Chapter I (5)

By this time the subject of mortuary registrations was mooted in magazines and periodicals, and many ideas may be found scattered over contemporaneous literature, which probably assisted to perfect the necrological system which we now enjoy. It may seem trite to relate that in 1773 it was recommended to keep a table of christenings, marriages, and burials in every church, chapel, and place of religious worship, to be published annually; but this was a grasp of intelligence not previously attained; and when, too, it was advised that the tables of christenings should specify the sexes, and the tables of deaths divide the males into children, bachelors, married men, and widowers, and the females into corresponding denominations, it was really no trifling advance in the objects of life assurance, although it was not thought so at the time. It was said, also, and said justly, “The establishment of a judicious and accurate register of the births and burials in every town and parish, would be attended with the most important advantages,--medical, political, and moral. By such an institution, the increase or decrease of certain diseases, the comparative healthiness of different situations, climates, and seasons, the influence of particular trades and manufactures on longevity, with many other circumstances not more interesting to physicians than beneficial to mankind, would be ascertained with tolerable precision. In the Pays de Vaud and in a country parish in Brandenburgh, 1 in 45 of the inhabitants die annually, and at Stoke Demerell, in Devonshire, 1 in 54. Whereas in Vienna and Edinburgh the yearly mortality appears to be 1 in 20; in London, 1 in 21; in Amsterdam and Rome, 1 in 22; in Northampton 1 in 26; and in the parish of Holy Cross, near Shrewsbury, 1 in 33. In the Pays de Vaud the proportion of inhabitants who attain the age of 80 is 1 in 21-1/2; in Brandenburgh, 1 in 22-1/2; in Norwich, 1 in 27; in Manchester, 1 in 30; in London, 1 in 40; and in Edinburgh, 1 in 42.”

This was in 1773, and the intelligent reader will necessarily be reminded of the period when life annuities were paid for without regard to youth or age, and when a life insurance office commenced business, and received equal premiums from the young and from the old, from the healthy and the sick. But people were beginning to think. In 1777 fault was found with the charges of the Equitable, and the following scale proposed:--

3_l._ per cent. 4_l._ per cent. 5_l._ per cent.
21 years of age 2 17 7 2 16 0 2 15 0
30 ” 3 13 4 3 12 8 3 12 5
40 ” 4 11 6 4 13 11 4 14 1
50 ” 5 15 5 5 18 0 5 17 4

In 1779 a proposal was made for an universal assurance of lives, by means of a tax to be levied by Government. By this all want was to be abolished, and various Utopian benefits to be received. As, however, the scheme was never carried out, it is only worthy of notice as indicative of a growing spirit of inquiry.

In 1783 Mr. Baron Maseres endeavoured to familiarise the mind with the doctrines of life annuities. It is to his discernment that we owe the confirmation of Mr. de Moivre having recourse to an hypothesis concerning the probabilities of the duration of human life, which he yet knew to be untrue, in order to facilitate the computation. This work of Francis Maseres is less referred to than it deserves; but there is reason to believe that the value of his tables for all ages under 75 or 80 were nearer the truth for the average of this country, than any other then extant.

During the mania for insuring anything and everything, there was a man named John Perrott of considerable repute in the coffee-houses and on the Exchange. He resided in a large mansion many miles out of town, and rode to Lloyd’s in his coach and four, after the fashion of the magnates of the day. He had come from the country a poor but clever boy, and had worked his way until he could boast that he was worth a plum. His avocations were various. He was a member of Lloyd’s; he was a speculator on the money market; he was an insurer of lives, of merchandise, and of anything that was offered, and so daring was his character that he would take any risk however desperate, his motto being, “Everything is insurable--at a premium.” He was liberal in his dealings in business, and in his annuity transactions would often grant more than he was asked if the applicant seemed to require and deserve it. He affected an expensive style of living; his agents bought rare pictures; but his chief delight was to collect fine china, a taste in which he indulged to an extravagant extent. The uglier the monster the dearer it was to John Perrott, and the more he was willing to pay for it. His clerks were employed to board the vessels from the East directly they reached the Thames, and he would at any time leave off business to listen to information about pottery and porcelain. When a man came to insure his life or his ship, to buy an annuity or to sell one, he was sure of a favourable bargain if he could but produce some vase or jar which had been seen by no one else. He had one fine specimen in his collection, which however required a second and similar one to complete its value in his eyes. This he once possessed, but being lost or broken, it afforded him a constant topic of complaint, and out of it arose a characteristic story of the man.

One day he was applied to by a merchant to effect an assurance on a ship which had been long absent, and of the safety of which many doubts were entertained. Perrott demanded a very high premium, and the applicant demurred. In the course of conversation, however, he carelessly alluded to a fine porcelain jar of which a friend was possessed, and which he thought he could procure. Perrott’s eyes opened as the description proceeded. It was the apple of his eye, the very specimen his soul desired, and his visitor, on witnessing the anxiety he evinced, offered to go for it, good-naturedly declaring it was of no value to him, and at the express solicitation of Perrott went off immediately to fetch the valued prize. The merchant seemed a long time gone, but Perrott attributed this to his own impatience, and felt fully rewarded when he saw him return bearing the porcelain he coveted. With eager hands he grasped it; the assurance on the missing ship was most advantageously concluded for his client; and Perrott went home a happy man. On entering the place where all his treasures were deposited, lo! his own jar was missing, and he found on inquiry that he had been outwitted by his City friend, who had tempted him to a low assurance with information about his own property, and at his urgent wish had procured it from his own home by a deception on his own housekeeper.

