Businesses, as well as workers, were being squeezed by the recession. The insurance companies that had paid out millions of dollars on “Great Fire” claims and had also loaned a substantial sum for the rebuilding, suddenly found defaults on these loans increasing at an alarming rate. The Connecticut Mutual Life Insurance Company and the National Insurance Co., among others, now found themselves in possession of large amounts of real estate, primarily in Chicago’s business district.
While the 1871 fire had destroyed the business district and the Near Northside, the same conditions that contributed to the scale of its destruction still existed in the South Division, the larger portion of which had been left untouched by the fire and therefore, was to where the burned out retail businesses had relocated to resume business. It was only a matter of time until the inevitable fire in this area occurred. On July 14, 1874, it started in a two-story frame building at 449 S. Clark St. at 4.30 P.M. and raged with an intensity reminiscent of the “Great Fire” for eleven hours, destroying forty-seven acres bounded by Van Buren, Michigan, Polk, and Clark containing some 800 buildings.
The fire was halted only when it came upon the new post-fire construction at Van Buren that incorporated thicker walls that prevented the farther spread of fire. The next morning, twenty-five more buildings were destroyed by another fire at Sangamon and Milwaukee. Fortunately, especially for the insurance companies, neither fire had spread into the rebuilt Business District, where these companies were now in possession of a significant amount of the defaulted properties. The 1874 fire, therefore, had convinced the insurance companies that nothing really had changed in Chicago since the 1871 fire, despite the claims of the “Fireproof Ticket.” In fact, the insurance companies were in an even more precarious position following the second fire, as their own assets (the defaulted properties) seemed to be in danger of imminent destruction.
The National Board of Underwriters, whose companies all had home offices in the East, met on the night after the fire, July 15, 1874, to discuss what action to take in the face of the potentially devastating position in which they now found themselves. The consensus action was an unveiled threat to Council that demanded immediate improvements in the fire department and other various improvements pertaining to fire safety, or else face the possibility of the cancellation of all existing fire insurance policies within the city’s limits. No one, however, had ever successfully threatened Chicago’s political leaders, so Council simply ignored the threat. The ensuing uproar in the business community that had become very adept at maneuvering around Council, as evidenced in the post-fire actions of the Relief Society, led to the formation of the Chicago Citizens’ Association headed by wholesale grocer/banker Franklin MacVeagh in August, but even these businessmen would take time to organize a viable response to the demands of the insurance companies. With no response forthcoming, the National Board had no alternative but to formally request on October 1, that its members cancel all current fire insurance policies within Chicago, with the result that by November 1 the entire city was left without any fire insurance protection. The tables had been turned, for now the business community was in a very vulnerable position with their assets totally unprotected. This action forced MacVeagh’s group to generate in a very timely manner over $5,000 (without any action by Council) for improvements in the city’s firefighting capacity and repairs in some water mains.
While the Citizens’ Association’s action led to the restoration of the insurance policies, it also brought further demands from the insurance companies for better regulation of construction, including the prohibition of wood balloon frame buildings, the demolition of all wooden cupolas and awnings, and the prohibition of the use of cast iron columns. The 1874 fire had finally confirmed the suspicions previously raised over the behavior of unprotected cast iron columns when subjected to the heat of a fire and the insurance companies were now making every possible effort to procure the substitution of cast iron columns with timber posts that had proven they could survive such a holocaust.
Sawislak, Karen. Smoldering City: Chicagoans and the Great Fire, 1871-1874. Chicago: University of Chicago Press, 1995.
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