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Public insurance
and compensation money
by Ulrich von Beckerath
(98 digitalization of a  68 reprint which was a premicrofiche version as well)
PEACE PLAN 11,  march 1968 A PAMPHLET SERIES; APPEARANCE ON DEMAND
LAST OF THREE SPECIAL ISSUES ON FREE BANKING - WITH INDEX FOR ALL THREE (not included here)

AIMS: Gradual publication of an ENCYCLOPAEDIA OF ALL PEACE PLANS, in digest form, gathered from all available sources. DISCUSSION OF ALL PEACE PLANS in scarch for the rightful end sensible ones.

TENDENCY: RECOGNITION OF ALL HUMAN RIGHTS, being the greatest degree of TOLERANCE AND IMPARTIALITY which is morally still justified. This implies ANTI-TOTALITARIANISM or condemnation of communist, nazi, and other dictatorships.Contributions are welcome. Reprint Is free and desired. Published, editod end distributed by J. M. Zube, 35 Oxley Berrima lN.S.W., Australis  Postal Code Number: 2577
__ __ _ _ ___ __ _ _ _ _
The Possibility of Developing Insurance Facilities in Asia, in Colonies and New Countries, through applying the Milhaud System; together with some Reflections on this System by Ulrich von Beckerath, Berlin, 1938 (A reprint with permission. See p. 267 The Editor.)
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This file was created near end of nov 98; last minor changes in dec 98
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concerning all sorts of currency issues



TABLE OF CONTENTS
(I kept the page numbering of the  20 c (auz), '68 peace plan pamphlet in for the exquisite purpose of later scanbloop corrections; volunteers anybody?)
    I   The Problem        208
  11  The popularisation of the Insurance Idea in Asia through Public Insurance      209
111 Traits Differentiating Public from Private Insurance       211
 1V, Organisation of a System of Public Insurance on the Assumption that in the Near Future no Specific Guaranteed Capital will be Available nor Reinsurance with Private Companies    211
A, Initial Stage 211
B, The Goal to Aim at     212
C, Nature of Obiects to be Insured and Extent of Insurance Protection   213
D, Dependence of the Uniform Magnitude of Contributions on the Size of a Society 213
E, Advantages of a Moderate-Sized Society   214
F, CompuLsory Membership  215
start of part 2
G, Grant of an Insurance Dependent on Voluntary Membership for Objects not subject to compulsory insurance       217
H, Mode of Paying Contributions        217
(I is not in my copy either)
       1, Due Dates 217
       2 Means of Payment ,
start of part 3
J, The standards of value in legislation to insurance in Asia, more especially in Iran
K,  Indemnification of losses only through reinstatement of destroyed values and not through cash Payments
L. Tariffs 245
start of part 4
M. Dispensing with Reinsurance in Private Insurance Offices 246
V) Fresh Legislation  248
V1) Insurance of Nomad Tribes 249
V11) Co-operation with a Country is Private Insurance Offices 250
V111) Federation of Public Societies 250
1 Time of foundation
2 Federational aid in catastrophes  250
3 Statistics prepared by the federation  250
4 A federational periodical .. 251
Concluding Remarks 251-266
They deal with many subjects such as:
the currency sides to the French revolution
part 5  continues the second half of the Concluding Remarks
on page 256

...............end = and, ffl = m, teut = but.....................
for some more remarks on remaining, uncorrected mismorphscans go to the guest_app. ./intro_to_curr...

I will start with showing the quote on the last page:
"GOVERNMENT MEDDLING WITH MONEY (other than that for and of its own business as one among many, implied here I believe (piet)) HAS NOT ONLY BROUGHT UNTOLD TYRANNY INTO THE WORLD; IT HAS ALSO BROUGHT CHAOS AND NOT ORDER. IT HAS FRAGMENTED THE PEACEFUL, PRODUCTIVE WORLD MARKET AND SHATTERED IT INTO A THOUSAND PIECES, WITH TRADE AND INVESTMENT HOBBLED AND HAMPERED BY MYRIAD RESTRICTIONS, CONTROLS, ARTIFICIAL RATES, CURRENCY BREAKDOWNS, ETC. IT HAS HELPED BRING ABOUT WARS BY TRANSFORMING A W0RLD OF PEACEFUL INTERCOURSE INTO A JUNGLE OF WARRING CURRENCY BLOCKS IN SHORT, WE FIND THAT COERCION, IN MONEY AS IN OTHER MATTERS, BRINGS, NOT ORDER, BUT CONFLICT AND CHAOS".
''Prof Murray N. Rothbard in: "What has Government dane to our Money?"

