ANNALS, ANECDOTES, AND LEGENDS
OF
LIFE ASSURANCE.

London:
Spottiswoodes and Shaw,
New-street-Square.

ANNALS,
ANECDOTES AND LEGENDS:
A Chronicle
OF
LIFE ASSURANCE.

BY
JOHN FRANCIS,

AUTHOR OF
“THE HISTORY OF THE BANK OF ENGLAND,” ETC.

“Tragedy never quits the world—it surrounds us everywhere. We have but to look, wakeful and vigilant, abroad; and, from the age of Pelops to that of Borgia, the same crimes, though under different garbs, will stalk in our paths.”—Sir E. Bulwer Lytton.

“Murder?”
“Murder most foul, as in the best it is;
But this most foul, strange, and unnatural.”—Shakspeare.

LONDON:
LONGMAN, BROWN, GREEN, AND LONGMANS.
1853.

Dedicated, by Permission,

TO

THE MOST NOBLE

THE MARQUESS OF LANSDOWNE.

THIS NARRATIVE,
RECORDING THE PROGRESS OF LIFE ASSURANCE,
AND
RELATING THE SERVICES OF SIR WILLIAM PETTY,
THE FATHER OF POLITICAL ECONOMY,
IN THE CAUSE OF VITAL STATISTICS,
IS, BY PERMISSION,
RESPECTFULLY DEDICATED TO HIS DESCENDANT,
THE MOST NOBLE
HENRY PETTY, THIRD MARQUESS OF LANSDOWNE,
BY HIS LORDSHIP’S
MOST OBEDIENT AND VERY DEVOTED SERVANT,
JOHN FRANCIS.

Shooter’s Hill, May 23. 1853.

PREFACE

The subject of Life Assurance is so important, that any endeavour to trace its history, however imperfect, may not be unacceptable. Men toil, work, slave, nay, almost sin for their families; they do everything but insure: and should this volume induce any one to avail himself of the benefits of Life Assurance who has not hitherto done so, or should it attract the attention of others who are ignorant of the system, the writer will not deem his labour entirely in vain.

The many legends and traditions of the subject, form a page from the romance of Mammon, which, remarkable as some of the stories may appear, and fearful as many of them are, form but a small portion of the sad and stern realities attached to the annals of Life Assurance.

The simple fact, that the payment of a small yearly sum will at once secure the family of the insured from want, even should he die the day after the first premium is paid, is sufficiently singular to the uninitiated; but it is more so, that very few avail themselves of an opportunity within the reach of all.

CONTENTS.

ANNALS, ANECDOTES, AND LEGENDS
OF
LIFE ASSURANCE.

CHAPTER I.

ORIGIN OF THE DOCTRINE OF PROBABILITIES.—ESSAY OF JOHN DE WITT.—THE PLAGUE.—FIRST BILLS OF MORTALITY.—CAPTAIN JOHN GRAUNT—HIS OPINIONS, LIFE, AND ESTIMATES.—CURIOUS TERMS IN THE OLD REGISTERS—THEIR EXPLANATIONS.—LIFE OF SIR WILLIAM PETTY—HIS CAREER AND CHARACTER.

In the early annals of this country, there was no foundation whatever on which to form a theory of the value of life. The wars of succession, intestine strife, and civil discord, killed their thousands. Disease, arising from exposure to the air, from foul dwelling-places, and from an absence of the comforts of advanced civilisation, slew its tens of thousands. They who were spared by the sword and escaped the pestilence, perished too often by the fire of persecution. Death came in forms which were governed by no known laws; and, notwithstanding the insecurity of life, there was no possibility of making a provision for survivors. To this we owe that kind consideration for the widows and orphans of their members, which is observable in many of the city corporate bodies.

Commerce was yet in its infancy, and all the capital which could be collected, was necessary to its development. It was, indeed, on this that the wisdom of the executive was concentrated. Every half century brought rumours of some new land which was to enrich the adventurers who combined to explore it. The most gallant spirits of England sailed, and not always in the stoutest vessels, to explore a new passage, or to trade on the shores of some new country, alike indifferent where they went or how long they remained, provided they could bring home some attractive article of merchandise. Every energy was, therefore, devoted to the extension of our mercantile interests; and although Lombards, goldsmiths, Jews, and usurers, frequently granted annuities, there appears to have been no united attempt to grant assurances on lives.

This universal spirit of commerce produced, however, marine assurance very early, while the gradual progressive movements made in science and philosophy, prepared the way for assurance on life. The rude notions of an uncultivated age were succeeded by broader and more statesmanlike views; the Roman Church, with its narrow notions and its denunciations of progress, ceased to exist; men feared no longer to give a free exposition of their principles; and the Provincial Letters of Pascal prove that a new era had arrived. The doctrine of probabilities,—originated at a gaming-table,—so curious, so interesting, and at the same time so necessary to the present subject, was first popularised by this great genius; but we are indebted to Holland for its earliest application to annuities; as when the States-General resolved to negotiate some life payments, the pensionary, John de Witt, added one more obligation to the many received from this distinguished man, by employing the theory which Pascal suggested, for the requirements of his government. His report and treatise on the terms of life annuities is the first document of the kind, and a most important paper it is. Step by step it explains the grounds on which the proposition of its author was based, and by which he arrived at the conclusion that the value of a life annuity, in proportion to one for a term of twenty-five years, was really “not below, but certainly above, sixteen years’ purchase.” It is probable that from political motives this paper was suppressed; but John de Witt was certainly the first who thought of applying mathematical calculations to political questions, and the first who attempted to fix the rate of annuities according to the probabilities of life. The essay of the pensionary was, however, but little known to the public, and had no sensible influence on the subsequent progress of the science.

Leibnitz, whose hobby was to investigate the theory of chances[1], first drew attention to this production; but though often alluded to, its very title was not correctly given, and we are indebted to the researches of Mr. Hendriks for its rescue from an unmerited oblivion, and for the able translation of an essay which, had it been published at the time it was written, would have exercised an important influence on its subject.[2] Up to the end of the 17th century, therefore, as there were no laws to calculate the chances of mortality, life annuities were granted according to the caprice of the usurer, or the ignorance of the annuitant; and there is no occasion to remind the reader that the barbaric splendour of the Tudors witnessed customs which, rendering the conditions of life terribly uncertain, had a depressive effect on the science of assurance. The smallpox, a frequent and fearful visitor, was only met by an attempt to stare it out of countenance; for to effect a cure the patient was clothed in scarlet, the bed was covered with scarlet, and the walls were hung with scarlet; so simple and so ignorant were the leeches of the early ages. Dysentery, then known by its Saxon synonyms of the “flux,” “scouring,” and “griping,” daily carried off the unwashed artificers of old London. Nor were dirty habits confined to the mere populace; the banquetting-halls of the palace were rarely or ever cleansed; the accumulations of months were left on the floors, which, to hide the dirt and preserve an appearance of decency, were periodically covered with rushes.[3] In such places disease was ever ready to spring into vigorous life. Every few years, fevers which had been lurking in alleys and ravaging obscure places, devastated the city under various names. At last, that awful sickness which, even at the present day, chills the blood but to think of it, seemed to be naturalised in this country, under the name of the plague; but to it we owe that the initiative step was taken in England, in founding the first principles which govern life assurance, for to it we owe our earliest Bills of Mortality.

Within a period of seventy years, London had been visited by it five separate times; 145,000 having died from its collective attacks. As the visitation had been governed by no known system, as it came without any apparent cause and disappeared quite as capriciously, the Londoners never felt safe from its re-appearance. It seemed always hovering over them; and as the intervals between its departure and return were sometimes only eleven years, and had never exceeded twenty-nine, its harassing impressions were constantly on the minds of the citizens. Its visits did not allow time even to soften or subdue the painful remembrances connected with it; and were it necessary, a reference to the letters, diaries, and chronicles of the day, would show that the name of the plague turned men pale, and predisposed their constitutions for its reception; that the very thought made the merchant regardless of ’Change and of counting-house; and that the tradesman shuddered at the memory of a disease which slew his children, depopulated London, and destroyed his business.

The reports of the approach of the plague were, then, a positive and practical evil; and in 1592, when 30,561 died of the disease, the rumours of its horrors, appalling as these were in reality, were enormously exaggerated. An attempt to quiet public feeling by correctly indicating its progress was, therefore, made in the Bills of Mortality; and though they were not at first maintained consecutively, they were afterwards found so useful as to be continued from 29th December, 1603, to the present time.[4] The mode of their production was simple. When any one died it was indicated either by tolling or ringing a bell, or by bespeaking a grave of the sexton. The sexton informed the searchers, who hereupon “repair to the place where the dead corpse is, and by view of the same and by other inquiries they examine by what disease or casualty the corpse died. Hereupon they make their report to the parish-clerk; and he, every Tuesday night, carries in an account of all the burials and christenings happening that week, to the parish-clerks’ hall. On Wednesday, the general account is made up and printed; and on Thursday, published and disposed of to the several families who will pay 4s. per annum for them.” In 1629, two editions of the weekly bills were printed, one with the casualties and diseases, and the other without. For a long time these papers were made but little use of by the public. A writer of the day says they were examined at the foot, to see whether the burials increased or decreased; they were glanced at for the casualties, as a matter of gossiping interest; and in the plague time, the progress of the pest was closely watched by the courtiers and the nobles, that they might escape its ravages; and by the citizens, with that morbid feeling which is as much attached to extraordinary calamities as to great crimes. But though this might be the case ordinarily, such was not the view with which a citizen of London, by name John Graunt, thought they should be regarded. This man was the author of the first English work on the subject, entitled “Natural and Political Observations on the Bills of Mortality.” Little is known of his antecedents, save that he was the son of one Henry Graunt of Lancaster, that he was born in “Birching Lane,” and that he had the ordinary education granted to the sons of tradesmen. He came early into business, passed through the chief offices of his ward with reputation, and became captain and major of the train-bands, when such an office involved danger as well as honour.

All that has hitherto been said of Graunt might be said of many. But Graunt’s genius was far from being confined within these limits. It shone through all the disadvantages of mean birth and doubtful breeding. It broke down the barriers of rank and the limits of position, and gave him the first thought of a design, which was the earliest movement in economical arithmetic, and the closest approximation to the data on which life assurance is founded.

