Chapter I (3)

Of course, schemes were plentiful enough, and many plans were commenced with no other view than that of receiving deposits and spending them. One of the offices was started by an old man called Le Brun. In 1690, he had promised to bring up pearls and gold from sunken ships. In 1710, he had been conspicuous in offering strange benefits to all who joined his Marriage and Widows’ Assurance Company; and in 1720, he was ready with something new. His life had been one of adventurous daring. He had owned a privateer when privateers were pirates. He had been, as a boy, with Sir Henry Morgan in his bucaneering attack on Panama. He had accompanied Paterson in his ill-fated Darien expedition. But in all had he failed to procure the gold for which his soul thirsted, and that which he did obtain was spent in riot. When the Mississippi scheme was acting he was in Paris, and now he came over in time to propose a wonderful project for the benefit of all who would risk 5_l._ By this “Office of assurance and annuity for every body,” any person who paid 5_l._ was to be assured of receiving 100_l._ per annum, “as soon as a sufficient number had subscribed;” and it need hardly be added that, as this “sufficient number” never did subscribe, the assurance of M. le Brun was all that the unhappy subscribers beheld for their money. To prevent the public from suffering by the arts of such men as these, legal proceedings were resorted to; and when the proclamation was issued, not only did it destroy the bubbles, but it produced a serious effect on the two chartered companies. It is probable that they had been “rigging the market,” as the directors were ordered to attend the authorities, in order that they might receive a fitting rebuke; and it must have been a very impressive, though not a very picturesque sight, to see a body of respectable, square-toed, elderly gentlemen, with brown coats and cocked hats, listening with subdued awe, as they were sternly cautioned “to keep strictly to the limitation of their respective charters, _or it would be the worse for them_.”

That they took warning from this caution may be deduced from the circumstance already stated, that when they petitioned to be released from the payment of so much of the 300,000_l._ as was not paid[9], the Chancellor of the Exchequer signified his consent, and a clause was inserted to that effect in a bill then passing through the House.

It must not be supposed that any more scientific system than that adopted by the Amicable Society guided these companies. On the contrary, whether an applicant were 12 or whether he were 45, one premium was asked. The policy was granted for a single year, and renewed without reference to age or to health. The earliest document possessed by either of these companies is dated 25th November, 1721. It was granted by the London Assurance to Mr. Thomas Baldwin, on the life of Nicholas Bourne, for 100_l._, five guineas being the premium for twelve months; and this was the annual per centage paid for many years. With such a system, it is not to be wondered that the success of the company was slow.

FOOTNOTE:

[9] The total amount paid by each company was 150,000_l._

CHAP. VI.

SKETCH OF DE MOIVRE.--HIS DOCTRINE OF CHANCES.--KERSSEBOOM.--DE
PARCIEUX.--HODGSON.--DODSON.--FIRST FRAUD IN LIFE ASSURANCE--ITS
ROMANTIC CHARACTER.--THOMAS SIMPSON.--CALCULATIONS OF DE BUFFON.

To the same year which witnessed the proposition for the new companies we are indebted for the work entitled the “Doctrine of Chances,” written by Abraham de Moivre, who, owing to the revocation of the Edict of Nantes, was compelled to seek shelter in England, where he perfected the studies he had commenced in his own country. In his boyhood he had neglected classics for mathematics, to the great surprise of his master, who often asked “what the little rogue meant to do with those ciphers.” In 1718, he published the first edition of the above book; and a few extracts from this, which led him afterwards to his hypothetical application of those chances to the survivorship of life, may not be unacceptable; as, though the author deemed it wise to apologise in his dedication for publishing a work which “many people in the world might think had a tendency to promote play,” yet his volume will prove the best apology. The book is very entertaining in its character, and is an evidence of an inquiring and mathematical mind employing itself upon trifling questions rather than remain idle. Thus, Case 1. is “To find the probability of throwing an ace in two throws of one die.” And this kind of problem he varied to almost every possible form. There is “the probability of throwing an ace in three throws,” of “throwing an ace in four throws,” of “two aces in two throws,” of “two aces in three throws,” worked out in a most exact and elaborate manner. From dice he proceeded to lotteries, and showed how many tickets ought to be taken to secure the probability of a prize. The volume, a considerable quarto, was nothing more than an amusing book on gambling and its various chances. But it produced a better effect. A few years later, he published something more worthy of him, in his “Doctrine of Chances, applied to the Valuation of Annuities on Lives,” in which he says, with some appearance of surprise, “Two or three years after the publication of the first edition of my ‘Doctrine of Chances,’ I took the subject into consideration; and consulting Dr. Halley’s tables of observation, I found that the decrements of life, for considerable intervals of time, were in arithmetical progression; for instance, out of 646 persons of 12 years of age, there remain 640 after 1 year; 634 after 2 years; 628, 622, 616, 610, 604, 598, 592, and 586, after 3, 4, 5, 6, 7, 8, 9, and 10 years respectively, the common difference of those numbers being 6. Examining afterwards other cases, I found that the decrements of life for several years were still in arithmetical progression, which may be observed from the age of 54 to the age of 71, where the difference for 17 years is constantly 10.”

