It is safe to say that every sober soul in San Francisco awakened at five-thirteen in the morning, Wednesday, April 18, 1906. For at that moment a shift in the earth's crust unleashed energies which are, as with the 50-megaton bomb, beyond our ability to comprehend.

The fury, the intensity of sound and motion were to burn that moment vividly into the memories of all.

J. B. Levison wrote later that he was awakened by something "impossible to describe - a crunching of timbers - a roaring, apparently from above and below - and a jumping of the house. It was most terrifying and frightful. I did not realize what the thing was, but had the feeling it was a nightmare. Not until my wife screamed that it was a dreadful earthquake and that I should try to get to the children, did I awaken to full realization.

"I leaped out of bed but could not retain my footing because the house was still jumping. This can be better understood when I say that it took two or three attempts or lunges before I could get hold of the knob of the door... I passed the point of being frightened, exactly as one might on a sinking vessel in mid-ocean when fully alive to the inevitable. My only thought was to get the family together so that when the house went down we should all go together."

Down at the Palace Dutton and his wife were awakened in terror to the same sounds and violent motions, accompanied by a shower of falling plaster. In their rush to dress and leave, Dutton collapsed with a heart attack, and not until the holocaust ended three and a half days later was he well enough to get about unaided.

After checking at his brother's house on Van Ness, Levison hurried up California Street to the top of Nob Hill on his way to the office. By then, several of the fifty-odd fires started at the time of the quake had caught hold.

"When I reached Taylor Street... the sight that met my eyes was beyond description. Half a dozen distinct conflagrations were raging and roaring in different sections, any one of which ordinarily would have been a great fire. I realized then that the city was doomed, and so expressed myself to my friend Frank Deering whom I happened to meet and who up to that time, in common with most people, had failed to realize the gravity of the situation."

Two days later Deering was to lead a contingent of Bohemian and Press Club members up Russian Hill to save the home of Robert Louis Stevenson's widow.

Levison continued down California.

"I was stopped by a severe shock during which the tops of the buildings on lower California Street appeared almost to come together. Then and there I decided that I was not justified in taking chance of injury, to say nothing of being killed... and that my place was at home with my wife and three small children."

With this decision, one which he would come to regret, the fate of home-office records was left to the handful of younger men, most of whom had neither wife nor child to worry about. Cashier Thomas Gardiner and marine surveyors Bruce and Turner were the only men with rank to arrive.

The record is not clear enough to say precisely who did what that day, but the young hands loaded up the vaults with as many maps and account books as they would hold. A group of them carried Dutton's desk across the street to the site of what was to be the new Bank of California building and covered it with canvas. The desk contained lists of stockholders and agents, and these were to be the only such records to survive.

Gardiner rescued, among more prosaic items, portraits of Parker and Staples. Two young marine underwriters broke into Levison's desk and stuffed a wastebasket with papers they thought would be most important to him.

"What was saved is all I have to show for [my first] twenty-eight years of business life," wrote Levison later.

Another of the youngsters, Benny Nourse, remembers working against the pressure of time. Too much to do, and the fire wouldn't wait. As the hours passed, they checked the advance by putting their hands against the windows. "It was hotter than billy-be-heck," he recalled.

When the Fireman's Fund Building finally caught fire that afternoon, no one was close enough to note where the fire entered or how long it burned. Only one detail of the burning could later be inferred. When the fourth floor burned through, a safe dropped and hit the corner of the upper vault. The impact broke a hole in the masonry big enough to let the fire in, and long before the ruins were cool enough to approach, every last record of insurance in force in San Francisco had been consumed.

San Francisco burned down in grand style. If the town had to go, at least it went in the California tradition: it was the biggest conflagration in man's history. These lines, put down by this writer years ago, sum up much of the substance and meaning of the disaster:

"Rain came Saturday evening to lay the ash that covered 490 ravaged blocks. Sunday morning the air was clear except for silvery white traces of steam rising from the damp, hot ruins. Thousands of acres of quiet desolation remained where for three days the worst conflagration in man's history had raged. Never before had so much of man's work been sacrificed to a single fire.