The exact time is not known when he began to collect and to consider the Bills of Mortality; but he says his thoughts had been turned that way for several years, before he had any design of recording certain notions he had formed. Until he published his volume, a more than Egyptian darkness was on the eyes of the people, and he had to combat some very singular notions. Among others, that London was to be reckoned by millions, that the proportion of women to men was three to one, and that in twenty-six years the population had increased two millions. “Men of great experience in this city talk seldom under millions of people to be in London.” To grapple with these and similar errors was Graunt’s object; and it is easy to comprehend, that his readers rebelled against assertions which lowered the pretensions of their favourite city. It is probable that he made some enemies by his book; as when the fire of London occurred, he was accused of having gone to the reservoir of the New River Company, and of cutting off the supply of water. As, however, he had changed, or was on the point of changing his creed from puritanism to papistry, and the papists had the credit of originating the fire; the accusation was possibly a party one, and is of little importance now. It is with his work on the population we have to deal, and this, which contained “a new and accurate thesis of policy, built on a more certain reasoning than had yet been adopted,” was first published in 1664; meeting with such an extraordinary reception that another edition was called for in the following year, the book being spoken of wherever books then made their way. It formed a taste for these studies among thinking men; and the fact is greatly to the author’s credit, that he made a bold, if fruitless, attempt to deduce the law of life from bills of mortality which did not record the ages as well as the deaths of the people. In addition to the London bills, he gave one for a country parish in Hampshire; and in the later editions he added one for Tiverton, and another for Cranbrook. Charles II. recommended the Royal Society to elect him one of their members, charging the Fellows “that if they found any more such tradesmen, they should admit them all;” and immediately after the appearance of the work, Louis XIV. ordered the most exact register of births and deaths to be kept in France, that was then known in Europe. A few extracts from this rare and curious work will at once indicate its character, and show the simplicity of the existing information; but in their perusal the reader will do well to consider, that Graunt was the first who wrote on the subject; that he had but slight foundations for his calculations; and that with all these difficulties, he was very successful in his conclusions. He says:—

“There seems to be good reason why the magistrate should himself take notice of the number of burials and christenings: viz., to see whether the city increase or decrease in people, whether it increase proportionably with the rest of the nation, whether it be grown big enough. But,” he adds, “why the same should be known to the people, otherwise than to please them as with a curiosity, I see not.

“Nor could I ever yet learn from the many I have asked, and those not of the least sagacity, to what purpose the distinction between males and females is inserted, or at all taken notice of; or why that of marriages was not equally given in. Nor is it obvious to every body why the account of casualties is made. The reason which seems most obvious for this latter is, that the state of health in the city may at all times appear.” In another page he writes that “7 out of every 100 live in England to the age of 70.” “It follows from hence that, if in any other country more than 7 of the 100 live beyond 70, such country is to be esteemed more healthy than this of our city.” It must be remembered, however, that this was very conjectural. “We shall,” he says, when leading to this conclusion, “come to the more absolute standard and correction of both, which is the proportion of the aged; viz. 15,757 to the total 229,250, that is, of about 1 to 15, or 7 per cent.; only the question is, what number of years the searchers call aged, which I conceive must be the same that David calls so, viz. 70. For no man can be said to die properly of age, who is much less.”

Out of the above 229,250 he estimates that 86 were murdered; and, alluding to a peculiar disease which had arisen, intimates that the proportion of males was greater than that of females, in the words, “for since the world believes that marriage cures it, it may seem indeed a shame that any maid should die unmarried, when there are more males than females; that is, an overplus of husbands to all that can be wives.” “In regular times when accounts were well kept, we find not above 3 in 200 died in childbed; from whence we may probably collect that not 1 woman of 100, I may say of 200, dies in her labour, forasmuch as there may be other causes of a woman’s dying within the month.” He then attempted to show the population of London, from which he had been a long time prevented by his religious scruples; but his arithmetical mind was provoked by a “person of high reputation” saying there were “two millions less one year than another.” To ascertain the number he made many very interesting calculations, and came to this conclusion:—“We have, though perhaps too much at random, determined the number of the inhabitants of London to be about 384,000.” He then gave the following table, which is perhaps one of the most remarkable we have, the period and the material being taken into consideration:—

From whence it follows that, of the said 100 there remain alive—

He says gravely of another of his calculations, “According to this proportion Adam and Eve, doubling themselves every 64 years of the 5610 years, which is the age of the world according to the Scriptures, shall produce far more people than are now in it. Wherefore, the world is not above 100,000 years old, as some vainly imagine, nor above what the Scripture makes it.”

That Captain Graunt was a man of no ordinary perceptive power let his volume bear witness. In it he touches on almost every intricate question which, despised when he wrote, has since been investigated by Adam Smith, by M’Culloch, by Porter, by Tooke, and by all to whom political economy is dear. The following will give some idea of the character of these studies:—

“It were good to know how much hay an acre of every sort of meadow will bear; how many cattle the same weight of each sort of hay will feed and fatten; what quantity of grain and other commodities the same acre will bear in 3 or 7 years; unto what use each sort is most proper; all which particulars I call the intrinsic value, for there is another value merely accidental or extrinsic, consisting of the causes why a parcel of land lying near a good market may be worth double another parcel, though but of the same intrinsic goodness; which answers the question why lands in the north of England are worth but 16 years purchase and those of the west above 28.” “Moreover, if all these things were clearly and truly known, it would appear how small a part of the people work upon necessary labours and callings; how many women and children do just nothing, only learning to spend what others get; how many are mere voluptuaries, and as it were, mere gamesters by trade; how many live by puzzling poor people with unintelligible notions in divinity and philosophy; how many, by persuading credulous, delicate, and religious persons that their bodies or estates are out of tune and in danger; how many, by fighting as soldiers; how many, by ministries of vice and sin; how many, by trades of mere pleasure or ornament; and how many, in a way of lazy attendance on others; and, on the other side, how few are employed in raising necessary food and covering; and of the speculative men how few do study nature, the more ingenious not advancing much further than to write and speak wittily about these matters.”

From this enumeration of his objects it may be seen that life assurance was not contemplated by the author when his important book was written; but as the earliest attempt to number the people, to classify their callings, and to ascertain the mortality among them, he assuredly laid the foundations of this science. His book gave new ideas. It first propounded the fact, that “the more sickly the years are, the less fruitful of children they be;” and though this was wonderfully ridiculed, time has proved that it was not less strange than true. It formed a taste for similar inquiries among thinking men. It was published at a period when, the city being less populous, there was additional facility in arriving at certain facts. From that time the subject was cultivated more and more. Increased attention was paid to the parish registers. The different diseases and casualties were gradually inserted; but it was not till 1728 that the ages of the dead were introduced. Graunt had forced people to think; and whatever merit may be ascribed to Sir William Petty, Daniel King, Dr. Davenant, and others, it may all be traced to the first observations of Graunt on the Bills of Mortality. To him we owe the care with which parish registers have since been kept, and the valuable material they have afforded to the science of political economy.

There is something in the old registers which places us in an almost antediluvian world, and seems to treat of diseases belonging to another sphere. In 1657, among the deaths are recorded 1162 “chrisomes and infants;” and few reading in 1853 would know that infants, until christened, wore a “chrisom” or cloth anointed with holy unguent, from which they were denominated chrisomes. “Blasted and planet” would puzzle the medical student of to-day; but the latter was simply an abbreviation of “planet struck,” both words indicating some wasting disease which the faculty failed to fathom. “Head-mould-shot” and “horseshoe-head” were meant for water on the brain, and were very expressive of the shape of the head in those who suffered from it. Another complaint was “calenture,” a disease said to be similar to the maladie du pays, for it seized seamen with an irresistible desire to immerse themselves, the sea assuming in their eyes the appearance of green fields. “Tissick” expressed phthisis or consumption. In 1634, the “rickets” is recorded; and the “rising of the lights” has been a great puzzle to our medical historians. A little later than this period is mentioned, “one died from want in Newgate,” “one murdered in the pillory,” and “one killed in the pillory.” In the course of twenty years fifty-one are put down as starved. “But few are murdered, not above eighty-six of the deaths in twenty years; whereas, in Paris, few nights escape without their tragedy.” It must be remembered, in explanation, that medicine had not assumed the dignity of a science before the time of Harvey in the middle of the seventeenth century, but was exercised by “a great multitude of ignorant persons.” Common artificers, smiths, weavers, and women took upon them cures, “to the high displeasure of God, and destruction of many of the King’s liege people.” Nor was the patient much better off when the clergy, priests, and poor scholars left the cure of the mind for the cure of the body. Such, however, was the position of leech-craft when Graunt inoculated the people with the love of vital statistics.

