LLOYDS

New Zealand Graphic, Volume XLII, Issue 12, 24 March 1909, Page 33

LLOYDS

The Great Marine Insurance Co npany, with a Sea wide Business, whose Records Show the History and the Character of Every Important Ship Afloat, and the Record of Every Master —The Romances Among Its Records—lts Interesting History.

( By

CHALMERS ROBERTS .)

PROSAIC modernits Lis left, little romance in tin* life of the ordinary man who goes down to the city ami toils. Commercial activity has stretched such a network of interests over the earth that few regions are now beyond the r *aeh of breakfasttable bulletins. Only the sea remains the home of mystery, retains a’l the charm of uncertainty. Ami, therefore, those whose business is concerned with the sea have perhaps most of old-time romantic

flavour in their lives. An unceasing war wages between the grim old monster and the men wi.o insure ships against its fury. How it must delight now' and then to upset all their calculations, to force back the ever-advancing tide of man’s mastery over it! For the story of Marine Insurance is one of constant conquest over the chances of the sea, of constant reduction in the risk taken and the rate asked. But even yet, until the day when Marconigrams Hood the fact* of the waters and every ship has a spark-emit-ling masthead, the risk and mystery re mains greater than in any other insurance underwriting. Modern statistical returns have made it easy to compute the average of human life, but mortality tables for ships have not yet been constructed. This is undoubtedly the oldest form of insurance. From the earliest times shipowners have combined for the mutual protection of their constantly endangered property. Those earliest voyagers to distant seas, the Phenivians, practised a kind of bottomry. Before the mastei sent his small banpie on a voyage to the edge of the earth In* mortgaged her against her return. If she came back safely he restored the loan with a heavy premium. From that time until now marine insurance has been bound up with the wars, frauds, and vicissitudes of commerce, and is full of line tales of adventure. It is particularly lifting that Great Britain, the very existence of which

is bound up in the rapid movement of a large commercial fleet, should be tin* home of marine insurance in its most perfect y orginised form. For this form of protection against the chances of the sea m ty Le said for all modern purposes to have been born in London. One may go further and fix its birthplace in the coffee-home kept by a certain Edward Lloyd in Tower-street in the seventeenth (ontury. For, although there was little evidence that Lloyd hinis.e’f engaged in

any sort of insurance, he has given his name thereto and has become in tact a godfather or patron saint of marine commerce. The early association between coffeehouses and marine underwriters is not to be wondered at. for these resorts became almost from their date of opening a general place of meeting for all men of business. The first on record is found in

H»’>2, when a Turkish merchant named Hodges introduced the brown berry in this way and opened what contvni|M>rary chronicle* call a “Kauphy 11 ohm*.'* And before the name of Lloyd occurs, notices ami advertisements were to be seen showing that shippers and imderw l iters used the new taverns, particularly those in tin* city, as places for auctions of ships and underwriting against their possible loss or damage. The first mention of the name of Edward Lloyd is in an advertisement in the London “Gazette” in 1(5S8. 'l’he advertisement reads: “A middle-sized man having black curled hair and pork boles on his fart* is wanted for having stolen a number of watches. A reward of one guinea, is offered for information as to the delinquent, ami those who would earn money are directed to apply to Mr Edward Llo\d at his Coffee House in Towerst reet. ’ Edward Lloyd moved in 1G92 to Lombard street, ami it was here that he began the publication of “Lloyd’s News.’’ a paper which contained intelligence from foreign countries ami home centres. In fact, very little else is known concerning the man whose name has now been carried to the uttermost cor liars of the earth. Almost the only other record left of him individually concerns a dispute which he had with

tin* House of Lords in consequence of some comments which he made upon a petition from the Quakers. In this encounter he appears as a doughty man. for when the noble Lords demanded that he publish a retraction of his statements he declined to do anything of tiesort. lie returned their demand with a reply that “Mr Lloyd will print no more at present.’’ And no more did he. It wa< thirty years later before his paper was revived as “Lloyd's List," -inc* when it has gone on uninterrupted to its present honourable age. Little further is known of its founder, but after his d*ath the coffee-house kept its original name for many years. It does not appear throughout th* greater part of the eighteenth century that merchants and underwriters frequenting Lloyd’s rooms were bound to • nHier bv any organisation. It was probably as the result of the enormous gambling crazes of the seventeenth een turv. so inseparably bound up with Hr* historv of insurance, that formal and final organisation took place in 1771. Bui Lloyd's coffee-house played an importa.it part in the long reign of insura i< scav.’als ami financial bubbles wlii li make almost tin* whole of tin* eighteenth centurv famous in financial annals. I i 17(58 a writer in the London “Chronicle*’ declared that Lloyd’s coffeehouse was the scene of all manner of illicit gaming, ami that insurance bad been develop'd into more or les* fraudulent bet- upon <>l<>«*Honon resignation* of the Gov