PEACE PLANS No. 12 will resume again the publication of about two dozen short plens per issue and wilt contain an index covering issues 1-8 and 12

'Universal politics as I perceive it is nothing but universal insurance.
Emile de G I R A R D I N, 1852

              1) The problem
Asia, which is most probably the part of the globe shere men first passed from hunting to stock-breeding and thence to agriculture; ehere first certain individuals stro had becose dissatisfied ei th the old tribal communism and its patriarchal customs, met and asserted their right to enter into contractual relations and chose their rulers and even ne' gods in order to safeguard their rights; Asia, whose languages were anparently the first to draw a clear distinction between "robbers" and 'heroes' and thus introduced the era of a burgess civilisation - this Asia is stilt without a proper systen of  i n s u r a n c e.
     To those who are not economists this deficiency may seem of no great account. They may object that the lack of a system of insurance did not prevent Confucius writing his Yun Lu ( the human factor in government), nor the Brahmans their Veda (the true source of the animating forces in animals), nor the inhabitants of the region between the Euphrates and the Tigris building their Babylon, a city not less spacious than New York and having also regularly laid-out roads (Babylon had a square city sall at most a hundred kilometres in circumference over 100 metres high, and over 30 metres thick, its observatory, the tower of Babel was over 200 metres high we possess no information concerning its suburbs which no doubt were numerous and densely populated.). However, Asiatic communities lacked something that European communities gradually secured for themselves, namely  s t a b i l i t y.
       A community can only possess stability if therein the number of those who have no visible means-of existence, and who are thereby tempted to favour every political upheaval, does not exceed a certain proportion. These should not be confounded sith the beogars and tramps of a country for the latter have either become reconciled to their lot or their nature -inclines them to a life of vagabondage, They may be a menace to individual citizens, but are not dangerous to Governments. However, those "Catiline existences" who have been by some mischance thrust out of their original paths but who, before want has broken their evil power, still enjoy all the intellectual'and coral posers of which officials, eholesale merchants, officers, even scholars are proud, menace both Governments and individual citizens eho have anything to lose. We need only turn to any page of the history of an Asiatic country, to find this ancient truth abundantly confirmed. Already 500 years ago, Lao Tse said that an orderly Governaent is impossible where people do not take death seriously. (Tao-te h king).
    "Catiline existences" are brought into being by two kinds of influences: by social evils (see Jane Schneider on that  one folks; there is a hint at the bottom of recent correspondence), more especially by a bad monetary and payment system such as that of ancient Rome or by mishaps such as conflagrations and hail-storms, floods end disease, deaths in the family-and theft, all of wh.i.c.h may be at-least partly retrieved by a good insurance system. For every million inhabitants in probably every country there are approximately 40.000 private catastrophes annually, producing "Catiline existences" where there is  n o system of insurance These existences a r e therefore created freely in Asia, for the scattered insurance found there is of little general importance economcally.
     The relation subsisting betoeen public security in the widest sense and the necessity to insure against fire theft, illness, and death, is so evident that is has long been recognised when the first insurance societies were founded - .e g., in Prussia and in Switserland  "c o m p u l s o r y  membership'' as justified by referring to that relation and the principles laid down two centuries ego by the ruling authorities concerned have lost nothing of their validity or importance.
    The problem then arises  h o w  Asia may be endowed with a systen of insurance appropriale for its circumstances (The difference, say, between an Indian, a Chinese, and an Iranian average town is much smaller than it could be in Europe or America. A fruitful discussion of the problem embracing the whole of Asia is therefore feasible, despite any differences in the circuastances of particular Asiatic countries, and 209 hence successes achieved by a given ruler may have a valuable lesson to teach to Asiatic countries generally.)
In the development of an Asiatic insurance system the biogenetic law cannot be set aside. The new organism, that is, must pass through the same stages of development as the "species" has passed through before it. These fundamental stages where:
a) Small associations of persons governed by mutuality whose members know one another and have often the same occupation. As statesman of the calibre of a Frederick the Great, a Hammurabi, or a Nizam al Piolk, the great vizier, will promote the formation of such societies wherever he cen.
b) Since such associations are commonly inadequate, they must be followed by societies established by the Government first with compulsory membership. To that we shall return in the sequel, Concerning this, one remark: public insurance anainst acts of nature, as it exists, for instance, in the Prussian societies and the Swiss cantonal institutions,is sometimes misteken by Asiatic economists for "social insurance", which relates exclusively to insurance of the person.
c) Insurance companies on the European and American model, after the insurance idee has become familiar to the masses through the public insurance societies. In the building up of such companies,considerable technical progress is still possible, but this is obstructed by hundreds of obsolete Acts in Europe and America, as well as by excessive State supervision (in some countries no "innovation" may be introduced without the consent of the supervising authority!), end also the notorious inflexibility end unprogressiveness of many of the companies, more particularly the large-scale ones. None of these three types of organisation is ever likely to prove superfluous. They should supplement one another, and a statesman will only watch that none of them should seek to suppress the others. Here are some proposals relating to the technical side.

