ta.t mm.
INSURANCE
PAGES OHM TO SXOXT.
The Omaha
UNDAY
Bee.
The Bee aims to print a paper
that appeals to intelligence;
not to an appetite for scandal
and sensations.
VOL. XXXIX XO. .7).
OMAIIA, SUNDAY MOKNIXU, MAY 1910.
SINGLE COrY FIVE CENTS.
OMAHA AN IMPORTANT INSURANCE CENTER
Well Organized Local Agencies Handle Immense Business and Control Wide Territory for the Solidest of Companies
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MAMA U a (jrPftt distributing
center for insurance becauiie
of its' eligible location. Com
pared -with., other cities of
about equal population, thin city
stands hUh BTnonB Insurance. :
A "business center for their Jlriev
The sale of Insurance Is very much like
the sale of anything else In the commer
CUt line. The demand is the thing the
sSleVr eeHfi conWcdt; with; 'anU;.whefa
the 'demand l'ttron,--; there . ttie sellers,
are on hand with an eye open for the
main chance. ' ..
' Long ago 'the large eastern companies
itook occasion to size up the field here
about, and concluded It was, good. They
began' to busily cultivate it. with the re-,
suit that thousands of men anu women
in Omaha nd Nebraska enrolled on the
books of the pioneer companies as buyers
of Insurance, contribute steadily to the
Income, and also to the protlt. So, when
tli -New Vork expose came, everything
developed at the hearings, good and bad,
founds Its reflections In the homes of .
Onatia and Nebraska where policies were
owned.
In recent years, local men vlio had be
come familiar with the business, in either
fire or life, ' Interested other men with
capital seeking profitable investment. As
a result of .this awakening to passing
possibilities, a good many Insurance com
panies of varying character, were organ
ized. Some, were strong and well man
aged and so stood the test, until today
they rank aa standard and successful.
FRANK HAKKLL 111 II I II JOSEPH CULLE.W U.OOT
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ley. Their business Is growing In most the question leads to Investigation, and
encouraging ratio, and all of them ara investigation brings education in the theory
now regarded as fixtures.
Ovat forty 5. Ufa- .jniiuraucaagoijqles - are -
doing business lit Oroaha, and their poli
cies are scattered all over' th west, r The
life Insurance in force in Nebraska alone
Vat this time will ' approximate between
$115,000,000 and $120,000,000, including the in
. , flustrlal companies, but nut the fraternal.
" in'lthe; fraterDal'cOmban'les.Vth'ihsuranee
of insurance, as well as In Its practical
application to the parttoular circumstances
of the man,-, who wants to buy. So today
farmers are good customers of the old
Una, insurance companies, as well as the
fraternals."
. If any person still - cherishes the ldf
that". Insurance Is In , the nature of a
heldby ebrasUaris; aggregates:. $Stf, 993,832. wmble.;. a glance at . the office Uteraturo
lllill BEECHEiC HJGBY
Tfp T. "R "H fi-rcrr vrrr r tit-r
. . i 1 .1 m. up. nbnllt X w :
that nave eniercu mo
to enter, are governing themselves, in
their campaigns for business by the
tested rules which have gained
for thAlr predecessors In the same field.
There are .vecy few. If any, companies
of more than loleaTicnaracter existing in
the United States that have not general
offices or special agencies in Omaha.
Some of them, like the Aetna of Hartford,
have established a department office ,rn ,
'o'maha!., through, "yhlcli "hll business,
several' sla(ea s transacted.''' ,THe Omaha
office of 'tho Aetna, Ior' example, handqs
tlie biiHlncss of twelve state west ol' tlia
Mississippi,' taking In -practically every
thing but Texas and Arkansas. Through
this and other companies the name of
Omaha Is carried far and wide, and ma
effect Is bound to react for the benefit of
the city In some way. This Is even more
true of ' the companies owned and offi
cered by Omaha people.
