When this company was first started, in 1840, for the insurance of loss
against the dishonesty of clerks, there was a great objection raised.
It was thought one of those vague and speculative undertakings of which
England has seen so many, and one which would necessarily fail, because
the master would hesitate to take an assistant who could only give the
security of a commercial company. “The moral security is wanting!” was
the exclamation of all. It was vain to answer, that this objection
pointed both ways, as the relative would often give the desired bond,
which a mercantile institution would refuse. Still the parrot reply
was heard, and the solemn shake of the head was followed by “The moral
security--where’s the moral security?” and was deemed sufficient to
crush all argument derived from mere statistics.
Time passed, and it was discovered that because a banker’s clerk gave
the security of a company, he did not become a rogue, but he did
become independent. It was found, too, that the master could make his
claim good on the company with far more promptitude than he could on a
relative. It was nothing to say to a board of directors, “I will have
justice and my bond;” but it was something to say to a broken-hearted
parent, “Your son has ruined you as well as himself--discharge your
obligation!” It is well known that bankers and merchants have often
foregone their due rather than thus reimburse their losses: and it has
been found that, notwithstanding the fact of the “moral security” being
wanting, the societies which guarantee the master from loss by the
servant have been very successful, are very serviceable, and are on the
increase.