11. The popularization of the insurance idea in Asia through public insurance
Small associations based on mutuality corresponding to the mutuat aid funds of the guilds end corporations in mediaeval Europe, end even in ancient Rome, are no doubt also to be found in Asia. For instance as regards diverse regions, travellers report that camel drivers replace one another's collapsed or stolen carmels precisely as formerly the German "cow guilds" came to the assistance of the peasantry. These associations it seems, have not even always written rules.
It may be reasonably supposed that the highly developed guilds of China include mutual aid funds, but even Chinese authors reporting on the associational life of their country, confess that it is difficult to obtain information on the subject. This may be possibly due to the fact that formerly the Imperial Chinese Government mistrusted associations generally with the result that in some provinces even the most useful societies had to adopt the form of secret leagues. Then, too it was necessary to keep secret the funds of the societies from rapacious officials.' The attitude of the Fiaachu Emperors calls to mina that of Trajan, otherwise a great ruler, who prohibited all societies, to the point that, as transpires from his correspondence with Pliny, he would not even allow the formation of voluntary fire brigades.
        The responsible statesmen of Asiatic countries should in any case collect end publish the available information about mutual aid groups It might very welt be that important discoveries would thus be made regarding the technique of insurance. This supposition will not be lightly dismissed on a priori grounds if we remember that, for example, the merchant guilds of China conducted their operations in various spheres in a manner that would have done honour to the best theorists. Here is an illustration. They invented for themselves the t a e l system, which is theoretically very remarkable, operates excellently in practice, end is, above all, safe against inflation. It is true that an Act of the Nanking Government of 1934 abolished it officially, but unofficially it is still widely used. Indeed when the Giro Bank of Hamburg was reconstructed at the time of the Seven Years' war, it served as a model, after Sonnin had called attention to it, The merchants of Ning-po developed a banking systea with 210 effective safeguards against a "run", a system that also automatically secured that Ning-po's balance of payments should not be thrown into confusion by external trading, And here is another example. The credit insurance system of the Hong merchants of Canton, which was based on mutuality, served as a model for the New York Act of 1829 relatinq to the protection of bank deposits. In explaining the bill. Governor van Buren specifically referred to that system. One thing is certain, the system of mutual aid funds in countries like China India; or Iran would be greatly furthered if the respective governments instituted enquiries on the subject end published the results (This opportunity could be utilised for making a collection of all local end provincial regulations relating to fire protection, which undoubtedly would yield valuable data) The extensive enguiry conducted in 1893 by the American labor Bureau into Building and loan Associations might be taken as a model here, inasmuch as it effectively stimulated both building end saving in America end also led to these associations learning of one another's existence end benefiting by their mutual experience. It would be frequently practicable to utilise the arrangements of local mutual aid funds in the formation of pub tic insurance societies Of course, if a statesman desired to furnish his country with an efficiently operating insurance system without undue delay, he would not be satisfied with developing the existing popular mutual aid groups, he would, on the contrary, proceed as, for instance the Prussian kings proceeded before trim. He would establish public insurance societies with compulsory membership, base them on mutuality, end arrange for the fullest self-government.
            It readily suggests itself that in order to achieve something as rapidly as possible, it might be best to start with establishing a private insurance office operating on the model of a European or American company - that is, finding its clients through commission agente, covering its administrative expenses during the first few years by means of an orqanisation fund end having recourse to reinsurance where its financial strength proved inadequate. There can be no objection to establishing such private offices, say joint stock companies the shares of which are held by the State. Such companies would, in any event, gather experiences' end if skilfully conducted they might prove profitable, extending also their activities to domains not at first open to public insurance, However, the goal- within about two decades or less, really to insure the greater part of the objects that need insuring in the country - is not to be attained in any Asiatic country by private companies. Even the largest insurance company anywhere would lack the capital required for paying commissions end could not secure the number of acents needed. Difficulties too, would be experienced in reinsuring on a sufficiently broad scale. The goal might, however, be attained by public insurance.
        If necessary, public insurance may get along  w i t h o u t   r e i n s u r a n c e and w i t h o u t  i n i t i a l  c a p i t a l. The experience of two centuries has demonstrated that. This circumstance is important for Asia where capital is scarce end where reinsurance for at least nine-tenths of the objects insured will, in the absence of pertinent stati stics, be out of the question for a long time yet. (This does not meen, naturally, that reinsurance might not be feasible for one-tenth of the objects,  p r o v i d e d  this one-tenth is successfully insured).
          The methods of pub tic insurance companies differ from those of private insurance. There is, however a consensus of opinion in Europe that in the present circumstances of this continent such a difference does not tell in favour of one or the other method; according to circumstances, both methods may be justified. For the time being, in the greater part of Asia the application of the tested, special methode of the public insurance societies would be alone practicable if a comparatively large proportion of the possessions requirinu to be insured, are to be really insured within a few years. In this connection statesmen should pay special attention to the considerations advanced by Paul Alglave, who in 1901 published (through Chevalier-Maresq) a work of nearly a thousand pages on the German public insurance societies. In his final comments, this author expresses a preference for public societies, but he admits that these societies would not have introduced the necessary technical improvements had it not been for the competition of private offices. On the other side it might welf be contended that this argument is weakened by the fact that in countries like England end America insurance has developed mainly along   p r i v a t e  e n t e r p r i s e  l i n e s.   211 But this may be countered by the consideration that during recent years in these countries, too, some economists end even some political parties have asked that private insurance should be supplemented by public insurance, on the ground that the latter does not meet all justifiable demands. The most serious criticism of private companies end one hard to refute, is that they must either forgo insuring all sections of society or even the greater part, or speed economically excessive sums on canvassing The private companies operating in Asia have not as yet insured as much as 1 % of the population. The cost of securing a new client is about equal to the amount of the first year's premium; often it greatly exceeds this. The second, end not less weighty, criticism directed against private offices, is that where the premium is not promptly paid, the insured is deprived wholly or partly of protection by insurance. Morally, this criticism is, of course wholly unwarranted' for private companies are not charitable institutions. On the other hand, public societies collecting their premiums as taxes are collected, frequently even through the tax collector, cen afford to be more generous to those in arrear with their premiums because they are certain later, when the insured are again solvent, to recover what is owine them, even with an additional percentage (Private companies could do the same. Comp, 269-276. The Ed (=Zube))