The greatest difficulty which occurred to him was to invent practical rules that might readily be applied to the valuation of several lives, “which was, however, happily overcome, the rules being so easy that, by the help of them, more can be performed in a quarter of an hour, than by any method before extant in a quarter of a year.”

It was first published in 1725; and finding thus from Halley that, for several years together the decrement of life was uniform, it being only in youth and old age any considerable deviation took place, he founded an hypothesis that it was uniform from birth to extreme old age; in other words, that out of a given number of persons living at any age, “an equal number die every year until they are all extinct.” On this he gave a general theorem, by which the values of annuities on single lives might be easily determined. This was of great use at the time, no table of the real value of annuities having then been published, except a very contracted one founded on Halley’s paper; and if subsequent investigations proved that De Moivre was utterly wrong, his conclusions formed the basis of many a future calculation.

Although the ability of De Moivre was recognised by the Royal Society when it appointed him arbitrator in the contest betwixt Newton and Leibnitz, and although Newton, when applied to for an explanation of his own works, would often say “Go to De Moivre, he knows better than I do,” yet it is to be feared that golden opinions were won by him more freely than guineas.

It is sufficiently known that the coffee-houses of the eighteenth century were the resort of all who sought intelligence or loved the company of the wits and fine men about town. To one of these, in St. Martin’s Lane, De Moivre went, where it was customary to apply to him for the solution of many questions connected with annuities, and for answers to queries concerning games of hazard, which were propounded to him by those who hoped to turn the chance of loss into a certainty of gain. The payment of these questions was his chief mode of subsistence; and there is something unpleasant in the memory of this man, compelled, in his old age, to be at the bidding of gamesters, and to consort with men who lived on the town by their wits.

The opinion of posterity is divided upon his merits. “By the most simple and elegant formulæ,” says Francis Baily, “he pointed out the method of solving all the most common questions relative to the value of annuities on single and joint lives, reversions, and survivorships.” The subsequent editions of his works prove that he was aware of his errors of detail, by correcting them. He enlarged the boundaries of the science which he loved, and encouraged others to follow in the same path. Although his hypothesis may not be applicable to all occasions and circumstances, and though later discoveries proved that it could not be always safely adopted, “nevertheless it is still of great use in the investigation of many cases connected with this subject, and will ever remain a proof of his superior genius and ability.” Such is the opinion of Baily on the merits of De Moivre; but it has been added by Morgan, that “on the whole the hypothesis of De Moivre has probably done more harm than good, by turning the attention of mathematicians from investigating the true laws of mortality.”

In 1737, an attempt was made to calculate the number of the people, which was estimated at 6,000,000, an amount probably not very far from the mark; as in 1688 the population was reckoned at a little over 5,000,000. Some important assistance was rendered in 1738, by the publication of Kersseboom’s tables, taken from the records of life annuities in Holland[10]; and as the ages of the annuitants had been there recorded for 125 years, they proved a considerable aid to those interested. So small was the progress made in England by 1746, that Dr. Halley’s Breslau Tables and those of M. Kersseboom were the only ones which gave anything like a representation of the true laws of mortality. In this year, however, the “Essai sur les Probabilités de la Durée de la Vie Humaine” of M. De Parcieux, with several valuable tables deduced from the mortuary registers of religious houses in France, and from the nominees in the French tontines, were an additional contribution to our information.

The first effort to show the value of annuities on lives from the London Bills of Mortality is attributable to James Hodgson. Nor was this endeavour uncalled for or unnecessary. Many assurance offices had arisen, undertaking to grant these annuities; and the tables principally in use were founded on the decrease of life at Breslau. But by the Breslau Tables, half the people lived till they were about 41 years of age, while in London half did not reach the age of 10. This was a vast difference in the estimate of mortality, and affected the price of annuities in a proportionate degree. But if the Breslau Tables calculated life at too high a rate, it was equally evident that the London Tables made them too low; it is obvious, therefore, that the value of a life annuity founded on any confined observations would be unsuitable to the general annuitant; and it is evident that a scale of prices should have been based on a more enlarged foundation.

The work of Mr. Hodgson deserves very great attention, and the notice of the reader is called to its investigation, as the conclusions were arrived at after great labour, and are a specimen of the time and trouble bestowed on the subject. “The easy way of raising money for public uses,” says Mr. Hodgson, “by granting annuities upon lives, has met with so great encouragement that there is no room to doubt it will be carried down to future times.” The following statements of this gentleman will be read with surprise by those who are acquainted with the chances of life as calculated at the present day. He estimated that “1000_l._ would purchase an annuity of 70_l._ per annum for a life of 29 years 10 months, when money is valued at 3 per cent. per annum; that the same sum will purchase the same annuity for a life of 23 years, when money is valued at 4 per cent. per annum; and that the same sum will purchase the same annuity for a life of 23 years, when money is valued at 5 per cent. per annum; and that it will purchase the same annuity for a life of 16 years 2 months, when money is valued at 6 per cent.