- In the life, accident and fidenity Insur
ance field Omaha has half a dozen com
panies founded,' financed and managed by
local men. The latest to' enter the field
Is the Commonwealth, with a capital , "of '
$400,000, and having some six hundred
stockholders, not all of whom are residents
of Omaha, but the control Is here. Of the
older companies the Bankers' Reserve Is
perhaps th most notable. Theti there Is existing local companies In the city and fire insurance carried will run weft over from two to four states for his field. Na
the German-American. the "Guarantee state, and in nrrnunrilnir atiiei inriiraipa st.t ftnn nno on.t mav ha tin Ann nm in innuu r ki. nr n
Fund, the National Kldellty-and In the a growth of horns spirit in. the Insurance of that amount. Premiums paid on this are employed, and they are continually on districts every year. has Its own particular rating, goyernea
fraternal field the Woodmes. of the World line that, while It 'will not eliminate the Insurance will total $850,000 a year. Some the go. Through their work, the city is "This thing of life Insurance for farm- by Its physical features, location, kind of
looms up like a giant competition of the older companies owned companies-carry as much as $50,000 on a brought . before the business men of this ers Is on the endless chain order," said occupancy and a dozen other factors.
Taken by and large, for personnel, finan- elsewhere, will keep them hustling for single risk. field, and every person having a loss In a one agent. "Some enterprising man takes When a man applies tor a policy na gives
Rome nassed out of existence after ca- clal solidity, spread of business, amount the new ' business that Is erowinir un to Kleht eoneral acents sre - situated In rU airotrh nf torrltnrv must lnnlr for out a policy and keeps It alive until It
recrs more or less checkered, and others of risks, commercial influence, advertising be written every month. Omaha, having Jurisdiction In from one to settlement to Omaha men. . begins to look mighty good to him. He
. have combined or. changed their plans In force, field, achievements the insurance Operating In Omuha are , 104 ' Insurance ten states. Probably fifty special agents Four fire Insurance companies in the talks about It, and when his neighbor be-
i the Interest of safety and solidity. business of the city of Omaha is one of companies;, through seventy-five agencies, and adjusters live In Omaha, and work Omaha field are controlled by local men Kins to think of Insuring the man with
These .local companies have now been It great institutions and one of its most The employes In each agency will rantje out from here through many states. and financed by local capital. These are the policy can advise' with him wisely as
(sifted to t ho basis of merit and now ones beneficial activities. Ths success of the ,from five to thirty or more. Amout of A special agent and adjuster may have Columbia. State, German and Missouri Vol- to the best: kind to. take.. Discussion of
E.T.SWOBEL
Thus it" will' be seen that Omaha. Is ths
focus pplnt for a great multitude of men and
women, who have been brought Into the
Insurance fold by the hustling agents, who
represent In the field the companies having
their business situs in this city.
It used to be the case that farmers were
glvtn little or no consideration as life In
surance buyers, and their fire Insurance
was of little moment in xne oia aays.
of any Omaha agency will convince him
to ths contrary. One-blank, which will
serve as an illustration, being at tha
foundation of all fire risks written In this
or any other city. Is known aa tha "Sur
vey." It Is made up "from ths analytio
system for the measurement of relative
fire hazard." Both sides of this largo
sheet are covered with lines giving each
smallest particular, touching every pos-
Today the farmers of Nebraska carry tble kind of building that can be erected
cSOHlT T.YATES
almost as much life insurance, on the
average, as the dwellers in ths city. Some
farmers, Indeed, carry very large policies,
and their clean, open air Ufa makes them
a preferred risk. In a day's travel, one
would not meet ' with a farmer,' or a
anywhere. Following the blanks dealing
with the physical hazards are schedules
of occupancy as to number, character, and
whether day or night workers. Then we
find "credits for protective features," such
as standpipes, sprinklers, fire escapes,
farmer's hired man, who Is not a member fire alarm system, watenman, neaung
of one to half a dozen fraternal Insurance system, and other possible elements mak-
societles; and the holders of old line poll- ing for safety from fire.
cle are arowlnr In number in ths rural Kvery . kind of building In every class
the number of his house or other build
ing, and the agent tells him In a minute
what rate Is on that exact place. No guess
work, no approxlmalon, no haggling. If
any company handles the risk at all, It
Is handled on a definite, exact basis.
