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First Meeting of the Board of Directors
Quietly and almost silently the directors gathered. The only emotion apparent was that of the usual caution shown by men of large affairs who meet to face a crisis. The president called the meeting to order and stated that the object of the gathering was to inform the directors that the company was heavily involved in the conflagration which visited San Francisco on April 18, 19 and 20, 1906, that the amount of which obligations was at present unknown, that they overshadowed the resources of the company and that ways and means would have to be devised to finance the California through this crisis.
The fire maps of the company were entirely destroyed and it was not advisable to open the safe in which the records of the company were kept until it was sufficiently cool to prevent danger of combustion. In light of these facts, it was impossible to immediately ascertain the actual amount of the company's obligations.
In response to an inquiry as to the probable extent of our liabilities, I, as secretary of the company, ventured the statement that I believed they would reach a total of $1,500,000 net, explaining that I based this estimate upon the company's income and the average rate. I also knew that the larger part of the entire liabilities in San Francisco were in the burned area and that if the safe did not afford protection it would mean the loss of the company's records, leaving it without means of ascertaining the amount of the loss until claims were filed. This would cause a delay of several months before the exact total could be developed. I explained that the policy contract allowed sixty days for filing claims and expressed the thought that this limit would undoubtedly be extended by legislative action in view of the magnitude of the disaster.
In the meantime, in the April 27 edition of the Examiner, on the first page, extending over its entire width, had appeared the following statement:
"The California Insurance Company Will Pay in Full."
This was discussed and the meeting began to assume a more lively interest and the members to more actively participate. Director W. E. Dean offered a resolution that has passed into history as being, possibly, the most noticeable ever adopted by the directors of a fire insurance company. It is a question whether a motion under like conditions had ever before been put or carried or ever will be in the future. This motion was seconded by Director Mark L. Gerstle. It was as follows:
That the action of the president of this corporation in publicly announcing that the California Insurance Company would pay all its losses in full as ascertained and adjusted, be, and the same is hereby confirmed and ratified, provided that each of the directors of the corporation affixes his signature to the matters of this meeting. Unless such ratification be unanimous and evidenced by the signature of each director to the matters of this meeting, the above action of the board be null and void.
The signature of each and every director was subsequently affixed to this resolution and it then remained a matter of detail to find how funds were to be procured to make this resolution possible of fulfillment and something more than a mere matter of words.
In the absence of any specific or definite information as to the amount of the company's indebtedness this action of the directors was a most magnificent exemplification of nerve and integrity and a superb testimony reinforcing the axiom that a California man's word is as good as his bond.
The board might have instructed its secretary to make the best compromise settlements possible and have wound up the affairs of the corporation. The public mind was in a receptive mood to accept such compromise settlements and such action would have resulted in extreme financial advantage to the stockholders at the time when the resolution was passed. No one at that time believed that the California would discharge its obligations on a parity with the largest and strongest insurance companies in the world. Indeed the public announcement that the company would pay in full was regarded as ridiculous and unbelievable and was generally considered in the light of an extremely sagacious bluff.
The directors of the company were not bluffers; they were made of different stuff. They did not hesitate. They were in deadly earnest and absolutely meant to live up to their spoken word and the world knows how they redeemed their promises.
My original estimate of $1,500,000 fell far short of the final net payment which amounted to $1,840,000, but long before this had developed the stockholders were too deeply involved to think of turning back even had they desired to do so. Staunchly and loyally they stayed and paid to the end, building a monument to their good name that turned the sneers of welshing competitors into envy and admiration.