Contemporary with Graunt, and contributor to his attempts, was one of those strange, restless, speculative men whose love of money teaches them how to procure it, and whose desire to preserve it, by purchasing land, and leaving their heirs in possession, makes them the founders of noble English houses. This was Sir William Petty, who, in his “Essay on Political Arithmetick concerning the Growth of the City of London, with the Measures, Periods, Causes, and Consequences thereof,” made a further onward movement. The earlier portion of his life was passed in battling with the world. He was as much a votary of mathematics as of money, and was eminently successful in both. Although only the son of a Romney clothier, he was the founder of a house which has exercised an important influence on English political life—the House of Lansdowne. He began his career with nothing, and he closed it possessed of 15,000l. per annum. He lived at a time when social economy was but little regarded; and he published a volume which, however uncertain both in its data and its conclusions, was an attempt to apply arithmetic to the economics of life. It is both unphilosophical and unjust to say, “Petty was nothing of a politician or statesman, or even of a political economist. He was merely a political arithmetician; that is to say, he occupied himself with a consideration of the circumstances of society and of the forces and activity that pervaded it, only in so far as they could be stated and estimated numerically. His social science was little more than an affair of ciphering, a business of addition and subtraction.” It is from the figures of such men that our politicians form deductions, estimate consequences, frame laws, and create trade. It may be true that he was no seer, and that he was wrong in his prophetic capacity; but this is only another proof that statisticians rarely possess a large development of the imaginative faculty. That his work is worth perusal to all who are interested in his subject, although based on information which was rude and imperfect, we hope to show. In it he calculates that—

In about forty years he estimated that London had doubled itself (the number being, when he wrote, 670,000), and that the assessment of London was about one-eleventh of the whole territory: “Therefore, the people of the whole may be about 7,369,000; with which account that of the poll-money, hearth-money, and the bishops’ late numbering of the communicants, do pretty well agree.” This founder of the House of Lansdowne was a good deal puzzled by the growth of the metropolis. He thus accounts for it:—“The causes of its growth from 1642 to 1682 may be said to have been as follows: From 1642 to 1650, men came out of the country to London to shelter themselves from the outrages of the civil wars during that time. From 1650 to 1660, the royal party came to London for their more private and inexpensive living. From 1660 to 1670, the King’s friends and party came to receive his favours after his happy restoration. From 1670 to 1680, the frequency of plots and parliaments might bring extraordinary numbers to the city. But what reasons to assign for the like increase from 1604 to 1642, I know not, unless I should pick out some remarkable accident happening in each part of the said period, and make that to be the cause of this increase (as vulgar people make the cause of every man’s sickness to be what he did last eat); wherefore, rather than so say, I would rather quit what I have above said to be the cause of London’s increase from 1642 to 1682, and put the whole upon some natural and spontaneous benefits and advantages that men find by living in great more than in small societies: I shall, therefore, seek for the antecedent causes of this growth in the consequences of the like, considered in greater characters and proportions.”

That the people are the life-blood of the kingdom, was Sir William’s fixed belief; and he said, that if the whole highlands of Scotland and the whole kingdom of Ireland were sunk in the ocean, so that the people were all saved and brought to the lowlands of Great Britain, the Sovereign and the subject in general would be enriched. The reader will smile when he hears that a great deal of useful information was embodied in Sir William Petty’s attempts to prove the following extraordinary points:—

1st. That London doubles in 40 years, and all England in 360 years.

2nd. That there be in 1682 about 670,000 souls in London, and 7,400,000 in England and Wales; and about 20,000,000 of acres in land.

3rd. That the growth of London must stop of itself before the year 1800.

4th. That the world would be fully peopled within the next 2000 years.

Burnet says, that Petty wrote the book published in Graunt’s name; but the bishop was too much of a gossip to be trusted, and the works which Sir William claimed are sufficient for his fame. In the midst of a life devoted to the world, he turned his attention to abstruse and recondite subjects. That money makes the man, was his fundamental article of faith. “Instead of saying with Bacon,” remarks a biographer, “that knowledge was power, he would have said that knowledge was l. s. d.... He was all for the practical, and in general for the pecuniary, as the most comprehensive form of the practical.”

He was, probably, not a brave man; for he left England at the most stirring period of its history, and, when at a later period he was challenged by one of Cromwell’s knights to fight a duel, he claimed the privilege of choosing time, place, and weapons, to throw an air of ridicule over the proceeding. The place he named was a dark cellar, and the weapon he chose was a carpenter’s axe. Near-sightedness was his excuse for both.

He wrote “An Essay concerning the Growth of the City of London,” “Observations on the Dublin Bills of Mortality,” “Two Essays concerning the People of London and Paris,” “Two Essays on Political Arithmetick;” and the name of Sir William Petty has come down to us more as the author of these works, than as the successful speculator, as the founder of the Marquisate of Lansdowne, or as one who began life penniless, and left a princely inheritance. To those who wish to trace the career of the man who drew so great a portion of public attention to the foundations of life assurance, the epitome of his life as given in his will may prove interesting.

Having thus endeavoured to trace the early dawn of the theory, it is now time to chronicle the progress of life assurance as a social and mercantile requirement.

CHAP. II.

PRACTICE OF ASSURANCE BY THE ROMANS.—SAXON APPROXIMATION TO FRIENDLY SOCIETIES.—MARINE ASSURANCE.—DANGER OF NAVIGATION, AND ITS EFFECT ON LIFE ASSURANCE.—ASSURANCE FOR PALMERS AND PILGRIMS TO THE HOLY LAND.—BULMER’S OFFICE OF ASSURANCE.—ASSURANCE OF NAVIGATORS, MERCHANTS, AND CORPORATIONS.—ASSURERS.—UNCERTAINTY OF LIFE.—ANNUITIES.—AUDLEY THE USURER—HIS HISTORY—ANECDOTES CONCERNING HIM.—THE USURER’S WIDOW.

It has been the endeavour of most writers to trace the practice, if not the principle, of assurance as far back as possible; but in doing this, trifles have been exaggerated into matters of importance. Some authors contend, on the authority of Livy, that it was in use during the Second Punic War: others, arguing from a passage in Suetonius, refer to the Emperor Claudius, as the first insurer; because, in order to encourage the importation of corn, he took all the loss or damage it might sustain upon himself.

These cases are, however, entirely exceptional, and certainly indicate no settled plan, as the very fact that the Emperor guaranteed the contractor against damage, is a proof that there was no other mode of doing so. Cicero is also quoted, because, in one of his epistles, he expresses a hope of finding at Laodicea, security by which he could remit the money of the republic without being exposed to danger in its passage.

If, however, the assertion that marine assurance was known to the ancients is not demonstrable, there is no doubt that life assurance was unknown and unpractised, although the Romans had some wise regulations in connection with the economy of the people. From Servius Tullius downwards, they took a census every fifth year, and the right of citizenship was involved in any one failing to comply with the requirements of his age, name, residence, the age of his wife, the number of his children, slaves, and cattle, together with the value of his property. They do not seem to have kept any exact mortuary register, as the chief object of their census was to levy men and money for the purpose of conquest. One of the commentators on the Justinian Code also gave a calculation of the worth of annuities, which, if it may be accepted as an expectation of life, gives far more correct views of its comparative value at various ages, than was known in Europe until the time of De Witt.

Turning from these vague theories of an antique age to our own country, we find that associations founded on social principles, in which union for good or for ill, and in which provision was made for contingencies, were the prominent features, are to be found in our Saxon annals. The axiom, that “Union is Strength,” the necessity of providing for casualties by mutual assistance, in other words, assurance on its broadest and most rational basis, was practised in the Saxon guild, the origin of which was very simple: Every freeman of fourteen being bound to find sureties to keep the peace, certain neighbours, composed of ten families, became bound for one another, either to produce any one of the number who should offend against the Norman law, or to make pecuniary satisfaction for the offence. To do this, they raised a fund by mutual payments, which they placed in one common stock. This was pure mutual assurance. From this arose other fraternities. The uncertain state of society, the fines which were arbitrarily levied, the liability to loss of life and property in a country divided against itself, rendered association a necessity. And if it was necessary before the Conquest, it became doubly so after it. The mailed hand of the Norman knight was ever ready to grasp the goods of the Saxon serf; and the Norman noble trod the ground he had aided to subdue, with the pride of a conqueror, at the same time that he exercised the rapacity of an Eastern vizier. To meet the pecuniary exigencies which were perpetually arising from fines and forfeitures, and to aid one another in burials, legal exactions, penal mulcts, payments, and compensation,—ancient friendly societies, somewhat similar to those of the present day, were established; and the rules of one which existed at Cambridge prove its approximation to the modern mutual friendly association. The following extracts will satisfy the reader of the truth of this assertion:—

“1. It is ordained, that all the members shall swear by the holy reliques that they will be faithful to each of their fellow-members, as well as in religious as in worldly matters; and that, in all disputes, they will always take part with him that has justice on his side.

“2. When any member shall die, he shall be carried by the whole Society to whatever place of interment he shall have chosen; and whoever shall not come to assist in bearing him shall forfeit a sextarium of honey: the Society making up the rest of the expense, and furnishing each his quota towards the funeral entertainment; and also, secondly, for charitable purposes, out of which as much as is meet and convenient is to be bestowed upon the church of St. Etheldred.

“3. When any member shall stand in need of assistance from his fellow-members, notice thereof shall be given to the Reeve or Warden who dwells nearest that member, unless that member be his immediate neighbour; and the Warden, if he neglect giving him relief, shall forfeit one pound.[5] In like manner, if the President of the Society shall neglect coming to his assistance, he shall forfeit one pound, unless he be detained by the business of his lord or by sickness.

“4. If any one shall take away the life of a member, his reparatory fine shall not exceed eight pounds; but if he obstinately refuse to make reparation, then shall he be prosecuted by and at the expense of the whole Society: and if any individual undertake the prosecution, then each of the rest shall bear an equal share of the expenses. If, however, a member who is poor kill any one, and compensation must be made, then, if the deceased was worth 1200 shillings, each member shall contribute half a mark[6]; but if the deceased was a hind, each member shall contribute two oræ[7]; if a Welchman, only one.

“5. If any member shall take away the life of another member, he shall make reparation to the relations of the deceased, and besides make atonement for his fellow-member by a fine of eight pounds, or lose his right of fellowship to the society. And if any member, except only in the presence of the king, or bishop, or an alderman, shall eat or drink with him who has taken away the life of a fellow-member, he shall forfeit one pound, unless he can prove, by the evidence of two witnesses on oath, that he did not know the person.

“6. If any member shall treat another member in an abusive manner, or call him names, he shall forfeit a quart of honey; and if he be abusive to any other person, who is not a member, he shall likewise forfeit a quart of honey.

“7. If any member, being at a distance from home, shall die or fall sick, his fellow-members shall send to fetch him, either alive or dead, to whatever place he may have wished, or be liable to the stated penalty; but if a member shall die at home, every member who shall not go to fetch his corpse, and every member who shall absent himself from his obsequies, shall forfeit a sextarium of honey.”

These rules might have been certified by a Pratt, so simple and so excellent is their arrangement. But they must not be regarded as exceptional. The following form a portion of the regulations of another similar society at Exeter:—

“1. At each meeting every member shall contribute two sextaria of barley meal, and every knight one, together with his quota of honey.

“2. When any member is about to go abroad, each of his fellow-members shall contribute five pence; and if any member’s house is burnt, one penny.

“3. If any one should by chance neglect the stated time of meeting, his regular contribution to be doubled.”