“It appears that the highest value of a life is when the person is about 6 years of age, and that from the birth to that time the value of lives decrease, as they do from that time to the utmost extremity of old age; that a life of 1 year old is nearly equal in value to a life of 7 years old; that a life of 3 years old is nearly equal in value to a life of 12 years old; that a life of 4 years old is nearly equal in value to a life between 9 and 10 years; and that a life of 5 years is nearly equal in value to a life of 7 years of age. And hence arose the custom of putting the value of the lives of minors upon the same value with those of a middling age, which at the best is but a bold guess, and made use of for no better reason, than that they knew of no better way to find the true value.”

Such was a portion of Mr. Hodgson’s contribution in 1747 to vital statistics. This work was followed in 1751 by the “Observations on the past Growth and present State of the City of London” of Corbyn Morris, containing tables of burials and christenings from 1601 to 1750. The tables were important in themselves, and the book is noticeable as containing a proposal to remodel the Bills of Mortality.

The topic was particularly interesting to mathematical men. In 1753, Mr. James Dodson pursued the subject, and solved in his “Repository” an immense variety of questions. Hitherto a table deduced by Simpson from the London Bills of Mortality, was the only one taken from real observation. But it need not be said that London was a very limited theatre on which to found the payment of premiums. The number of persons who died there in a given time, doubled that of other and more healthy cities. It was impossible to separate the casual visitors from the natives, in the record of deaths. It was equally difficult to divide those who had been born there, from those who were naturalised by virtue of a long and continued residence. The city, which has ever been the land of promise to the country, brought adventurers from the rural districts in a continued stream. The difficulties which prevented correct information from spreading may be judged by the statement that, from 1759 to 1768 a third more deaths than births were registered, the average annual burials being 22,956 to 15,910 of births. In the previous 10 years, the excess had been 10,500, or near half the burials. The baptismal registries were also very deficient in that large class denominated sectarians; Jews, Quakers, Roman Catholics, and all who refused to recognise the rites of the English Church being excluded. It required, therefore, care and calculation of no ordinary character to make any approximation to the truth; and Mr. Dodson believed he would be nearer it, by adopting the opinions of De Moivre as the ground work of his tables, rather than by entering on a sea of uncertain and hypothetical calculations.

In 1754, a further “valuation of annuities on lives,” deduced also from the London Bills of Mortality was published. By this it appeared that the work of Mr. Hodgson had not produced much effect in sending the Breslau Tables out of general use; for, says the author, “I think it very unreasonable that a poor citizen of London should be made to pay for an annuity according to the probability of the duration of life at Breslau, where, as appears from the bills of mortality, one-half of the people that are born live till they are about 41 years of age, whereas at London one-half die before they arrive at the age of 13.”

The first known fraud in assurance is one of the most singular in its annals. The reader must judge for himself of the circumstances attending it; but there is no doubt that others far more fearful in their results have since been practised.

About 1730, two persons resided in the then obscure suburbs of St. Giles’s, one of whom was a woman of about twenty, the other a man whose age would have allowed him to be the woman’s father, and who was generally understood to bear that relation. Their position hovered on the debatable ground between poverty and competence, or might even be characterised by the modern term of shabby genteel. They interfered with no one, and they encouraged no one to interfere with them. No specific personal description is recorded of them, beyond the fact that the man was tall and middle aged, bearing a semi-military aspect, and that the woman, though young and attractive in person, was apparently haughty and frigid in her manner. On a sudden, at night time, the latter was taken very ill. The man sought the wife of his nearest neighbour for assistance, informing her that his daughter had been seized with sudden and great pain at the heart. They returned together, and found her in the utmost apparent agony, shrinking from the approach of all, and dreading the slightest touch. The leech was sent for; but before he could arrive she seemed insensible, and he only entered the room in time to see her die. The father appeared in great distress, the doctor felt her pulse, placed his hand on her heart, shook his head as he intimated all was over, and went his way. The searchers came, for those birds of ill-omen were then the ordinary haunters of the death-bed, and the coffin with its contents was committed to the ground. Almost immediately after this the bereaved father claimed from the underwriters some money which was insured on his daughter’s life, left the locality, and the story was forgotten.

Not very long after, the neighbourhood of Queen Square, then a fashionable place, shook its head at the somewhat unequivocal connection which existed between one of the inmates of a house in that locality, and a lady who resided with him. The gentleman wore moustaches, and though not young, affected what was then known as the macaroni style. The lady accompanied him everywhere. The captain, for such was the almost indefinite title he assumed, was a visitor at Ranelagh, was an _habitué_ of the Coffee-houses, and being an apparently wealthy person, riding good horses and keeping an attractive mistress, he attained a certain position among the _mauvais sujets_ of the day. Like many others at that period, he was, or seemed to be, a dabbler in the funds, was frequently seen at Lloyd’s and in the Alley; lounged occasionally at Garraway’s; but appeared more particularly to affect the company of those who dealt in life assurances.