III. Traits differentiating public from private insurance
The characteristic features of the first public insurance societies were the following:
a) Compulsory membership for all inhabitants of a certain category or a given administrative district, for example for alt house-owners of a province. (The claims of private insurance offices may ai the same time be fairly met, more especially by freeing the larger objects - factories, bazaars, caravanserais, bonded warehouses, etc - from compulsory membership) (See pp 269ff The Ed.)
b) Collection of outstanding insurance contributions with the aid of the authorities by means of a curtailed procedure namely by leqally classing outstanding insurance contributions with outstanding iaxes, (In the case of certain societies in Prussia all contributions cue, end not only outstandinq ones, are collected by the fiscal authorities.) (See the comment on p. 272 The Ed)
c) Exemption of societies from all taxes end from chaiges for all business transactions, if possible also exemption from payinq postage. (The author assumes here the existence of a postal monopoly, a monopoly which he attacks e g. on p 24 and 119 Regarding tax exemption see the comment on paqe 275 The Ed.) Such a society could naturally not be established by private contract. It presupposes legislative action or decrees.

IV, Organisation of a System of Public Insurance on the Assumption that in theNear Future no Specific Guaranteed Capital will be Available nor Reinsurance with Private Companies

A. INITIAL_STAGE
To begin with, a small model society should be established in a district where the influence of the Government is sufficiently strong. Following this example, similar societies would be gradually established more especially in neighbouring districts, allowing fully for local peculiarities. The sphere of activity of the first model society snould be a district containing not more than 100 000 inhabitants This was the method followed in Prussia and in Switzerland, countries whose insurance arrangements have been exemplary for many decades Prussian experience more especially might be here very largely utilised. It would be advisable that a work highly esteemed among german speaking peoples, that by the Present Managing Director of the Pomeranian Feuer societaet Landesrat a.D Dr. Erich Brunn, "Die Geschichte der Pommerschen Feuersoietaet" (history of the Pomeranian Fire Insurance Society), Stetting 1935 should be translated into French end into the language of any country in question The intersted parties would thus learn that almost the same insurance problems requiring soition in Asia, had presented themselves in Prussia end how they'`were grappled with successfully.

