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This was discussed and the meeting began to assume a more lively interest and the members to more actively participate. Director W. E. Dean offered a resolution that has passed into history as being, possibly, the most noticeable ever adopted by the directors of a fire insurance company. It is a question whether a motion under like conditions had ever before been put or carried or ever will be in the future. This motion was seconded by Director Mark L. Gerstle. It was as follows:

That the action of the president of this corporation in publicly announcing that the California Insurance Company would pay all its losses in full as ascertained and adjusted, be, and the same is hereby confirmed and ratified, provided that each of the directors of the corporation affixes his signature to the matters of this meeting. Unless such ratification be unanimous and evidenced by the signature of each director to the matters of this meeting, the above action of the board be null and void.

The signature of each and every director was subsequently affixed to this resolution and it then remained a matter of detail to find how funds were to be procured to make this resolution possible of fulfillment and something more than a mere matter of words.

In the absence of any specific or definite information as to the amount of the company's indebtedness this action of the directors was a most magnificent exemplification of nerve and integrity and a superb testimony reinforcing the axiom that a California man's word is as good as his bond.

The board might have instructed its secretary to make the best compromise settlements possible and have wound up the affairs of the corporation. The public mind was in a receptive mood to accept such compromise settlements and such action would have resulted in extreme financial advantage to the stockholders at the time when the resolution was passed. No one at that time believed that the California would discharge its obligations on a parity with the largest and strongest insurance companies in the world. Indeed the public announcement that the company would pay in full was regarded as ridiculous and unbelievable and was generally considered in the light of an extremely sagacious bluff.

The directors of the company were not bluffers; they were made of different stuff. They did not hesitate. They were in deadly earnest and absolutely meant to live up to their spoken word and the world knows how they redeemed their promises.

My original estimate of ,500,000 fell far short of the final net payment which amounted to ,840,000, but long before this had developed the stockholders were too deeply involved to think of turning back even had they desired to do so. Staunchly and loyally they stayed and paid to the end, building a monument to their good name that turned the sneers of welshing competitors into envy and admiration.

Second Meeting of the Board of Directors

In the advance of the company, the next historical date of importance was May 11, 1906, when the succeeding meeting of the Board of Directors was held at the home of Director Mark L. Gerstle, 2350 Washington street, San Francisco. Again, I was called upon to bring bad news. I was compelled to inform the Board of Directors that all the records of the company had been destroyed as the safe which contained them had been smashed by falling walls and the contents absolutely obliterated. The only thing recovered was some rolls of silver coins melted together by the intense heat. I also reported that three hundred and fifty claims had been filed for an amount totaling over 0,000.

The loss of the records was a very serious matter and complicated proceedings to a degree apparently almost insurmountable. Lost in the destruction of the safe were some 0,000 in re-insurance policies. This meant restoration of this data from the records of the re-insuring companies and at that time this looked like a superhuman undertaking. However, I immediately detailed two employes with instructions to devote their entire time to this angle of affairs. The companies met the situation with every courtesy and finally after several months' exertion all of the reinsurance was located, with the exception of about ,000.

I do not like to harbor the thought, but nevertheless I feel that some company or companies, possibly still doing business, know that they owe the California some part of this re-insurance, which goes to show that in the insurance business, as in other enterprises, there are those who cannot bear the light of day.

About twelve months after the "Big Fire" I remember having received a re-insurance claim from a company whose home office is in New York. As this particular company was one of the very few that declined to respond to the request to assist us in restoring the lost data, I thought it the better part of wisdom to ask it to furnish the information previously requested, holding up their claim in the meantime while awaiting their reply. It never came, and their claim against the California still remains unpaid. The conclusion is too glaring to need further comment. A few similar instances might be recorded but they are best forgotten.

This meeting also made history. It levied the first assessment of per share on the six thousand shares of capital stock of the corporation. This would bring in 0,000 and was subsequently followed, month by month, by seven others, until the total assessment had reached 5 per share, amounting in all to ,830,000, of which ,800,000, or 98 per cent, to the everlasting glory of the stockholders of the California, be it said, was paid.

