Insurance pays 6/8 of $4,000, equals $3,000, and assured stands 2/8, or $1,000, of the loss himself, thus becoming a co-insurer. Now, the reason for insurance companies having such a clause is that they can afford to insure certain classes of property at a lower rate if the assured will agree to carry sufficient insurance to make it improbable that the companies will be called on to pay the face of their policies when only a portion of the property is destroyed. If all fires produced total losses there would be no need of such a clause, but the great majority of fires in towns having water works and fire departments produce only partial losses. The insurance company gives another example: Assume that rates were the same, with and without co-insurance, that A and B each own buildings side by side, worth $50,000 apiece, and that this Company issues a $10,000 policy on each building. Suppose A carries a total of $40,000 insurance and B carries but the $10,000. Now, a fire occurs and damages each of these buildings $10,000. Both A and B are paid in full, but in A's case our $10,000 policy contributes but $2,500, while in B's case we pay the face of our policy. Had we issued a policy for the entire $40,000 for A, this Company would then have paid the entire $10,000, but would have still been paying but one-fourth of its policy and would have received the premium on $40,000 insurance. Now, certainly A is entitled to a lower rate than B because the chances are much less that in his case the insurance will be all paid out. Consequently this is a plain business proposition and becomes a matter of rate, and while it is at present deemed impracticable to apply the clause to dwellings, farms and certain other property, it is in very general use on business risks. A simple chart showing the practical working of the co-insurance clause as it would have applied four years ago compared with present conditions with property values 100 per cent higher is used by the Globe & Rutgers Fire Insurance Company of New York, to explain this point graphically. The Insurance Committee recommends that members of the Association review their protection on all properties with the above information in mind in order that they may be assured that their fire risks are properly protected. S. E. WOLFF: The Insurance Committee, being a new committee, had the same difficulty that every new committee has in getting started, and its work is by no means completed. I think, with regard to insurance rates on electrical vehicles, based on the experience of all vehicles, that the owners of that type of equipment are paying probably two or three times what they should pay. There are a number of matters outside of rates which this Committee has investigated, and one of these is the matter of coverage for electrical losses. In the ordinary fire insurance policy you will find a provision to the effect that damage from electricity or lightning is not covered, and I will ask Mr. Blood to tell you what has been accomplished so far with regard to that matter. When you have an electrical disturbance and fire ensues, you have some trouble in adjusting the losses. One of the works that the Committee will undertake is the issuance of an insurance manual. Many of the electric light companies do not understand all the fine print in their policies, and when they have a loss there are a number of loopholes for the underwriters to escape at least some of their financial responsibilities. I will add one more word, and that is to urge the members in respect to these inquiries as to practices and insurance matters generally to realize what this means to them. We have already effected a saving in one case of a member company which substantially exceeds all the payments they have made for membership in this Association for a period of five years, and I urge all member companies that have not done so to promptly submit their answers to the questionnaires recently sent out. THE PRESIDENT: You have heard the report of the Insurance Committee. Are there any questions you would like to ask Mr. Wolff? W. H. BLOOD, JR.: As Mr. Wolff explained, this Committee is a new committee. It has just started, but it is well under way, and I think that next year it will show some interesting results. I have had the pleasure of sitting in with the Committee at all of its meetings and know that it has started in the right direction. There are one or two additional matters which I wish to emphasize concerning the work which I am doing, supplementing the activities of this Committee. In I should like to ask each member company, when a fire occurs in your home town, to have some competent man investigate it to find out the real origin. of the fire. If you can have it made clear before the decision is published that it is not of electrical origin (unless, of course, it is evident that it was an electrical fire), you will help a good deal in improving the reliability of the final statistics published by the Actuarial Bureau of the Underwriters. other words, the origin of the fire is frequently determined and reported by the Fire Commissioner or Chief of the Fire Department immediately after the fire, and from that report the statistics which show the fire losses in the country are made up, and it is very important to get the data accurate. This matter has been called to your attention a number of times, but the suggestion has not been followed very generally. In the case of the Dayton Company, however, the company co-operates with the Fire Marshal, and it has been successful in removing many inaccuracies in the official reports on the causes of fire in Dayton, Ohio. It is very desirable that all important fires attributed to electrical causes should be reported to your Insurance Expert, because the news items appearing all over the country regarding the origin of these fires frequently contain a certain amount of misinformation. Many times I have seen headlines in the newspapers which ascribed the origin of fires. to "crossed wires" or "short circuits," where an investigation developed the fact that the fires were not due to electrical causes. The damage is done by the publication of the original statement and the misinformation is spread all over the country. It is then almost impossible to correct the original "news item." Our electric lighting companies should, I believe, do more educational work along the lines of cau tioning our customers in regard to the proper use, or rather with regard to avoiding