Well may Mr. Ansell say, “The guilds or social corporations of the Anglo-Saxons seem, on the whole, to have been friendly associations, made for mutual aid and contribution, to meet the pecuniary exigencies which were perpetually arising.” Nor can the reader fail to be struck with the resemblance these rules bear to those of many of the modern societies; and, as they were framed 800 years ago, the similitude is somewhat remarkable. After the Conquest guilds were established for the express promotion of religion, charity, or trade, and from these fraternities the various companies and city corporations have arisen. The following, forming a portion of the rules of St. Catherine’s Guild, seem like those of some modern fraternity:—

“If a member suffer from fire, water, robbery, or other calamity, the guild is to lend him a sum of money without interest.

“If sick or infirm, through old age, he is to be supported by his guild according to his condition.

“If a member falls into bad courses, he is first to be admonished, and if found to be incorrigible he is to be expelled.

“Those who die poor, and cannot afford themselves burial, are to be buried at the charge of the guild.”

Societies like these, established at a period when

“The good old rule, the simple plan,

That they should take who have the power,

And they should keep who can,”

was almost the law of the land, cannot fail to surprise those who believe that the past was an age of barbarism, and the present the culminating point of civilisation. It is certainly a curious truth, that that combination which has been esteemed a peculiar feature of modern times, had its antetype in societies framed when commerce and law were yet in their infancy.

Of the rise of assurance generally in Europe the information is limited enough. Malynes and Anderson say it was known about the year 1200, and refer to the marine laws of the isle of Oleron; but a perusal of these has satisfied later writers that the theory was too hastily adopted, and that the earliest ordinance on the subject with which we are acquainted is that of the magistrates of Barcelona, in 1523, to which city must be attributed the honour, until some authentic evidence to the contrary has been produced; and we must not omit to notice, also, that a writer on the “Us et Coutumes de la Mer” says assurance was long detested by the Christians, “being classed by them with the unpardonable sin of taking interest.”

The first English statute relating to marine assurance was passed in 1601. The earliest mention of it occurs in 1548, in a letter written by the Protector Somerset to his brother the Lord Admiral, and that it was commonly known in 1558 may be gathered from a speech of the Lord Keeper Bacon. In the act alluded to above, “An Act concerning Matters of Assurances among Merchants,” it is stated, that “it hath been time out of mind an usage among merchants, both of this realm and of foreign nations, when they make any great adventure, specially into remote parts, to give some consideration of money to other persons, to have from them assurance made of their goods, merchandises, ships, and things adventured, or some parts thereof, at such rates and in such sort as the parties assurers and the parties assured can agree; which course of dealing is commonly called a policy of assurance, by means of which policies of assurance it cometh to pass, upon the loss or perishing of any ship, there followeth not the loss or undoing of any man, but the loss lighteth rather easily upon many than heavily upon few, and rather upon them that adventure not than on those that do adventure.”

If mercantile or marine assurance were so common, it is difficult to imagine that some approximation to life assurance, however imperfect or normal it might be, was entirely unpractised. It must necessarily have occurred to the captain of a trading vessel, that the storm or the whirlwind, which might send his merchandise to the bottom of the sea, might also send himself with it; and the thought that, if his goods were worth insuring for the benefit of the owners, his own life was worth insuring for the benefit of his family, arose naturally from the risks he ran. And in those days there was not merely a risk of storm or whirlwind. Man was more cruel than the tempest; and the galleys of the Turks were then as much feared, by the masters of trading vessels, as the corsairs of the Algerine were dreaded at a later period. They roved the seas as if they were its masters; they took the vessels, disposed of the cargo in the nearest market, and sold the navigators like cattle. The only way of mitigating this terrible calamity was by some mode of insurance, to procure their rescue if taken; and we find that to attain so desirable a result they paid a certain premium to their merchant freighters, who, in return, bound themselves to pay a sufficient sum to secure the navigators’ freedom within fifteen days after the certificate of their captivity, the ordinary days of grace being lessened on such policies.

In those days, also, when crusades were common, and men undertook pilgrimages from impulse as much as from religion, it was desirable that the palmer should perform his vow with safety, if not with comfort. The chief danger of his journey was captivity. The ballads of the fifteenth century are full of stories which tell of pilgrims taken prisoners, and of emirs’ daughters releasing them; but as the release by Saracen ladies was more in romance than in reality, and could not be calculated on with precision, a personal insurance was entered into, by which, in consideration of a certain payment, the assurer agreed to ransom the traveller, and thus the palmer performed his pilgrimage as secure from a long captivity as money could make him. It is true, that this care for his personal safety may detract somewhat from a high religious feeling; but truth is sadly at variance with sentiment, and the pilgrims of the crusading period were but too glad to lessen the chances against them.

Another mode of assurance was commonly practised, by which any traveller departing on a long or dangerous voyage deposited a specific amount in the hands of a money broker, on condition that if he returned he should receive double or treble the amount he had paid; but, in the event of his not returning, the money broker was to keep the deposit, which was in truth a premium under another name.

In 1643 Captain John Bulmer published, “Propositions in the Office of Assurance, London, for the blowing up of a boat and a man over London Bridge.” Nor was this an unusual mode of conducting an enterprise which was at once ingenious and costly, and which required an union of capital to support it. In the address above alluded to, Bulmer, an unsuccessful engineer, pledged himself to perform his promise within a month after intimating from the office that he was ready; “viz. so soon as the undertakers wagering against him, six for one, should have deposited enough to pay the expenses of boat and engine,” he also subscribing his own proportion. The money was not to be paid until the Captain had performed his contract, when he was to receive it all. If, however, he should fail, it was to be repaid to the subscribers. “And all those that will bring their money into the office shall there be assured of their loss or gain, according to the conditions above named.”

These facts are an evidence that the principle of assurance was making way, and that men endeavoured to provide against the chances or mischances of life, to the best of their ability. Thus, any seafaring person proceeding on a voyage, could insure his life for the benefit of his heirs; and if the information which has come down to us limits the practice to this particular class, it was because seamen were the chief visitors to foreign countries, and for them some such plan was essentially a necessity.

But there was a further and more remarkable fact in operation; as an annuitant enjoying a life-rent or pension could make an insurance on his life, by way of provision for his family. These, however, were only exceptional cases, for which the premiums were probably distressingly heavy; if we may judge from the fact, that a century later the life of a healthy man, of any age, was estimated at only seven years’ purchase. The great merchants of that day were chiefly responsible for such assurances, and many of the corporations engaged in these and similar adventures. The following will show that by 1569 the provident societies of the present day were anticipated. The writer is illustrating his opinion on usury.

“A merchant lendeth to a corporation or company 100l., which corporation hath by statute a grant, ‘that whosoever lendeth such a sum of money, and hath a child of one year, shall have for his child, if the same child do live till he be full 15 years of age, 500l. of money; but if the child die before that time, the father to lose his principal for ever.’ Whether is this merchant an usurer or not? The law says, if I lend purposely for gain, notwithstanding the peril or hazard, I am an usurer.”

Again: “A corporation taketh 100l. of a man, to give him 8l. in the 100l. during his life without restitution of the principal. It is no usury, for that here is no lending, but a sale for ever of so much rent for so much money. Likewise, if a private man have 1000l. lying by him, and demandeth for his life and his wife’s life 100l. by the year, and never to demand the principal, it is a bargain of sale and no usury.”

But though these things are evidences of something closely akin to the principles of life assurance, it is certain that no system existed by which so happy a result could be habitually attained. The state of society was opposed to it. Life was then scarce “worth a pin’s fee.” The noble was at the mercy of his own fierce passions, and, if not engaged in some intestine warfare, was crossing and recrossing seas, was making or unmaking kings. The knight sought dangerous adventures with an avidity which would place his life on the trebly hazardous list of assurance-offices, and pale the roses on the cheeks of directors. The citizen, again, was constantly embroiled in quarrels with which he had no business, and merchants would have looked doubtfully on any proposal to accept a life which was likely enough to end the day after its assurance.

In addition to these chances, there was the liability to “plague, pestilence, and famine.” The black pest, the sweating sickness, the small-pox, are names to conjure up frightful images. Nothing is now certainly known of the numbers which these diseases swept away in our early history, but the rapidity with which whole families disappeared tended to exaggerate the feeling of insecurity. It seems, therefore, almost impossible to suppose that any plan of life assurance could have existed during these ages, when there were no documents to give the number of deaths, and no laws to determine the value of life. But if assurances were rare, we have constant evidence that annuities were familiar enough. The State employed them for its wants; scriveners employed them for the necessities of their clients; Pole and Whittington, Canning and Gresham, invested their mercantile gains in them; the usurer made his money breed by granting them in many forms and on various securities; and although to arrive at a just system of annuities was as difficult as a just system of assurance, yet the usurer took as much care in the one case to secure his own interest, as he would in the other had it been an operation into which he chose to enter.

The sixteenth century gave birth to one of these men, who, before life assurance was understood, exercised great genius in granting and receiving annuities. The name of Audley is one of the earliest we possess in this line: he was originally a lawyer’s clerk, with a salary of 6s. a week; but his talent for saving was so well supported by his self-privation, that he lived upon half, keeping the other half as the superstructure of his future fortune. He was so great an adept in the tricks of law, that he was soon enabled to purchase his apprenticeship; and, with the first 600l. he had saved, bought of a nobleman an annuity of 96l. for nineteen years. The nobleman died; his heir neglected to pay the annuity, and Audley made him suffer for his neglect to the tune of 5000l. in fines and forfeitures.

The usurer soon found money trading better than law writing. He became a procurer of bail; he compounded debts; he enticed easy landowners into granting well-secured annuities; he encouraged their extravagance, and, under pretence of ministering to their wants, became possessed of many a fine estate. The following story will illustrate his craft:—In the early part of his career, a draper of mean repute was arrested by his merchant for 200l. Audley bought the debt of the latter for 40l., and was immediately offered an advance on his bargain by the fraudulent tradesman. Audley refused the terms; and when the draper pressed, as if struck by a sudden whim, he consented to discharge the debt, if his creditor would sign a formal contract to pay within twenty years from that time one penny, to be progressively doubled on the first day of twenty consecutive months, under a penalty of 500l. The terms seemed easy, and the draper consented. The knave was one of those who “grow rich by breaking.” But here Audley had him in his net. Year after year he watched his prey; he saw him increase in wealth, and then made his first demand for one penny. As month succeeded month he continued his claim, progressively doubling the amount, until the draper took the alarm, used his pen, found that to carry out his agreement would cost him more than 4000l., and, to avoid it, paid the penalty of 500l.; his only revenge being to abuse Audley as a usurer, probably anticipating the wish of Jaffier, that he could “kill with cursing.”