His house soon became a resort for the young and thoughtless, being one of those pleasant places where the past and the future were alike lost in the present; where cards were introduced with the wine, and where, if the young bloods of the day lost their money, they were repaid by a glance of more than ordinary warmth from the goddess of the place; and to which, if they won, they returned with renewed zest. One thing was noticed, they never won from the master of the house, and there is no doubt, a large portion of the current expenses was met by the money gambled away; but whether it were fairly or unfairly gained, is scarcely a doubtful question.

A stop was soon put to these amusements. The place was too remote from the former locality, the appearance of both characters was too much changed to be identified, or in these two might have been traced the strangers of that obscure suburb where as daughter, the woman was supposed to die, and as father, the man had wept and raved over her remains. And a similar scene was once more to be acted. The lady was taken as suddenly ill as before; the same spasms at the heart seemed to convulse her frame, and again the man hung over her in apparent agony. Physicians were sent for in haste; one only arrived in time to see her once more imitate the appearance of death, while the others, satisfied that life had fled, took their fees, “shook solemnly their powdered wigs,” and departed. This mystery, for it is evident there was some collusion or conspiracy, is partially solved when it is said, that many thousands were claimed and received by the gallant captain from various underwriters, merchants, and companies with whom he had assured the life of the lady.

But the hero of this tradition was a consummate actor; and though his career is unknown for a long period after this, yet it is highly probable that he carried out his nefarious projects in schemes which are difficult to trace. There is little doubt, however, that the _soi-disant_ captain of Queen Square was one and the same person who, as a merchant, a few years later appeared daily on the commercial walks of Liverpool; where, deep in the mysteries of corn and cotton, a constant attender at church, a subscriber to local charities, and a giver of good dinners, he soon became much respected by those who dealt with him in business, or visited him in social life. The hospitalities of his house were gracefully dispensed by a lady who passed as his niece, and for a time nothing seemed to disturb the tenour of his way. At length it became whispered in the world of commerce, that his speculations were not so successful as usual; and a long series of misfortunes, as asserted by him, gave a sanction to the whisper. It soon became advisable for him to borrow money, and this he could only do on the security of property belonging to his niece. To do so it was necessary to insure their lives for about 2000_l._ This was easy enough, as Liverpool, no less than London, was ready to assure anything which promised profit, and as the affair was regular, no one hesitated. A certain amount of secresy was requisite for the sake of his credit; and availing himself of this, he assured on the life of the niece 2000_l._ with, at any rate, ten different merchants and underwriters in London and elsewhere. The game was once more in his own hands, and the same play was once more acted. The lady was taken ill, the doctor was called in and found her suffering from convulsions. He administered a specific and retired. In the night he was again hastily summoned, but arrived too late. The patient was declared to be beyond his skill; and the next morning it became known to all Liverpool that she had died suddenly. A decorous grief was evinced by the chief mourner. There was no haste made in forwarding the funeral; the lady lay almost in state, so numerous were the friends who called to see the last of her they had visited; the searchers did their hideous office gently, for they were, probably, largely bribed; the physician certified she had died of a complaint he could scarcely name, and the grave received the coffin. The merchant retained his position in Liverpool, and bore himself with a decent dignity; made no immediate application for the money, scarcely even alluding to the assurances which were due, and when they were named, exhibited an appearance of almost apathetic indifference. He had, however, selected his victims with skill. They were safe men, and from them he duly received the money which was assured on the life of the niece.

From this period he seemed to decline in health, expressed a loathing for the place where he had once been so happy; change of air was prescribed, and he left the men whom he had deceived, chuckling at the success of his infamous scheme.

It need not be repeated, that the poverty-stricken gentleman of the suburbs, the gambling captain of Queen Square, and the merchant of Liverpool, were identical. That so successful a series of frauds was practised appears wonderful at the present day; but that the woman either possessed that power of simulating death, of which we read occasional cases in the remarkable records of various times, or that the physicians were deceived or bribed, is certain. There is no other way of accounting for the success of a scheme which dipped so largely into the pockets of the underwriters.

The next movement in the scientific annals of life assurance was made by Thomas Simpson, a natural and self-taught mathematician, whose life prior to throwing himself on the world of London for support had been somewhat of a vagrant one. He had cast rustic nativities, told fortunes, advanced courtships, and occasionally varied his vagabondism by undertaking to raise the devil, an attempt in which he was so successful, that he sent his pupil mad, and was obliged himself to leave the village. In 1740, he produced a volume “On the Nature and the Laws of Chance;” in 1742, this was followed by his “Doctrine of Annuities and Reversions,” deduced from general and evident principles, with tables showing the value of joint and single lives. In 1752, he made an additional contribution to the statistics of annuities, as he published in his “Select Exercises” a supplement, wherein he gave new tables of the values of annuities on two joint lives, and on the survivor of two lives, more copious than hitherto. He first attempted to compute the value of joint lives; but as these were still taken from the London Bills of Mortality, they were by no means fit for general acceptance. He treated his subject, however, more broadly and clearly than it had been previously treated, giving some of the best tables of the values of life annuities, which were published for many years. Though the manner in which they might be computed had been shown by Dr. Halley, it is to the self-taught Simpson we are indebted for their practical application.