Burning with rage, and vowing vengeance against the crafty merchant, whom he determined to expose on ’Change, Perrott went to town the next morning, where the first information which greeted him was the arrival of the vessel he had just assured. Finding the tables turned in his favour he wisely held his peace, merely making an especial visit to the merchant to congratulate him on the arrival of his merchandise so immediately after he had assured it.

The following fraud, which was perpetrated in 1780, was perhaps the first instance of a deception which has since been often repeated. An application was made to the London to insure the life of a lady for 2000_l._ The references were satisfactory. The lady’s health was sound, her habits were good, her constitution was excellent. The usual certificates were handed in and the assurance was concluded. Within six months a claim was made for the money. The ordinary forms were lodged and found to be regular, the disease was certified to be that of the lungs, which of all others should have been discovered in the earliest stages. The directors looked grave and questioned the secretary, and the secretary questioned the doctor. There was no accounting for it; it all seemed regular; no fraud could be alleged, and the policy was discharged. Scarcely had it been paid when certain information was given. Inquiries were again instituted, and it was discovered that one sister being ill and utterly given over, the other brought a certificate of the invalid’s birth, personated her at the assurance office, deceived the medical man, sent in the certificate of her sister’s death, and obtained the money. No sooner did the office commence its inquiries than the lady was missing, and the company compelled to abide by its first loss.

An annuity and assurance office, stimulated by the success of the Equitable, was commenced under the title of “the Universal,” but history is silent as to its results. Many other attempts were made, some of a purely local character, which were very successful; others, more ambitious, failed in their endeavours. In 1792 the present Westminster Society commenced business, and in 1797 was followed by the Pelican, now in active existence. Some time prior to these, there was an advertisement of a new assurance office on the lives of men, women and children at the Bell and Dragon, otherwise called “Lincoln’s Inn Eating-house in Portugal Street, Lincoln’s Inn, Back Gate.” It need not be added that it was not by means of the “back gate to the Bell and Dragon” that the Westminster and the Pelican obtained their deserved success.

FOOTNOTE:

[15] “Never grant life annuities to old women,” Gideon would say; “they wither, but they never die;” and if the proposed annuitant coughed on approaching the room door, Gideon would call out, “Ay, ay, you may cough, but it shan’t save you six months’ purchase.”--“Chronicles and Characters of the Stock Exchange. By John Francis.” 2nd. Edition.

CHAP. XI.

LEGAL DECISIONS.--WILLIAM PITT, AND GODSALL AND CO.--ROMANCE OF
LIFE ASSURANCE.--THE GLOBE.--NEW COMPANIES.--THE ALLIANCE--ITS
PROMOTERS.--IMPROVEMENT OF THE VALUE OF LIFE CONSEQUENT ON THE
IMPROVEMENT IN SOCIETY--ITS DESCRIPTION.--TRIAL CONCERNING THE DUKE
OF SAXE GOTHA.--IMPORTANT LEGAL DECISION.

It has been said that corporations have no souls to be saved or bodies to be kicked; but it may be added that they have a wild kind of justice meted to them when they appeal to a jury. So early as 1801, this was proved in a case of life assurance.

In 1799, a Mr. Robson, at the instance of a Mr. Kerslake, who was to grant the former an annuity, proposed his life for insurance to the Westminster Insurance Company. The usual forms were passed through, the usual undertaking entered into that the assured was in good health, his age being only twenty-three, and the policy was issued by the office. In three months he died. The Westminster Society made inquiries which perhaps they should have made before, and those inquiries discovered that Mr. Robson had been labouring for some time under what is popularly known as a tendency to consumption; that in 1797 he had suffered from hæmorrhage in the lungs, but had recovered; that in February, 1799, though he had another similar attack in a more violent degree, he had said nothing about it, opening the policy on his life in March. In the autumn he took cold, fell into a rapid decline and died. There was clearly a predisposition to disease, and though it is a very important consideration, whether a policy once open should not be indisputable, yet until this is so, there is in a case like the present but one view to be taken. The company rightly refused to pay, and an action was brought to compel them.

“Who shall decide when doctors disagree?”

One party swore there were no symptoms which indicated consumption. The other took their oaths that consumption was inevitable with such symptoms. In vain Lord Kenyon charged the jury in favour of the Westminster, the jury knew better than his lordship, and had no notion of a policy being opened without being discharged, whatever the deceit might be. They decided against the company. Another trial was sought and granted, but in vain. The new jury maintained the principles of the old, and the company lost its money and gained the vituperation of the unthinking.