B. THE GOAL TO AIM AT
The goal ought to be that all insurable possessions should really be insured. If, for instance, insurance in Iran is 'operated by societies restricted to districts having approximately 100.000 inhabitants, then about 120 such societies would be required. Once the first model society has been established, end operates successfully enabling alt interested partjes to study it, it would become feasible to establish other societies in ten such districts in one year, with the result that in about twelve years every district in Iran would have its public insurance society. In India end iina such a rapid pace could naturally be only imagined on the supposition that the provincial governments should have obtained the necessary authorisation for action, ch a society could not possibly be established "centrally", that is by o n e man for a territory containing, say, about 100 million inhabitants.
              However, let us confine ourselves to Iran ohich during the last decade -that is, since the accession of the present Shah- has developed with amazing rapidity end which therefore enters first into account for insurance arrangements (the author had for some time seriously considered migration to Persia. In an advisory capacity to the then existing Persian government The Ed.) Estimating the number of Iranis inhabitants as roughly 12 million (some two milion families) end - apart from the posssions which are at present insurable by private offices on the European model the average Insurable property per family at 10.000 rials (1 rial equals 4,50 grams fine silver), the total sum insurable by the neely established societies would be 20 000 million rials.
             Assuming for the first few years an average annual damage quotient of roughly 10 per million  -far too low an estimate -, this quotient would represent the necessity of collecting for administrative end valuation expenses, fire fighting arranqements etc. altogether about 20 per million, which would be equal to roughly one-fiftieth of 20.000 millions, or 400 million rials, per annum, Here it may be noted that according to the prewar statistics of the Russian Semsivo Offices (See Sergowsky, 'Theorie der Feuerversicherung', Prag, 1931, published by the Erste Boehmische Rueckversicherungsbank), which would ie fairly applicable to present condition in Iran, a damage rate exceeding 10 per million would have to be anticipated. Of the estimated revenue of the insurance societies of at least 400 million rials, given the methode of payment proposed in the sequel, at least 40 million rials could be diverted to the Central Goverment, which amount it could devote to the furtherance of every sort of insurance facilities. The necessary fire protection expenses could also be allocated out of the 400 million rials. The Prussian public insurance societies calculate that about one-fourteenth of receipts have to be devoted to fire-protection. For Iran the percentage proportion would probably be somewhat higher.
                 The following estimate is relevant in the above connection. Assuming 1.200.000 insurable buildinqs in Iran, a fire frequency of 1 per 100 buildings annually would be equivalent to 12.000 fire damages or 1.000 month. On a moderate estimate, this is equal to 30 fire-damages a day. It would be scarcely an exaggeration to suppose that today one-third of these damages mean economie ruin for the parties affected, reducing them indeed to beggary. The introduction of the type of insurance here proposed would prevent accordingly, on a conservative calculation, the creation of ten beggars daily.
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C. NATURE Of OBJECTS TO BE INSURED AND EXTENT OF INSURANCE  PROTECTION
Actually all kinds of objects enter into consideration, buildings as well as tools end products of labour. Those to be insured in Iran include about 1,100.000 small-scale proprietors, primarily therefore peasants, But owners of landed estates end their obiects would not be excluded from the category of the insured. However, the large objects of these owners,objects such as castles, big earehouses, end the like, should be end could be left to private insurance offices; but their small objects, such as flour mils, barns, etc, might very well be insured in the same society as the objects of peasants
             It would have to be settled whether the  r e i n s t a t e m e n t  p r i c e, the  s a l e  v a l u e, or any other kind of value,would be paid in case of loss. It may be noted in passing that insurance only properly fulfils its social purpose when the indemnity paid enables the insured to replace the damage object by a new object of good quality, e g, a house burnt down and perhaps 30 years old, to be reelaced by a new house, not worse than the old house was immediately after beine built this appears to contradict the fundamental insurance principle, according to which an indemnity should never leed to the enrichment of the insured. Yet it is a feasible proposition, end experts have long since pondered over ft, namely that enrichment may be excluded by treating a s a loan the difference between the reinstatement value end the safe value at the time the loss is incurred. This loan might be repayable within 12 to 15' or more or fewer, years' the amount unredeemed at any time paying about i i monthly interest (This would meen say, in the case of a loan of  rials repayable within 12 years, a payment of 10 rials a month for interest end amortisation) In this way the insured could not enrich himself by the added value Incidentally, indemnification on the basis of the original value would have a result not contemplated by European insurance experts in this connection: it would materially reduce arsons committed out of revenge. If the enemy of the insured knows that the latter would really suffer little or not at all through fire-damage he will not have recourse to arson. In this connection it may perhaps not be amiss to refer to a fi Im that was for a time very popular in Germany.That film was based on Gerhart Hauptmann's film "The Weavers".There we find described how in a Silesian village, mutinous weavers are on the point of setting on fire a large spinning milt, but desist when one of them calls attention to the fact that the mill is insured against fire, Those competent estimate the risk in Asia of buildings being set alight through revenge as decidedly considerable.
              As has been hitherto the case in all countries, the authorities should begin with  f i r e  i n s u r a n c e, later, perhaps alreacy after a few months, other risks, e.g., storms, floods, hail robbery, even war, among others, might be dealt with, Insurance of persons (against death, illness, invalidity, end accidents ) would readily follow if once insurance of objects is established That is, the idee of insurance as such must be impressed on the masses by a striking exemplification, such as that of insurance against fire.