Audley, like many of our own day, was equally ready to lend money to the gay gallants of the town on annuities, as he was to receive it from the thrifty poor who took, on “the security of the great Audley,” the savings of their youth to secure an annuity for their age. But needy as the youngsters of that day might be, the usurer was as willing as they were needy. He lent them, however, with grave remonstrances on their extravagance, and took the cash they paid him, with an air of paternal regret.

His money bred. He formed temporary partnerships with the stewards of country gentlemen, and, having by the aid of the former gulled the latter, finished by cheating the associates who had assisted him to his prey. The annuity-monger was also a philosopher. He never pressed for his debts when he knew they were safe. When one of his victims asked where his conscience was, he replied, “We monied people must balance accounts. If you don’t pay me my annuity, you cheat me; if you do, I cheat you.” He said his deeds were his children, which nourished best by sleeping.

His word was his bond; his hour was punctual; his opinions were compressed and sound. In his time he was called the great Audley; and though the Fathers of the Church proclaimed the sin of usury to be the original sin, Audley smiled at their assertions and went on his way rejoicing. As his wealth increased he purchased an office in the Court of Wards; and the entire fortunes of the wards of Chancery being under his control and that of the other officers of the court, it may be supposed that Audley’s annuity-jobbing increased. When he quarrelled with one who disputed the payment of an annuity, and who, to prove his resisting power, showed and shook his money-bags, Audley sarcastically asked “whether they had any bottom?” The exulting possessor answered in the affirmative. “In that case,” replied Audley, “I care not; for in my office I have a constant spring.” Here he pounced on incumbrances which lay on estates; he prowled about to discover the cravings of their owners, which he did to such purpose that, when asked what was the value of his office, he replied, “Some thousands of pounds to any one who wishes to get to heaven immediately; twice as much to him who does not mind being in purgatory; and nobody knows what to him who will adventure to go to hell.” Charity forbids us to guess to which of these places Audley went. He did not long survive the extinction of the Court of Wards, and died “receiving the curses of the living for his rapine, while the stranger who had grasped the million he had raked together owed him no gratitude at his death.”

It must have been the widow of some such shrewd assurer who dared the dangers of Chancery in 1682, and endeavoured to file a bill, the purport of which was to compel 500 individuals to declare the amounts they owed her husband, who is designated as “a kind of insurer.” The boldness of this woman in attacking 500 persons attracted attention; and the alarm which must have possessed her creditors was no doubt heightened by the fact that 60 skins of vellum and 3000 sheets of paper composed the bill, and that each would be compelled to have a copy, provided the plaintiff were successful. Not only, however, did Lord Chancellor North, “amazed at the effrontery of the woman,” dismiss the bill on the ground of the enormous expense which each defendant would incur, but he directed the plaintiff’s counsel to refund his charges and to “take his labour for his pains.”

CHAP. III.

JUDAH MANASSEH LOPEZ, THE JEW USURER—HIS TRICK ON THE DUKE OF BUCKINGHAM—SUSPICIONS CONCERNING HIM.—THE INCREASE OF LONDON.—POPULATION OF LONDON.—PROCLAMATIONS.—HALLEY’S MOVEMENT IN LIFE ASSURANCE—HIS TABLES.

Among the frequenters of St. Paul’s, when the noble, the merchant, and the citizen congregated in its walk, was an old man known to all who met there in their daily avocations as Judah Manasseh Lopez. A Lombard, a Jew, and a usurer, it was difficult to say whether the outward respect he received from his customers was not counterbalanced by the curses he received from the public. The bullying mien of the self-dubbed captain sunk into a more subdued tone as he asked for loans or deprecated payment. The spendthrift who was dicing away his paternal inheritance, and who had security to offer for the money he wanted, was more indifferent, while the goldsmith shrunk from his approach with a contemptuous expression he did not always care to conceal. This man employed his wealth in the purchase and sale of annuities. He lent to merchants when their vessels failed to bring them returns in time to meet their engagements. He advanced cash on the jewels of those whom a disturbed period involved in conspiracies which required the sinews of war. But annuities were his favourite investment; and to him, therefore, resorted all that were in difficulties and were able to deal with him. With the highest and the lowest he trafficked. He was feared by most, and respected by none. One remarkable feature in his business was, that no one found it easy to recover the property he had pledged, provided it much exceeded the amount advanced. In an extremity, Buckingham, the favourite of Charles, applied to and received assistance from the Jew on the deposit of some deeds of value. When the time approached which had been stipulated for repayment, Lopez appeared before the Duke in an agony of grief, declaring his strong-room had been broken into, his property pilfered, and the Duke’s deeds carried away. But Buckingham had dealt too much with men of this class to believe the story on the mere word of such a Jew. He, therefore, kept the usurer while he ordered some retainers to proceed to the city and to search out the truth, placing the Hebrew at the same time under watch and ward, with an utter indifference to his comfort. When the messengers returned, they avouched that all Lombard Street was in an uproar at the violation of its stronghold. Still the Duke was dissatisfied, and refused to part with his prey until he had received full value for his deposit. In vain the Hebrew fell on his knees, in vain did he call on Father Abraham to attest his innocence, for in the midst of one of his most solemn asseverations Buckingham was informed that a scrivener was urgent in soliciting an audience, and he saw at the same time that a cloud came over the face of Lopez. The request of the scrivener being granted, to the Duke’s astonishment he produced the missing document, explaining to his Grace that Lopez, believing the scrivener too much in his power to betray him, had placed it in his charge until the storm should blow over, but that, fearing the Duke’s power and trusting to his protection, he had brought it to York House. On the instant Buckingham confronted the two. The Jew’s countenance betrayed his crime, and, fawning on the very hem of the Duke’s garment, he begged forgiveness, and crouched like a dog to procure it. From that time it is probable that the Duke had his loans on more equitable terms and on smaller security, as he dismissed the Jew with a consideration the latter did not deserve.

But darker and more dangerous things were hinted of this man. He was well versed in medical lore. He was reputed to possess subtle drugs; and it was often noticed that the healthiest of those to whom he was bound to pay life annuities were sometimes cut off in a remarkable way, and that, too, after they had been closeted with him. Whether Lopez granted insurances on lives is unknown, but he lived himself to a bad old age, hated as much as he was feared, and sought after as much as he was despised.

Such men made large profits. They knew nothing and they cared nothing for the chances of life. Their charges covered all risks. And so little was known of the number of the people, that a few desultory facts concerning this and a previous period, being gathered from various sources, may not be unacceptable or uninstructive. Up to this time, and long after, the population of London and of England was a riddle. The utmost exaggeration prevailed in all the accounts which we possess concerning it. Fitzstephen writes of London being peopled with a multitude of inhabitants; and adds, that, in the fatal wars under King Stephen, 80,000 men were mustered. Allowing for the martial fury of the time, this would give a population of 400,000 in the twelfth century dwelling in London. Everything points to the fact that the metropolis augmented more than the authorities thought good.

The progressive increase of London was a continual source of alarm. In 1581 a proclamation was issued, forbidding any new buildings. Elizabeth caused a statute to be passed to the same effect, because “such multitudes could hardly be governed, by ordinary justice, to serve God and obey her Majesty;” and because “such great multitudes of people in small rooms, being heaped up together, and in a sort smothered, with many families of children and servants, in one tenement, it must needs follow, if any plague or any universal sickness come among them, it would presently spread through the whole city.” These proclamations were continued. James said, so many people “cumbering the city were a general nuisance;” adding, that the single women who came from the country marred their reputations, and that the married lost them. Still the people flocked, in spite of proclamations, and in opposition to statutes. Old country establishments crowded by the score to “upstart London,” “pinching many a belly to paint a few backs, and burying all the treasures of the kingdom in a few citizens’ coffers.” At last some effect was produced, not however by the proclamation, but by fining one Mr. Palmer a thousand pounds. Still, if we may judge by what Howel writes, the city of London continued to increase “For the number of human souls breathing in city and suburbs, London may compare with any in Europe in point of populousness.” This he estimates, taking “within that compass where the point of the Lord Mayor’s sword reacheth,” at a million and a half of souls. Foreigners could scarcely understand the huge concourse which thronged London, and which for a long time baffled our earlier political economists, who wondered how it was that the annual deaths outbalanced the annual births. Our satirists were very hard on the new comers. Ben Jonson describes them as “country gulls,” who come up every term to learn to take tobacco and see new notions. They paid heavily for their lesson in London life; and many an annuity was wrung out of the fat land of the country gentleman from his visit to the metropolis. Sir Richard Fanshawe, in an elegant and elaborate poem,—an evidence that the subject occupied public attention,—asks,

“Who would pursue

The smoky glory of the town,

That may go till his native earth,

And by the shining fire sit down

On his own hearth,

“Free from the griping scrivener’s hands

And the more biting mercer’s books,

Free from the bait of oiled hands

And painted looks?”

It is clear, from these and other facts, and from the circumstance that it would be very difficult to separate the casual visitors from the fixed inhabitants of London, that up to the year 1700 there was little information on which to found an argument. All that we possess is vague and desultory. Lord Salisbury, in a letter written to Prince Henry prior to 1612, says, “Be wary of Londoners, for there died here 123 last week.” On the 1st of May, 1619, we learn by another source that the number of deaths in London was from 200 to 300 weekly. At the accession of James I., London was said to contain little more than 150,000 inhabitants; and at the restoration of Charles II., 120,000 families were said to be within the walls of London. “Before the Restoration,” said Sir William Petty, “the people of Paris were more than those of London and Dublin put together; whereas, in 1687, the people of London were more than those of Paris and Rome.” Evelyn, again, says, in his Diary, in 1684, that he had seen London almost as large again as it was at that time. Judging from various independent sources, however, the population of England at the time of the Revolution may be fairly estimated as ranging from 5,000,000 to 5,500,000.