"Only scattered marks of a great city remained. The City Hall and its records, the libraries, the courts and jails, the theaters and restaurants had vanished. The heart and guts of one of the world's best-loved cities were gone. Thirty schools, eighty churches and convents, the great business sections, and the homes of 250,000 San Franciscans had been taken. Art collections, vast stores of food and goods, 10,000 gardens, the complex transportation and communication systems... all these things, big and small, were now part of the City's past.

"Businesses had been struck down never to come back. Prominent families had been ruined financially - their names would fade from the public ear and be forgotten. The destruction had been ruthless, unemotional, almost complete. The fire had covered 2831 acres, 490 blocks, and, with the earthquake, claimed more than 450 lives."

Against this background, the affairs of the Fireman's Fund seem puny. But the total burden of pain and loss is nothing more than the sum of the parts. The problems of the Fireman's Fund, with a responsibility to thousands of policyholders and to hundreds of employees and stockholders in San Francisco, made up a measurable part of the whole.

In days gone by, insurance men spoke of the two great mysteries of their industry: "How did the Globe and Rutgers make so much money?" and "How did the Fireman's Fund manage to stay in business?"

For the first, we have no answer. The balance of this chapter will be devoted to the second. It is a complex tale - one of despair and triumph, of bold finance and good faith. There was no precedent, and for many reasons the story will never be duplicated. It has been called, without challenge, the most romantic event in the history of insurance.

On the night before the fire ended, Dutton lay recovering from his attack in a darkened room in the home of T. C. Coogan, a friend and prominent attorney. Unable to sleep, he wrestled with the fundamental problem: the Fireman's Fund Insurance Company, as such, was doomed. They had assets to pay their losses, he thought, and enough left over to reinsure all their unburned risks. But before they could ever straighten up the books, every insurance commissioner in the country would shut them down.

The Fireman's Fund was blessed with two assets hard to place a value on: thousands of loyal agents and an enviable reputation for honesty and fair treatment. With the idea that these must be maintained, Dutton conceived a bold plan which would later turn out to be nothing more than a staying action, but without which the final salvation would have been impossible.

Writing in dim light on the back of an envelope, he outlined the Firemen's Fund Insurance Corporation. The new company would reinsure the policies of the old. The Company would transfer enough assets to the Corporation to cover the unearned portion of the premiums (a premium is never fully earned until the policy expires). The Corporation would pay for the good will and agency plant of the Company, and the Company would be left with nothing to do but settle the San Francisco claims, distribute what funds were left among the stockholders, then die.

Dutton summoned Levison and briefed him on the plan. Levison opposed the idea at the start, but Dutton's logic was sound. "If we don't do this, the cancellations will wreck us." The situation was similar to that of a bank facing a run. Something had to be done to head off panic. "I was gradually persuaded that it was the only possible way in which anything could be saved," Levison later wrote.

Dutton estimated the Company's total San Francisco insurance in force to be about $7,000,000, with approximately one quarter of those risks unburned. He felt the $5,000,000 gross claims would be further reduced by disallowing damage done by the earthquake and the dynamiting crews. Fire policies did not cover losses attributable to either of these causes. He also believed that there would be some salvage and that, along with reinsurance, the Company would have no trouble paying the resulting net amount of $4,000,000. In truth only Faymonville, as head of fire underwriting, was in a position to know what the losses would come to, and he was thousands of miles at sea.

Pressure was felt all across the country. In Boston, for example, the treasurer of a savings bank walked into Kellogg's office with a bundle of Fireman's Fund policies he wanted canceled. Kellogg handed him a wire from Dutton which read in part, " ...the Company's ability to meet its losses and to carry on its business is unquestionable..."

The man answered, "That is only one man's say-so, and I doubt very much whether it is true."

Kellogg rose. "Anyone who questions the integrity of the man who signed that telegram will not remain long in my office!"

Stunned by Kellogg's wrath, the man apologized and the two sat down to start from the beginning. By the time Kellogg finished his lecture, the man took his policies and left, convinced that insuring in the Fireman's Fund was the next thing to godliness.

Down South, the Southeastern Underwriters Association passed a resolution that none of its members would raid the agencies of the Fireman's Fund. One company tried to take advantage of the situation and lived to regret it. Its reputation among the agents was ruined, and it finally retired from the Southern states.

Special agents of the Queen Insurance Company in the South were authorized to tell their agents to keep writing Fireman's Fund policies (agents generally represented a number of different companies and spread the business among them) and that the Queen would cover if the Fireman's Fund should fail.

