worship his God as his conscience may dictate, and launch him for weal or for woe! This I believe to be the true theory of our republican institutions, and all legislation which tends to restrict his free action seems to me contrary to public policy.* If a citizen, competent to manage his own business interests, is willing to contract with an insurance company for an open policy upon his property, why should he not be permitted to do so? Why should the advocates of the valued policy compel their fellow-citizens to procure that form of contract, or to remain uninsured? Should not both classes be permitted to contract for open or valued policies, for specific or floating insurance, etc., as their judgment may approve? Insurance companies cannot force their customers to take open policies, any more than the latter can compel them to issue valued policies. There are several ways in which there could be marked improvement in the methods of conducting the insurance business, viewed from my standpoint, but the changes must result from competition and experience not from arbitrary legislation. If this valued * * "One result of all the new State interference is, that the State is being superseded in vast domains of its proper work.' While it is reaching out on one side to fields of socialistic enterprise, interfering in the interests of parties in the industrial organism, assuming knowledge of economic laws which nobody possesses, taking ground as to dogmatic notions of justice which are absurd, and acting because it does not know what to do, it is losing its power to give peace, order, and security. * * I have examined a great many cases of proposed interference with free contract, and the only alternative to free contract which I can find is 'heads I win, tails you lose,' in favor of one party or the other. Which may we better trust, the play of free social forces or legislative and administrative interference? This question is as pertinent to those who expect to win by interference as for others, for whenever we try to get paternalized we only succeed in getting policed."-Professor W. G. Sumner, in North Am. Rev., August, 1887. * * * policy law is a step in the direction of paternal government, let us at least be American, and move at once to what is the logical result, namely, "Insurance by the respective State Governments." I could present some plausible arguments in support of such an innovation, had I the time. Experience has demonstrated that every man with property should be insured against the loss resulting from contingencies beyond his control. Why should not a small additional tax be collected in consideration that in case of loss by fire, the public treasury should respond? An honest administration of such a governmental scheme would result in cheap insurance, and would prove a lion in the path of incendiarism and fraudulent claims, because the legislative, judicial, and executive powers would all be brought into full play to punish the criminal and to protect the treasury. The details could be readily worked out, and doubtless much money would be saved to honest taxpayers, who now have to meet, in the shape of increased rates, the loss resulting from frauds successfully perpetrated. But such a scheme would not be in consonance with our institutions, and no legislator of the present day, would propose it. Yet, I maintain that it is but the logical sequence of the principle upon which the valued policy legislation is based! Closely related to the valued policy laws are the bills prohibiting the removal of cases to the United States Courts, requiring the reincorporation of foreign companies desiring to do business in States, and prohibiting the formation of associations of companies, etc., for the purpose of regulating and maintaining rates. All of these are contrary to the general policy of our system of government. The Constitution of the United States provides that the "judicial power shall extend *** to controversies between citizens of different States." Congress has declared how this jurisdiction shall be maintained and exercised by the courts. Under these circumstances the Legislature of a State enacts that a foreign corporation, as a result of exercising a right guaranteed to it by the Consti |