The resolution bringing this about was as follows:

"Notice is hereby given that at a meeting of the directors held on the 11th day of May, 1906, an assessment of forty dollars per share was levied upon the capital stock of the corporation payable on or before the 13th day of June, 1906, to Mark L. Gerstle, assistant secretary, at the principal place of business of the corporation, No. 2350 Washington street, San Francisco, Cal. Any stock upon which this assessment shall remain unpaid on the 13th day of June, 1906, will be delinquent and will be advertised for sale at public auction, and unless payment is made before will be sold on the 2d day of July, 1906, at 2 o'clock p. m. to pay the delinquent assessment, together with cost of advertising and expenses of sale."

The "'Dollar for Dollar" Resolution

It became my duty to inform the directors that a meeting of the representatives of all the fire insurance companies interested in the conflagration was called for an early date at Reed's Hall, Oakland, and that I understood the principal object of this meeting was to secure an expression of opinion as to the method to be adopted in settling San Francisco losses, whether seventy-five cents on the dollar should be paid or settlement on a 100 per cent basis be made, and I requested instructions. This was merely pro forma as the company had already announced its position publicly as being in favor and promising to pay cent for cent the full obligation of its contracts. The board gave me the instructions I had expected.

The meeting at Reed's Hall was a most memorable one. The late Geo. W. Spencer, at that time manager of the Aetna Insurance Company, presided, and to his fair and impartial rulings and usual courtesy and dignity of manner, is attributable the fact that there was not considerably more friction than developed. Even as it was, the discussions were acrid and verged at times close to personalities and the oratory, especially on the part of those who advocated the "six-bit" policy, was both perfervid and vociferous. However, the representatives of the companies that had made up their minds that their honor and contracts were worth dollar for dollar had little to say and were not influenced by the alleged arguments of the "six-bit-ers."

They felt that in the last analysis there was no logical, honest argument for the discounting of payments unless it were a case of absolute insolvency with individual companies. It was maintained by the opponents to the "six-bit" policy that the insuring public had paid for what it assumed to be valid contracts and was entitled to just indemnity and payment in full. Finally, the roll call came to ascertain the sense of the meeting--seventy-five cents or one dollar. The roll call was thrilling in the intensity of feeling it developed and in the position in which it revealed each company's standing, whether for an honorable fulfillment on the one hand or a dishonorable scaling of losses on the other. Alphabetically, the California Insurance Company came early in the list and I voted with those who felt their obligation to be one hundred cents on the dollar. The position which the California would take had been awaited with considerable interest. The public announcement that the company would pay dollar for dollar was still recent and this announcement had appealed to nearly every person at that gathering as a promise which the company was absolutely and physically unable to perform. The registering of the vote called forth quite a demonstration. Laughter, smiles and sarcasm predominated in the part of the hall where I was located. For a moment I was the center of attraction.

Despite the embarrassment and annoyance under which I labored, I felt that I was called upon to defend the good name of the company and, gaining recognition from the chairman, I said that the manner in which the "California" voted seemed to cause some of those present considerable amusement and that, individually, I didn't see anything in it that was funny; that it was more of a tragedy than a comedy, and that it was a solemn and serious matter for the company of which I was the representative to go on record for the second time, publicly, as pledging itself to pay so tremendous an amount of money out of the pockets of its stockholders; that I was present at the meeting to carry out the expressed instructions and wishes of these same stockholders and that they intended to be scrupulously careful in keeping their promises, backing their words with their deeds and dollars. This statement brought from the dollar-for-dollar companies a gratifying amount of applause and the "six-bit-ers" sank into silence.

As the days passed and the "tumult and shouting" died, it gave a certain amount of satisfaction to find that amongst the jeerers and sneerers at the memorable Reed's Hall meeting, those who had battled most vigorously for the horizontal cut of twenty-five cents were those who afterward developed into the worst welshers and shavers in the entire history of the loss settlements of the San Francisco or any other conflagration. The "sparkling" Rhine, the "still" Moselle, the far-famed "Dutchess," the German of Freeport, the Traders of Chicago, the Austrian Phoenix, the Calumet, the American of Boston and others soon after sought the seclusion which a receiver or cessation of business in California grants, and like the Arab, they folded their tents and silently stole away.