One of the officers of the bank which was to become the Seattle First National came to Frank G. Taylor and told him the bank couldn't accept Fireman's Fund policies on property against which they had loaned money.

Taylor answered, "Well, if you won't take Fireman's Fund policies, I won't take your checks."

In those days, one didn't trifle with bankers, but the strength of Taylor's words threw the man on the defensive.

"Yes, but you're broke!"

Taylor shot back, "How do I know that you're not broke?" With the vision of the Fireman's Fund banner still flying, Taylor had made yet another convert.

Work on formation of the Corporation went ahead with amazing speed. The plan was approved by all but one of the directors on May 9 and announcements were sent out to the stockholders on May 14. The dissenting director, John T. Wright, didn't want any part of the scheme but Henry Rosenfeld, a large stockholder in the Company, could see the merits of the plan and subscribed to what Wright wouldn't take.

A clamor went up when the news was made public, but the underlying soundness of the scheme eventually calmed the critics. Dutton pointed out that, without knowing exactly what their losses were, neither an assessment nor an increase in capital could be made. They had to move quickly. Insurance commissioners from the other states were pressing for a statement of liability; New York had already suspended the Company.

Even though response to the prospectus turned out to be surprisingly good, the Corporation still faced the problem of showing the insurance commissioner twenty-five per cent of its capital in cash, not merely the pledges received from stock subscribers. Levison conceived an admirable bit of legerdemain to get over that hump. On May 16, with Dutton's go-ahead, he outlined his proposal to William H. Crocker of the Crocker National Bank and two of his associates. Levison wanted to borrow $250,000 on the personal notes of the directors, using the borrowed money as security. The amount was to be credited to the Firemen's Fund Insurance Corporation, but held on deposit to protect the bank. Crocker heard him out, then turned to one of the other bankers, Wellington Gregg.

"Wellington, this looks like an ordinary banking proposition. What do you think of it?"

Gregg agreed, and on the basis of the bankbook they prepared, showing a $250,000 deposit, the commissioner issued a certificate on May 19 authorizing the new company to write insurance in California. On May 22, the Corporation reinsured the outstanding policies of the Company. So far so good.

Fate worked with the Fireman's Fund in many ways. The first wave of cancellations brought the policyholders nothing. Governor Pardee had boarded up the banks immediately in anticipation of panic, and the accounts of the Company were unavailable. By the time the holiday ended, confidence in the Company and Corporation had returned.

No one then could possibly have suspected that before the year was up the Corporation would be dead and the old Company very much alive and, in fact, sassier than ever. Although this outcome was brought about by an incredible amount of hard work, ingenuity, and good faith, it is a curious fact that no happy conclusion of any sort would have been possible if the Company's San Francisco records had not burned. If the records had been available, the commissioner would have found the Company hopelessly insolvent, and in the chaos of the early weeks following the fire, any assessment attempt would have failed abysmally. And it would have been literally impossible to form the Corporation. All that would have been left was about sixty cents on the dollar for the claimants, and no Fireman's Fund of any variety.

Fortunately, too, Faymonville was completely out of touch when the Corporation took shape. Dutton's whole plan hinged on the Company's ability to meet the San Francisco losses, and only Faymonville was in a position to know that Dutton's estimates were inadequate. By the time he arrived home on May 7, the Corporation plans were so far advanced that he refrained from making public comment. Even Faymonville grossly underestimated the losses, and all hands went into June hopeful that everything would come out in the wash.

While Faymonville struggled with the transition from Company to Corporation, Levison had come to the conclusion that marine insurance should be written independently of fire, and attempted to form a combine headed by the Fireman's Fund to write marine exclusively. Charles Platt, grand old man of the Insurance Company of North America and the most important figure in Levison's plan, wrote in answer to his proposal:

"My own opinion would be that the Fireman's Fund Insurance Company should pay its San Francisco losses to the best of its ability and should continue both its fire and marine business under the old name. Five years from now, or even three years, the feeling of antagonism, or lack of confidence which you anticipate, will have disappeared. You must also bear in mind that companies doing an exclusive marine business have also their weak spots. A war, for instance, is liable to cripple them in a very short time...Looking back over my experience, the number of marine companies which have failed has been quite as large, as to percentage, as the failure among fire companies...

