Business Hints for Men and Women, Alfred Rochefort Calhoun [best classic books .TXT] 📗
- Author: Alfred Rochefort Calhoun
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The English company, known the world over as “Lloyd’s,” is ready to insure an ocean liner, or to guarantee that the next child born into your family will be a boy or a girl; it will even insure that there will or will not be twins, and that, if twins, they will be boys or girls, or one of each.
Now, this looks like gambling, and you would be quite right in so classing it, yet it is founded on the well considered law of chance, and the premiums—call them bets—are calculated with a mathematical precision surprising to one who has not studied the matter.
WHAT IS FIRE INSURANCE?
Fire insurance is a contract between the insured and the company taking the risk, in which for a consideration called a “premium,” the company agrees to pay to the insured a stated sum, should the property, named in the policy, be destroyed by fire.
If there should be a fire, during the life of the policy, and the damage is not total, the company pays only enough to cover the loss.
Should the property be totally destroyed the company pays up to the amount named in the policy.
No company cares to insure for the full amount of the property; that might be an incentive to incendiarism.
In taking a fire risk, the companies base their estimates on tables as carefully worked out and from experiences quite as well studied as those of the actuaries of life companies.
Fire companies are purely business corporations, and their conduct is subject to the inspection of the officials of the state from which they receive their charters.
PREMIUMS
As life companies have rates dependent on the age of the insured, so fire companies regulate their premiums by the location and other circumstances of the buildings; in other words, they calculate the probabilities, and charge accordingly.
There are buildings particularly subject to combustion on which American companies will not take a risk. Among these may be classed kerosene and turpentine stills, sulphur and powder mills, and the buildings in which these products are stored.
Buildings not used for the purposes named, but in close proximity to them, are often considered too dangerous to warrant the issuance of a policy.
In all cases, the company makes a careful survey of the property to be insured, and on this report the amount of the premium is based.
Premiums on fire policies must be paid in bulk and in advance.
Policies should be renewed some days before the expiration of the old ones.
Fire premiums, taking into consideration the amount to be paid, are much lower than life premiums. We know that a man must die, but a building may never burn down, therefore the risk is less.
COLLECTING
A man may insure in a dozen life insurance companies, and each must pay the amount of the policy on his death, but not so with fire companies.
A man owning a house worth, say ten thousand dollars, can insure it in ten companies, each taking a risk of eight thousand dollars.
If this house burns down the man does not receive eighty thousand dollars. The actual loss is calculated and the companies divide it up, each paying its part.
Fire companies, while anxious to issue policies on every insurable house, are more than willing that their business rivals should do the same, as in the event of fire the burden of loss will not be borne by one.
After every fire the company’s agent examines the damage and estimates what is saved. On this the payment is based.
INSURABLE PROPERTY
A building is classed as real estate, but personal property is just as liable to be destroyed by fire.
Fire policies can be secured on goods, furniture, machinery, live stock and other things, and the method is about the same as where buildings are insured, but as a rule the premiums are higher, for such things are apt to be ruined by smoke and water, when the building in which they are stored may not be much injured.
MUTUAL COMPANIES
Men can associate for any legal purpose, and mutual protection against loss by fire is one of these.
In many neighborhoods throughout the country, but particularly in the eastern states, there are mutual insurance companies, usually composed of a number of men who know each other and who agree to share the losses of a member, in proportions agreed to in advance.
This form of insurance is cheap and effective, but the field of its operations is necessarily limited.
STOCK COMPANIES
The stock companies start with a fixed capital, each member receiving stock in proportion to the amount contributed.
The capital and the interest from it, after paying the necessary expenses, is invested, and reinvested, till it often reaches a large sum.
At the end of every fiscal year, usually June 30th, the expenses and the losses paid are deducted from the earnings and the net gain may be divided as dividends.
Often there are not only no dividends, but a great conflagration, like that of San Francisco, may wipe out all the earnings, all the reserve and even the capital itself, leaving the company bankrupt and heavily in debt.
Great calamities cannot be foreseen. No actuary has yet appeared to forecast the acts of Providence, but on the whole our fire insurance companies are well managed and prosperous.
ACCIDENT INSURANCE
We have insurance against storms, against the breaking of plate glass and even against loss from burglars, but the best known of the minor insurance societies are those known as “accident companies.”