D.DEPENDENCE OF THE UNIFORM MAGNITUDE OF CONTRIBUTIONS ON THE SIZE OF A SOCIETY
Of course, if the insurance principle is to be realised by a society, the latter must be of a certain minimum size In genera!, modern insurance technicians demand a fairly large size, i.e" a fairly large number of risks, in order to permit the opei ration of the insurance principle end of the law of larqe numbers In practice this means that the contributions should not seriously fluctuate from one due date to another end that there should be no need to establish exceedingly large reserve funds, say, larger than would correspond to the average of the annual levies. No insurance scientist is likely to be satisfied with an office that insures objects end operates on modern principles, which has insured fewer than 1000 objects This minimum would be in fact reached if one society were established for aboutevery 100.000 inhabitants. Most modern insurance offices have insured considerably more objects end many specialists consider that a  s t a b l e  insurance undertaking operating without reinsu
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rance and reserves, requires that at least 20.000 separate objects should be insured, the largest of-which should not exceed five time the value ot an average object. Buteven ehere the number of insurances is relatively small, decidedly satisfactory insurance protection is attainable, if we remember that  t h e  m e t h o d  o f  c o l l e c t i n g  t h e  c o n t r i b u t i o n s  is of great importance,although this importance cannot be easily demonstrated mathematically. To illustrate, Managing Dir.Dr. Brunn reports in chapter 5 of his abovementioned work concerning a small firefund which in the eighteenth century peasants of the cathedral lands of Cammin in Pomerania had established on a basis of mutuality, The fund was already long established end had 154 members when in 1782 the authorities examined its soundness. It had always given satisfaction to its members. That was because the peasants paid their contributions  i n  k i n d  end received their indemnities also in kind. The contributions consisted in transporting house timber to the site of the burnt-down building (the timber came from the l Forests end was mostly obtained gratis) end in the delivery of corn, straw, etc. when fire destroyed the harvest of one~ of the members. It is thus evident that many a peasant eho might find it- difficult to- pay a cash premium of as little as 1 thaler, might nevertheless easily contribute  m a t e r i a l  values or  l a b o u r  worth 20 thaler, especially if he is not being  p r e s s e d  for time. For instance, we may readily imagine that, where a house has been destroyed by fire, the neighbours might devote for sone months a few hours daily, for rebuilding by transporting, by deliveries in kind, end by personal labour. In this way a small insurance society such as that of our Pomeranian peasants, comes to be as effective as a group ten or tenty times larger, but collecting its premiums in  c a s h.  Facilities should be created to enable the peasants of almost all Asiatic countries, who are short of cash but possess material values end labour power, to contribute in goods end services. In other worde, the efficient functioning of an insurance system in countries with an economie system such as that prevailing in Asia should not be made to depend on  f a v o u r a b l e  e c o n o m i c  c o n d i t i o n s  providing sufficient  r e a d y  m o n e y.