vnimeiiL all the live- of di-t iiigili-hed people, and even upon tin* cxeciitio.i of certain well known peers. To look back briefly over (hi- vurion- development of financial history we find that it wa- an important day when near 1 ; at tin* end of the seventeenth century the -on of an Edinburgh goldsmith e*caped from the King'- Bench prison in London, having been tried at <>l<l Bailey for murder and condemned to death. The fugitive son reached the

(oa*t of France, and in the Hue *nd (Ty which went after him iTi- n.um was given as John Law ami ho was described as “A black, lean man about six feet high, large pock holes in his face ami easily known by his high nose and his loud and broad speech.” Although tin* description of this fugitive is not attractive. he seem- to have* been able to exercise wonderful iiillm nce over those or the highest birth and rank. lift In.-aim* tin* intimate friend and counsellor of tin* Regent of France, (‘omp--11 oiler (Jeneral of tin* Exchequer of the Kingdom, and tin* originator of tin* most gigantic financial imposture ever known. Not only individuals, but masses of people and nations must go mad at certain periods, for in no way els* can be described Hu* furious seething mass of pimple whirling round a group of needy speculators in the Rue Quinrompoix. Paris, during 1718 and 1719. In these years Law and his Mississippi Company ruled everything. The di-east* proved infectious, for. leaving Paris, it came t * England and found its culmination in the South Sea bubble. During this tune, and in fact for a period of about forty years, the greatest, scoundrels in England were starting in-iirance com-

panic- ami selling -hare- it price- vary ing from a quarter of a dollar to 5.000 dollar-. At the time of the South Sea mania there were more th.in two thou -amis scheme- alloat in the shape of j< int -lock undertaking- representing a nominal capital of 2.500.000d015. about five time- the current ca-h existent in till Europe. It wa- onl\ nece-sary for an uiikonw per-on to take a room and to advertise to receive subscriptions amounting to thousand- of pounds, which it is needle-* to -ay. disap|H*ared along with the promoter. At this time

all manner of insurance swindles were afloat. Advertisements may be seen offering to insure horses from natural death, to increase children's fortunes, and there was even a company which etTered general assurance from lying. It was in 1774 that the association of underwriters and brokers calling itself The New Lloyds settled down in the Royal Exchange. It was here, at about, this time, that the printed policy of insurance was first made uniform: and that adopted on the 12th of January, 17 711. is used with few alterations to-day. In fact, it is identical, except that the opening formula. "Be it known that, has been substiuted for the more pious. "In the name of Clod, Amen." the association was again reorganized in 1811, but was not finally incorporated by an Act of Parliament until 1871. I he objecs of the incorporation were stated to be (1) carrying out marine insurance, (2) the protection of the interests of members of the association, and (3) the collection, publication ami diffusion of intelligence and information with respect to shipping. In 1871 the society created a Nautical Institute called Lloyds Register of British and Foreign Shipping. This cla sification of ships is the work of a <eparate executive. The first steamer noted on Lloyd's Register was the James Watt. 294 tons, built in the previous year at Grenock. ami classed as "A 1. that brief but very significant term. • \ 1." ha-' become so general a colloquialism that people who constantly Use it have probably little idea of its origin. In imitation of Lloyds there was founded at Rostock in 1868. ami afterwards transferred to Berlin, the G.rmani-ehe Lloyds. After this French. Russian ami American eompanie- have been similarly formed. '1 he name has also been adopted by navigation companies. perhaps because of the seeulitr it seems to promise. The North German Llovd of Bremen founded in 1857. traverse- the North Sea. the waters of Eng land. North and South America. The Austrian Lloyds, founded in 1836. was at first a marine insurance company, but now it sends ship- through the Adriatic and Mediterranean seas and acro-s the Italian Ocean to Hongkong. The wreat central room in the handsome Lloyds building in London is available only for sub-crfbers and members, ami is generally spoken of as the "Room." Sub-eribers pay 25 dollars per year and have no voice in the manage inent of the association. Non-under-writing members pay an entrance fee < f 60 dollars, while underwriting members pay an entrance of 500 dollars and