Accident policies are of many kinds, and there is no reason why the companies, under their charters, should not extend their risks indefinitely.
Accidents against property are insured much as is destruction from fire, but the nature of the accident as “hail,” “explosions,” “tornadoes” and “insect destruction” must be specified in the policy.
The most popular form of accident policy is that which is sold to travellers, and which can usually be had at the office where one buys his ticket.
The method here is simple, and the purchase may be made in a minute. “I want a policy for $1,000 for ten days,” you say to the clerk. He tells you the amount, you pay and get your ticket, and there you are.
Prudent men have a stamped and addressed envelope ready. Into this they push the policy, and the wife gets it. No, it does not startle her. It is just Harry’s prudence and she is used to that.
If properly conducted, there is much to commend the management of a business through partners.
Never go into a partnership with a man who puts in his experience against your capital, unless you know him like a brother.
“It lasted about a year,” said a man who had done this. “Now the fellow, who has cleared out, has the capital and I have the experience.”
A partnership is an agreement between two or more persons to associate for the purpose of carrying on a certain form of business.
Each member of a copartnership must contribute a stated contribution to the establishment of the enterprise, but each need not give the same amount.
Neither is it necessary that the contributions of each to the firm shall be of the same character.
One may contribute a building, another machinery, or material, and still another money.
The shares in the profits are based on the cash values of the different contributions.
The work of the different parties may be estimated as contributions, but in such cases it is better to pay the worker a fixed compensation, and charge this to the expense account.
PREPARE AND SIGN
Never go into a partnership based on a verbal agreement, unless it be for the distribution of fish, game or nuts, when out with a friend for a holiday.
Have the copartnership articles carefully drawn up and signed before you put a cent into the undertaking. A document like this can be appealed to should disputes arise; and should a partner die, his heirs may find it of the greatest value.
The articles should contain:
1. The amount to be contributed by each. 2. The nature of the business. 3. The time which the partnership is to last.
If the time is not specified, a partner may withdraw whenever he pleases.
If the profits are to be equally divided, this should be stated and provided for.
SILENT PARTNERS
When a man invests money in a business in the management of which he takes no active part, he is said to be a “silent partner.”
Such a partner has a share in the gains and he is responsible as the others for the firm’s liabilities.
Again, a man may not give money or time to a firm, but is willing, for business reasons, that his name shall appear as if he were in the association. In this case the man is known as a “nominal partner.”
Although this man is not entitled to a share in the profits and has no money invested, yet he can be held liable for the debts and other obligations. The reason for this is very plain.
LIABILITY
In all matters rightly belonging to the business of a firm, any member has the right to act, and his acts will be held binding in law.
It is usual for partners active in a business to have each his separate duties, but even if these duties be designated in the articles of agreement, the outside business world is not supposed to know anything about the relative duties of the members of a firm as decided among themselves, so it is decided that each is empowered to act for his partners.
Under the usual articles, it is stipulated that while a dual partnership lasts, neither of the members shall make a note, sign a bond, or enter on any outside obligation as an individual without having secured the written consent of his business associates.
Each partner in a firm is liable with the others for all the business indebtedness.
If a firm fails, and the assets are found not sufficient to satisfy the creditors, they can levy for satisfaction on the private property of one or all of the partners.
If a member of a firm should become so far indebted, as an individual, that he cannot comply with his obligations, the interest he holds in the firm may be disposed of and applied to the payment of his debts.
This does not mean that the creditors may take or seize on any particular thing which the firm holds jointly, but that the debtor’s interest in the concern may be so disposed of. All this the law has provided for.
A new partner admitted into a firm cannot be held responsible for the debts of the old concern.
HOW TO DISSOLVE
Every partnership agreement must provide for and distinctly state the period for which it is to continue.
At the end of the period named, the partnership is dissolved by limitation.
If the partnership is to continue, a new agreement must be made and signed.
On proper application, a partnership may be dissolved by an order of the court.
If a member who has become objectionable to his partners should not agree to a dissolution of the firm, the partners may apply to a court of competent jurisdiction for a decree of dissolution.
No member of a firm can withdraw at his own option. The consent of the other partners is necessary, and before he is released he must provide for his share of the obligations.
Notice of dissolution should be published, and notices sent to agents and others interested.
The following is the customary form
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