"I dislike extremely to write to you in this strain, in the midst of your many and great troubles... but I think it will do no harm to state my views plainly."

Levison later commented, "The letter...was most remarkable in light of subsequent events. His prophecy has indeed come true."

Work to restore the building began right after the fire, and by the first week in July all departments - with the exception of the claims adjusters, who had set up shop in a flat out on Turk Street - were back at 401 California.

It is difficult to name the date when the cautious optimism that accompanied the launching of the Corporation turned to gloom. Claimants had been given 120 rather than the normal 60 days to file proofs of loss, and not until sometime in July did the truth begin to emerge. The Company's losses were sure to exceed $10,000,000.

On July 23, the powerful and vocal Policy Holders' League, which represented many of the major claimants, appointed a "Fireman's Fund Committee" to watch the liquidation of the Company. A day later the headlines read: "Fireman's Fund Arranges to Quit!" and "Offer to Divide Scanty Assets." Levison wrote:

"My feeling from that time on was that the old company was doomed and that the corporation would be dragged down with it, as the transfer of assets from company to corporation would undoubtedly be attacked by the creditors of the company."

Faymonville, deep in the affairs of the Corporation, worked on undaunted. He and Levison realized that only with the closest cooperation of the Policy Holders' League could anything hope to be salvaged. Faymonville suggested that the League be given a list of stockholders, but Dutton, imbued with old-fashioned business rules, refused. Fortunately, Faymonville went ahead and presented, in confidence, not only a list of the principal stockholders in the Company but all details of the organization of the Corporation to Harry Weinstock, president of the League. It was the foundation for the extraordinary trust in which the League was to deal with the Fireman's Fund.

Several of the newspapers kept up their attack. On July 28, one morning daily headed a vituperative editorial: "California's Financial Honor Covered with Mud by the Fireman's Fund." Three days later they charged the Corporation had been organized to take the best of the assets and the least of the liabilities of the Company.

Dutton took each accusation as a personal slur. Levison commented later:

"The effect of this kind of publicity was deplorable. He seemed to become more and more demoralized. In fact, he reached the point where he frankly said to me in Oakland that he had about come to the end of it all."

The turning point came on Saturday, August 4. By chance Levison happened to enter Dutton's office that afternoon just as Henry T. Scott, an old friend of both men, was about to leave. In earlier years Scott and his brother had owned the Union Iron Works and had built many warships, including the battleship Oregon and the cruisers Charleston and San Francisco. A man of great business talent, Scott in 1906 was president of both the Mercantile Trust Company (later the American Trust Company) and the Pacific Telephone and Telegraph Company. Neither Dutton nor Levison knew that day Scott's real purpose in making the visit. He had planned to suggest that Dutton appoint his bank, the Mercantile Trust, receiver of the bankrupt Company, but seeing Dutton in utter dejection, he couldn't bring himself to mention it.

He left with heartening words and an offer to do anything that might help. Although he obviously must have held little hope, the warmth of his words stirred Levison.

"Scott's words of encouragement gave me the first thought, as I remember it, that something could still be done to save the wreck. This I suggested to Dutton, to which he replied:

"Levison, I have reached the end of my resources. Go ahead and do anything that you can; I'm through."

In his memoirs Levison added, "It should be explained that because of age and the extraordinary situation he had become entirely overwhelmed."

Later that day, on the ferry to Sausalito, Levison discussed the possibilities with Charles P. Eells, one of the Company's attorneys. From that conversation arose the basic proposition that would eventually resurrect the Company: assess to the limit, pay every penny in cash possible, and return the balance out of future earnings.

Sunday morning, Levison called Dutton and arranged to meet him at the office. Dutton heard the scheme and, visibly buoyed, urged him to go ahead and explore further. The next day Levison outlined the general plan to half a dozen of the Company's biggest claimants, including Henry Scott. All but one were sympathetic, and encouraged by their interest, Levison requested a meeting of the executive committee of the Policy Holders' League. On August 8, he outlined the plan to them. Although it was subsequently to be changed in detail, partly because they didn't yet know how much the Company owed, two salient features remained the same: the stockholders were to be assessed $300 per share, and the claimants were to receive fifty per cent cash and the balance in stock ($100 par, valued at $500 per share).