At the termination of the meeting, President Chase of the Hartford, President Damon of the Springfield, Chairman Spencer and several others, all leaders in dollar-for-dollar ranks, some of whom are alive and some of whom are gone, gathered around and congratulated the California upon its attitude. Individually, it gave me a feeling of pride and satisfaction to be the representative of a company which manfully stood up to the rack with the best traditions of American fire insurance. It may be well to recall to mind as a historical fact that it was at this meeting the term "dollar-for-dollar" companies was born.

Coming Back to San Francisco

Early in June we made arrangements to vacate our quarters in Oakland in the Blake and Moffitt Building, and on the 5th of that month the California was moved to an office in San Francisco. This was a temporary frame structure erected on identically the same site which the company had occupied prior to the fire, and where the magnificent new skyscraper known as the "Newhall" Building now stands. As things go now, it was not much of an office either as to style or appearance, but it was roomy, light, well ventilated and comfortable and in every respect preferable to the two crowded rooms that had so hospitably housed us in Oakland. The return to San Francisco heartened us. The daily trip from the city to Oakland and return had been a hardship, in addition to the time lost when every minute was too precious to be wasted. Less time was lost in crossing the bay than in getting to and from the Ferry. The street cars were not in operation and I was compelled daily to make the walk over the hills and through the ruins threading my way through the ashes and over brick piles a distance of quite two miles, from my home to the water front. This twice a day for six days a week, and often seven, was exhausting in the extreme, so the wear was not altogether mental. The thought was very often in my mind that I had about the most trying job of anyone in the business. Other managers seemed to me to be paying very little attention, if any, to the detail of settling claims and, of course, had nothing whatever to do with providing the sinews of war. They were fortunate in being able to pursue the even tenor of their way, their entire business and time being occupied with current routine, just as if nothing of an extraordinary nature had happened. This condition arose from the fact that the companies in the East hurried to San Francisco and Oakland all the adjusters, both near and alleged, that they could obtain from any portion of the United States and a few from abroad, in order that the losses might be promptly taken care of. The home offices saw to it that the funds were provided. The special agents and field men of these offices were not disturbed in their usual work and were rarely, if ever, made use of at headquarters to make adjustments. With the California it was quite different. Our entire field force was called in and promptly clothed with authority to adjust. This left our agency plant entirely unprotected as to cultivation. Financially, we were in such a crippled condition that we felt we could not afford the expense of employing independent adjusters. These were a luxury in any event and some of them, alas, would have been dear at any price. The thought often comes that perhaps this policy was poor economics. This was a golden opportunity for representatives of the "dollar-for-dollar" companies to secure valuable agents, as carrying capacity was in large demand to replace those companies that had either failed or made unsatisfactory loss settlements. That there was an abundance of the latter admits of no dispute. Possibly, we might not at that time have been able to secure many of these valuable connections, even if we had had the field force requisite for the required technical work, for the reason that doubts were still expressed as to our ability to fulfill our promises.

Duties of the Secretary

In the California Insurance Company office, the position of secretary was closely akin to that of the celebrated "Pooh-Bah." Attached to the office was the duty of collecting the assessments on the capital stock, adjuster in chief, the underwriting, a court of appeal on technical points in disputed settlements, a diplomatic agency and encouragement dispensatory with and for the stockholders. The latter item took considerable time. Singly and in groups they fired their questions: "How many assessments will there be?" "How much do you think the losses will total?" "How soon will you know the amount?" "When we do get out of this shall we be as big as any other fire company or bigger?" This was the daily grind. But since it was their money and they were laymen, their anxiety was as pardonable as their courage was commendable.

The president occupied an office on the other side of the hail, directly opposite mine. The one door was lettered "President" and the other "Secretary."