The great minister of the past century died insolvent, and from this arose one of those actions, which at once confirm a law and establish a principle. In 1803 William Pitt was indebted to Godsoll and Co., his coachmakers, upwards of 1000_l._ To secure some part of this in the event of his demise, they assured his life for seven years with the Pelican Company, for 500_l._ at the rate of 3_l._ 3_s._ per cent. In 1806, three years after this, the premier died without sufficient assets to meet his liabilities. The greatness of his services to the country, the fact that he had died in debt being a proof of his self-abnegation, demanded an acknowledgment, and the state very properly determined to pay his creditors. This was not sufficient for the coachmakers; an immediate claim was made by them for payment of the 500_l._ assured. As Godsoll and Co., however, had received the entire amount of their bill when Mr. Pitt’s other debts were discharged, the Pelican refused to pay, on the ground that their insurable interest in the life of the deceased had been terminated by the payment of his debts, and that as the insurance was to meet a special debt, since discharged, they could not recover.

On the one hand, Godsoll and Co., possessed an insurable interest at and from the time of the opening the policy, to the death of Mr. Pitt. On the other, the assurance being for a special purpose, to procure the payment of a debt otherwise discharged, there could be no justice in paying it twice. The company therefore offered to return the premiums, but refused to pay the policy. There was an immense amount of special pleading by the counsel of Godsoll and Co. to make the worse appear the better cause. It was contended that, having had the necessary insurable interest up to the death of Mr. Pitt, the after payment of his debts did not vitiate their right; that, in other words, having paid the premiums for a special purpose, which purpose was effected, they ought to receive their 500_l._ instead of being satisfied with the return of the mere premiums. It was now to be resolved whether, under any form or by any subtlety of argument, the statute which said so distinctly an insurable interest was necessary, could be broken through.

Had Godsolls carried their point, every creditor might have insured the life of his debtor and received a double payment of his debt. Every tradesman in London might have speculated on his customers’ health, and the act which was to destroy gambling policies, would have been practically repealed. The judgment of Lord Ellenborough, when he gave the decision in favour of the Pelican, is worth transcribing.

“The interest which the plaintiffs had in the life of Mr. Pitt was that of creditors, a description of interest which was held to be an insurable one. That interest depended on the life of Mr. Pitt in respect of the means and of the probability of payment which the continuance of his life afforded to such creditors, and the probability of loss which resulted from his death. The event against which the indemnity was sought by this assurance, was the consequence of his death as affecting the interest of these individuals assured in the loss of their debt. This action is, in point of law, founded upon a supposed damnification of the plaintiffs, occasioned by his death existing at the time of the action, and being so founded, it follows that if before the action was brought, the damage was obviated by the payment of his debt to them, the foundation of any action on their part on the ground of such assurance fails. And it is no objection to this answer that the fund out of which their debt was paid did not originally belong to the executors, as a part of the assets of the deceased; for though it was devised to them _aliunde_, the debt of the testator was equally satisfied by them thereout, and the damnification of the creditors, in respect of which their action upon the insurance contract is alone maintainable, was fully obviated before their action was brought. Upon this ground, therefore, that the plaintiffs had in this case no subsisting cause of action in point of law, in respect of their contract, we are of opinion that a verdict must be entered for the defendants.”

In one of the eastern possessions of this country, there resided a lady who, when gold was sought there by adventurous men, and when young ladies were regularly educated for the Indian matrimonial market, had left England on an expedition of this character. Her craft and cunning would have insured success, had not her beauty, which is described as exceedingly great, been a sufficient guarantee. She was consigned to the care of a lady who had gone out on a similar adventure herself, and who then held a somewhat high position in her own circle. The arrival of the young adventuress as a new article was marked by a succession of amusements: whispers of love and offers of settlement were not wanting, though, being ineligible, they were disregarded, until she became acquainted with a civilian reputed to be very wealthy, and known to be rather old. This gentleman she married. Unhappily, the wealth was only reputed; and the stormy indignation of the young beauty when she discovered her error,--when she found her requests for new carriages were disputed, and for new jewellery were refused,--somewhat astounded the indolent Anglo-Indian, who had been the woo’d rather than the wooer, and been married rather than he had married. So soon as she discovered that she had wedded a poor instead of a wealthy man, and that all her care and cunning had been in vain, she grew gloomy, dark, and discontented; but at last, on representing to her husband that she would be comparatively penniless if he were to die, accompanied by blandishments which were the more welcome from their rarity, he procured an insurance on his life, from the agent of a London company, for some thousands.

Among others attached to the household of this gentleman was a native domestic, who at first had received the authority of his new mistress with discontent, for until she came he had been paramount. But it was not long before he succumbed, being suspected of a warmer attachment than could be reconciled with the connection of servant and mistress. There were many whispers circulated concerning them, in the dissipated circle in which the lady moved; though so long as open decency was preserved, the manners of the time allowed a considerable latitude; and rather than disturb the _dolce far niente_ of their indolent and luxuriant existence, they were content to give her the benefit of the doubt. It was not long before symptoms of decaying health--“the liver disease,” said the doctor, for every thing was then and there so called--began to appear in the insured man. Whether he declined to apply for leave of absence, or whether some backstairs influence was used to prevent it, is uncertain; at any rate, he still kept at his old quarters, dying gradually away, wasted by slow disease. During this period, the behaviour of his wife was exemplary: his pillow was smoothed, his medicine was administered, his cough was hung over by her: and if she left him for a time, the Hindoo, gliding about like a shadow, was ever by his master’s side, to complete what his mistress began. It was noticed, however, that the patient seemed to suffer, rather than desire so close a connection; and to shrink from, rather than claim such attention. This, however, was thought little of, being attributed to an irritability of temper arising from disease.