That the tables of Graunt and Petty had produced small practical effect, and that little or nothing was known as to the chances of life, may be gathered from a pamphlet printed in 1680, in which the whole doctrine of the value of life as then understood and acted on is affirmed: the utmost value allotted to the best life was 7 years, at which the life of a “healthful man,” at any age between 20 and 40, was estimated; while that of an aged or sickly person was from 5 to 6 years, the various limits between these two extremes constituting the whole range of difference in value.

Such was the limited nature of the statistics of life when the Astronomer Royal Halley compiled those calculations which make his name honoured by directors and actuaries. To him we owe the germ of all subsequent developments of this science, in that general formula for calculating the value of annuities which is yet regarded with so much respect.

Up to the period in which he lived—the latter half of the seventeenth century—the town of Breslau, in Silesia, was the only place which recorded the ages of its dead; and from these Halley drew a table of the probabilities of the duration of human life at every age. This was in 1693, and was the first table of the sort ever published.[8] In it he taught, with great clearness and exactness, the conditions needful for the formation of rates of mortality; the manner of forming them with complete geometrical precision; of deducing a corresponding table of the present state and annual movement of the population; of reading in them the probability of survivorship of any person taken at random in a given society; of, in truth, concluding upon the probable duration of the co-existence of several individuals from the sole knowledge of their age. He also first developed the true method of calculating life annuities, taking for his guide the rate of mortality during five successive years in Breslau.

That the tables of Dr. Halley were very much wanted may be assumed, as in 1692 annuities were granted on single lives at 14 per cent., or only 7 years’ purchase; and that the State took very little trouble to apply these tables is as true, for we read that, soon after they were published, annuities were estimated on 1 life at 9 years’ purchase, on 2 lives at 11 years’, and on 3 lives at 12 years’ purchase. Some allowance must, of course, be made for the difficulty of raising money and the difference of interest; still the price paid was out of all proper proportion. But the most singular circumstance connected with government annuities at this period is, that, when life annuities were changed into annuities for 99 years, the owner of a life annuity might secure an annuity for 99 years, by paying only 4 1/2 years’ extra purchase. Thus, by the payment of 15 1/2 years’ purchase, a certain annuity of 99 years could be procured.

CHAP. IV.

FIRST TRIAL CONCERNING LIFE ASSURANCE.—THE MERCERS’—ITS ESTABLISHMENT AND SYSTEM.—THE SUN—JOHN POVEY, ITS PROJECTOR—HIS CHARACTER.—WAGERS ON THE LIFE OF KING WILLIAM.—NEW ASSURANCES.—THE AMICABLE—THE MODE IN WHICH IT WAS ESTABLISHED.—NEW ANNUITY SOCIETIES—ANECDOTES CONCERNING THEM—CLOSE OF THEIR CAREER.

It may be judged that life assurance was in operation by the latter end of the seventeenth century, as a policy was made on the life of Sir Robert Howard, for one year, from the 3rd of September, 1697. On the same day in the following year Sir Robert died, and the merchant refused to pay, on the ground that the policy had expired. Lord Holt, however, ruled, that “‘from the day of the date’ excluded the day itself, and that the underwriter was liable.” This appears the first assurance on a life of which there is positive legal record.

Reference is usually made to the Amicable Society as the earliest institution for the assurance of lives; but the Mercers’ Company, in 1698, commenced a scheme for granting life annuities to the nominees of the assurers, in place of paying down a fixed sum. This was undertaken at the instigation of Dr. Asheton, and its failure is a proof that the duration of human life was very little known, or that sufficient care had not been taken by the Mercers’ Company to enable them to be annuity-mongers with half the success of Audley the usurer, or Lopez the Jew. They formed something like a scale, but it was incomplete. Married men, under 30, were allowed to subscribe but 100l.; under 40, they might not subscribe more than 500l.; under 60, they were limited to 300l. When this was commenced, it was considered a very notable plan. It was thought that it would prove a good business speculation, and, on considerable sums being subscribed, “the Corporation rejoiced greatly.” It was soon discovered, however, that the undertaking was founded on a mistake; so the first breach of faith was in lowering the annuity. This proved insufficient, and the company became unable to meet their engagements. They had fixed the payments to their annuitants at the rate of 30 per cent., and now they saw their funds almost annihilated by the error. At last they stopped payment altogether; but the distress was so acute, that, recollecting one or two forced loans they had made to the monarchs of England in the troublous times of old, they petitioned parliament, in 1747, for assistance. Their tale was a pitiable one: “At Michaelmas, 1745, they found themselves indebted to the said charities, and their other creditors, 100,000l.; they were liable for present annuities to the extent of 7620l.; for annuities in expectancy, 1000l. a year more: the whole of their income being 4100l.”

The desired assistance was granted, and it need not be added that the company is now one of the most flourishing in London.

If the principles on which the Mercers’ Corporation founded its operations were erroneous, it must be considered that Government acted as strangely in its public proposals for life annuities. Nothing can illustrate more strongly the crudities of the science at this period, than the fact, that when loans were raised by William III., on life annuities, no greater annual amount was given to the man of seventy, whose chances of life were so small, than to the man of thirty, whose chance was so large. Thus, the State offered 14 per cent., at any age, and it is curious that these proposals were accepted by very few. It is true that interest was much higher than at present, but this does not palliate the fact, that there was no attempt to vary the rate according to the age.

Before approaching the next movement, it will not be out of place to indicate the establishment of one or two offices which have since added life assurance to that of fire. The Hand-in-Hand was established in 1696, by about one hundred persons. In 1698 they framed a deed of settlement, which was enrolled in Chancery. Ten years later, John Povey, author of the “Unhappiness of England, as to Trade,” projected the Sun. Finding his attempt very successful, Povey conveyed his rights to certain purchasers, who, by a deed of settlement, of April, 1710, erected themselves into the society now familiar as the Sun Fire and Life Office.

It is not generally known that this institution printed, at first weekly and then quarterly, a work which has since proved a valuable addition to our historic literature. It was, indeed, a general custom with insurance companies to publish periodical papers in aid of their business, and was only another mode of that advertising which is so liberally practised by those of the present century.

Mr. Povey, the founder of the above company, was a veritable promoter. Not contented with establishing an office to insure against the chances of fire, he invented also a scheme to extinguish it, and “Povey’s fire-annihilator” was then a feature of the time. This gentleman, who looked “a grave, honest-countenanced, elderly gentleman,” but is described as “a meddling, restless, and turbulent spirit,” projected a life assurance company for “4000 healthy persons, between the ages of 6 and 55,” to be called the Proprietors of the Traders’ Exchange House. This, like many of his proposals, died a natural death. With those of his class he was often in hot water, and was accused of plagiarising the ideas of others. In addition to the offices of which mention has been made, he formed the Society for Assurance for Widows and Orphans, the progress of which is lost sight of. At any rate, he comes down to us as the founder of one of the most liberal fire-offices in existence, of the capital of which it may be remarked, en passant, almost as little is known as of its projector.

The war which was undertaken by William, against France, produced a new form of assurance: not only did wagers on his life become prevalent—a betting which was but another form of insurance; policies were entered into on the result of his campaigns. The conspiracies which were formed against him increased the interest felt; and so uncertain were the chances of his taking Namur, that 30l. were offered down, to receive 100l., provided the city and castle were captured before the last day of September in 1694. At this period, also, a mutual assurance company was formed to aid an adventurer with funds to raise a vessel which, laden with the treasures of the East, had been lost on her passage home; the peculiar feature of the transaction being, that, if any of the association should die before the object was accomplished, their share was to be transferred to the remaining adventurers.

The assurance merchants found their profits endangered in 1706, when the Bishop of Oxford and Sir Thomas Allen applied to Queen Anne for a charter to incorporate them and their successors, “whereby they might provide for their families in an easy and beneficial manner.” The application was successful, and the Amicable, an improvement on the Mercers’ Company, obtained its charter, the number of shares being limited to 2000. But that which appears most extraordinary was, the mode of arranging the payments. The age of the shareholder—from 12 to 45—made no difference in his premium; and whether he were well, or whether he were dying, was no consideration. Each person paid 7l. 10s. entrance money, and 6l. 4s. per annum for life; but, as a yearly return of 1l. 4s. was paid to each shareholder, the real payment was 5l. The yearly number of deaths in London was about 1 in 20 at this period, and this fact probably originated the amount of payment, though nothing could surpass the absurdity of a plan which made no distinction between an old life and a young one,—between a healthy and an unhealthy man. It is said that the Amicable had no data; but Dr. Halley had already published his tables, and Vulture Hopkins, or Mr. Snow the banker, or any money-monger, would have taught the directors their error. It is true that success,—at any price, almost,—was their object, and this was insured by the large payment. It may be said, also, that it is wrong to judge of past actions by the aid of present information; but common sense was as general then as now, and any usurer’s books would have taught the Amicable its mistake.

The annual income, after deducting expenses, was divided yearly among the representatives of those who had died. Thus a healthy year, with only a slight mortality, made the division good; but in an unhealthy year it was proportionably less. An annual distribution of this kind was manifestly unsound, if not unfair; and must have been sometimes severely felt by the representatives of the deceased. The Amicable, however, may be received as the nursing mother of life assurance at a period when, little as arithmetical economy was understood, it was still less acted on.

Besides the attempt to engraft an annuity society on the Mercers’ Company, various minor endeavours were made, from 1690 to 1712, to establish institutions which should grant yearly payments and pay specific sums to the representatives of the deceased.

The principle of assurance, applied to other subjects than merchandise, seemed a sudden light to those who had capital, and did not know how to employ it; while it was a great boon to those who wanted money, and did not know how to get it. The latter employed their wits in its application to subjects which are not yet allowed to be legitimate; and, while the former, with the praiseworthy caution of men who had “put money in their purses,” went slowly but surely to work to found institutions like the Amicable, the Royal Exchange, and the London, the others did not hesitate to form societies, to frame rules, and to decoy all they could meet, under titles as promising as their results were ruinous.

