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Chapter Nine: A Gray And Troubled Time

In the reckless years before the crash, the Company viewed the booming stock market with mistrust. In 1928, Levison expressed his and the Company's conservatism this way:

"Our business depends upon and naturally follows general business conditions and therefore we cannot do otherwise than to look to the immediate future with the fear that we may be facing a reaction from the present period of unprecedented wealth and plethora of money. On the other hand, such authorities as Secretary of the Treasury Mellon, Secretary of Commerce Hoover and Colonel Leonard Ayres, vice-president of the Cleveland Trust Company (one of the leading financial authorities of the country), all agree that with proper control to prevent over-speculation and inflation the present era of prosperity should continue through 1928. Let us hope that this may prove to be the case and that the great business of insurance may enjoy its full share of such prosperity."

The Great Depression struck the fire and marine insurance industry with a lighter hand than most businesses, but strike it did. Premium income dropped, accounts became increasingly difficult to collect, stock and bond values shrank dramatically, and fear spread across the land. Levison's own words, which appeared in the pages of the Fireman's Fund Record, reveal the disquieting loss of confidence between 1930 and 1933.

February 1930
"While there are some clouds on the horizon, all authorities appear to agree that the business of the country is on a sound basis."

Christmas Message, December 1930
"...Has 1930 been a difficult year? Very Well! But surely it brought a certain compensation, if only because it taught us fortitude and sympathy. Perhaps we were all a little spoiled by good fortune and needed to be jostled out of our self-satisfaction...It is a bewildering situation only to those who are too young to remember other years of much heavier trial. I am quite convinced that by the time another Christmas comes, we shall all wonder at the misgivings that beset us during 1930. Meanwhile, let us warm our hands at the Christmas hearthstone and share with all our friends the Heavensent blessings of peace and good will."

February 1931
"To one who went through the dark days of 1906 in the Fireman's Fund following the San Francisco disaster ... the present economic business situation is not dispiriting in the slightest degree."

Christmas Message, 1931
"As the year speeds toward its close, we come to the celebration of another Christmas -the most wholesome and joyous of festivals. Perplexed and disappointed as we continue to pay the penalty of make believe, we gratefully turn toward the healing comfort of the Christmas message - Peace on Earth, Good Will toward Men.

"Our hearts are filled this year with the ideal of brotherhood; we have accepted responsibility as our brother's keeper and to an unprecedented extent, those

who have are sharing with those who have not. Thus will the hallowed Christmas story be retold more truly at the end of a year that has brought distress and privation to many..."

January 1932
"...having finally been brought to the realization that the pendulum will not swing to the rhythm of our choice until there have been fundamental readjustments, we come to the New Year prepared to face reality. Our idols of bigness and speed failed us just as similar idols have failed earlier generations..."

Christmas 1932
"Let us put aside our doubts and fears and celebrate this Christmas in a happy spirit of hopeful good cheer."

February 1933
"In the face of continued decline in commodity prices, the further shrinkage of purchasing power, the top-heavy debt and tax structure, the stagnation of foreign

commerce and the low ebb of security values, it is natural that insurance... should have found 1932 one of the most trying years in its history."

December 1933
"Peace on Earth, Good Will Toward Men"

"Today, as never before, this age-old greeting is demanding recognition as a definite principle in the lives of men. With nationalistic sentiment growing to the point of fanaticism, with trade barriers and other irritations disturbing relationships between nations, many observers are deeply concerned over the existing international scene. And yet it is hard to believe that world leaders are so blind as to be unaware of the ruin which must surely follow some of their present policies.

"In our own country, economic and social conditions make for uneasiness in contemplating the future. Our President is making strenuous efforts, and although new and untried policies are being employed we must not lose faith."

The Fireman's Fund was one of the last to cut salaries, but in late spring of 1932 the announcement was made: a straight ten per cent across the board with further cuts up to twenty-five per cent among the higher-paid men. It hurt, but there was no rancor. Everyone was happy to have a job. In those days if you were lucky enough to be hired by the Company, it was cause for celebration. The Fireman's Fund was called the

"Tiffany" of the insurance world.

