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The Earliest Fire Insurance Company in Berlin and Brandenburg, 1705–1711
Published online by Cambridge University Press: 24 July 2012
Abstract
The first fire insurance program of the Hohenzollern was an important phase in the growth of the concept of risk coverage, incorporating many features regarded as standard in modern insurance practice. The Brandenburg-Berlin scheme also reflected the strengths and weaknesses of a benevolent despotism in its attempts to force the citizenry to protect itself against an admitted menace of major proportions.
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- Copyright © The President and Fellows of Harvard College 1958
References
1 For a discussion of the origins of marine insurance see Roover, Florence de, “Early Examples of Marine Insurance,” Journal of Economic History, Vol. V (1945), pp. 172–200.CrossRefGoogle Scholar
2 Fire insurance probably existed in Germany before it did in England. Feuerkassen (fire indemnity funds) and Brandgilden (fire gilds) were known in individual German towns in the early 17th century. Cf. Relton, Francis B., An Account of the Fire Insurance Companies Associations Institutions Projects Established and Projected in Great Britain and Ireland During the 17th and 18th Centuries (London, 1893), p. 7.Google Scholar
3 For a brief summary of the origin of fire insurance concerns in Great Britain see Bulau, Alwin E., Footprints of Assurance (New York, 1953), pp. 125–145.Google Scholar Presumably, a proper claim to the distinction of being the first fire insurance company in England might be made for Barbon's Fire Office formed in 1680 and incorporated in 1688. See also Gibb, D. E. W., Lloyds of London: A Study in Individualism (New York, 1957).Google Scholar
4 Bulau, p. 245. The first fire insurance company in France was chartered in 1754, although a Bureau des Incendies was established in 1717 to aid fire victims with funds contributed by public charity. “All in all, fire insurance in eighteenth-century France was in an embryonic state,” see McCloy, Shelby T., “Fire Relief and Prevention,” Government Assistance in Eighteenth Century France (Durham, N.C., 1946).Google Scholar On France see also Bulau, pp. 235–236.
5 An earlier effort had been made in 1701 to set up a cooperative assistance program in the rural areas of Brandenburg. By a Fire Ordinance of 26 January 1701 the Elector directed that in each of the counties (Kreise) of Brandenburg six to ten neighboring villages were to form a Fire Society to help each other. If one village was burned out, the others were to furnish lumber, straw for the roofs, hauling and labor if necessary to aid in reconstruction. To defray money costs the villages were to make collections through boxes placed in the village churches. This was a program of mutual assistance but not of insurance. It was of the older pattern of fire gilds and mutual assistance societies but with the advantage of allying groups who were not likely to be affected by the same disaster as had sometimes occurred with such societies formed in cities by neighboring house-owners. Corpus Constitutionum Marchicarum, ed. Christian Otto Mylius (Berlin, 1740), Vol. V, Part I, Chap. 2, No. 7, Cols. 169–172 -hereafter cited as Mylius.
6 For a discussion of fire prevention and fire fighting in Brandenburg see my article “Prussian Fire Protection 300 Years Ago,” Quarterly of the National Fire Protection Association, Vol. 51, No. 3 (Jan., 1958), pp. 195–205.
7 Certain marked distinctions between the early development of fire insurance companies in England and Brandenburg may be noted. Basic was the distinction between the private undertaking and enterprise that marked the English concerns and the form of state socialism found in the first Brandenburg companies. One advantage accruing to the peoples of Brandenburg from this distinction was that fire-fighting was not left to individual enterprise and competition as advertising build-up. The state likewise sponsored and regulated the acquisition of the latest and best fire-fighting machines, their proper maintenance and manning in case of fire, and offered the advantage of this protective apparatus to all citizens equally. It will also be noted that subscription to the English concerns was voluntary and that membership in the Brandenburg company became compulsory for all houseowners, a factor, it will be discovered, in its undoing.
8 Mylius, No. 9, Cols. 173–176.
9 Taking the value of a Reichsthaler at $0.75, and one Groschen at 1/24 of a Rthlr. or about $0.03, and ignoring the almost impossible task of converting a 1700 Rthlr. into 1957 value, the scale of rates would appear to have gone from about 50 cents per $100 in the first year to 12 cents per $100 in the sixth year.