In 1760, M. Buffon published a further contribution to the statistics of assurance, in a table of the probabilities of life, estimated from the mortality bills of three parishes in Paris, and two country parishes in its neighbourhood.

The following are some of his calculations:--“By this table,” says the author, “we may bet 1 to 1 that a new-born infant will live 8 years; that a child of one year old will live 33 years more, that a child of full two years old will live 33 years and 5 months more, that a man of thirty will live 28 years more; that a man of forty will live 22 years longer, and so through the other ages.”

Buffon adds, “The age at which the longest life is to be expected is 7, because we may lay an equal wager, or 1 to 1, that a child of that age will live 42 years and 3 months longer. That at the age of twelve or thirteen, we have lived a fourth part of our life, because we cannot reasonably expect to live 38 or 39 years longer; that in like manner at the age of 28 or 29, we have lived one-half of our life, because we have but 28 years more to live; and lastly, that before fifty we have lived three-fourths of our life, because we can hope but for 16 or 17 years more.”

Some profound moral reflections followed these estimates; and as a critic of the day “thought all serious remarks out of place in an arithmetical calculation, and that M. Buffon had better reserve them for his book on beasts,” the reader will not be troubled with their repetition. He will not, however, be displeased to read the remarks on this table, by one of the annotators of the day.

“For insuring for 1 year the life of a child of three years old we ought to pay 10 per cent., for as it has by M. Buffon’s table an equal chance of living 40 years, it is 40 to 1 that it does not die in a year. In the same manner we ought to pay but 3 per cent. for insuring for 1 year the life of a lad of nineteen or twenty; but 4 per cent. for insuring for 1 year the life of a man of thirty-five; and 5 per cent. per annum for insuring for 1 year the life of a man of forty-three; after which the insurances ought to rise above 5 per cent. in proportion to the advance of a person’s age above forty-three. So that a man of seventy-seven ought to pay 25 per cent., and a man of eighty-five 33-1/2 per cent. for insuring his life for 1 year.”

FOOTNOTE:

[10] By Kersseboom’s table, out of 817 persons of 20 years of age, all living at the same time--

711 will have lived to 30 years
605 ” ” 40 ”
507 ” ” 50 ”
382 ” ” 60 ”
245 ” ” 70 ”
100 ” ” 80 ”
10 ” ” 90 ”

By De Parcieux’s, it appears that out of 814 persons of 20--

734 will have lived to 30 years
657 ” ” 40 ”
581 ” ” 50 ”
463 ” ” 60 ”
310 ” ” 70 ”
118 ” ” 80 ”
11 ” ” 90 ”
1 ” ” 94 ”

CHAP. VII.

RISE AND PROGRESS OF THE EQUITABLE--ITS DANGERS AND ITS
DIFFICULTIES--COMPARATIVE PREMIUMS.--SKETCH OF MR. MORGAN--HIS
OPINIONS.--SINGULAR ATTEMPT TO DEFRAUD THE EQUITABLE--DEATH OF THE
OFFENDER.--ATTEMPT OF GOVERNMENT TO ROB THE OFFICES.

The first meeting of the Equitable Society for the assurance of life and survivorship “was holden at the White Lion in Cornhill” in 1762, when only four assurances were effected. In the next four months their number did not exceed thirty; and so lightly were the prospects of the institution held by those having authority, that when the Attorney-General was applied to for an act of incorporation,--“I do not think the terms are sufficiently high,” was his intelligent opinion, “to justify me in advising the Crown to grant a charter.”

Such was the commencement of this institution. For many years prior, the Equitable had been struggling into being, aided by the lectures of “the justly celebrated Mr. Thomas Simpson,” but yet more by the strenuous exertion of Edward Rowe Mores, an accomplished antiquarian and an enlightened gentleman. To his “great pain and travel,” says the deed of settlement, “the society was indebted for its establishment,” and in return its promoter was made a director for life with an annuity of 100_l._[11] Though its board of management included some of the first bankers and merchants of the day, yet then, as now, it seemed necessary to catch a peer of the realm to act as decoy, so Lord Willoughby de Parham, with no interest in its movements or concern in its affairs, was paraded before the public as patron and director, and at the end of two years was gravely thanked for the use of his name in maintaining the reputation of the novel society. It was probably, however, the working spirits, such as Sir Richard Glyn[12] and Sir Robert Ladbroke who took charge of its movements, and who were guilty of, or at any rate were responsible for, the double dealing which followed; for it is quite in keeping with the commercial integrity of the eighteenth century, that the directors, fearing its slow growth would injure its character, gave it the appearance of a more rapid advance, by adopting the unworthy expedient of calling the 25th policy the 275th, thus inducing the world to understand that the society consisted of 250 more members than its actual number. Thus the success of the Equitable institution may be dated from the mendacious employment of names, and from an absolute deception in the number of the policies. For many years, an utter indifference was exhibited by the policy holders about the concerns of the society. It was useless to advertise a general court, as a sufficient number to form a meeting did not answer to the call. Nor could a full court be procured until the cupidity of the members was appealed to, and five guineas were promised to the first twenty-one who should arrive before twelve o’clock. Then, and not till then, were the meetings properly attended; a fact which speaks loudly for the shrewdness of those who devised the scheme, and the avarice of those who formed the association.