Levison couldn't have anticipated the reaction of the committee. With the single exception of his close friend George A. Story, every member's response was discouraging. Chairman Frederick W. Dohrmann said he couldn't think of recommending such a plan. Several others went so far as to say that they wouldn't even talk about accepting stock as far as their personal claims against the Company went. It was a serious blow but according to the minutes the meeting ended with the door still open:

"The Executive Committee discussed the plan of Mr. Levison, reaching no definite conclusion, and leaving the matter for further consideration."

The next day Levison tried another tack. He wired Kellogg in Boston:

"Working on something promising. Get views of Cutting [insurance commissioner of Massachusetts] and Kelsey [New York State superintendent of insurance] and wire me reply to this question: If an insurance company pays its San Francisco claimants part cash and part scrip constituting a lien on its assets but payable exclusively out of future underwriting profits, would departments consider the scrip as liability against the assets?"

Kellogg's answer left the cash-plus-stock plan the only possibility:

"Massachusetts Commissioner says that he certainly considers scrip issued in payment of losses incurred a liability although such scrip was payable only out of future profits. No such method of paying debts incurred is contemplated by Massachusetts insurance laws and moreover it would be fatal to thus handicap an insurance company. We dare not approach New York until requirements wired for by them July 30th are complied with and license issued."

Even though Dutton endorsed Levison's efforts, Faymonville was dead set against any rehabilitation scheme. He had labored for months to pull the Corporation together, and rightly felt that if the attempt to revive the Company failed, the Corporation would be mortally damaged. Levison agreed with this, but insisted that the Corporation was doomed not only if the revival attempt failed, but also if they allowed the old Company to go into receivership. He believed the only chance to save anything hinged on revival of the Company. Matters of this sort are not decided by vote. Levison prevailed, and years later wrote this candid explanation:

"I was more positive than he was, and being in better physical condition and, I think I can say, the stronger man, eventually broke him down, but he continued to protest against what he maintained would be a fatal mistake."

By August 11, Levison had the plan worked out to the point where he could approach the first policy-holder with a firm proposal: Pay twenty per cent cash now, thirty per cent in ninety days, fifty per cent in stock (par $100, valued at $500), and an extra cash dividend if the collections of reinsurance and assessments ($300 per share) should exceed the forecast.

The League agreed that if the Company could get enough signatures to the plan, they would endorse it. It must have been with some pride that Henry T. Scott played John Hancock. Close on his heels were George A. Newhall and William H. Crocker. These three, personally and as trustees, represented hundreds of thousands of dollars in claims. The first fifty-five signatures accounted for more than $1,200,000 in claims, but that was only the beginning. If the plan were to work at all, the great majority of claimants had to agree. Somewhere between 5500 and 6000 proofs of loss had been filed, and the gross liability totaled $11,300,000. As it turned out, a lot of leg work and debate were necessary to secure these signatures.

Nevertheless, the first big hurdle had been crossed. The League, impressed by the willingness of so many major policyholders to agree and also with the Company's unrestricted cooperation, called a special Fireman's Fund policyholders' meeting.

On August 17, a throng of policyholders gathered at Calvary Church on Fillmore Street to hear the proposal. Chairman Dohrmann, who only a little more than a week before had rejected the idea, had come around in his thinking, and spoke out strongly in favor of the plan, as did L. A. Redman, attorney for the League. Henry Scott might have overstated the Company's case when he told the crowd:

"The plan will give you twice as much as you could recover at law, and you will get your money in six months instead of waiting five years for it."

A report in the Call summed up the meeting this way:

"As a result of the mass meeting of policy holders in the Fireman's Fund and its allies, the Home Fire and Marine and the Pacific Underwriters, between 300 and 400 claims against those corporations are in the hands of the Policy Holders' League, and that organization is virtually pledged to secure for the claimants as much money as can be collected without forcing the companies into bankruptcy. The sentiment of the meeting was temperate."

The last line is perhaps more significant than it might appear. A few of the English companies, all of the German companies, and too many of the American companies failed to meet their responsibilities in varying degrees, and the public attitude toward the industry was hostile.