In due time the unhappy man died; the insurance money was claimed by the widow, and paid by the insurers. The household was broken up, and the widow came to England. For a few years she lived in great luxury, indulging expensive tastes on the money she had received, until only a few hundred pounds were left in the hands of her bankers. Being a woman of such remarkable beauty, it is somewhat surprising that she had not married a second time in accordance with the extravagant and voluptuous tastes, which her residence in the East had engendered. Instead of this, she formed an acquaintance with a young man of inferior position; a proposal of marriage followed, and she induced him to offer his life for insurance, undertaking to pay the premiums out of her own funds. The banker with whom her money was lodged was amazed when he heard what she was about to do, and made some inquiries of an old East Indian, who was then in England, concerning her former life. The replies of this gentleman, although cautious, were sufficient to point the lady out as a very doubtful character; and whether, on this, a hint was given to the intended bridegroom is uncertain, but that gentleman declared off; and the condition of the insurance not being complied with, the dark purpose was foiled. A few months after other offices were applied to, with proposals for an insurance on the life of a young relative of the same lady, accompanied by a reference to the gentleman who acted as her banker. Inquiries were necessarily instituted as to the reasons for insuring, but no sufficient cause could be shown. It was found, too, that she had no money to pay more than one insurance; and, coupled with the reports which were afloat concerning her first husband’s death, a very dark purpose was assigned to her present movement. Awkward questions were raised--information was received, which pointed to her as the poisoner of her husband, and to the Indian servant as an agent in the infamous deed. A prompt negative was given to her application for insurance; and whether conscience aroused her to a sense of her frightful position, or whether she saw her way to success on the continent or in India, is uncertain. She drew her money from her agents, and disappeared for ever from the society in which she had glided like an incarnation of evil.

Up to 1800, six offices only were in existence. The Globe, however, followed in 1803, being founded by Sir Richard Glyn; and though purely proprietary, answered the requirements of the time. When it endeavoured to obtain a charter, the vested interests rose against it, using the same arguments to prevent its establishment, which the Globe itself has since brought against the formation of the new companies in 1850. It may be noticed that this insurance bill was introduced by Lord Henry Petty[16], descended from that Sir William Petty whose services in the cause of vital statistics have already been mentioned. Sir Charles Price, Sir William Curtis, and Mr. Grenfell, opposed it in behalf of the Royal Exchange and London Assurance Companies, on the ground that it would be an infringement of their rights. On behalf of the Globe, it was argued that competition was necessary--that the population and trade of the country had vastly increased since 1720--that a large amount of insurance was effected out of England, for want of chartered companies--and, above all, that the Globe would give 100,000_l._ to the public. The last consideration carried the point, and the Globe was chartered. In 1805, a movement began in these institutions, occasioned by a great excitement in the money market. In 1806, in 1807, and 1808, eight new offices more were established; and from that year to 1821, out of a great number which were proposed, commenced, and failed, eight additional companies maintained their ground. In 1823, four; in 1824, seven; in 1825, four; and in 1826, three more were added to the list, making, by that year, a total of 41.

There was room, in 1825, for an augmentation of companies. The population of London in 1821 was 1,225,694; of these very few had assured their lives; and if a city like London were behind in this matter, it may be supposed that the inhabitants of the rural districts were difficult to impress with its importance. Up to 1825, assurance could not be said to have made much advance--certainly not in proportion to the general advance of commerce. There had, indeed, been much to alarm the public as to the safety of life institutions. From 1806 to 1826 more companies had been broken up than had been successful. In the first-named year only 9 were in existence; since which, out of 30 which were commenced, 20 were compelled to abandon their business.[17] Some went down in total insolvency; others lost a large portion of their capital; another set of directors paid the Provident Life 21,000_l._ to take their risks off their hands. Very extravagant promises had been made by these companies. One gentleman announced of the Union Life, “that every feature of its plan was marked by superior liberality and with a decided contempt of all the petty advantages which swell the profits of other offices.” A second society, the Provincial Union, offered to take lives at 10 per cent. under others; while another, with a spirit of “extra superior liberality,” would do it at 20 per cent. less. Of course such as these were never meant to last; but it was said, “they are persevered in until everything is consumed, while the chief actors laugh in their sleeve and enjoy their profits as long as the bubble lasts, and impunity when it bursts.”