In 1708 began what were then known as “the little goes” of assurance. One was held at the Cross Keys, in Wych Street. We gather that each person subscribed 5s. fortnightly, inclusive of policy, stamp, and entrance money, on condition of 200l. being paid to his heirs and executors. Another was an evident bubble, 5s. a quarter entitling the subscriber’s representatives to receive 120l. at his demise; while a third, called the “Fortunate” Office, was to provide marriage portions of 200l. for those who paid 2s. a quarter. If contemporary accounts are to be trusted, the ravenous appetite for assurance was something like that which at the present day possesses projectors, as offices were opened in every part of the town. If one company was commenced to insure marriage portions, a second was sure to follow to insure the portions of their children. A mutual life assurance was instantly followed by a mutual ship assurance. The following notice from the “British Apollo” will be found to illustrate this speculative fancy:—“A first and second claim is made at the Office of Assurance on Marriage, in Roll Court, Fleet Street. The first will be paid on Saturday next; wherefore, all persons concerned are desired to pay 2s. into the joint stock, pursuant to the articles, or they will be excluded. The two claimants married each other, and have paid but 2s. each.” They were, however, to receive but 37l. Here is another specimen: “Any person by paying 2s. at their entrance for a policy and stamps, and 2s. towards each marriage but their own, when the number is full, will secure to themselves 200l.; and in the mean time, in proportion to the number of subscribers.” This undertaking was found to answer so well, that many others opened in the same line—one of them, appropriately enough, in Petticoat Lane. Soon after this, appears an advertisement from a baptismal office of assurance, where every subscriber paid 2s. 6d. towards each infant baptized, until he had one of his own, when he was to receive 200l., “the interest of which is sufficient to give a child a good education; and the principal reserved until it comes to maturity.” Most of the projects were systems of wholesale robbery. For a time, however, they were greedily run after. “The success of these schemes,” says a chronicler of the time, “sharpened the invention of the thrifty, and immediately almost every street in London abounded with insurance offices, where policies for infants three months old might be obtained for short periods. From these, they diverged into other ages and various descriptions of persons.”

Emblems were placed in windows indicating the allurements of the “Golden Globe.” Tempting advertisements were inserted in the journals to show the especial advantages of a new Tontine. Infant or adult, married or single, were addressed in, “The Lucky Seventy, or the Longest Liver takes all;” while, paraded in promising forms, and painted in bright colours, arose societies to keep the subscribers when they married, and pay for their burials when they died.

There is something very painful in the recollection that the sufferers were those who could least afford it. It was not the grasping Hebrew who invested from his full store. It was not the wealthy East Indian director, the rich alderman, the over-fed citizen, or the “new-fangled banker” who lost a small portion of his gold. It was the poor and thrifty man, who, denying himself to secure his children a provision, was involved in loss.

Policies and premiums were in the mouths of all. It was the El-dorado of the London craftsman, the alchymy of the needy tradesman. The philosopher’s stone seemed placed before the class that least dreamed of grasping it: but it was the realisation of the legend in which the dreamer awakes and finds his golden pieces are turned to slate; it was the arousing of Analschar from his gorgeous vision.

The jobbers of Change Alley were not behind; the members of Lloyd’s entered keenly into competition, usurers trembled with delight at the prospect of increasing their store, and annuity-mongers threw themselves with ravenous rapacity on the unwary. Under the name of Africanus, Steele selects a well-known character of the day to satirise the “bites and bubble-mongers” of 1710, in “one who has long been conversant in bartering; who, knowing when Stocks are lowest it is the time to buy, therefore, with much prudence and tranquillity, thinks it the time to purchase an annuity for life.” “Sir Thomas told me it was an entertainment more surprising and pleasant than can be imagined, to see an inhabitant of neither world, without hand to lift, or leg to move, scarce tongue to utter his meaning, so keen in biting the whole world and making bubbles at his exit. Sir Thomas added, he would have bought twelve shillings a year of him, but that he feared there was some trick in it, and believed him already dead.”

There is some confusion between annuities and assurances; it is an evidence, however, that the public attention was pointed to the tricks which were current. During this period, there is no trace of any life-office; but it would appear that the Bills of Mortality were regarded with interest, from a paper in the “Guardian” being founded on them, and that they were so regarded is most probably to be traced to their connection with assurance. The following is an extract from a quizzical paper bearing on the mortuary registers. Died

Addison also composed the following bill of mortality in a paper “On Dying for Love;” and it is a further proof of the attention paid to the subject, that this great writer took it as a model:—

“T. S. wounded by Zelinda’s scarlet stocking, as she was stepping out of a coach.

“Tim Tattle killed by the tap of a fan on his left shoulder by Coquetilla, as he talked carelessly with her at a bow-window.

“Samuel Felt, haberdasher, wounded in his walks to Islington, by Mrs. Susanna Cross Stitch, as she was clambering over a stile.

“John Pleadwell, Esq., of the Middle Temple, assassinated in his chambers, the 6th instant, by Kitty Sly, who pretended to come to him for advice.”

After 1712, these projects ceased to be placed before the town; and the following odd “bite” had its share in dispersing the hungry crew who proposed them. “There has been the oddest bite put upon the town that ever was heard of. We having of late had several new subscriptions set on foot for raising great sums of money for erecting offices of insurance,” &c.; “and at length some gentlemen, to convince the world how easy it was for projectors to impose upon mankind, set up a pretended office in Exchange Alley, for receiving subscriptions for raising 1,000,000 of money to establish an ‘effectual’ company of insurers, as they called it: on which, the day being come to subscribe, the people flocked in and paid down 5s. for every 1000l. they subscribed, pursuant to the Company’s proposals; but after some hundreds had so subscribed, that the thing might be fully known, the gentlemen were at the expense to advertize, that the people might have their money again without any deductions; and to let them know that the persons who had paid in their money contented themselves with a fictitious name set by an unknown hand to the receipts delivered out for the money so paid in, that the said name was composed only of the first letters of six persons’ names concerned in the said scheme.”

For a period the people had rest from new propositions: as it was found necessary to stop these offices for insurances on marriages, births, christenings, and annuities, and to close the career of gentlemen without a penny; this being done by the insertion of a clause in an Act of the 10th of Queen Anne, enacting a penalty of 500l. on the promoters of such societies.

Unfortunate as these bubble assurance companies might be, unformed and unintelligent as their conductors proved, and ruinous as they were to the people who trusted them, they were a movement in the right direction. The principle of life assurance is so eminently social, and so important to those who wish to invest their savings for their successors, that any effort or endeavour to move this science from the hands of usurers and speculative merchants was to be rejoiced at. Hitherto it had been entirely in the hands of the monied man. Many had been honourable in their dealings, but they were ignorant of the trade in which they invested their money, while a bad business year or the destruction of a fleet,—a civil war or the arbitrary demands of a monarch,—might ruin alike assurer and assured.

Others who traded in it were harpies; who took advantage of the wants of the applicants, who measured their terms by the requirements of their customers, who demanded to the last penny, and claimed on the earliest day. Such men did more harm to the feeling of security in these transactions than can now be possibly imagined; but the above two classes only could supply the requirements of the people in the early annals of annuities and assurance.

CHAP. V.

ROYAL EXCHANGE AND LONDON ASSURANCE—THEIR RISE AND PROGRESS.—BUBBLE ERA.—EPIGRAMS.—OPPOSITION TO THE NEW COMPANIES.—ACCUSATIONS AGAINST THE ATTORNEY-GENERAL.—LIST OF ASSURANCE COMPANIES.—EXTRAORDINARY CHARACTER OF MANY.—REMARKABLE CAREER OF LE BRUN.—DIRECTORS IN TROUBLE.

The rise of the Royal Exchange and London Corporations forms no uninteresting picture of the time in which they were produced. The bubbles of 1712 had not long passed away, when some of the first merchants of London, willing to secure to themselves the advantages which the Amicable as a life, and the Sun as a fire, office possessed, met in Mercers’ Hall, to petition the crown for a charter to effect marine and other assurances. The petition was well timed, as upwards of 150 underwriters had recently failed; many merchants having fallen to the ground with them, there was every reason in the public clamour for a safer and more secure mode of investment. About the same time also another body, of “knights, merchants, and citizens of London,” had petitioned with the same object. A junction of the two was arranged, and, under the title of the Royal Exchange Assurance, they endeavoured to obtain a charter. This was at the commencement of that remarkable period in commercial history known as the South Sea bubble. The above proposition, however, was well grounded; and so many were prevented from subscribing, that, under the title of the London Assurance, a company of equal magnitude was commenced.

Their petitions made slow progress; but the Royal Exchange, without waiting the issue, commenced business, and, in nine months, had insured property to the amount of 2,000,000l. sterling. While these companies were in progress, the great bubble era came. With it, excepting as regards assurance, this volume has nothing to do. But the public found this pressed closely on its attention. When men were willing to receive a company with fair promises in the place of fair prospects,—when persons ran about the Alley exclaiming, “Give us something to subscribe to; we care not what it is,”—a practice so sound as assurance was certain to be applied in every form that the hurried ingenuity of speculators could devise. Besides the proposed assurances on the lives of men, cattle were brought into use, and 2,000,000l. were demanded for assuring horses. Of this it was said:—

“You that keep horses to preserve your ease,

And pads to please your wives and mistresses,

Insure their lives, and if they die we’ll make

Full satisfaction, or be bound to break.”

Of an office for marine assurance:—

“In vain are all insurances, for still

The raging wind must answer heaven or hell;

To what wise purpose must we then insure?

Since some must lose whate’er the seas devour.”

The life and fire-companies were also epigrammatised with as much point as the epigrammatist could confer. Thus, on the former he wrote:—

“Come all ye generous husbands with your wives,

Insure round sums on your precarious lives,

That, to your comfort, when you’re dead and rotten,

Your widows may be rich when you’re forgotten.”

With regard to fire-companies:—

“Projecting sure must be a gainful trade,

Since all the elements are bubbles made;

They’re right that gull us with the dread of fire,

For fear makes greater fools than fond desire.”