It had taken some doing, but Faymonville finally came around to Levison's and Dutton's position in general, but completely disagreed with the idea that the Company's reinsurers should pay the Fireman's Fund dollar for dollar while they proposed to pay only sixty cents in cash. Attorney W. S. Goodfellow finally convinced him of the soundness of Levison's conviction with the argument that, when a policy-holder signed a receipt for payment of a total loss, this reinsurer was obliged to pay his full share. It had been difficult to win him over, but once convinced, Faymonville worked with great energy and enthusiasm. Armed with Goodfellow's opinion, he took on the formidable job of convincing the very same reinsuring companies he had once defended. Dutton had estimated that $2,500,000 of the $3,500,000 reinsurance could be collected. Faymonville brought home almost $3,000,000.

On September 12, the Company made a twenty per cent cash payment, even though far fewer than half the claimants had agreed to the plan. Each claimant, when given his money, was asked to sign a slip agreeing to the rehabilitation plan. Levison wrote, perhaps with tongue in cheek:

"... I have wondered many times whether some of the people who signed it did not do so under the impression that it was simply a part of the receipt for their money."

One way and another, they got the signatures. By November 5, all but $1,000,000 of the claims had been put into the hands of the League. With this, the directors of the Company levied the $300-per-share assessment. At least $600,000 would come from their own pockets. Faymonville had to mortgage his house at #1 Presidio Avenue to pay his share. Dutton took the delicate job of convincing Eastern stockholders of the wisdom of meeting the assessment. The Company had for many years been heavily represented in Hartford, largely through the offices of agent Silas Chapman. He had seen the Fireman's Fund go through the Chicago and Boston trials while his other companies each time had vanished like the wind. Chapman's estimate of the Fireman's Fund was not to be changed, and with his help, Dutton's mission was an unqualified success.

Only 19 of the 374 stockholders owned 100 shares or more. Many had been ruined by the fire - almost twenty per cent were unable to make any payment at all; some made a part payment and surrendered their stock. A solid majority paid in full, and by the time the dust had settled, more than $2,000,000 had been collected.

On November 27, the Company paid an additional thirty cents on the dollar, and on January 10, 1907, the directors voted to increase the capital stock from $1,000,000 to $1,600,000 to provide shares for the policyholders.

While this was going on, the collection of assessments and reinsurance exceeded the preliminary estimates, and despite the Company's strong recommendation that the extra sum be left in surplus, for everyone's advantage, the policyholders wanted the bird in hand. On March 12, an additional payment of six and a half cents was announced.

It took years for the policyholders to gain in dividends and increased stock value what an all-cash payment would have given them in 1906. As it was, though, the cash and stock were worth in 1907 at least ten cents on the dollar more than what would have been realized had the Company been forced into receivership.

If you had suffered a $1,000 loss in the fire, the Company would have given you $565 in cash and one share of stock which had, in the spring of 1907, a market value of about $150. Since that $150 share represented $435 of your loss, you paid, in effect, a $285 premium for it.

The stockholder's plight was blacker. If you had been so lacking in foresight as to buy a share on April 17, 1906, you would have paid $450 for it then and $300 more for the right to retain it when the assessment call went out in November. Your share, though it had cost you $750, was identical to the one "bought" by the policyholder for $435.

After the revival of the Company, S. H. Wolfe, a noted New York actuary, was brought out to examine the books and submit his findings to the California insurance commissioner. On the final page of his report he wrote:

"It is difficult to imagine any institution being subjected to a more severe test than was the Fireman's Fund Insurance Company. It has emerged with its reputation untarnished, and its excellent [agency] plant intact. The credit for this happy result belongs, in the great part, to the loyalty of the officers and employees, and to the remarkable plan of rehabilitating an institution which had practically been wiped out by an unusual catastrophe; but in the final summing up, due credit must be given to the loyalty of the claimants in San Francisco, who united with the officers in an endeavor to prevent the extinction of a company which had enjoyed so many years of honorable dealing with its policyholders."

In looking back, through partisan eyes, it is difficult to avoid the conclusion that what happened to the Fireman's Fund could only have happened in San Francisco. The men of the Company and the men on the outside who helped save it were pioneers and the sons of pioneers. Without this bond, this common heritage, no plan of any sort and no amount of hard work could have saved the Company. Without the generous and spirited support of the people of San Francisco, particularly the people who controlled the wealth of San Francisco, the Company would have been forgotten many years ago. To that vigorous generation the Fireman's Fund is deeply indebted.