The usual quarrels which depress young institutions, pursued the Equitable; and twenty-one persons who had contributed to pay the original expenses made a sudden claim of 15_s._ for every 100_l._ assured. This was resisted by the new members, and “kindled into a flame that might have destroyed the society, had not the moderation and good sense of Sir Charles Morgan and a few other sober-minded gentlemen allayed the fervour of the contending parties, and prevailed on them to enter into a compromise.” The natural result of this “flame” was to decrease the number of policies from 564 in 1768, to 490 in 1770, and it was some time before the assurances were again increased.

There were many reasons for its comparative want of success. There was an air of mystery about the Equitable which did not become a commercial institution, and which is now difficult to understand. In December, 1762, a solemn oath was taken by directors and actuary, “never to discover the names of persons making or applying for assurances,” as if some unimaginable disgrace attached to it. The terms, notwithstanding the learned opinion of Mr. Attorney-General, were enormous; for Mr. Dodson, taking the London Bills of Mortality from 1728 to 1750 as his foundations, produced premiums so high as to be almost prohibitive. He had, “for greater security, assumed the probabilities of life in London during a period of 20 years, which, including the year 1740, when the mortality was almost equal to that of a plague, rendered such premiums much higher than they ought to have been, even according to the ordinary probabilities of life in London itself.”

In addition, there were certain fantastic extreme premiums for fancied risks: there was “youth hazard,” “female hazard,” and “occupation hazard”! There was 11 per cent. placed on the premiums of “officers on half-pay,” and on persons “licensed to retail beer.” There was no capital on which to fall back, as with the Royal Exchange and London Assurance; and in addition, the original subscribers claimed all the entrance money for themselves, so that, altogether, it is no great wonder there was a lassitude and lack of vigour in the first few years of the institution. There was also probably more impediment in insuring with a company than with a jobber, as the underwriters would not be hedged with the forms and ceremonies which always surround a board of directors.

The following is a comparative statement of the premiums in 1771, with those now charged; and though the former may excite a smile, we must remember that up to this period there had been no attempt whatever to vary the payments in proportion to age, but that 5 per cent. was still the accustomed demand for youth and eld:--

Premiums in 1771. Present Premiums.
Age. Male. Female.
_£_ _s._ _d._ _£_ _s._ _d._ _£_ _s._ _d._
14 2 17 0 3 3 11 1 17 7
20 3 9 4 3 14 3 2 3 7
25 3 14 0 4 1 5 2 8 1
30 3 18 7 4 4 4 2 13 4
40 4 17 9 5 4 8 3 8 0
49 6 2 5 6 11 0 4 17 10

In 1769, the continuance of the Equitable must have been very doubtful; and had it not been for Dr. Price’s treatise, which recommended it to public notice, it is possible that this beneficial institution would have been closed. Hitherto its actuaries had been men who knew nothing about their business. The first, Mr. Mosdell, was a simple accountant; its second, Mr. Dodson, son of the mathematician, possessed the name, without the acquirements, of his father; the third, Mr. Edwards, was sufficiently aware of his own incapacity never to trust to himself; the fourth was a vice-president, who knew about as much of the art as his predecessor; nor was it until 1775, when Mr. Morgan was appointed, through the interest of his uncle, Dr. Price, that any real progress was made. From this period a new era may be dated; and “the society, no longer going on from year to year in ignorance and terror, incapable of deducing any just conclusion as to its real state, became now, by its more intimate connection with Dr. Price, possessed of ample means for ascertaining that fact and forming its future measures on the solid principles of mathematical science.”

In 1776, as Dr. Price urged on the directors the necessity of decreasing the tables of premiums, declaring them to be exorbitant and absurd, the female and youth hazard were at once abolished; and in consequence of an examination of the accounts, all the payments were reduced one-tenth. In 1780, on the recommendation of the same gentleman, the Chester and Northampton observations of mortality were adopted as the basis of the premiums, with an addition of 15 per cent., because certain directors thought the doctor was lowering the character of the institution by lowering the charges. In 1786, however, this 15 per cent. was discontinued, and various additions were made to the policies, which, like the taste of human flesh to the tiger, stimulated the proprietors to ask for more.[13] At the next meeting, ignorance and avarice united to demand a repetition of the bonus; but the majority decided on investigating the affairs of the society, and so satisfactory was the result, that a further 2 per cent. was added. In another two years an addition of 1 per cent. of all insurances of an earlier date than 1795 was voted; but still the cry was “Give! give!!” from a few absurd and insatiable proprietors. Success continued to mark the progress of the society; and by 1815, alarm being manifested lest it should become unmanageable from its magnitude, a resolution was passed limiting the participators in the surplus to 5000. Decennial investigations were agreed to, and the Equitable maintained its brilliant career. Below is a tabular statement of its progress; but it would be unjust to close this sketch without a more special allusion to one whose name was connected with it for upwards of half a century. Mr. Morgan, nephew to Dr. Price, was, as his name would imply, a native of the principality. Although originally educated for the medical profession, he showed so great a tabular aptitude, and evinced so much facility in the acquirement of mathematical knowledge, that Dr. Price induced him to relinquish the profession of surgeon for the situation of actuary to the Equitable; his management of which, seeing it rise from a capital of a few thousands to many millions, was sound and judicious; and although the institution contained in itself the germ of its success, yet Mr. Morgan’s arrangements tended to raise it to a position of almost national importance. His mathematical attainments were of the highest order; he contributed important papers to our scientific publications; he wrote various valuable works on annuities; and many a reader will call to mind his last few appearances at the meetings of the Equitable, when, drawn from his retirement, he stood bravely up to oppose, with the experience of a long life, the rash innovations of greedy proprietors; when he alluded so modestly to his past services, and touched so feelingly on that great misfortune, the death of his “friend, associate, and son,” which had compelled him to leave his retirement and to appear in defence of those rules and regulations by which he had conducted the Equitable to a distinguished success.