the careless use of electric heating devices. This matter is emphasized at every Convention, and then we go home and forget it; but we must get our customers to realize the effect of the careless use of electric heating devicesnot that the devices themselves are dangerous, but the careless use of them creates the hazard. An ordinary coal stove is a harmless thing, and no one would ever think of heating the covers red hot and then putting them on a wooden floor. An electric flatiron is a harmless affair, but if a woman leaves it on a wooden ironing-board with the current on and then goes off and forgets it the results are likely to be serious. Another thing I think we should pay more attention to is to discourage, as far as possible, the use of wiring done with lamp cord. The lamp cord extensions made by high school boys and "sidewalk" contractors, and by customers themselves, have been a prolific source of trouble, and we should in every case impress upon the owner the personal risk to his family and his property that he is taking with that class of construction. Let us give the matter more attention. As you know, the National Electrical Code is revised every two years. It has now a successful organization in operation for taking care of the necessary revisions. Constructive criticisms of the Code and suggested changes in the rules should be handed to your Insurance Expert as they occur to you, because these changes are now considered only when they come through a national organization, and the representative of the National Electric Light Association who has to do with these matters is your Insurance Expert. Mr. Wolff, in his report, called attention to the lawsuits in which I have been interested, and I simply want to emphasize that the way in which these suits are handled and the decisions obtained are matters of great importance to the industry. The Insurance Expert is always ready to give free advice and assistance in all these cases. In regard to broadening the insurance policies to secure full electrical coverage to which Mr. Wolff referred, I discussed that matter with various insurance interests somewhat over a year ago, and at the start they did not seem inclined to broaden that coverage clause, but of late they have decided that perhaps they could do something along those lines. The settlement of a loss which is due partly to electricity and partly to fire has always been a difficult one. The insurance interests during the past year have become interested in this question. They have appointed committees to consider the matter, and I expect we will have some action on that subject during the coming year. I received a letter in regard to the matter since I came to the Convention, and I will read an extract from it. It reads as follows: "I believe I can safely say that the Underwriters are giving careful and serious thought not only to the electrical clause, but to other matters which we discussed when I last had the pleasure of conferring with you. "Of necessity, departures of this character require time on the part of the committee of both sides, who are busy men, and I believe that it would be unwise to attempt to unduly hasten the decision, in view of the impending vacation season when the insurance interests find it almost impossible to get a representative committee together. Therefore, I anticipate that this subject will not be decided until some time the early part of next fall." Now there are two questions: One is whether the electric light companies wish this additional coverage; and the other is whether they are willing to pay for it. And when the questionnaires come to you, I hope that you will give us definite answers on these two points. THE PRESIDENT: Is there any further discussion on the report of the Insurance Committee? If not, the next number on the program is the report of the Electrical Resources of the Nation Committee. I want to introduce to you Mr. M. S. Sloan, Chairman of this Committee, of the Brooklyn Edison Company. Report of Electrical Resources of the Nation Committee This Committee presented its first report to the Forty-third Convention of the Association at Pasadena, Cal., in May, 1920. The Committee was created by the administration of that year and prepared its report in accordance with special and comprehensive instructions from the president of the Association. This report covered four subjects: (a) the state of municipal operation of electric plants throughout the country and their relative economy; (b) a study of a movement for the extension of Public Utility Commission Control over municipal plants where such control does not exist; (c) a study of the statistical data available on the operation of the Electric Power Industry throughout the country, with a view to cooperation with the Federal Government in such a manner that the com bined resources of information would give a complete and continuing census of the electric power resources of the country; (d) a report on the state of the Electrical Resources of the Nation. In its report the Committee, in its opinion, made several specific recommendations of considerable import to the industry. Because of its report on the state of the electrical resources of the nation and a census of these resources, the Committee has followed with deep interest the trend of affairs of the industry and the discussions and comments appearing during the year in the publications devoted to its interest on vital policies affecting the improvement and future of the electric power industry throughout the country. The Committee is gratified to find in the develop ments of the year nothing which would tend to qualify or modify its premises of fact or its conclusions and recommendations based thereon. On the contrary, it is a matter of regret that the Committee finds itself of the opinion that little has occurred to relieve the situation of the industry, nor does it find any increased organized effort being made to do so. It might be said that general business conditions are so unfavorable it is not the time to attempt improvement, but in many instances the industry is called on for heavily increased service to new customers, and expansion becomes imperative. The Committee stated in its report that the difficulty of obtaining capital for this expansion and for deferred maintenance was the great problem before the industry. This problem is made still more difficult from the enormous increased industrial demand on the central station during