STILL FLYING AND NAILED TO THE MAST
Chapter Eight: Twilight Of An Age Now Gone
In May 1921 the Fireman's Fund gave the required fifteen-day notice to cancel all its registered-mail insurance, a line of business the Company had written for more than fifty years. The announcement came as a blow to the financial community.
"Officers of the Fireman's Fund must regard this situation as very grave," said one banker, "when they choose to disturb their relations with the banks of the nation, and what is more ominous, they must feel that it will grow worse rather than better."
As in every line of insurance, the Company had suffered losses, big and small, over the years. But on November 13, 1920, the Company found itself liable for a lion's share of the biggest robbery in the history of the world.
At six-thirty that Saturday evening, Orville Phillips, seventeen, and Fred Poffenbarger, nineteen, broke into a Burlington fast mail car due to leave the Council Bluffs transfer station for Chicago. Orville's brother Merle, twenty, a railway mail handler, had walked ahead and asked the engineer for a ride down to the passenger station. He was to act as lookout and keep the engineer occupied in conversation. Six blocks down the line, at a crossing where the train would make a stop, sat twenty-four-year old Keith Collins, in a stolen Maxwell sedan.
When the train pulled out of the station, Phillips and Poffenbarger opened the doors and waited until the train ground to a halt at the crossing. As the engine started up again, they kicked ten canvas bags to the ground and jumped out, closing the door behind them. With Collins' help they loaded the back seat of the Maxwell and drove off in a rush unobserved.
In their hurry to get away, the thieves left one of the bags lying beside the track where a sharp-eyed mail clerk spotted it shortly after. If he hadn't seen and reported it, the theft would have gone undiscovered until the train reached Chicago. A quick check at the passenger station revealed the crime.
When the news broke in banner headlines, the Atlantic Marine and home offices anxiously exchanged wires to determine the extent of their liability. It was grim testimony to the Company's eminence in the field: stocks and bonds valued at several hundred thousand, $50,000 in ten-dollar bills (serial numbers unknown), and $500,000 in unregistered Liberty Bonds. For insurance on the latter, the Company had collected a $36 premium.
Dozens of postal inspectors, Secret Service men, insurance investigators and private detectives converged on Omaha and Council Bluffs. From San Francisco,
Vice-President John Marshall telegraphed the Company's Nebraska field man, Charles Siefken, with orders to work full time with the government agents on the case. Siefken enclosed his first report to Marshall with the words:
"I thank you for the honor of turning over this large deal to me and assure you that I will be on the job every minute..."
The train's engineer, a man named Alonzo Quinby, had been somewhat puzzled by Merle Phillips' arrival that evening and, on the chance he might have had a role in the robbery, turned Phillips' name over to the railway inspectors. Thirty-six hours later, Phillips broke under what one newspaper called an "inquisition," and implicated Poffenbarger and Collins but covered for his brother Orville. To his credit, Orville immediately confessed his part and tried to alibi Merle out of any connection with the plot.
The morning after the robbery, Collins and Poffenbarger double-crossed the Phillips boys and split the $50,000 cash, but both of them were soon caught and forced to produce the money. All but about $2500 was recovered. Collins had skillfully concealed his share in a bread tin under a stair. Poffenbarger's share was found in an ingenious assortment of places: at the bottom of a lard jar; in a can hung by a string from the seat of an outhouse; in a mule's bish heap. The four principals were sentenced to terms of twelve to eighteen years in Leavenworth. Collins turned state's evidence and was given half the thirty -year sentence he originally faced.
All of the take was eventually recovered or accounted for with the exception of the $500,000 in Liberty Bonds. Collins had confessed that he found them in the bags he opened by himself, and claimed he had placed them in an old suitcase weighted with cobble-stones and thrown them into the Missouri River from the Douglas Street Bridge. Siefken had searchers dragging the river bottom for weeks, in vain.
The Company had paid the loss less than a month after the robbery, but because they couldn't prove conclusively that the bonds were destroyed, it took two years and an act of Congress to get the new certificates issued. The Company had to post a bond with the Treasury guaranteeing that it would pay double the face value plus interest for each of the missing bonds negotiated.
The Company had spent about $90,000 in the investigation, much of it in legal and detective fees. Unlike most losses, this one proved profitable. In the two intervening years the bonds increased $92,000 in value - a $2000 net gain on the loss.
On April 1, 1922, Siefken, still hopeful the bonds could be found intact, wrote with characteristic enthusiasm to Marshall:
"The question now arises in my mind, can we secure valuable information from Merle Phillips. I honestly believe we can...it is my suggestion that you allow me to make one more attempt to secure information... from Phillips, or possibly Collins or Poffenbarger, (I would not have much hopes in the latter, as he has sworn to destroy me)..."
In a postscript he wrote:
"I have spent so much time and effort on this case that I do so want to be at least partly instrumental in the recovery of these bonds if they are still in existence."
Poffenbarger was never to have the chance to fulfill his oath. At nine-thirty in the evening of May 20, Siefken received a call from his sixteen-year-old son Robert, who was tending a neighborhood Omaha gas station by himself. He was concerned about a suspicious-looking stranger who had been loitering around the station.