On December 28, 1933, with Christmas come and gone without the traditional bonus, Levison's secretary, Mabel Quinn, went from department to department summoning everyone to the second floor. When they had gathered, Levison came to the door of his office with a smile on his face and read this message:

DECEMBER 21, 1933


[signed] J. B. Levison

You can imagine their cheers. They spontaneously formed a line and, as at a diplomatic reception, everyone shook hands with Levison and expressed his thanks. Today, thirty years later, those who were there tell the story with animation. The day was memorable, as was the evening on the town which followed.

The National Underwriter, a well-known magazine in the industry, picked up the story and wrote a strong editorial urging all the insurance industry to face its social responsibilities. It read in part:

"...We may regard 'social justice' as a slogan of fanatics, theorists and extremists. Today it becomes a living, practical question, the very heart of the 'New Deal.' It was announced some days ago that the Fireman's Fund paid all its employees the country over, one month's salary ... Many were astounded at this action. It is estimated that it cost the Fireman's Fund from $200,000 to $250,000. There has not been a truer revelation of the 'New Deal' and a finer vision of what will have to be the policy of companies in the future than was manifested by this gesture of the San Francisco company.

"Let us all now face the east, see the rising star and give proper recognition to the human side of business."

The 1933 bonus was not an isolated event. The employees had no health plan in those days, but if someone got sick and was unable to pay the bills, the Company quietly took care of them. Beginning with Dutton's retirement, no one was required to work on until old age felled him. The board granted retirement allowances, usually fifty per cent of salary.

Not all of the Company's benevolence was expressed in cash, however. In 1923, Grace Lafferty, who had been Levison's secretary for many years, fell ill and was taken to the hospital. The doctors announced she was near death. In her pain, she developed an overwhelming thirst for champagne, and told this to one of the girls from the office who had come to visit. The girl returned to the office and passed the story on. Levison, who with characteristic foresight had filled his cellar before the Great Experiment was launched in 1920, sent a bottle out to Grace. When the first bottle proved to be flat, Levison dispatched his chauffeur to the hospital with another. The second one was sound and Grace Lafferty had her dying wish fulfilled. Only she didn't die. No one knows whether it was the wine or not, but she recovered and lived on in good health for a number of years.

Although the Depression limited the volume of insurance written, the Fireman's Fund grew in a very modest way from 1933 to the outbreak of World War II.

Levison had submitted his resignation in 1927 when he reached sixty-five, the Company's official retirement age. But because business was doing so well and because his resignation was not an expression of desire, the board prevailed on him to remain as president. In 1937 he moved up to become chairman of the Board of Directors, and Charles Page was elected to take his place. Page was the only native son to serve as president in the Company's first century.

When the Germans invaded Poland on September 1, 1939, in their second futile attempt at world conquest in twenty-five years, a shadow fell across America. Britain and France declared war two days later, and although the nation remained officially neutral until Pearl Harbor, this neutrality was in word only. Except for the rabid right wing, manifestations of which remain today, the American public was anti-Axis from the outset.

Much of the American insurance industry's reinsurance was placed in the English market. The question of what the Fireman's Fund should do in the face of the possible German invasion of Britain was raised at a meeting of the Board shortly after the war began. Page answered, "It's in the lap of the gods. To cancel would be morally wrong."

Board member A. P. Giannini, chairman of Transamerica Corporation, said, "Gentlemen, I think we should back Mr. Page in this." The faith of the entire American insurance industry was rewarded when the English underwriters placed many millions on deposit in the United States to back up their commitments.

On July 1, 1940, the world's third longest suspension bridge, a delicate arch of steel and concrete spanning the treacherous Tacoma Narrows, opened to traffic. The bridge was a source of considerable pride in the Northwest - a symbol of emergence from the Depression. And to the people of Tacoma it was the fulfillment of an old dream.