E, ADVANTAGES OF MODERATE SIZE OF SOCIETY
There is an 'optimum' for the size of an insurance institution, that is deviations from this optimum, in an upward or downward direction are prejudical, of course only to a slight extent where the deviation is within moderate limits. The size of insurance undertakings has a similar economie effect as the size of factories, whose lucrativeness is greatest where the size is within certain moderate limits (According to pre-war statistics, daily papers, for example, with an edition of 80.000 copies, yield the relatively highest surplus.) Leaving aside however, that from a purely business point of view the size of every undertaking has a maximum beyond which it ceases to be as advantageous as a smaler undertaking there is the fact that ininsurance matters an extention beyond a certain limit is technically undesirable. ltis true that according to the laws of probability an insurance office should yield the more u n i f o r m  results the  l a r g e r  its size. But experience shows that this is by no means the case and that, on the contrary, a moderate sized societyis more advantageously placed than a very large one, this because the homogeneity of the business done, almost necessarily decreases with increase in size. In this connection the investigations of the Swiss Insurance Supervisory Authority about-the stability of the insurance offices operating in Switzerland have yielded valuable conclusions. And there is also the psychological-aspect. In the case of the insurance societies to be established in Asiatic auhtorities- the size of the societies, 'at' least to begin with should not prevent the iheured from' feeling that they are-bound together as neighbours. In the case of fires, for instance, every member shoud be able to reach the iscene' of the fire within a day's journey in order to betable to convince himself personally how the insurance'office; deals with fire-damages. The experience of smalt insurance companies in Germany, and probably in the whole world, have shown that even high premiums are willingly paid if the members have seen the place of thefire themselves, have received a direct impression of the extent of the fire, and can
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personally assure themselves how the insurance society's management deals with fire
losses. The moderate size of an insurance society - whose contributors feel themselves neighbours - possesses a further advantage. Arsons on the part of the insured in order to drair the fire indemnity, are frequently discovered where the  n e i g h b o r s  take a personal interest in the fire. Similarly the deliberate ignoring of precautionary measures with the same object in view, which plays an even more important part than direct arson by proprietors, is almost always soon revealed, if the  n e i g h b o u r s  participate in settling the loss incurred or where the settlesent at least takes place in their presence. The determination not to pay an incendiary a considerable indemnity out of their own pockets creates in the contributors a great and strong interest to ascertain the cause of the fire, end what the shrewdes settlement official of a large-scale private insurance company might very likely not discover, will be exposed by his neighbour.
In the case of medium-sized or small insurance societies, where the members feel they are neighbours, and where heavy contributions are imposed when heavy losses are incurred and light ones in the opposite instances, the members keep an eye on the fire protection arrangements of their neighbours end tfiose of the other insured, e.g., whether water buckets are available, whether the wells are in a proper state, etc.
     In the case of those insured in a large private company where fixed premiums are paid, the personal interest is absent. This remark suggests the desirability of weighing the  m o r a l  risk as it affects insurance societies, namely, the risk inherent in the  p e r s o n  i n s u r e d, which is large with careless, neglinnent, or criminally disposed persons end small otherwise. In general, the imoral risk should not be minimised. It amounts probably to half the total risk, perhaps even more - that is, fire indemnities might be broadly half what they are, if so many fires were not occasioned maliciously or through the negligence of the insured parties. The shall return to this aspect in the section dealing with indemnification. It would be advisable to organise a meeting of the members after every considerable fire-loss where they might, on the one hand express their opinion on the fire and the lessons to be learnt from it end, on the oiher where the office manager might furnish information on the nature of insurance protection, e.g the danger of under-insuring, the need for protective arrangements etc. Such explanations presented immediately after a fire, and if possible near the scene of the disaster, would always make a profound impression. Meetings of this kind would be less practicable to arrange in the case of large-scale offices.
           In districts of about 100.000 inhabitants, one fire-damage a day might be expected. That is about as much as the  m a n a g e r  of the district society can at the beginning personally examine end  s u p e r v i s e  the settlement of. Accordingly, the optimum for an insurance society at the initial stage is about 100.000 inhabitants,