One of the stockholders cornered me and demanded a full and explicit statement of conditions. I gave him the facts and frankly confessed that the prospect was not alluring. He bade me goodbye with a long face and went directly across the hall into the office of the president. In a brief while, he returned, his face wreathed in smiles, and quietly said 'that the president's office was "Heaven" and my office was "Hell"; that I was a "gloomy Gus" anyway, but I couldn't help it and he pitied me, but as for the president, he was the right man in the right place, and he knew our exact position.' I did not make any reply. The optimism of the president was a very great asset and in those days optimism and hope were at a premium.

Turning of the Tide

Finally the tide turned. Several months had elapsed, however, before it became generally known and admitted and the insurance world had hammered into it the conviction that the California was truly "Californian." At this time our field men were again in the saddle and the agency of the California was not only readily accepted whenever offered, but eagerly pleaded for by connections which materially contributed to subsequent success.

Adjustments

There are millions of stories with regard to the adjustment and settlement of claims during this period. All kinds of pressure, all kinds of seduction and all kinds of bribes were offered the adjusters. There appeared to be in the minds of many a conviction that this was the time to make a claim against the insurance companies; that everything was burned and that with the upset conditions any old claim could get by. Stevedores, laborers and others not generally credited with an excess amount of worldly wealth gayly and festively swore to proofs showing the loss of family plate, ancestral pictures, silk underwear, ball gowns, evening clothes and jewels. There was no possibility of disciplining these perjurors and it was up to the expertness of the adjusters to defend their companies from being looted.

There were all kinds of attempts to defraud on the part of other policyholders. One instance in which the California was interested was a proof for a ,000 loss on a policy covering on stock of dry and fancy goods located in a building on Market street. I received a visit from the policyholder who made a request for prompt payment. I explained that our funds were being raised by assessments which were levied once a month and that, if agreeable, we would pay him sixty per cent of his claim and the balance in sixty days. This appeared to be satisfactory and he left in a happy frame of mind. Thirteen thousand dollars of the risk in question was ceded to other companies and we naturally filed claims with the reinsurers for their proportion. The following day a friend who was acting as chief adjuster for another office which was one of the re-insurers on this risk, called upon me regarding this particular claim. He laid upon my desk a photographic album and called my attention to a large photograph of the building wherein the stock was located. It was a two-story brick and the picture showed that the entire front of the second story had, as the result of the earthquake, been thrown into the street. This was taken before the fire had reached the property. He stated that the authenticity of the photograph was absolutely guaranteed and that in event of litigation, the testimony of the photographer was available. He further stated that acting for the re-insuring company, he would not follow the California for more than sixty-five cents on the dollar. I borrowed the photograph and at once sent for the claimant. He called the next day. It was found on examination that he had made the statement to the general adjustment committee that the property was not damaged prior to the fire. Unfortunately, no affidavit was taken from him to that effect. With the photograph before me, I realized at once that the claim was not an honest one. I explained that the larger part of our policy had been ceded to other companies and that some of them demanded, earthquake affidavits with every claim; that while I regretted to put him to any inconvenience, it would be necessary for him to produce this testimony. He looked me squarely in the eye and said, "I'll sign it and swear to it. Not a brick in the whole building was disturbed." He attached his signature to the affidavit. I showed him the photograph and then stated that we should be compelled to penalize him to the extent of thirty-five cents on the dollar. As a matter of equity, there was little, if any, liability under the policy. He shouted, "Fake!" "No," I replied, "simply a matter of contractural rights and of justice. The picture is absolutely bona fide." He left, emphatically stating that he would at once "go to the bat." I suggested that he submit the matter to his attorney. Fortunately for him, he had a wise one who promptly advised that he accept the terms offered.

This is another angle of the settlement of the San Francisco losses--no more nor less in fact, methods, and manner, than that with which other legitimate companies had to contend.