Admiration for the graceful approaches and willowy lines soon gave way to consternation, however, when the span proved to be so supple as to yield to moderate winds and move up and down in a wavelike motion. As the wind grew stronger, the bridge not only slowly rippled, but undulated laterally at the same time. Driving across the bridge in a stiff breeze was likened to driving down the deck of a ship in heavy seas.

The Fireman's Fund had written builder's risk insurance for the three firms responsible for construction - the Pacific Bridge Company, Bethlehem Steel, and John A. Roebling's Sons - and when the state of Washington took possession, the Company took $350,000 of the $5,200,000 written to protect the bond-holders.

It soon became obvious that the bridge was going to fall. Engineering studies were ordered, but before they even had a chance to start on an effective cure a 45-mile-per-hour wind lashed the center span into an abandoned dance. Pictures of the collapse are as well known as the fall of the Hindenburg or the flag-raising on Mount Suribachi.

Page had been urged by his underwriters and surveyors to cancel the Company's line on the bridge, but he refused to do it. Months before he had been asked by the president of a San Francisco bank if the Fireman's Fund was going to participate in the insurance on the bridge. When Page assured him that the Company would, the banker, at least partly on the basis of their conversation, bought a sizable number of the bonds. Page felt an obligation to stay on the risk.

At the time the bridge fell, Richard T. Saunders and his wife were speeding through the Oregon countryside on their way to San Francisco. Since Saunders had managed a great part of the bridge underwriting for the Company, he had been called to the home office to make a full report on the impending catastrophe. When he arrived the next afternoon, worried that he might no longer be on the payroll, he was called immediately to Page's office.

"Richard," said Page, "I want you to know one thing. If Pacific Bridge or Bethlehem or Roebling ever build another bridge in your territory, make sure we have our line on it. It wasn't their fault the bridge fell any more than it was yours. We lost, so forget it."

Actually, the collapse of the bridge was just the beginning. The Toll Bridge Authority at first agreed that the existing towers and cables should be repaired and a new and rigid deck built immediately. But in the months that followed, the official state position switched around. Contrary to the best engineering opinion available, Governor Arthur Langlie declared the bridge a total loss and demanded the full $5,200,000.

This the companies adamantly refused to pay. In their policy they had promised to pay the amount required to restore the bridge to its original condition in case of direct damage. They did not contract to pay a total loss if the state had no interest in rebuilding the bridge as it once stood. The companies took the stand, rightly, that if the governor wanted to build a four-lane bridge, as one of his advisers publicly announced, all well and good. But they had no obligation to pay more than what it would take to fix the old bridge.

The companies made a final offer in August of 1941, of $4,000,000, which was readily accepted without a word of thanks, even though that amount was at least half a million in excess of what it would have cost to rebuild everything from the piers on up. The companies made the generous settlement not because they agreed with the state's contention but because of the cost and trouble of litigation and the undeserved public criticism which would have resulted.

Governor Langlie said after he had accepted the offer that he had been advised that it was "advantageous to the state at this time." It might appear so. The state collected $4,000,000 from the companies, $250,000 in salvage from the steel removed from the old structure, and owned the piers and anchorages valued at $3,200,000. Added up, the total is $950,000 more than it had cost to build the bridge in the first place.

Langlie thought he had won quite a victory, but nine precious months had been lost. War came before the new bridge could be started. Tacoma and Pierce County, fierce rivals of Seattle and King County to the north, had waited a long time for their bridge, and now they would have to wait longer. Without the bridge, they were cut off from the naval shipyard at Bremerton and took a back seat to Seattle for the duration. Not until 1952 did the new bridge open.

And of Governor Langlie? When the elections of 1944 were over, Langlie found himself no longer in office. And not so strangely, Pierce County appears to have tipped the balance. Langlie had made the insurance companies jump through the hoop in 1941, but his heroics left Tacoma without her bridge. There has been a Democratic governor in Washington ever since.

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