Among the companies which were started in 1825, and which attracted attention from the importance of its promoters, was the Alliance. In its marine capacity it broke down the charters of the old corporations, and was at once successful, not from any special merit, but because it numbered among its members the representatives of the first city firms. It may be added, that, among them, four men more alike in the one desire of making money, but more dissimilar in tastes, pursuits, and habits, were never before united. These were John Irving, Baron Goldsmid, Moses Montefiore, and Samuel Gurney. The first of them, John Irving, affected West End company and aristocratic tastes, by virtue of the friendship of the House of Rutland. He was familiar with men in Lothbury who were never able to meet his eye in Hyde Park. He knew many a merchant on ’Change whom he could not recognise in St. James’s. “He shakes me by the hand in the City,” growled Rothschild to a friend; “but he can never see me in Piccadilly when he is walking with a duke.” Moses Montefiore, the huge capitalist, and Isaac Goldsmid, the hereditary financier, are familiar to the reader. The last on the list is Samuel Gurney, whose simple garb of russet brown and unassuming speech, contrast as much with his great wealth, as his massive, masculine, and almost leonine face does with his single-minded and benevolent character. These were the men who gave at once success and security to the Alliance.

The increased number of offices had the tendency to extend public information, and to draw the attention of many who had hitherto thought nothing on the subject. The original object of life assurance was simply to enable a person to secure to his family the receipt of a certain sum at his death. But by 1825 it was applied to a variety of purposes; assurances were effected by creditors on the lives of their debtors. If money were borrowed for a year the life of the borrower was assured. In marriage settlements, where the capital would pass from the husband at the death of the wife, an assurance was effected on the life of the latter. “In every form,” says Mr. Gilbart, “the system seems to produce unmingled good. It promotes habits of forethought and economy on the part of the assured; it tends, by the accumulation of saving, to increase the amount of the national capital.”

The knowledge connected with the population was constantly increasing; and, though it was imperfect enough, still it was in advance of our previous information. In 1801 an approximation was made to that of London, which was supposed to be 864,845; and when it is remembered that Captain Graunt, so early as 1664, calculated it at 384,000, the numbering of the people in 1801 was no small benefit. In 1811, when a second census was taken, the population was stated to be 1,009,546; and a further increase was declared in 1821, when the population showed itself as 1,225,694. These calculations were not effected without difficulty, and many objections were made by good but narrow-minded men, who, from press and from pulpit, did not fail to remind our rulers that David was rebuked by the prophet, and punished by God, for attempting to do that which they had done.

The health of London was also improved. It was estimated that the introduction of vaccination had increased the mean duration of human life about 3-1/2 years. There had been a great advance in medical skill. Discoveries in chemistry had been brought to bear upon disease. The arrangements of our hospitals had enabled students to graduate under men of distinguished attainments; the discipline of the medical school had been increased; and, though ignorance was often in the ascendant, and quackery was encouraged as a revenue to the state, men--somewhat different to those who were licensed to kill in the days of Fielding and of Smollett--were employed in invigorating the constitutions and prolonging the lives of their fellow-countrymen. We must not also forget, that by 1825 a vast improvement had occurred in the manners and habits of social life. Our fathers still remember their visits when the bottle kept so constant a round that few remained sober; when to be asked to a dinner-party was to be asked to get intoxicated; when two and three-bottle men boasted their acquirements; when the wild orgy disgraced humanity, and the wild debauch destroyed life. We of the present day boast of this improvement to our children, and whatever new vice may have usurped the place of the old, it is, at least, less open in its defiance, and less baneful in its results. When Petty first published, the streets were confined, cleanliness was disregarded, refuse and offal accumulated in the highways, and ventilation was laughed at. There may still be many receptacles of filth in London, but they do not meet us in our daily avocations. The kennels of Southwark do not run blood two days in every week, as they did in the last century; nor are hogs “bred, kept, and fed,” in our populous neighbourhoods. If, therefore, there were any thing in the advance of chemistry, in draining, in ventilation, in more wholesome living, in the absence of open debauchery, it followed that there would be a considerable decrease in the rate of mortality. From 1700 to 1780, the deaths averaged about one in thirty-eight of the existing population. But in 1790 it became about one in forty-five, in 1800 one in forty-eight, in 1810 one in fifty-four, and in the ten years preceding 1820 one in sixty, in England and Wales.

But though these important facts had gradually become known; although it was also clear that people lived longer; that the wealthy classes attained a greater age than the indigent; that the value of a lady’s life, commercially, and not in the spirit of gallantry, was superior to that of a gentleman; it could scarcely be said to be acted on. So late as 1819, Dr. Rees suggested the importance of specifying the sexes, and discriminating them in the burial registers, advising also that the numbers of both sexes dying of every distemper in every manner and at every age should be specified. “This would afford the necessary data for ascertaining the difference between the duration of human life among males and females, for such a difference there certainly is much in favour of females.”

The tables on which the rates of the companies had been founded, had given the continuance of life at a far lower estimate than time had proved it to possess. The enormous success of the original societies had proved this; and, by 1821, it was generally understood that the Northampton table was only an approximation to the truth. This table was chiefly in use until the Carlisle table of Mr. Milne gradually made its way, up to which period the following were the principal sources whence information was derived:--

A Record of the Births and Burials in Breslau from 1687 to 1691.

London Bills of Mortality from 1728 to 1737.

