FullReads

But how, it may be asked, could the company’s actuary know that the man’s house would last until he had paid in more than its insured value in premiums–more, that is to say, than the company would have to pay back? He could not, but from his statistics he could know how many houses in ten thousand of that kind burned in their first year, how many in their second, their third, and so on. That was all that he needed to know, the house-owners knowing nothing about it. He fixed his rates according to the facts, and the occasional loss of a bet in an individual instance did not affect the certainty of a general winning. Like other professional gamblers, the company expected to lose sometimes, yet knew that in the long run it must win; which meant that in any special case it would probably win. With a thousand gambling games open to him in which the chances were equal, the infatuated dupe chose to “sit into” one where they were against him! Deceived by the cappers’ fairy tales, dazed by the complex and incomprehensible “calculations” put forth for his undoing, and having ever in the ear of his imagination the crackle and roar of the impoverishing flames, he grasped at the hope of beating–in an unwelcome way, it is true–“the man that kept the table.” He must have known for a certainty that if the company could afford to insure him he could not afford to let it. He must have known that the whole body of the insured paid to the insurers more than the insurers paid to them; otherwise the business could not have been conducted. This they cheerfully admitted; indeed, they proudly affirmed it. In fact, insurance companies were the only professional gamblers that had the incredible hardihood to parade their enormous winnings as an inducement to play against their game. These winnings (“assets,” they called them) proved their ability, they said, to pay when they lost; and that was indubitably true. What they did not prove, unfortunately, was the will to pay, which from the imperfect court records of the period that have come down to us, appears frequently to have been lacking. Gakler relates that in the instance of the city of San Francisco (somewhat doubtfully identified by Macronus as the modern fishing-village of Gharoo) the disinclination of the insurance companies to pay their bets had the most momentous consequences.

In the year 1906 San Francisco was totally destroyed by fire. The conflagration was caused by the friction of a pig scratching itself against an angle of a wooden building. More than one hundred thousand persons perished, and the loss of property is estimated by Kobo-Dogarque at one and a half million drusoes. On more than two-thirds of this enormous sum the insurance companies had laid bets, and the greater part of it they refused to pay. In justification they pointed out that the deed performed by the pig was “an act of God,” who in the analogous instance of the express companies had been specifically forbidden to take any action affecting the interests of parties to a contract, or the result of an agreed undertaking.

In the ensuing litigation their attorneys cited two notable precedents. A few years before the San Francisco disaster, another American city had experienced a similar one through the upsetting of a lamp by the kick of a cow. In that case, also, the insurance companies had successfully denied their liability on the ground that the cow, manifestly incited by some supernatural power, had unlawfully influenced the result of a wager to which she was not a party. The companies defendant had contended that the recourse of the property-owners was against, not them, but the owner of the cow. In his decision sustaining that view and dismissing the case, a learned judge (afterward president of one of the defendant companies) had in the legal phraseology of the period pronounced the action of the cow an obvious and flagrant instance of unwarrantable intervention. Kobo-Dogarque believes that this decision was afterward reversed by an appellate court of contrary political complexion and the companies were compelled to compromise, but of this there is no record. It is certain that in the San Francisco case the precedent was urged.