Real Estate Mortgages: Their Selection, Protection and Amortization
M
. .'r
BT.F. W. HERON.
T Is not without diffidence that
I attempt an article on mort
gages, a topic with which you
are so thoroughly familiar, but
as an insurance man I deal so
much with interest, and inter-
sat being an Important factor in loans of -all
kinds, I am, through It, led Into a
mass of mortgages, their qualities, val
ues, eta.
Ths. general object of mnrtRuge In the
manner in which I will use it is to secure
a money debt by making it a charge on
land, so that, if the debt so created be
not paid by the tlmo agreed upon between
the parties, ths creditor may sell the
land and pay himself out of the proceeds.
Mortgages have been used for generations
and have passed through but thi-ee stages.
The first beting that the land was deeded
outright to the creditor, with tha agree
ment that It would be deeded back in case
the mortgage was paid as agreed. If, how
ever, the creditor refused to deed back the
land, the borrower had no other recourse
than a personal action. In the second
stags the custom was that the land did not
pavs by d.ed to the creditor, but he was
given possession of It until such time as
ths mortgage was paid. The third and
last we find about the .process we use to
day, namely, a mortgage Is given and the
owner of the land retains possession of It,
ana u n mortgage Is paid when due, no
Changs appears in ths title.
Mortgages are Invested capital, snd capi
tal is that portion of wealth which is set
ssldo for ths production of additional
wealth. Capital or wealth Is Invested with
a ... xo revenue, and therefore the in
teres paid by ths mortgagor Is In a sense,
rent for ths use of ths money thus ob
tained. Interest and rent differ, but not
essentially; both are agreed and stipulated
, ) payments for ths use of capital. la rent
,f?R0"evr' th- "m Physical asset must bs
yr ln upon ths completion of ths per
k : 4. If you borrow a dollar, you may re-
turn any old dollar, while if you rent a
house or horse, you must return the Iden
tical one you rented.
Interest 4s. an Important factor In
Investments, and one of the two elements
used by actuaries in constructing life In
surance premiums, the two elements upon
which life Insurance calculations are based
being Interest and mortality. In life In
surance, Interest gauges the premium rate,
and in Investments It gauges the quality of
the Investment A low rate of Interest on
an Investment means safety, and a high
rate designates greater risk. Tho same
statement may properly be applied to mor
tality tables In life Insurance. The assumed
Interest rate on mortality tables and the
entire Interest earnings of insurance com
panies.' the largest purchasers of mort
gages, has steadily declined since 1876; then
the average rate of Interest 'earned by
thse companies on their mean assets was
(.S3 per cent, while today it Is fully t per
cent less.
This reduction does not signify that
the securities have changed, but that the
companies are now buying fewer var
ieties, and experience has proven that
first farm mortgages granted to farmers
are not only a stable security, but that
the interest on them Is maintained and
mors promptly paid than on any other
form of mortgage. This fact of Interest
being paid promptly Is of most importance
in Judging the quality of an Investment.
It has been said, and rightly, that tha
three essentials necessary to make a good
investment are, first, security; second. In
come; third, convertibility. You will note
ths first and third control the second,
and the second gauges them both. This
statement was made by a New York banker
and financier, and did no doubt express
his views, but personally, I would be sat
isfied with sn Investment that would em
body thres elements, as follows: First, in
come; second, something that will In
crease In value; third, something that will
not keep ms awske at night
Safety cannot bs beyond ths point of ths
prompt return of capital and interest
This being true, on may ask why u cer
tain form of Investment, such as a bond,
earns lower rate of Interest than another,
when both may have the same prompt
payment of Interest or fac on maturity?
This Is on account of the convertibility, and,
therefore, demand by certain buyers. Banks
and trust companies must buy securities
of a nature that can be converted quickly
if necessary, while life Insurance com
panies seek long tlmo investments, such as
mortgages, and only Invest a certain per
centage of their assets, about 10 per cent.