Another company, having at its head “three English peers, two bishops, four Irish peers, with many eminent merchants and gentlemen,” petitioned the king that it might be incorporated for purchasing and improving forfeited and other estates in Great Britain, for granting annuities, and for insuring lives; “seeing this will unite by interest many of the king’s subjects against the Pretender and his adherents for ever. In order to which, several of the petitioners have sent persons into Scotland for purchasing the forfeited estates there, and have since, by a voluntary subscription to the Governor and Company of Undertakers for raising the Thames water in York Buildings, raised a joint stock of 1,200,000l., on the credit of which estates they propose to grant annuities for and to insure on lives; for the benefit of such of his Majesty’s subjects as are straitened in their fortunes by the reduction of interest.”

When this petition was referred to the Crown lawyers the Amicable employed counsel to oppose it, and a vigorous warfare was carried on. Rejecting with scorn the idea of any rival being of use to the world, and pointing to its own venerable standing of fourteen years, the Amicable called the new company a “company of upstarts.” The latter retorted that its opponents had grown old and supine, and that the safety of the entire commercial world depended on their success; that, having a large capital, there would be a greater security than in a society like the Amicable; and they backed their argument with bribes to all who could be supposed to have any interest. Their arguments and their bribes, however, were futile, and they missed their object.

Even the Royal Exchange and London Corporation did not escape the charge of having attempted to forward their interests by fees disproportioned to the services which were sought. The age at which we have arrived was the age of corruption. Whispers passed through every coffee-house in the city that the Right Honourable Nicholas Lechmere was accused of betraying the trust reposed in him, and that some persons concerned in various undertakings had endeavoured to obtain charters by corruption and other undue practices. These reports were attributed at the time to the private assurers, who were by no means pleased at so formidable a rivalry. The proper degree of indignation having been exhibited by the Right Honourable gentleman, the rumour was found to have emanated from Sir William Thompson, who broadly asserted that very unjustifiable methods had been taken by one Bradley and Billinghurst in order to obtain a charter for Lord Onslow’s Assurance Company; that large sums of money had been received by his Majesty’s Attorney-General, contrary to his duty, to influence him in his opinion; and that there were public biddings for these charters, as if at an auction, in the chambers of the Attorney-General. Such assertions being somewhat damaging to the character of an official gentleman, the committee appointed to inquire into “petitions for companies for insurance, annuities, &c. &c.,” instituted a minute inquiry. As all the witnesses represented some proposed company, they were unanimous in asserting its virtue. Not one of them ever dreamed of offering Mr. Attorney more than his legal fee. Not one of them was not content to rest the success of his case on its singular merits only.

Their examination lets us into a picture of the customs of the time. On a certain occasion as many as 150 met in the Attorney-General’s chambers, where the question was debated with great warmth; one party contending, with all the eloquence of self-interest, that a new company for the purpose of assurance would be very beneficial to the nation; the opposite party asserting that no such company was requisite, and that the nation would suffer from it. The advocates representing the underwriters proved that there were private adventurers ready to undertake all the business that could be brought; and, in return, the advocates for the companies produced a list of failures among the private assurers, and a calculation of the loss the public had sustained through them. The general tenor of the evidence went to clear Mr. Attorney, but it tended to criminate the applicants for charters. One company gave its agent authority to pursue “all proper methods;” and, as the agent had interpreted these words “to bribe all he came near,” they could only express their regret. Another company declared its purity with much vehemence; but, on close examination, it was found to arise from its poverty. Moral feeling was utterly extinct. The cry with all was, “Give!” “Give!” said the Attorney-General’s clerk. “You must give something; they have given something handsome on the other side,” said the Attorney-General himself. One witness deposed: “He, with some others, went to the chambers of the latter, and, having procured access, informed him they were come to wait on him with his fee; but Mr. Attorney said, ‘What do they come here for? Why do they not leave it with my clerk?’ The reply was, ‘It was matter of weight, and they desired to give it him themselves.’ Sir William Chapman then gave the fee, recommending the assurance company to the Attorney’s favour, saying, ‘The company would speak for itself, and hoped, if it should be found to be of use to the nation, that he would favour it,’ and some words of that kind, and then they withdrew.” The accusation failed, the decision being, “That the Right Honourable Nicholas Lechmere had discharged his trust, in the matters referred to him by his Majesty in Council, with honour and integrity.”

In the mean time the two new companies proceeded slowly. “Onslow’s Insurance,” as the Royal Exchange was called, and “Chetwynd’s Bubble,” the title given to the London, were hawked in Change Alley along with companies for “importing jackasses” and for “fatting hogs.” The House of Commons was privately importuned by lavish promises, and publicly solicited in two letters printed and given to every member. Even in that age of corruption their bribery proved vain; and had not a fortunate chance turned up in their favour, their application for charters might have been dismissed with contempt. By some inadvertence, the grand Committee of Supply had been dismissed before provision could be made for the arrears in the civil list. The ministers were in despair; and the companies took advantage of the necessities of the State to offer the large sum of 600,000l., on condition of receiving his Majesty’s charter for their respective companies. The offer was eagerly grasped by the ministry; and on evidence being given of the respectability of the members,—of the cash lodged at the Bank to meet losses,—of their funded property, and of the amount of the business transacted,—Mr. Aislabie, Chancellor of the Exchequer, presented to the House the following message:—

“His Majesty, having received several petitions from great numbers of the most eminent merchants of the city of London, humbly praying he would be graciously pleased to grant them his letters patent for erecting corporations to assure ships and merchandise, and the said merchants having offered to advance and pay a considerable sum of money for his Majesty’s use in case they may obtain letters patent accordingly; his Majesty, being of opinion that erecting two such corporations, exclusive only of all other corporations and societies for assuring of ships and merchandise, under proper restrictions and regulations, may be of great advantage and security to the trade and commerce of the kingdom, is willing and desirous to be strengthened by the advice and assistance of this House in matters of this nature and importance. He, therefore, hopes for their ready concurrence to secure and confirm the privileges his Majesty shall grant to such corporations, and to enable him to discharge the debts of his civil government without burdening his people with any aid or supply.”

A bill was then ordered to be brought in, and the “most dutiful Commons” waited on his Majesty with an address of thanks “for communicating the application for an insurance company,” it being “an instance of so much condescension as deserved the highest return of duty and thankfulness.”

Each of the companies thus established had power to purchase lands to the value of 1000l. yearly. No person could be a director of the London Assurance and Royal Exchange at the same time. Each corporation was to pay 300,000l. for its charter; but though this was a chief condition, the difficulties into which they fell induced the government, when life assurance was added to that of marine and fire in 1721, to absolve the proprietors from paying such amount of the 300,000l. as remained unpaid.

The following is the most correct list which can be obtained of the assurance projects of the South Sea bubble era:—

1. The Royal Exchange.

2. The London Assurance.

3. For a general insurance on houses and merchandise, at the Three Tuns, Swithin’s Alley, 2,000,000l.

4. For granting annuities by way of survivorship, and providing for widows, orphans, &c., at the Rainbow, Cornhill, 1,200,000l.

5. For insuring houses and goods from fire, at Sadler’s Hall, 2,000,000l.

6. For insuring houses and goods in Ireland, with an English earl at the head of it.

7. For securing goods and houses from fire, at the Swan and Rummer, 2,000,000l.

8. Friendly society for insurances.

9. For insuring ships and merchandise, at the Marine Coffee-house, 2,000,000l.

10. British Insurance Company.

11. For preventing and suppressing thieves and robbers, and for insuring all persons’ goods from the same, at Cooper’s, 2,000,000l.

12. Shales’s Insurance Company.

13. For insuring seamen’s wages, Sam’s Coffee-house.

14. Insurance Office for horses dying natural deaths, stolen, or disabled, Crown Tavern, Smithfield.

15. A company for the insurance of debts.

16. A rival to the above for 2,000,000l., at Robin’s.

17. Insurance Office for all masters and mistresses against losses they shall sustain by servants, thefts, &c., 3000 shares of 1000l. each, Devil Tavern.

18. For a general insurance in any part of England.

19. A copartnership for insuring and increasing children’s fortunes, Fountain Tavern.

20. For carrying on a general insurance from losses by fire within the kingdom.

21. Insurance from loss by Garraway’s Fishery, Crutchley’s, at Jonathan’s Coffee-house.

22. Mutual Insurance for Ships.

23. Symon’s Assurance on Lives.

24. Baker’s second edition of Insurance on Lives.

25. William Helmes, Exchange Alley, Assurance of Female Chastity.

26. Insurance from house-breakers.

27. Insurance from highwaymen.

28. Assurance from lying.

29. Plummer and Petty’s Insurance from death by drinking Geneva.

30. Rum Insurance.

A mere glance at this list will show that the ideas conveyed by some of the titles were sound and salutary, and that they are now being brought into action. It is true that we cannot yet insure our homes against house-breakers, or our persons from highwaymen; we cannot yet insure our poor population from death if they drink too much rum or Geneva; we certainly have yet no assurance against lying, however necessary it may be in this age of projects; nor have we, like William Helmes, of Exchange Alley, commenced a company to insure female chastity. These were Utopian schemes into which we have not yet entered; but with many of the more practical we are growing familiar. The present “Agricultural Society” answers to that for insuring cattle. The “Guarantee Company” has adopted that of “insuring to all masters and mistresses the losses they may sustain by their servants.” The company for the “insurance of debts” is at the present day fairly represented by the “Commercial Credit Mutual Assurance Company;” nor is there much doubt that the system will be spread to a still greater extent. The society for insuring seamen’s wages was very desirable, as the sailor never received his pay in cash, and parted with his tickets at a heavy discount. To this some of our naval losses may be attributed, as our best men went over to the enemy in consequence. A company, therefore, which should cash the seamen’s tickets at a fair rate would have been a national good.

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 5l. By this “Office of assurance and annuity for every body,” any person who paid 5l. was to be assured of receiving 100l. 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 300,000l. 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 100l., 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.

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 “1000l. would purchase an annuity of 70l. 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 2000l. 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 2000l. 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.”

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 100l.[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 15s. for every 100l. 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:—

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 1000l. 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:—

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.

CHAP. VIII.