F. COMPULSORY  MEMBERSHIP
In his "Rechtslehre", especially in par 8, Kant stated that everybody is entitled to compel another to form part of a  "juridical community" that would perait both to possess property by right end to protect this property against depredations. Kant's principles could be easily extended to justify to the same degree compulsory membership in a juridical community which, in the case of fire, indemnified the affected party end membership in a juridical community for protection against theft and murder. But apart from this, the experience of two centuries has taught us that the initiation of a system of insurance orotection embracino a sufficient number of persons can seldom be accomplished without resortinq to compulsory membership. However, experience also shows that, particularly at the commencement, compulsory aembership is frequently regarded by the individuals concerned as an abuse of State authority. The insurance contributions,that is,are considered as a new end unjustifiable tax. Should it also happen that at its inception there are really some abuses, then not even absolute rulers riould be powerful enough to force insurance through Such was the case over two centuries ego in Prussia, wherc the grandfather of Frederick the great was:
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unable to overcome the opposition of the population against a compulsory insurance system
The weightiest argument of the population against obligatory insurance nes at the time the difficulty of paying the contributions  i n  c a s h.  It was urged that a house-owner could not possibly find the money for all the payments due from him end was therefore constantly obliged to beg for a respite, today of the tax-collector, tomorrow of the mortgage creditor, end the day after of some purveyor. Even quite insignificant additions to the expenses payable in ready money, it was said, could ruin those house-owners who had reached the limit of solvency, end among these would have to be counted, it was then contended, the large majority of course, those who argued thus did not know that a good insurance arrangement reduces regularly the  i n t e r e s t  b u r d e n  on house property end this by a far larger amount than is involved in the insurance premium. lt is however, a fact that this favourable influence does not affect all houseowners forthwith end that during the first few years some of them may actually experience difficulties in making payments because of the system of insurance protection, But all these arguments are satisfactorily disposed of by a system of paying contributions based on Milhaud's  p r i n c i p l e s. With this system the lack of ready money in the national economy or among individuals, ceases to form an obstacle to the smooth working of an insurance system. In the succeeding chapter we shall examine this subject more closely.
              But even with our present imperfect payment system there is a great and manifest advantage in obligatory fire insurance. This should enable a tactful statesman to overcome any initial resistance. He must follow the example of the Prussian rulers end introduce the first insurance societies with compulsory nembership immediately after great conflagrations in the districts where they had occurred. Experience shows that the population of those districts does not in such circumstances regard compulsory membership a burden, but a benefit, certainly not an abuse of State authority. Add to which that immediately after the establishment of a public insurance society the credit conditions of the particular district, owing to the increased security of the creditors is markedly improved but should not, ot course, be exaggerated. Let us suppose that in a country district of 1.000.000 inhabitants there are 10.000 buildings belonging to poor peasants as well as perhaps 10 large factories end a large bonded warehouse. Should the factory owners and also the customs be compelled to participate in the insurance scheme, it might well happen that if a factory or, what would be worse, the bonded warehouse burnt down, the levy impcsed might considerably exceed the paying capacity of 10.000 peasants. The factory owner or the customs authorities would accordingly receive the full indemnity they were entitled to. Hence all objects should be exempt from compulsory participation which in the case of fire-dasage, would impose excessive contributions on the members. Naturally, the society iould not receive the c o n t r i b u t i o n s for those large objects, but this disadvantane - leaving  aside that it is balanced by the diminution in the risk incurred- is not too great, it is just such objects which are preferred by  p r i v a t e  i n s u r a n c e  c o m p a n i e s, more particularly by the foreign companies operating in Asia. Accordidingly, large obiects need not forgo the protection of insurance because exempted from compulsory participation.  Such exemption offers, on the contrary the conditions for a peaceable coexistence of public end private insurance creating thereby the possibility of protecting by insurance of all property in need of being insured (precisely as at present in Germany).
              Model texts for the required laws on compulsory membership in French might be found the legislation of the Swiss cantons, to which we refer here for the information of the reader.
            The laws of Asiatic countries might be more liberal in  o n e  point than most Swiss laws are at present namely by waiving compulsory membership in all instances where a proprietor establishes that he is adequately insured privately.  The State should never force its services on the people or the individual, if these have already helped themselves or are able end willing' to help themselves This priciple of the Prussian statesmen of the memorable period between 1807 end 1813,  217 which, by the way, already Confucius end Lao Tse constantly reiterated, should guide the rulers of Asia. A true statesman takes pride in bringing his people a step nearer to responsible manhood.

G. GRANT OF AN INSURANCE DEPENDENT ON  VOLUNTARY MEMBERSHIP   FOR OBJECTS NOT SUBJECT TO COMPULSORY   INSURANCE
In many cases there will be a doubt whether a given object should or should not be subject to ccmpulsory insurance. In order to allow of an amicable settlement of such ases, there should be a provision that the society may insure certain objects even if their owners' ere not obliged to insure them in the society. Here is an example: It is doubtful whether a given mosque of the value of 1 million rials is subject to compulsory narticipation. The peasants in the village concerned would probably strongly esire that their mosque should be insured in their society. There need not be any obection to this. However, some limit to voluntary insurance must naturally be fixed. It might be, for instance, provided that no object would be insured which, in the case of a total loss would impose on the members a greater monthly contribution than he equivalent of the wages of an adult for one day, (Objects of more than five-fold he value of the average insurance amount n o society should insure at its own risk.) hence it follows that fairly large objects might be insured by relatively small socities if the indemnity may be paid in instalments and of, in addition, there is a proision in the insurance conditions that when there is an unusual multiplication of fire-losses the societies payments to the individual sufferers from damage may be deerred until the statutory maximum contributions in the succeeding year, or even in ucceeding years, suffice to pay for the fire losses. These restrictions would, of ourse, not apply to the degree that the several societies reciprocally granted a rensurance to one another. We shall return to thisiaspect. (A maximum levy, say triple the annual 'normal levy', should be fixed for the paying members.)
Considerable latitude in the matter of voluntary participation would have to be allowed as regards insuring objects that are  n o t  buildings, harvests tools, furniture, and the like, and much else which may come to light after the establishment of society, are probably not compulsorily ascertainable,but nould be easily dealt with y voluntary insurance.
           It is also feasible that the society should later undertake kinds of insurance deendent wholly on voluntary membership, e g., insurance against storm damage and burglary. We cannot enter into details here
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