Register of Assignable Annuities in Holland from 1623 to 1748.

Lists of the Tontine Schemes and the Necrologies of Religious Houses in France.

Mortality of Northampton for forty-six years prior to 1780.

” of Norwich thirty years prior to 1769.

” of Holy Cross thirty years prior to 1780.

” Warrington for nine years.

” Chester for ten years.

” Vienna, Berlin, and Brandenburgh.

” Seven enumerations of the entire population of
Sweden.

” of similar materials from the Canton de Vaud.

Notwithstanding these varied materials, and although they were quoted as authorities for maintaining a high rate of premium, the societies in existence were well aware that their rates were fixed on too ascending a scale. They had found unexpected sources of profits in lapsed policies; they had estimated an employment of their money at 3 per cent., and, at the very lowest calculation, their receipts had averaged 4 per cent. Nor was this likely to diminish, for there can be no doubt that laws as unerring as those which govern health govern the annual value of money. In 1810, Mr. George Barrett had presented to the Royal Society a new mode of calculating life annuities. This the Society declined to publish, but that which was refused by a public body was adopted by a private individual, and Mr. Bailey gave it to the world in the appendix to his valuable work on “Annuities.” The method of Mr. Barrett was extended and improved by Mr. Davies, in 1825, in his tables of life contingencies; a proof that the Royal Society had made a mistake in refusing to publish the contribution of Mr. Barrett.

In 1830 it was decided that a policy was vitiated because the person insured had only answered the questions demanded, and had not stated all the features of his case. The following is a digest of the circumstances:--

The life of the Duke of Saxe Gotha, after the fashion of the Germans half a century since, was said to have been a dissolute one, and by 1825 had debilitated his constitution. He had lost the use of his speech, and whatever mental faculties he had originally possessed, became materially decreased. Private reports to the directors hinted at these material circumstances, “little as they were believed to have an influence on his natural life.” No hint of the kind, however, escaped the friends of the assured, and the directors, trusting to the honour of the duke more than as traders they ought to have done, granted a policy. One year after, Death, respecting not the person of his highness, seized him for his prey, and it was discovered that a tumour, of some years’ standing, had pressed upon his brain and caused his decease.

With only one year’s premium received, the office found this claim very unpleasant, and refused to pay. They said the mental state of the duke had not been mentioned, that they were ignorant of his loss of speech, and they fought very vigorously against discharging the policy. The question which rose was, whether it was necessary to give special information which was not asked; whether, in fact, a truthful answer to all queries was not enough. When the trial came on, the verdict was given for the office, because, according to Mr. Justice Littledale, it was the duty of the assured in every case to disclose all material facts within their knowledge: “In cases of life assurance, certain specific questions are proposed as to points affecting all mankind. But there may also be circumstances affecting particular individuals which are not likely to be known to the insurers, and which, had they been known, would have been made the subject of specific inquiries.” However legal this might be, it was scarcely equitable. The directors had insured the life of this gentleman, knowing, from private information, that his career had been gay, and his constitution debilitated, and they ought, on every principle of justice, to have been compelled to pay their obligation.

In the same year another very important decision was arrived at. A gentleman assured the life of his son in the Asylum for 5000_l._ After the payment of two years’ premium the son died, and the office refused to honour the policy, because the father had no insurable interest in the life of his son. When the case was tried, the grounds on which the counsel endeavoured to prove an insurable interest were, that the father had expended a large sum in maintaining and in educating the deceased; that if a man had an insurable interest in his own life, he certainly had in that of his son; that a father might have many valuable rights and expectations depending on it which he could only protect by an insurance; that, by the statute of Elizabeth, if a father became poor in his old age, and his son was capable of maintaining him, he was bound to do so, and therefore the chance of the father being maintained in his old age was decreased by the death of his son.

The special pleading evident in this line of argument was not calculated to be successful. But though a strict interpretation of the act might justify the refusal to pay, it does not appear that such a decision is strictly equitable.

The reason which induced the office to refuse payment may possibly be found in the fact that only two years’ premium was received, and that, as a young office, they were galled at having made an unfortunate bargain. But there does not seem justice in the interpretation of a law which decides that a father has no interest in the life of his son, although there are many reasons to justify it as expedient. Yet so it was ruled; and this decision affected property to the amount of half a million. Mr. Justice Bayley, in giving judgment, said: “If a father, wishing to give his son some property to dispose of, made an insurance on his son’s life, not for the father’s own benefit, but for the benefit of his son, there was no law to prevent his doing so; but that was a transaction quite different from the present; and if the notion prevailed that such an insurance as the one in question was valid, the sooner it was corrected the better.”

FOOTNOTES:

[16] The present Marquis of Lansdowne.

[17]

Birmingham.
Commercial.
Egis.
Hercules.
Kent.
London Commercial.
Marine.
Minerva.
National.
Philanthropic.
Protector.
Rainbow.
Royal Institution.
St. James’s.
St. Patrick.
Shamrock.
South Devon.
Southwark and Surrey.
Star.
Sussex.

CHAP. XII.