Special Meeting of Stockholders

Another historical meeting was held August 9th. This time at the office of the company. It was a special meeting of the stockholders. Three assessments had been levied of forty dollars each, amounting in all to 0,000. This money had been paid out in settlement of claims. This was the first meeting of the stockholders proper since the fire. The directors realized that in response to inquiries from the stockholders who were principally interested that they were entitled to a report as to the progress made and the policy to be adopted for the future. Over ninety individual stockholders were present and in order to accommodate the crowd, the employes removed their desks and chairs, and during the time of the meeting adjusted losses and discharged their duties on the sidewalk in front of the building. The early-comers had seats. The late-comers stood, but so interesting was the meeting that discomforts were forgotten. The president made a very full and analytical report, finishing with the announcement that another million dollars would be needed to continue the splendid work and accomplish the final result of bringing the California through the disaster with justice, equity and fairness to all its contract-holders. The atmosphere was charged with optimism and enthusiasm and amongst all the speeches made, and they were many, not one bore any intimation of regret or of any desire to do other than march steadily ahead. Mr. Ignatz Steinhart, at the time manager of the Anglo-Californian Bank, careful, cautious, shrewd and a hard-headed financier, in his speech practically struck the keynote of the whole meeting. He said in substance:

"I have lived here many years and I expect to die here. I love San Francisco and I know you all feel the same and it is my honest conviction that the directors of the California have adopted the proper and only course and that its stockholders will stand behind them, and that, the company will pay its losses at the rate of one hundred cents on the dollar without discount. I now present a motion that it is the sense of this meeting that the Board of Directors be given all that they request and that all their actions are hereby heartily ratified, approved and confirmed."

There was not a single dissenting vote. At this time a stockholder enthusiastically jumped on his chair and proposed three cheers for the company and the management. The clerks on the sidewalk and some of the passers by rushed into the crowd to see what was the cause of the commotion. When the meeting adjourned, the confidence of all was renewed. The barometer of their enthusiasm and determination had risen and smiles and handshakes put the period to the gathering. Seldom, if ever, has an Irish dividend meeting been held and disbursed with such a wholesome feeling of satisfaction. It was more like a "melon cutting" than a preparation to excavate to still lower depths their pocketbooks. Never was the true California spirit more faithfully portrayed.

The Final Supreme Effort

The annual statement of the company at the end of the year showed beyond the peradventure of a doubt that the company had kept the faith, but it was left with a very attenuated surplus. Then business began to grow by leaps and bounds. The bread which had been cast upon the waters was returning and another problem now confronted the company--to protect the reserves on the rapidly increasing income. This required a working surplus and meant more assessments which seemed to be adding insult to injury. The stockholders had already provided the funds to pay losses and to now ask for more money for any other than loss-paying purposes, gallant as was the spirit of those directly interested, seemed dangerous. The directors and some of the more prominent stockholders met informally and discussed the situation and the concensus of opinion was that the honor of the company demanded that it continue to the end to accomplish to the fullest that for which so many financial sacrifices had been made--to take any other course, to discontinue, to fall down, or to break faith with those who had given us their confidence would be suicidal. In this deduction proof was given of the sound judgment and business acumen of those who bore the brunt of the burden in those hot days of battle. They took the position that the reputation which the company had already builded was an asset of almost unlimited value and realized that the peak of the mountain was just a few steps further on--that summit from which the company could look out upon the valley of success and reap the full reward for all the sacrifices its stockholders had made. Plan after plan was submitted for financing, change after change was suggested, but for a time concerted action seemed almost impossible of attainment. Finally, I called upon the largest stockholder and treasurer of the company, Mr. Geo. L. Payne, in his office at the Payne Bolt Works. I laid before him the plan of increasing the capital stock from six thousand shares to ten thousand shares by the sale of four thousand shares at sixty dollars per share which would realize for the company a total amount of 0,000 of which 0,000 could be applied to capital, bringing that item up to 0,000, and ,000 to surplus. While this did not make the surplus as much as was desirable, we were used to economies, to making every dollar count. This has always been a feature of the management of the company. With this sum and by a continuance of conservative methods and proper management we believed it possible to provide for all contingencies. Mr. Payne listened quietly, a pad of paper before him and a pencil in his hand. When I had exhausted every argument and made the best possible statement of the exact conditions, he stated that he realized fully the gravity of the position and then came the flood. He said that, if it became necessary, he, as the largest stockholder in the company, would endorse the proposition to the extent of taking the entire issue. The balance of the consummation of the idea was merely a matter of detail. Another meeting of the stockholders was called and of the many meetings that we had gone through, this stands out brightest of all. The plan was presented and as might naturally be expected invoked little enthusiasm and did not appear to interest anybody. Mr. Payne quietly rose to his feet, explained the position of the company as he saw it and then shocked the assemblage into activity by making public the announcement of his willingness to take the entire issue of additional stock. That was a flash of optimistic lightning the bolt of which apparently struck every man in the room. They sat up, took notice, and awoke to the fact that they were possibly missing something worth while. The outcome was that Mr. Payne was only able to secure his pro rata as the entire issue was promptly over subscribed by the stockholders, it being understood that the right of subscription should be confined rigidly to stockholders of record. Never in my business career have I seen the value or virtue of a leader expressed in so forceful a manner as in the effect of Mr. Payne's offer upon that meeting. It was the greatest evidence of applied psychology that ever it has been my good fortune to experience.