and since the war, which is compelling the building of so-called superpower plants and their interconnections. Since the date of the last convention the industrial press has been full of discussions and descriptions covering these two issues, financing the industry and developing great efficient power plants. The discussion has come from all sides, government officials, military authorities, governors of states, commissioners, bankers, engineers, power producers, manufacturers and others. There is little real difference of opinion. The general consensus is that during and since the war the effect of the war on the money market has been such that the price of money has been raised beyond the ability of a restricted industry to pay it. In consequence its normal supply of money being cut off, the power industry cannot expand to meet the demand for electric energy so favorably developed by war conditions. If it is not met, the inefficient individual plant will again develop to take its place, and the production of cheaper efficient power retarded accordingly. The superpower plant development as primarily suggested in specific localities by the Power Section of the War Industries Board has been reviewed and discussed since the war with ever favorable comment. The Superpower Survey now being conducted under government auspices will confirm the idea exhaustively and elaborately. So, then, all concerned apparently concur that the power industry should receive greatly increased supplies of money and adequate rates should be allowed as earnings to the industry so it can command increased funds with which to build the great efficient plants necessary to meet the power demand of the future. During the past year, however, all this has produced little, if any, favorable effect on financing the industry. A number of the larger and financially stronger companies have succeeded in selling shortterm securities at high interest rates, others have sold bonds at almost prohibitive prices in the hope of carrying over to better times and rates. The smaller companies, in most cases, have had to stand and wait, seeing their opportunities but unable to grasp them. These smaller companies, representing the great number of smaller manufacturing towns, in the aggregate involve a greater industrial production than the companies of the metropolitan cities. The press of the electrical industry has presented recently an estimate of the demand for power that may be required by 1925, including the great war superpower districts and the development of water power under the new Federal Power Commission. It figures that this demand will require an increased capacity by that time of 11,700,000 kw.. costing, exclusive of customers appliances, $3,706,000,000. able central station operating capacity a year ago at This Committee's report placed the actual availabout 11,000,000 kw. Accepted at its face value this new estimate means doubling the capacity of the industry again in less than five years. The estimate is impossible and hopeless of fulfillment. It is a statement of gross returns not expected to be realized, and is quoted here only to show a trend. But if half of it is necessary by 1925, at the rate of progress of the past year it will not be reached. There has been no flow of money to the industry at the rate of half a billion a year during the past year, nor are there signs of it now. How, then, is it to be obtained? As already stated, among those interested in the industry there is no difference of opinion over what is needed. But there is no force driving home to the State and its people what an adequate supply of power means to its prosperity. True, the National Electric Light Association has reorganized into what can be made. effective industrial and Geographic Divisions. True, that a campaign of safe and wise financing in the selling of increased proportions of junior or stock securities to the individual customer and to the public has been well started; also a good-will advertising campaign. These alone will not meet the problem of increased capacity, either in scope or time. A broader movement than this is required and was recommended by the Committee in its first report. In brief, it was that the problem of the industry be presented to the State, showing its immediate and real relation to the prosperity of the communities making up the State. A single instance of this has occurred-that of California-and its good results were at once apparent. The shortage of power due to drought in California so affected the industries of the State that its inhabitants had proved to them conclusively the necessity of electric power to their industrial life. The Companies got together and joined the state authorities in a study and a solution of the problem, which was presented to the people so effectively that cooperation in the development of power has taken the form of a great public movement. So much so that the junior securities of these great power companies are being rapidly absorbed by the consumers of power in the state and by investors who are indi rectly, if not directly, concerned in the use of electric power. It is just such a work lies at the hand of the member companies of the N.E.L.A. in each state or natural industrial power district. Assume a state or district made up of a number of industrial manufacturing communities, each with its ever-increasing output and consequent increased demand for power. Each community or group of communities has its central power supply. In many of these communities and states the increased demand for power since the war has never been met. Assume the different companies get together and establish their condition as it is, showing what power they are producing, what it is used for, what it manufactures and what this represents in the industry of their community, what it costs and its cheapness compared to other forms of power supply. Show the demand it is unable to furnish and what that demand would produce for the community in product, work and wages, could it be filled. Show the saving in transportation, coal and excess cost of individual power supply. In other words, show the real value to a productive community of an ample and cheap supply of power, not only the immediate advantage to industrial concerns, but the ultimate advantages to the consumer. This value established, show the plant, the facilities and the co-operation necessary to create it, show its cost and the returns necessary to command the