WHO SHOULD BEAR THE COST?
The protection of property from the ravages of fire is becoming one of the most important questions communities are called upon to consider. To properly equip and maintain a Fire Department in each town and city of the country, involves in the aggregate the expenditure of large sums cf money. Some idea of how large this expenditure is, may be formed from the fact that the appropriations for maintaining the New York City Department average $1,500,000 annually. This does not include the first cost of the buildings occupied by the apparatus, and tor other necessary purposes, nor for the original cost of the apparatus, horses, etc., constituting the plant, the whole representing many hundreds of thousands of dollars. Other cities are equipped and maintained at a proportionate cost. In the paid Departments there is no question raised as to who should bear the cost of providing and maintaining the Fire Department. It is taken for granted that the propertyowners, who derive the benefit of its services, should pay the bills, and, consequently the sum required for Fire Department purposes is included each year in the tax levy, and each taxpayer pays his proportion. There can be no question but this is the proper plan, and is right and equitable as between all citizens. The same is true regarding the water supply of New York -the works are owned by the city, are for the use of all classes of citizens equally, and are maintained at public cost.
In some of the smaller cities, where Volunteer Fire Departments are maintained, the question of cost is a vexed one, causing much trouble and dissatisfaction. Fires occur comparatively seldom, and taxpayers are wont to rebel against paying for the maintenance of an adequate Fire Department, apparently forgetting that it is the part of wisdom to prepare for the unexpected, and that it is in the hour of their greatest need that they will find their reward in having taken the needed precaution. A Fire Department may be needed but seldom, but when the emergency does come that calls it into service, the importance of having it thoroughly well equipped in men and apparatus is appreciated. It is a very common thing for taxpayers and even for some Firemen to claim that the insurance companies are the greatest gainers by the work of the Firemen, and hence should contribute liberally to their support. Indeed, we have heard it asserted that the underwriters should bear the entire cost of fire protection. As there are upwards of 3000 Fire Departments in the country, the absurdity of this proposition is apparent —the capital of the companies would be absorbed in fire apparatus and expenses of maintenance, and leave them nothing to indemnify policyholders for losses. It is impossle for one who reasons thoughtfully upon the subject, to see how the insurance companies are more interested in the matter of fire protection than ordinary propertyowners. At first glance it would appear that they were, for, where an insured building takes fire, the loss incurred by the insuring company is lessened by so much as the Firemen save from destruction. But this is a fallacious view of the matter; the underwriters’ interest in the building is equal to the amount of premium they received for insuring it, and no more. It the building stands for years without accident, no one would claim that they had any other interest in it, the owner occupies it, has full control over it, pays taxes on it, and often exposes it to fire hazards that should be provided against. But when the building takes fire it is common to say, “ It is insured and belongs to the insurance companies.” The simple fact is that the iusurance companies are interested in fire protection precisely the same as other taxpayers, which is for the amount they have invested, and this investment in a given locality if equal to what they receive for premiums, and not the amount they have at risk. Upon the amount of premiums they receive, they pay taxes already to a greater extent than any other class of taxpayers, being required to pay for the privilege of doing business in each State, for special licenses for local agents, and a tax upon all premiums received. In several of the States two per cent of this tax is appropriated already to the Firemen’s relief funds. Having paid all the taxes exacted of them upon the amount of business done by them—which is the full measure of their interest in any locality—the insurance companies would seem to be on the same footing precisely as other propertyowners and taxpayers, and interested to the same extent as they are in securing fire protection adequate to cover those interests. To this extent the insurance companies, we believe, will always be found ready to co-operate with their fellow taxpayers in the maintenance of Fire Departments. That they should go beyond this seems to us unreasonable. If propertyowners neglect to provide fire protection, the insurance companies charge higher rates ; but if they co-operate with the underwriters, and provide adequate means of extinguishing fires, then the companies give them the benefits that are likely to result from their foresight by charging low rates for insurance. In this way the companies offer a premium to propertyowners to protect their own property.