also deposit securities of a value of from 25 000 dollars to 50.000 dollars, according to circum-tances. Lloyds is managed by a committee chosen from its own members, which in turn appoints clerks and a secretary to attend to the daily routine of business. The mode in which this is done is very simple. Brokers write on a slip of paper the name of the ship, the ship’s master, the nature of the voyage, the subject to be insured, and the amount at which it is valued. If the ri.-k i- accepted, each underwriter subscribes his name and the amount he agrees to take or underwrite, the insurance being effected as soon as the total amount is made up, and in these times ot progre-s in shipbuilding and navigation the sum paid by the insured to the underwriter is a very moderate tax indeed.

As in the old days of insurance gambling, all manner of risks may be but marine insurance is the only kind which receives official recognition. There are two classes of members —brokers who act for clients, and underwriters who do business on their own account. Admission is not easily obtained, and the most careful investigation is made into the character of all applicants. No one who has been in the ‘‘Room” at Lloyds during office hours will forget the animated scene. The underwriters sit at tables ready for business, and to them brokers come constantly submitting risks to be covered for their clients, or perhaps some member comes to gain information before undertaking a. certain risk. As has been said before, the intelligence system at Lloyds is as perfect as modern ingenuity can make

it. The coasts of nearly all the civilised world are subdivided into districts which are covered by Lloyds agents, and much fuller news is obtained when the subject for information comes within reach of the signal stations which have been erected throughout the world at Lloyds’ expense. All the marine insurance companies of the world practically are dependent upon this source of information. To the underwriters’ associations in Paris, Marseilles, Bordeaux. Genoa. Hamburg, Bremen, Berlin, and in fact all the commercial centres of Europe; to New York for the underwriters* association there, and to Melbourne for the underwriters in the Australasian colonies go constant bulletins from Lloyds. The registers available for members are wonderfully complete. Near the entrance to the “Room” is the huge casualty book, in which may be found recorded the fate of many a gallant ship. In another set of volumes are set down the movements of every British vessel, for these are entered up as the telegraphic news arrives, and the actual position of the vessel and the name of the place where she was last spoken is There is still another register containing the biography of every skipper in the British Mercantile Marine, where and when he was born, on what ship he served his apprenticeship, what vessels he has commanded, the casualties that have befallen them, and anv other information which may be of help to the underwriter about to undertake a risk in which this particular captain is concerned. There is another volume called the Confidential Index, which is not so easily obtainable by the public. Tn this the underwriter finds the history and financial standing of every ship owning firm and company. Here. too. is to be found a list of captains who have had their certificates suspended, with reasons for suspension, and whatever other information is considered of value to those who conduct marine insurance business. One of the most distinctive sights to the average visitor to Lloyds is the crier, who stands in a rostrum under a great sounding-board, and announces good or bad nows as it is received from the four corners of the earth. A great ship’s bell is placed above his right hand, and when it rings out. all the noisy babble of the place ceases, as everyone is keen to hear whether the news announced concerns some long-belated ship’s arrival in port or if the intelligence adds another name to the many which have surrendered to the fury of the sei. And after this will be posted a very brief formula concerning the missing ship, which is full of sig-