capital to build it. Show the rates at which power could be sold by the improved plant and its increased productivity and value to the community. those most concerned, submit the matter in a body to the Utility Commission of the state in an endeavor to show the necessity of co-operation on the part of the state by allowing necessary rates and passing such laws as may be required to develop a successful financial plan which will be safe yet elastic enough to provide for an increasing supply of power and attractive enough to keep the actual investment ownership in the communities themselves by the purchase of stock. It is only in such a co-operative educational way that the large future demand for electrical power will be successfully met. Outside of California it is very doubtful if the great industrial states realize the present and future importance to them and to the ply. They must be educated by showing how such nation of efficient and sufficient electric power supsupply affects the economic productiveness of their communities and the pockets of their citizens. The National Electric Light Association is the organization which should do this work and is best. fitted for it. It has nothing to fear from an accurate picture of the situation; on the contrary, it has everything to gain under present conditions. But to succeed it must bring its story home to the business interests of its respective communities and states, and show that a cheap and ample supply of power is a necessary element of the future success of any industrial community. It was because of this conviction that this Committee made its recommendations of last year, and it repeats them now with the added force of a year's experience and discussion which confirmed its conclusions. confirmed its conclusions. It feels the N.E.L.A. should be in a position to furnish an accurate picture of what the power situation means in each industrial state or district and place this picture before the authorities and communities in a manner so convincing it will compel relief. The Committee feels that the Association will not be performing its full duty to itself or to the state unless it does so. Respectfully submitted, Submit this presentation to the Chambers of Commerce, Boards of Trade and manufacturing consumers of the community and gain their support for the progress of their community; submit it to the investment and banking interests for their constructive criticism and support. Let the Federated Engineering Societies of the state study it. With a cause, then, that has demonstrated its value step by step to Special Report of Electrical Resources of the Nation Committee The Committee desires to report that an important matter has just been presented to it through Mr. Frederick Darlington, one of its members, from Col. Charles Keller and Col. William Kelly, both officers of the Corps of Engineers, U. S. A. Col. Keller was assigned by the Chief of Engineers to act in the investigation and control of the supply of electric power during the war, such investigation being primarily caused by the now well-known shortage of the supply. Col. Keller has recently made a report to the Secretary of War through the Chief of Engineers entitled "The Power Situation During the War," in which this condition of affairs is fully set forth. In this report Col. Keller points out the value of collecting information and statistics on the power supply and the preparation of plans and projects for supplying war needs. This was also of much interest to Col. Kelly, who is the Consulting Engineer of the Federal Power Board, and a member of the Superpower Survey. Both these officers feel convinced of the value of keeping permanently in touch with the power situation in the manner outlined in the report referred to. In order to devise a plan by which this can be accomplished, Col. Keller wrote to Mr. Darlington, former Chief of the Power Section of the War Industries Board during the war, for advice as to the best method of obtaining from the industry the information that may be desired by the Chief of Engineers in the future. As the data required is of an engineering character, it would properly be collected by the Chief of Engineers of the Army. The force of the Office of the Chief of Engineers includes Engineer Officers stationed at or near every industrial center in the United States. Cols. Keller and Kelly therefore suggest that an arrangement be made by which these officers can get in touch with member companies of the Association and obtain from them such information as may be desired by the Chief of Engineers and discuss with them such plans as may seem desirable in preparation for war. Mr. Darlington referred the matter to this Com mittee for its consideration and action in relation to the National Electric Light Association. After careful consideration of Col. Keller's suggestion, the Committee unanimously agreed that such a plan was an excellent one of much merit and that such cooperation with the Office of the Chief of Engineers would prove valuable to both the Government and our Association. The life of this Committee has so nearly terminated, there is not sufficient time for it to take up this matter thoroughly with Col. Keller and in consequence the Committee feels it should be referred to a new committee to consider with these officers and report to the Association. The Committee therefore refers this matter to the Association recommending that favorable action be taken at once by appointing a Committee to confer with Col. Keller as to the best method of accomplishing the end desired. The satisfactory growth of the Class A membership during the last year, as compared with the previous four years, is graphically shown in the accompanying chart. Class B The large net increase in the Class B membership. -the first since 1917-is especially gratifying to the Committee. While the number of new members secured, 3430, establishes a new record, the net gain is due principally to the smaller number of resignations. In this connection, the accompanying chart, showing the membership changes during the last five years, should prove interesting. In its efforts to build up the Class B membership, the Committee has followed the policy adopted last year of reaching out for a quality rather than for a quantity membership. Its campaign was therefore directed toward enlisting company officers, department heads, and bureau managers, a list having been prepared with the aid of the member com |