10 It is interesting to note the presence of ft two-thirds loss clause and a three-quarters value clause in fire insurance in America today.
11 E.g., failure to observe the fire-prevention measures required of all citizens by various fire ordinances. Foul chimneys were a common example of neglect.
12 Frederick I was Elector of Brandenburg but in 1701 had been elevated in dignity to the title of King in Prussia, one of his many other territories. The insurance project of 1705 affected only his Brandenburg territory.
13 Cf. “General Fire Insurance Regulation,” Mylius, No. 10, Cols. 175–182.
14 Mylius, No. 11, Cols. 181–190.
15 “Mandate Concerning the Royal Prussian General Rural and Urban Fire Insurance Office, of 21 March 1708,” Mylius, No. 14, Cols. 213–216.
16 While the Hohenzollern rulers did feel a deep paternal responsibility for the welfare of their subjects, the principal motive behind the fire insurance project was to assure speedy reconstruction of houses and buildings in cities, towns and villages throughout Brandenburg. Beginning with the Great Elector (1640–1688), the Hohenzollern had launched on a program of expansion after The Thirty Years' War which was to make Brandenburg-Prussia a major state in Germany and a rival of Austria in the eighteenth century. Many immigrants were invited to settle in Brandenburg, villages were restored after the great war, cities and towns were built up in size with development of industry and commerce. The ravages of fire could easily set back this development program. Relief from taxes and grants of aid from the state were insuflicient to assure immediate reconstruction. Reconstruction was necessary if Brandenburg-Prussia was to continue her economic growth and expansion. So the state went into the fire insurance business to spread the risk and to make reconstruction capital available in the event of catastrophe.
17 Mylius, No. 16, Cols. 217–224.
18 Brandenburg-Prussia in 1708 was in a serious financial predicament because of the mismanagement and embezzlement of various treasury funds by two scheming court favorites who syphoned out of all special treasuries into the household treasury whatever funds were available, without concern for the future. The Fire Insurance Treasury was completely devoid of funds in 1708 in spite of the royal promise of 1705 that the insurance premiums would not be used for any other purpose. This embarrassing situation served to discredit the king's effort to establish a fire insurance program for his territory. See Prutz, Hans, Preussische Geschichte (Stuttgart, 1900), Vol. II, pp. 335–336.Google Scholar
19 Cf. Mylius, No. 17, Cols. 223–226 for a “Patent Concerning Punishment of Those Who Are Negligent in Turning in Money Collected for the Fire Insurance Treasury of 31 August 1708.”
20 “Edict Concerning Various Points Connected With the Fire Insurance Treasury of 20 March 1709,” Mylius, No. 22, Cols. 231–234.
21 “Patent Concerning the Nobility and Their Subjects' Houses and Buildings Which Are Not Registered With the Fire Office of 28 March 1710,” Mylius, No. 23, Cols. 235–236.
22 Mylius, No. 25, Cols. 235–238.
23 “Notification That Each Resident in the Capitol Cities Appraise His House and Record It in the Fire Register So That in Case of Fire Damage He May Benefit in Proportion,” Mylius, No. 26, Cols. 237–238.
24 Berlin had grown from a city of about 8,000 in 1648 to a metropolitan capitol of the expanded Brandenburg-Prussian Kingdom with a population of about 57,000 in 1710. Elaborate and strict fire prevention measures had been taken, over the previous fifty years, to protect the capitol against destruction from fire. But if loss from fire should occur it was urgent in the plans of the Hohenzollern that reconstruction should suffer no delay.
25 “Reglement Concerning the Operation of a General Society in the Capitol Cities for Protection Against Fire Damage,” Mylius, No. 30, Cols. 249–254.
26 For a description of this court see Dorwart, Reinhold A., The Administrative Reforms of Frederick William I of Prussia (Cambridge, 1953), pp. 84–85, 92.CrossRefGoogle Scholar
27 Feuersozietät der Provinz Brandenburg (1719), Stettiner öffentliche Feuerversicherung-Kmttalt (1722), and Feuersozietät für die Procinz Ostpreussen (1723).
28 See Bulan, op. cit., pp. 245–247 for interesting illustrations of the fire marks used by these Brandenburg-Prussian fire offices.