GOVERNMENT ANNUITIES--OPINIONS CONCERNING THEM--GREAT LOSS TO THE
STATE.--MR. MOSES WING’S LETTER.--MR. FINLAISON.--NEW ANNUITY
ACT--ITS ADVANTAGES TO JOBBERS.--ENDEAVOURS TO PROCURE OLD
LIVES.--ANECDOTES CONCERNING THEM.--PHILIP COURTENAY.

Up to the year 1808 there was no mode of investing money in life annuities at once safe and profitable. Although the assurance were also annuity offices, yet, at this period, only three of any standing were in existence, and the public had seen and suffered so much from the failure of various joint stock companies, that they regarded all new societies with a proper degree of jealousy. At the time above named there had been a speculative excitement in the money market, followed by a disastrous panic. Many companies had been compelled to wind up their business, and others, having no business to wind up, had been left to their fate. And of annuities granted by private persons, the public had a well-founded horror; for the persons who had chiefly granted them were bankers, stock-jobbers, and mock millionnaires, who had often been swept away by panics on the Stock Exchange. In 1809 complaints were instituted that persons wishing to make provision for themselves or their families had no certain fund on which such annuities could be secured, and the ministers were made aware of many infamous practices which often plunged whole families into ruin. The Government, therefore, determined to become dealers in life annuities, and in the very outset made a considerable and almost fatal mistake. The tables of mortality known as the Northampton were the chief basis on which the various life assurance companies founded their premiums; and, by a singular error, the state adopted the same basis on which to grant annuities for life; but as the most intelligent men of the day were employed in calculating and constructing tables, the Government was scarcely to blame, particularly as they sought no profit, entering into the undertaking solely from a consideration of its advantages to the community.

From 1809 to 1819 this system continued. The speculators soon found out that the Government charge for a life annuity afforded a very remunerative investment, and the insurance offices made considerable profit by purchasing and reselling them. The Commissioners of Greenwich Hospital also selected many of the most healthy of their pensioners, and bought large annuities on them,--a proceeding productive of as much profit to the commissioners as of loss to the state. The mistake made by Government in its calculations was no secret. Actuaries and accountants were well aware of it; and Mr. Moses Wing wrote to the chancellor, informing him that the tables on which they were granted were productive of great loss to the revenue. The ordinary lassitude of Government was displayed in the chancellor’s reply, that it was not expedient to make any alteration, as “the compilation of new tables would be attended with much difficulty.” Mr. Wing then wrote again, showing that there was a loss of 15 per cent. on some, and on others of 20 and 24 per cent.; and that on a transfer of 12,000,000_l._ stock there was a loss of not less than 2,691,200_l._, and from this, the chancellor took refuge in a dignified silence.

In 1819 the attention of the authorities was again drawn to the same fact. But vainly for many years had they been informed that the public money was wasted; that no capitalist in London would grant annuities on the same terms; and that a serious loss was incurred. Government servants, like kings, can do no wrong, and the information was officially pooh-poohed! Letters might be written, and the receipt acknowledged; but the letters were shelved with due determination not to recur to them in a hurry. Among the assailants, however, was one who was important as well as vigorous, and very annoying questions were put in the House of Commons. It was the day when large majorities answered every unpleasant topic, and for a time the querists were silenced. At last it was stated that Mr. Finlaison had informed the Chancellor of the Exchequer that Government was losing 8000_l._ per month by its supineness, and “the patriots,”--so miscalled because they were in opposition,--seized on this important point to harass their opponents. It was triumphantly replied that the bill had been in operation since 1808, and was founded on the Northampton bills of mortality. As Dr. Price passed for an authority, and as a name goes a great way, the patriots were dumb, until one of more mark than the rest hinted that the value of life, as estimated by a life assurance company for its own benefit, and on which enormous profits had been made by them, would be just as unfavourable to the granters of life annuities; that the proportion of gain to the office would be the proportion of loss to the Government. The ministers shook their heads at this, and required time to consider. The economical members pressed their point, and urged an investigation. Night after night they pursued their foes with clamour, and day by day they reiterated their assertions in the clubs. The reports and rumours which were spreading in the financial world, and the assertions which were everywhere made, were, indeed, somewhat alarming. It was said that, according to Mr. Finlaison’s report, 400,000_l._ a-year was being lost; many, determined not to be outdone, asserted 100,000_l._ a-week was the lowest estimate; others, that an insurance office had realised 60 per cent. by dealing in them. Statements like these were so injurious to the financial character of the Government, that it was found necessary to stop them; and the chancellor said that, as only 640,000_l._ had been granted in the shape of life annuities, it was not very likely we were losing 100,000_l._ weekly; that Mr. Finlaison was employed in constructing tables; and that, though this gentleman had certainly stated the terms were too favourable, yet the true amount of loss would be difficult to attain, Mr. Finlaison’s estimate being an abstruse calculation as to the amount of the National Debt which would be redeemed in sixty years, compared with the amount which would have been redeemed had no annuities been granted. This he estimated at 3,200,000_l._ less than would have been attained by the Sinking Fund. At last, in 1829, Mr. Finlaison reported to the House, and the tables in connexion were certainly the most valuable of the kind then published. Access had been given to every document bearing on the subject. The registries of the tontines, the ages attained by the lives on which annuities had been granted a century previous--the experience of the offices--procured a mass of information which was turned to great advantage. The tables fill fifty folio pages, and show the rates of mortality, the value of annuities on single lives at all ages, among many classes of annuitants, separate and combined; the sexes being distinguished, both in exhibiting the law of mortality and the value of annuities.