Recapitulation

These memoranda I have written years after the happenings which they sketch. They are drawn from the records of the company and from the tablets of my memory. Those upon which I have touched were amongst the higher lights, they are vivid in recollection and as well remembered as if they had taken place at a recent date.

Those were strenuous times. Times that not alone tested the dignity and honor of men, but rocked them to their very foundations. Only the admittedly honest and honorable men survived the experiences of those days without blotch upon their escutcheons. It is naturally to be presumed that the minds of those who passed through those days of reconstruction recall many deeds of heroism, of sacrifices made upon the altar of duty. Each has the surmounting of his individual trials to remember, but amongst all that was done as the result of the San Francisco conflagration there is, in my opinion, nothing carrying greater, honor or higher integrity than the work and sacrifice of that gallant band of men who were directors and shareholders of the California Insurance Company. They were the pioneers and the sons of pioneers who braved the hardships and terrors of desert and sea--the founders of this great commonwealth. Incidents and happenings which have passed from public record will still live in the memory of those who played a part. The wonderful rehabilitation period, with all that it meant of physical and mental suffering, but typifies today in concrete, stone and brick the sturdy and stalwart spirit of those men who were made absolute pioneers by the ash heap of 1906. Some of these have gone to their last accounting, but for those who are still serving, and still tugging at the oar, there remains but to guard the heritage which they bequeathed--to bring upon the results of their work a continuation of their ideals.

The spirit of 1906, glorified by San Franciscans, which alone made possible the resurrection from the ashes of that "city loved around the world," sitting serenely upon its seven hills by the portals of the Golden Gate and whose destiny is oblivious of fire and earthquake, is worthy of more than a passing tribute. Its example should thrill and encourage those who are inclined to falter. It is a beacon light to those who are to continue the struggle with the petty details and the larger duties of everyday life. And among the contributors none are more to be admired or borne in reverent respect than the directors, those men who held either large or small investments in the "California" and were true to their trust.

Conclusion

Whether the end justifies the means depends upon the judgment of the critic. It is possible that there is too much of personality herein, but in justice to the writer, it must be borne in mind that no attempt has been made for literary style; that the task imposed upon him was attempted solely to comply with the insistence of others and that the use of the first personal pronoun is the readiest vehicle of expression.

No special mantle of credit rests upon his shoulders. If there be any such garment it drapes the shoulders of every man connected with the company from the humblest employee up through the heaviest stockholders to the highest official. It overlaps and falls with becoming dignity on the shoulders of those who are fellow citizens and fellow Californians, who shared with us as we shared with them the heat and burden of the days succeeding the never-to-be-forgotten disaster of April 18, 1906.

The Spirit of 1906 is a book of the Primo Press, San Francisco, printed in April, 1921

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