hiticance, for it means that all hope is gone and that captain and crew are dead in the eyes of the law. There is a room devoted wholly to the posting of these notices and telegrams, und it has come to be called “The Chamber of Horrors.” The bell which announces the news, good or bad, which is daily received, is itself connected with a romantic chapter in the history of Lloyds. The late Mr Frederick Martin, the historian of Lloyds, as well as the best authority upon marine insurance, tells very fully the story of the wreck of the warship Lutine, to which this bell formerly belonged. For about 60 years the bell itself lay at the bottom of the Zuyder Zee. The ship went down in the autumn of 1791 with all on board save one solitary survivor. It was originally a French man-of-war, but after its capture by Admiral Duncan it was added to the British Navy. At the time of the disaster she was" on her way to Hamburg with a large amount of gold and bullion on board, consigned there by English merchants. But as this was the day of the newspaper hoax, the most extraordinary stories were printed in the London papers at the time about the cargo. One story had it that the Dutch crown jewels were on board, and that the treasure on board amounted to £2,000,000. There is no doubt that the amount was a large one, but as England was then at war with the Netherlands, and the Netherlands Government claimed the wreck, English underwriters had little hope of recompense. It is said that local fishermen succeeded in salving coin and bullion amounting to $415,000 from the wreck, and were allowed by their Government to retain a third of this. But peace had oeen restored many years; in fact, not until 1858 were salvage operations begun on a scientific scale. As a result of this search, Lloyds secured in all the sum of $llO,BlO, as well as the bell which bears the royal crown and arms of Bourbon, and the ship's rudder, from which were made a great armchair and a table, which are to be seen in the underwriters’ room, 'ibis sum saved, however, by no means satisfied the expectation of those carried away by the glamour of submarine treasureseeking, for even in 1871. when the Aet of Incorporation was granted, the committee of Lloyds secured the insertion of a provision that “the society may from time to time do or join in doing all such lawful things as they think expedient with a view to further salving from the wreck of the Lutine.” It is needless to say that this organisation is, to a great extent, the public prosecutor as well as the police system of the sea It is largely owing to the relentlessness of Lloyds in dealing with wrong-doers that many old forms of piracy and sea knavery have come to an end. This is not to say that the members of Lloyds quibble over genuine mistakes. They have been known to pay insurance without question even where the ship lost had sailed from another port than that named in the policy. Still it is inevitable that underwriters should at times be victimised. Of course, unscrupulous owners and captains do not scuttle ships now with the same impunity which they enjoyed in the early days of marine insurance. But the records at Lloyds are filled with stories of bold buccaneering men of the sea, and also filled with the very severe punishment meted out to them. Even to-day cases of fraud discovered in attempts to secure marine insurance unjustly are dealt with very severely by the courts. A well-remembered case at Lloyds concerns the yacht Firefly. Not long after this boat had been insured for a considerable sum, two men landed in an exhausted condition from a rowingboat on the south coast of England. They told a long story of shipwreck, of perils braved, of how the Firefly had gone down, and under what great difficulty they had escaped. It was subsequently discovered that the whole story was an invention, and that the very boat in which the escape had been made had been stolen by the shipwrecked mariners. They were just upon the point of receiving the sum of insurance money they expected. They obtained instead a lengthy term of imprisonment as the just meed of their audacious crime. But with the developments of modern science these enterprises have become as rare proportionately as have the actual risks which nowadays threaten marine commerce. Marine underwriters of a hundred years ago would indeed be amazed at the enormous reduction which has taken place in insurance rates. The

price of gold bullion between London and New York is only twenty-five cents net per 100 lbs., and this covers not only the risks of the transatlantic voyage, but transit from the lamdon house to the liner ami from the liner to the firm in New York to which the bullion is consigned. Ami the most easily negotiable of securities, even when sent by registered post lietween England and the United States, can be covered by insurance at the rate of one-third per 100 lbs. There eomes a time, however, when this very rate rises by leaps and bounds, ami seems to point in its rise to a great loss of life and property. Only recently a great Atlantic liner was announced to be three days overdue. On the third day there was no noticeable advance in the rate charged for those who had neglected to insure property shipped upon it, but on the fourth day, when anxiety as to both the passengers and the property on board Hid increased it was ominously announced from Lloyds that the rate of insurance upon that particular vessel had been advanced to £2 in £IOO. This was on Tuesday. On Wednesday, when no further news had been heard, the rate had jumped to £5 in the £IOO. On Thursday it reached £lO. and by Friday the enormous su mof £2O in £IOO was declared to be the rate in any and all manner of insurance upon the missing vessel. It is needless to say how horribly these announcements confirmed the anxious fears of those most deeply concerned in the arrival of the vessel, for all the world knows that if there is any hope it will be longest found at Lloyds. It is also needless to say that when the great liner in question finally reached her dock in New York, nowhere was there greater rejoicing at the announcement than in the room where it was tolled out by the bell of the Lutine and read by the crier to the assembled crowd at Lloyds.