These tables were satisfactory in the evidence they gave of a material improvement in the average duration of life. In forty years so great a change had taken place in the condition of the people, that the decrease of mortality was from 1 in 40 to 1 in 56. They proved, also, to demonstration, the extraordinary difference between the longevity of men and women, a circumstance not hitherto known to a certainty, but one which was most important to the granters of annuities. The result of all these calculations was comprised in the fact mentioned,--that the public, at the end of thirty-five years, will be burthened with a perpetual annuity of 96,000_l._, owing to the error so tardily rectified. We shall now see the mode in which these errors were amended.

There is something very provocative of mirth in the economical movements of Government. They had just been obliged to annul tables which had been in operation for twenty years; they had been compelled to acknowledge to the House that they had been wasting the public money; they had employed an actuary for ten years in procuring information on which new tables could be constructed, and scarcely had these been brought into operation than they found they were again in error. While the new act was preparing which was to enable the Government to sell life annuities and annuities for certain terms of years, the tables were shown to a gentleman in the Bank of England, who at once declared that those which were framed for lives above a certain age were too low in price. It was replied that they were taken from the experience of the assurance offices, and that they represented the average value of life at that period. “Yes!” was the reply, “but if select lives are brought, what becomes of your average?”

The act was passed; and by the tables which it authorized a man of ninety by paying 100_l._ would receive for life an annuity of 62_l._ The first payment commenced three months after the purchase, and if the nominee lived one year and a quarter, the nominator received back all the purchase money, so that every half year the annuitant lived after this was pure gain.[18]

The shrewd gentlemen of the Stock Exchange immediately saw and seized the advantage. Agents were employed to seek out in Scotland and elsewhere robust men of ninety years of age, to select none but those who were free from the hard labour which tells on advanced life, and to forward a list of their names. The Marquis of Hertford, of unenviable notoriety, added to his vast wealth by choosing as nominees those who were remarkable for high health; on two only, taking annuities of 2,600_l._ Wherever a person was found at the age of ninety, touched gently by the hand of time, he was sure to be discovered by the agents of the money market, the members of which speculated with, but scarcely perilled their wealth on the lives of these men, on such terms.

The inhabitants of the rural districts of Scotland, of Westmoreland, and of Cumberland, were surprised by the sudden and extraordinary attention paid to many of their aged members. If they were sick, the surgeon attended them at the cost of some good genius; and if they were poor, the comforts of life were granted them. In one village the clergyman was empowered to supply the wants of three old, hale fishermen during the winter season, to the envy of his sick and ailing parishioners. In another, all the cottagers were rendered jealous by the incessant watchful attention paid to a nonogenarian by the magnate of the place. It was whispered by the less favoured that he had been given a home near the great house; that the cook had orders to supply him with whatever was nice and nourishing; that the laird had been heard to say he took a great interest in his life, and that he even allowed the doctor twenty-five golden guineas a year, so long as he kept his ancient patient alive.

One man was chosen of above ninety who would walk eight miles any day for 6_d._ The hills and dales of the north of England, with the wild moors and heaths of Scotland, peopled by those who never breathed the air of cities, furnished nominees; and, lest there should be any lurking disease, they were examined by a medical man to confirm the appearance they bore. There were several curious anecdotes in connection with these shrewd speculations. There were two baronets offered, illustrative of an old story. Both were nonogenarians, both were sound, wind and limb; the one was remarkable for his extreme temperance, the other for drinking two bottles of wine daily, but both first-rate lives.

The offices were besieged with contracts on such men as these. Notwithstanding the heavy losses which Government had sustained by the previous tables, they lost much more by the present oversight, for against lives chosen with so much care and nursed with so much attention, there was not a chance.

One legend is extant to show the trouble which the nominators would take, in order to procure a person on which they could safely invest their money.

An eccentric, simple old man, an amateur angler in the streams which adorn the dales of Cumberland and Westmoreland, gave rise to the following attempt to procure him:--This man, named John Wilson, had not been born in the dales, but had come at an early age to take his lot among the single-minded people who dwell there. He had bought a small farm, on the produce of which, tilled by his sons and grandsons, he lived. He was soon found out by the agents of the speculators; but for some reason, known only to himself, refused to be speculated on, and as the secret of his birthplace was confined to his own breast, no register of his age could be procured without his consent. At ninety he would have passed for seventy. He would wander for whole days with only his fishing-rod and basket among the lakes and rivers of his adopted home. For a week together he would be away from his dwelling, lodging, when the night came, wherever he could procure a bed. In vain was he tempted with presents of fishing-rods; in vain the choicest London-made fly was offered; he turned away with an air of indifference and defied the temptation.