In what would be termed available se
curities. It la seldom that safety can bo embodied
in an Investment that will increase in
value, but tho security of a first farm
mortgage is steadily increasing and the
rate of Interest on the whole. If locations
selected are scattered throughout the
country and well inspected and con
servatively made, is above that of the
average. Tho life Insurance companies
that have placed a large percentage of
their assets In farm mortgages have aver
aged 1 per cent higher Interest earnings
than companies that have selected princi
pally bonds for Investment. The only
losses on farm mortgage can be traceable to
those made in new countries where locations
have been boomed, where investors and
not owners were the borrowers ami where
climatic conditions wer changeable and
the land should never have had the rating
given It Mortgages on city properly, while
earning a good rale, require mutt ron
srrvatlva and careful selection. Old frame
houses, houses cheaply built arid not mod
ern, cannot be figured as a security at
all, and especially when In a locality where
all adjoining buildings art modern and
up-to-date. Such a property become an
eys-sor and never will bring a price near
it worth. Then, a large and , f xpsnslv
residence should bs giveu ths utmost cars
in selection as security for a mortgage.
Th property may or may not be in th
fashionable district In a few years, and It
may change ownership In the meantime.
In my opinion, the best form of uecur-iy
for loans in a city, asldo from stores and
office buildings, are guod flat properties,
conveniently located to car lines, com
manding a rental value which the. man
of average Income can afford to pay; prop
erties in growing cities, of substantial
character, modern and well furnished, the
appraiued value being from tea to fifteen
tlmej greater than the net yoarly income.
Such security is second to none, and mort
gages on this class of properly are ul?o
readily convertible anywhere. Mortgages
oil nearly all kind of manufacturing plains,
especially In smaller tuv.ua, havo proven
very bud, and in the cities are good only
in small amounts as compared with full
valuation. Buildings ued fur pluct of
public amusement, liotelu, churches or
licensed houses, etc., should not be re
garded with favor, and loans, If made at
all, should nut exceed tho value of Hut
ground for building purposes.
Whilo we all agree that a mortgage la a
good form of Investment either for the cor
poration or individual seeking investment,
I now want to offer a plan for the safety
of the borrower, he being tho "party of
the second part" in tho transaction. Many
borrowers today, especially In t'.;o cast, aru
making arrangements to discharge their
loans through the agency of an endowment
lifo Insurance policy, making tuu premium
payable at the time of the interest, thus
amortising the loan. To illustrate this, we
will suppose a man wished a loan of $10.0JO
on a. flat properly bringing an annual
rental or $2.. He will at th tlni of
making application for the Kau make ap
plication for a twenty-) ar endowment
polley on bis life for ths same amount
The Interest on tha luavn will be, say i per
cecit, or M per year; ths premium on tK
endowment policy $400. making a total of
$300 per year. While this would appear a
high rate, 9 per cent the borrower has
greater ' benef It in that in can death
should tak htm away, th Insurance policy
"will pay off the loan and give th property
to his beneficiaries clear of incumbrances.
On the other hand, the insurance company
having this greater security, reducing their
risk to a minimum, can make a much
larger loan on good property, and In many
cases, a loan on property that would other
wise be considered sub-standard. Should
the borrower live out the twenty year
the endowment policy will mature and pay
off the loan, or should he setl the property
any time after throe years, ho could draw
the cash surrender value of the policy and
would thus have had only a low rate of
Interest on his loan, but would have had
the additional security of life Insurance
from the date the transaction was made.
In no other manner being able to secure
a large enough loan, this form of mortgage
with endowment Insurance is frequently
used by Catholic churches throughout the
United "States, the life Insurance policy,
being written on the life of the pi lest, and
tho premiums paid by the ladies' societies
of the church. Each year the loan Is thus
practically reduced, and this gradual re
duction of the mortgage could, or I mlKht
say, would not be accomplished In any
other manner.
The same rule would apply to the farmer.
He could get a larger loan, acquire more
ground or muko better Improvements on
what he had, and his crops would easily
allow tho small extra cot of endowment
Insurance, and he would therefore never
need to worry about the mortgage hanging
over htm, as year by year it decreases, and
If there came a year when crops were
poor, or If sickness should overtaks him,
he hus the cahh values of the endowment
policy available to meet the contingency.