At the present time the following warning of this “old man eloquent,” uttered at one of these meetings, may have an effect in staying the demand for decreased premiums, annual divisions, and half-yearly bonuses:--“Can anything be more absurd, or betray greater ignorance, than to propose an annual profit and loss account in a concern of this kind, or to regulate the dividend or the call by the success or failure of each year?... Exclusive of the immense labour of such an investigation, the events of one year vary so much from those of another that no general conclusion can be safely deduced from the experience of so short a term.”

A tradition is current that, very shortly after the establishment of the office, a fraud was discovered in time to save the society from loss and to hang the criminal for the attempt. A man named Innes induced his step-daughter to insure her life with the Equitable for 1000_l._ Soon after this she died, and in proper time Innes produced a will, duly signed and attested by her, making him executor and legatee. There were facts connected with her death which seemed morally to implicate him in a terrible tragedy, but there was nothing which could be brought home as legal proof. The character of the man, his eagerness to procure the money, the doubtful circumstances of the case altogether, made the assurers hesitate, and they took the bold course of refusing to pay, upon the ground that the will was not a genuine document. But the man whose character was bad enough to justify such suspicions, was not likely to lose his money for want of a few false oaths, so he produced upon the trial one of the attesting witnesses, who swore that the will was executed in Glasgow, and that he personally knew the other witness. As Innes, however, undertook to procure further evidence in his favour, the trial was postponed, and when it came on a second time every thing went swimmingly on in his favour. His two confederates, one of them was named Borthwick, were ready to swear anything and everything. The time, the place, the room, were minutely described; the scene was graphically painted; and they sat down satisfied that they had played their parts to perfection. But Innes was not contented: he wanted the thousand pounds; and resolved to “make assurance doubly sure,” another person was called, who was to clench the argument by proving that he saw the deceased person sign the will in the presence of the two men who had attested the signature. This witness appeared with fatal effect. Wan and ghastly he is said to have arisen in the witness-box, and well might he be ghastly who was about to peril a brother’s life! “My Lord,” he said, “my name is Borthwick. I am brother to the witness of the same name who has been examined. _The will was not made on the Bridge-gate at Glasgow, it was forged by a schoolmaster in the Maze, in the Borough!_” The trial immediately ceased: “a screw is loose,” said Innes, as in vain he endeavoured to glide out of court. Of the confederates in this base deed one graced the pillory, another was imprisoned, Innes himself paid the extreme penalty of life, the office escaping the meditated fraud.

It is said to be the boast of the Equitable that this was the only case in which they found it necessary to appeal to law.

Whatever defects may have characterised the constitution of this Society, it was a great improvement on the arrangements of the Amicable and the two proprietary companies. It did all that a legitimate life office could be supposed to do. It assured lives for any number of years, or for the whole continuance of life. It took the price of the assurance in one present payment, or it accepted annual premiums. It allowed annuities to the survivors if they preferred it; and though the scale might be too high for what we now know, it at least was more business-like than its contemporaries; for so slow were the latter to profit by experience, that it was not until the commencement of the nineteenth century that the Royal Exchange Corporation availed itself of the Northampton Tables to compute its premiums.

In 1779, Mr. Morgan produced his “Doctrine of Annuities and Assurances.” This gentleman was the first to detect the inaccuracy of the rules which Mr. Simpson with others had given to discover the value of contingent annuities, and which he himself had adopted in the above work. Notwithstanding the castigation he received from Mr. Baily, for his “loose and obscure manner,”--for the “grossest errors,”--for “distorting,”--for “enveloping in mystery,”--for “introducing a depraved taste in mathematical reasoning,” there is no doubt that his was the earliest attempt to give correct solutions on the various cases of deferred annuities which had arisen out of his experience in the Equitable.