We are aware that many Firemen will oppose this view of the case, and claim that insurance companies are interested in a town to the full extent of the amount it has at risk. If it was foreordained that all insured property was doomed to destruction, then such would be the case; but, as a matter of fact, it is only asmall proportion of insured property that burns, otherwise there would be no insurance companies. It is by taking advantage of the law of averages that the insurance companies establish their rates for the numerous classes of risks they are called upon to insure. It is in accordance with this law that they charge more for planing mills, and other hazardous industries, than they do for dwelling houses. One of the prominent factors considered in establishing this law of averages is the fire protection available in each locality. But the fact will be found to be as we have slated it, viz : that the interest of a company in a given locality is only equal to the amount of premiums contributed to it by that locality, and upon this interest they should be taxed uniformly with the other taxable interests of that locality. All losses are paid from the premiums received by the companies, and this forms but a very small proportion of the amount they have at risk. The losses incurred by all the companies doing business in this country have averaged for several years past about 58 per cent of their premium receipts, leaving only 42 per cent to pay expenses, dividends, etc. In fact, the premium receipts have not equalled losses and expenses in many cases, and the companies have only been saved from insolvency by the interest received upon their invested assets, so that, in fact, instead of being a source of profit to capitalists, insurance stocks have been the poorest paying investments in the market. Insurance companies are not organized as benevolent or charitable institutions, but solely as business enterprises, Their interest in good order, good morals, fire protection, etc., is no more and no less than the interest of other business men, capitalists or propertyholders. Like the latter, they should be taxed upon this interest uniformly with other taxpayers, no more and no less.
No special interest can be held responsible tor providing fire protection to communities. All propertyowners and all citizens derive benefit from it proportioned to the value of the property they have at risk, and, consequently, all should contribute proportionately to the equipment and maintenance of the Fire Department that affords them protection. Insured and uninsured property is alike under the watchful eyes of the Firemen, and their exertions are put forth as vigorously for the saving of the one as of the other. There is but one way to apportion the cost ol Fire Departments equitably between citizens, and that is to ascertain the estimated cost for a given year and include the amount in the tax levy, just as the amounts required for the support of public schools, the police force, street cleaning, lighting the streets, etc., are included in the expenses of a city or town and assessed against the property owners, who receive equal benefits from these necessary accompaniments of civilization. It is quite as reasonable to ask the disorderly element of society to support the police force as the insurance companies to support the Fire Departments. Hut for the disorderly classes no police force would be required, and but for the recklessness and carelessness of householders, no Fire Departments would be necessary, for all fires that occur, except those caused by lightning, could be prevented if proper care and foresight were exercised in the construction and occupancy of all buildings. Because of the lack of precaution on the part of all citizens the maintenance of Fire Departments is necessary, and, logically, all citizens are equally responsible for the cost of such maintenance.
In some of the larger cities the insurance companies have established Fire Patrols as auxiliary to the Fire Service of such cities; but this is entirely gratuitous on their part, and is an expense that should, in equity, be borne by the taxpayers. Their object is the protection of property from destruction by fire and water, and this is as much a part of the duty of Firemen as the putting out of fires. But because citizens have not organized this important branch of the Fire Service the insurance companies have done so. These insurance patrols, however, make no distinction between insured and uninsured property, but labor as energetically and efficiently to save the one as the other. The patrols should be incorporated with the Fire Departments, and supported from the same funds that maintain them, the whole being raised by taxation equi’ably imposed upon all citizens.
In this connection Chiefs of Departments owe a duty to themselves, to the men under their command, and to the citizens whose property they protect, and that is to make known promptly the requirements of their Departments, and to use every reasonable effort to secure the means to enable them to keep their Departments thoroughly efficient. To this end, they should make an estimate of the probable cost of maintenance at the beginning of each year, and submit it to their superiors in time to have it incorporated in the tax levy. Of late years there have been numerous unexpected conflagrations in small towns where the fire protection was inadequate, and, on such occasions, Firemen are apt to be censured for inefficiency, when the facts are that they have not the means to do with. They should make known their requirements promptly as they occur, and if their demands are not complied with, they cannot be blamed if their work is unsatisfactory. It is impossible to saw wood with a hammer, or to put out fires without the proper appliances for directing water upon them. Every community owes it to its citizens to provide and maintain adequate fire protection to all property within its jurisdiction, and the propertyowners are the only ones who are properly chargeable with its cost. Chiefs should see to it that the citizens are properly informed as to the needs of the Fire Departments, aud then the responsibility for the efficiency or inefficiency of the Department rests with the citizens and not with the Firemen.