Siefken, with his wife and thirteen-year-old daughter, drove past the station and circled the block. As he pulled in to park across the street, they saw a masked man run from nearby shrubbery into the station. Siefken, carrying a German pistol, jumped out of the car and ran over to stop him. In a blazing exchange of gunfire, the bandit backed out of the station and vanished in the dark. Mrs. Siefken found her son and husband lying in a pool of blood on the station floor. Siefken's last words before he died the next day were "How's my son?" The boy died four days later.
Many suspects were arrested in the man hunt which followed, but not until 1934, with the unsolicited confession of a Louisiana convict, was the murder solved.
The Fireman's Fund did not withdraw from the registered-mail business because of the Council Bluffs robbery alone. Judge Wade, in sentencing Poffenbarger and his friends, stated:
"This mail robbery has caused more big crimes in the country than anything that has happened for a generation. Robberies of the mail have become so frequent that the government will be obliged to place guards on all mail cars when anything of value is carried."
The rash of holdups in the first months of 1921 had no precedent, and each robbery hurt the Company more. The Fireman's Fund was prime underwriter for the Federal Reserve Banks, and the great volume of Liberty Bonds transferred by them through the registered mail made the Company particularly vulnerable.
On March 3, 1921, two gunmen hijacked a mail truck that had come to a stop at a railroad crossing in Los Angeles and made off with $275,000 in Liberty Bonds and industrial bearer bonds, which were almost as good as gold. This was the last straw.
It was a difficult decision to make. No responsible insurance executive wants to cower and run in the face of losses. Three factors forced Levison to make the unpleasant choice. First, the Fireman's Fund had built up a far greater proportion of registered-mail premiums than the other companies, and was thereby faced with a liability which must have brought back memories of 1906. Secondly, he could see no improvement in the protection of the mails, and third, the Company's reinsurers, although a patient lot, were deeply concerned.
It proved to be a mistake, one which Levison readily acknowledged as his own. Fortunately, the other companies stayed in the business. Without insurance, the banks and brokerage houses would have been in great difficulty, and blame would have rested squarely with the Fireman's Fund.
As it was, they suffered in small ways for years. When it became certain that the postal security system was sufficiently tight to forestall a repetition of the postwar crime wave, the Company quietly re-entered the business and, to no one's surprise, found few takers. To this day, the Company does not write its share of the business. When the Fireman's Fund Indemnity Company was formed in 1930, to give an example of the feeling that had been generated, the manager of the Twelfth District Federal Reserve Bank refused to accept Fireman's Fund fidelity bonds, and this rule held until he retired.
As everyone knows, the 1920's were something unto themselves: jazz and Normalcy and blind pigs and talking pictures and two cars in every garage and women with bobbed hair smoking cigarettes. Prosperity was spelled with a capital P, and the Fireman's Fund prospered right along with everyone else.
Stock fire insurance companies, through their boards and associations, had agreed decades before to limit each locality to one agent per company. This rule had been the reason for reviving the Home Fire and Marine. By forming the Occidental, owned largely by the stockholders of the Fireman's Fund and the Home Fire and Marine, the group of companies could then legitimately appoint three agents in each town. As if this were not enough, paper entities with such names as "Fireman's Fund Underwriters," "Home Fire and Marine Underwriters," "Occidental Underwriters," "Silver State Underwriters," etc., were created, each entitled to its own set of agents. These annexes (as they were called) divided their business among the three parent companies.
The Occidental Indemnity was organized for the sole purpose of accommodating big West Coast shippers. A federal act had been passed requiring workmen's compensation for longshoremen, but no casualty company wanted to write it. Fire and marine companies were forbidden by law from writing casualty insurance, so to keep and enhance the good will of the Company's marine clients, Levison, with some trepidation, made his first venture into the casualty field. A year later the new company began writing liability and other casualty lines, and on this experience the decision to launch into the business on a nationwide basis was made. The Fireman's Fund Indemnity Company, with Charles Page as godfather, a capital of $1,000,000, and a surplus of $3,000,000, sprang full blown into competition in the fastest-growing section of the insurance industry.
Beginning in the 1920's, more and more emphasis was placed on the Eastern operations. When A. K. ("Pop") Simpson, who had succeeded Colonel Kellogg in 1909, retired in 1921 as manager of the Eastern Department, Levison hired Edward T. Cairns away from the North British & Mercantile to replace him. Cairns brought thirty-four-year-old Charles Crawford Hannah along with him, and in so doing started a chain of events that would have far-reaching effects on the course of the Company's history. When John Marshall retired as vice-president in 1928 because of poor health, Cairns was named to replace him and was called to the home office to take charge of all fire underwriting. Hannah moved up and began his search for an assistant to supervise Eastern fire underwriting. In 1929 he and Cairns approached James F. Crafts, a thirty-year-old assistant secretary of the Queen Insurance Company, with an offer of a second assistant managership of the Eastern Department. They had had an eye on the young man for years. In fact, the department's first assistant manager, Ralph Goodwin, had attempted to hire him away from the Queen as early as 1924. But Crafts was not interested in making a lateral move even if the change meant an increase in salary. His future with the Queen was excellent and he saw no reason to leave.
Fate took a hand the following year, however, when Goodwin, who had suffered from a chronic heart ailment, collapsed and died. Only then was Hannah able to prevail on Crafts to join him in the Company. Together, with Crafts one step behind, they advanced up the corporate ladder. Each in his turn was to become president of the Fireman's Fund.