The following additions were made to the policies of the Equitable by 1800:--

_£_ _s._ _d._
For every 100_l._ assured in 1762 258 0 0
” ” 1763 249 10 0
” ” 1764 241 0 0
” ” 1765 232 10 0
” ” 1766 224 0 0
” ” 1767 215 10 0
” ” 1768 207 0 0
” ” 1769 198 10 0
” ” 1770 190 0 0
” ” 1771 181 10 0
” ” 1772 173 0 0
” ” 1773 164 10 0
” ” 1774 156 0 0
” ” 1775 147 10 0
” ” 1776 139 0 0
” ” 1777 130 10 0
” ” 1778 122 0 0
” ” 1779 113 10 0
” ” 1780 105 0 0
” ” 1781 96 10 0
” ” 1782 88 0 0
” ” 1783 81 0 0
” ” 1784 74 0 0
” ” 1785 67 0 0
” ” 1786 60 0 0
” ” 1787 54 0 0
” ” 1788 48 0 0
” ” 1789 42 0 0
” ” 1790 36 0 0
” ” 1791 30 0 0
” ” 1792 24 0 0
” ” 1793 19 0 0
” ” 1794 16 0 0
” ” 1795 13 0 0
” ” 1796 10 0 0
” ” 1797 8 0 0
” ” 1798 6 0 0
” ” 1799 4 0 0
” ” 1800 2 0 0

That a desire for the benefit of insuring was spreading, and that the commercial relations of the Continent were increasing, may be traced in the fact that in 1765 his Prussian Majesty granted letters patent for establishing a chamber of assurance in Berlin for thirty years, during which period no other assurance office was to be allowed in any part of Prussia; and during the same year, the free city of Hamburg established a company for the sale, not only of immediate, but of deferred annuities.

In 1765, one of those insolent attempts occurred on the part of the state, which reminds the reader of an absolute, rather than of a representative, government. The peace concluded in 1763, followed a war which cost upwards of a hundred millions, and the bribery which was necessary to carry the treaty through the House, had contributed to exhaust the treasury. Money was to be acquired, and the people grumbled at the taxation necessary to raise it. In this dilemma it suddenly occurred to the ministers that there might be unclaimed property in the assurance offices, and by some confusion of right and wrong it was thought just to claim this private property for the public good. Nothing could more decidedly approach confiscation. But in dealing with these offices the government was dealing with a large and influential body of proprietors whose gains were aided by this “dead cash,” and who were not men to see their purses invaded with impunity. The Amicable, the Royal Exchange, the London and the Equitable Assurance Companies numbered among their shareholders the greatest mercantile names of the day; they were the same men, or of the same generation, who as directors or as proprietors of the Bank of England resisted, a few years later, the just demand of William Pitt for the unclaimed dividends on the national debt; a demand so obviously sound that its opponents had not an argument to support their refusal. If, then, they were so vigorous when wrong, it may be imagined that they stood boldly forward when they were right. Their courage was undaunted, and they positively defied the claim. The Whigs declared that it was as barefaced as shutting the Exchequer by the Second Charles; the Jacobites said they might as well have a Stuart as a Guelph, that the minister had mistaken his men, and that under no circumstances would they voluntarily yield. Pamphlets were issued, which distinctly asserted that no one would trust a government acting so infamously; that confiscation of private property to pay a nation’s debts was only one remove from bankruptcy; and that no citizen would lend money to a government so unprincipled. The propriety and proper feeling of the people aided the resistance of the offices, and the attempt was only successful in proving to the state, that all arbitrary power had past away, and that for the future an honest course would be their best policy.

FOOTNOTES:

[11] In 1768, Mr. Mores quarrelled with and separated from the society.

[12] Sir Richard was a notability of those days, and divided civic popularity with Beckford, whose colleague he was in the representation of London in 1761. He was made Doctor of Civil Laws by Oxford University, a custom which would have been perhaps more honoured in the breach than the observance; and we owe Blackfriars’ Bridge greatly to the energy and exertions of Sir Richard Glyn, Knight, Baronet, and Lord Mayor, and--more honourable title still,--director of our first purely mutual life assurance office. We look in vain for such names as Glyn, Gosling, Ladbroke, or Beckford, among the sheriffs and aldermen of the present day.

[13] That the safety of this Society was doubtful may be partly judged from the fact, that half the policies issued within the first twenty-five years had been abandoned, probably from doubt of their ultimate payment.

CHAP. VIII.

BUBBLE ANNUITY COMPANIES--THEIR PROMISES--EFFECT ON THE
PEOPLE.--DR. PRICE--HIS LIFE.--SIR JOHN ST. AUBYN.--THE YORKSHIRE
SQUIRE--ASSURANCES ON HIS LIFE--HIS SUICIDE.

The bubbles which sprang up in the shape of annuity institutions were numerous. They were becoming objects of serious concern. They attracted the class which understood the least. They appealed to the finest sympathies of nature, and traded in the feelings they sought to excite. Projectors and promoters arose, and with them came societies which could do nothing but empty the pocket of the subscriber to fill that of the manager. There were annuity clubs for naval and for military men, for clergymen and clerks, for schoolmasters and for tradesmen; but as there was no special information by which to govern the rates, or as those rates were more tempting than trustworthy, the subscribers were fleeced, partly in proportion to their own ignorance, and partly in proportion to the consciences of the directors. This was the era of annuity societies, as the present is the era of life assurance. A prodigious traffic was carried on in such schemes, and a perfect rage for forming them spread through the kingdom.