To ths business man owning a $X),0fl0 flat
properly, and wishing to use all of hi
money, I would suggest term ineurance.
Hut gross annual rental Income fronvhla
property Is, say, $J,300. Ills Interest on his
$10.UOO, five-year C per cent mortgage is
$TiU0; annual premium of the five-year term
Insurance policy on his life is $125. Thus
you will see that by the payment of les
than 1V per cent Interest mors he can
keep bis property clear, in cas of hi
death, and the protection thus afforded is
well worth the small extra cost.
I earnestly believe that If an agent lend
ing money In Omaha, or one of the build
ing and loan companies, would advertise
that they had money to loan on homes,
and that in case of the death of tho bor
rower, ths mortgage would be cancelled,
that this concern would get the bulk of the
business both from tho borrower and from
the lurge corporation furnishing the
money, as both mortgagor and mortgagee
are safer than under any other plan. I.ifo
Insurance, as you will see, can enter many
forms of investments or philanthrophy. It
can either protect or prevent mnrtgtiKes.
The Young Men's Christlnn association
building In this city Is mortgaged for about
$50,000. Here Is Mr. John Doe, a retired
and JI-to-do citizen, who has more than
iuO.000 available cash, but does nut feel
Sijo giving this amount to the Young
Men's Christian association for the rea
son that he would be tuking It from his
children. Now what should be done is
this: Have John Ioe take out a life In
surance policy on his life for $50,000, pay
able to Ins children, he to then give the
Young Men's Christian association $50,000
In rapti, and thus wipe out their mortgage,
with the proviso that they in turn agree to
pay the premium on th s life Insurance pulley
so that at his death the Insurance com
pany would pay to his children $50,000 In
cash. John Uoe ha thus benefited the
Young Men' Christian association by giv
ing them $60,000 when they needed it,
mado safe the $50,000 for hi children, and
at the same tlmu did not take away any
thing from hi estate.
The Young Men's Christian association
would not only pay off their mortgage, but
would be freed from paying I per cent Inter
est Indefinitely, by paying a lower rate (the
life insurance premium would bs between
4 and S per cent), for possibly one year,
poasltly five years, but not for many yeai
at most a th period of the Insured's ex
pectancy would show.
A you are awar large institution l.k
railroads, and I might Include counties and
states, are rapidly adopting the amortiza
tion of their indebtedness and on the other
hand the large lenders of money, uch aa
the insurance and trust companies, ar
atriving more and more t get aa largo a
percentage as Is possible of ' their long
time Investments on the amortization basis.
It Is the only true system, sinking fund
do not fur various reasons accomplish th
amii purpose, and I think the day Is not
for distant when laws will be enacted in
all of the states or the custom will bs
adopted the same as In Europe to amort
ize any and all Investments or loans of any
size. When I speak here of Investment
and loans, I include, of course, bund is
sues by the county and state and upon
Investigation 1 think that you will agree
it Is the best and safest pructice for both
the borrower and the lender.
Amortization of all large real estate
mortgages wuuld to a large degree prevent
real estate panics. I venture to slate that
had an amortization plan been in use in
this city priur to l&KJ and that if all loans
of any size had been made on that basis,
that few mortgagors wuuld have lust their
property through foreclosure and few mort
gagees havo had reason to complain, with
the result that whut now appears a a bad
blut on the mortgage history of Omaha
would have been to a large extent elimi
nated. The office of every member of this ex
change that make or broker mortgages
or bonds should b equipped with a set of
schedules of amortization, bund tables and
logarithm for the study of this principle
that give safety to your patrons, tlie mort
gagee and mortgagor, the buyer and th
seller of bonds. A system that I believe
will eventually be thrust upon you. Thia
practice ha been popular In Europe for
generations, and while few tables ar to be
had In tbe Englluh language, the schedule
and principles ar easily obtainable.
When bonds are purchased, even la
reasonable amounts fur investment by either
(Continued on Pago Two.)
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