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Mepe, pletee. charts, etc.. may be filmed at different reduction ratioa, Thoae too large to be entirely included in one axpoeure are filmed beginning in the upper left hand comer, left to right and top to bottom, aa many framae aa required. The following diagrama iiluatrate the method: Lee cartee. planchee. tableaux, etc.. peuvent Atre filmte A dee taux do rMuctlon diffirents. Lorsque le document eet trop grand pour Atre roproduit en un soul clieh4, il est film* i partir de Tangle aupMeur gauche, do gauche i droite. et de heut en bee, en prenant le nombre d'Imegee ndceaaaire. Lea diagrammea suivants lliustrem la mithoda. 1 2 3 1 2 3 4 9 ll iPippRil^iiilJIfimi mifmm^m ^^^^nwmi'^mm «^pject; Imt we hopo wo liave Hai0 Sun 1,757 2,995,058 20,576 $39,296,021 or close upon an average of $2,000, the premiums charged on the same being for Canadian Companies 2.97%, English, 3.01%, and American 3.24%, making the average 3.11%. Tt must be palpable to all that a Government, not being burdened with the heavy ex- pense attending life companies, such as office rents, directors' fees, advertising puffs, stock dividends, etc., would not require to charge as high rates of premium ; and supposing the average rate to be "8%, we shall find that a revenue amounting to the enormous sum of ^$30,000,000 per annum lies within the reach of our rulers. Even allowing that only half of this would for a year or two be obtainable, we think it will be ad- mitted that a scheme which promises so much is not to be lightly thrown aside, but is worthy of the seri- ous consideration of our Government. We shall next endeavour to show what the probable outlay would be on such annual income, but for the present we surmise that we have said enough to engage the attention of our readers io the development of the subject we have on hand. 10 No. 8.— COMPARATIVE FEATURKS. We have no doubt that many of our readers were somewhat surprised at the figures we presented to them when we last touched upon the above subject, and it is more than probable that those opposed to the scheme of Government Life Insurance will endeavour to show that we have been guilty of exaggeration even in our lowest estimate of the income which would accrue to the country were the Government to com- mence insuring the lives of the people. The argument will doubtless be used that, as the combined efforts of all the life companies transacting business in the Do- minion have only collected a premium income of be- tween two and three millions of dollars for the past five years, it would be utterly impossible for the Go- vernment to swell that amount to the sum of fifteen millions. Our answer to this, as already pointed out» is two-fold. In the first place, there is the infinitely greater security oftfered by the Government compared with the strongest company, especially in times of de- pression like the present, when the assets of the com- pany, invested in the best securities its directors can fix upon, show a vast depreciation of value. As an il- lustration of this we may point to the largest institu- tion of its kind in the world — the Mutual Life, of New York, which, according to its latest published returns. 11 has a surplus of $10,643,201 on assets of $84,749,808, or something over 12 per cent., proving that a very slight drop in the securities (over sixty millions of which consisted of real estate and mortgages thereon) would sweep away the entire surplus. Turning to England, it is curious to observe that during the late monetary crisis, when banks like the City of Glasgo\. went down with a crash, the only securities which showed no depreciation were Consols. Secondly, we are convinced that Government ,Life Insurance would reach hundreds and thousands of people which the present institutions fail to do ; so that we consider it a moderate calculation that (ij per cent, of our popula- tion would become insurers under the system proposed. As regards death claims paid, we find from the re- turns of the nine companies already mentioned, the following figures : — Premium receipts in 1876, $1,09.2,- 820; claims paid, 5(^403,933 ; premium receipts in T877, $1,142,459 ; clairas paid, $407,731 ; or about 37 and 36 per cent, respectively, while in the latter year forty-one companies transacting business in the United States re" ceived the sum of $66,008,446, and disbursed for death claims $22,467,843, or about 34 per cent. Taking into account that in some yeais the deaths may be more numerous than in others, we will take an outside aver- age of 40 per cent., which upon a premium income of $15,000,000 is $6,000,000. But we do not propose that this sum should be paid away as is done by ordinary 12 life companies, hut that Consols or Government scrip should be issued bearing interest at the rate of 6 per cent., which upon the said $6,000,000 would com*^ to exactly 2.40 per cent, upon the premium income. These Consols would be saleable in case the parties to whom they fell due wished for any reason to dispose of them, and they might also be made redeemable at their mar- ket value by the Government itself — should such a course be considered advisable at any time, a certain notice to be given when such redemption was ordered. We think it will be admitted that there is a wide dif- ference between a return of 34 or 37 per cent, and 2.40 per cent., and we venture to say that no objection would be raised by heirs or trustees of heirs to the investment in Government Consols at 6 per cent. Coming to the ratio of expenses of manage- ment, we have only space enough for a few remarks. It is almost needloss to observe that the item created by stock dividends would not be saddled upon the Go- vernment scheme at all ; this was about 4 per cent, on the Canada Life's premium income in 1877, over 5 per cent, on the Confederation's, and about 7i per cent, on the Sun's. Respecting the total expenses of manage- ment, we are unable to give the latio of the nine com- panies already named, for the reasons that in the re- turns before us the Canadian Companies are the only ones that have furnished the necessary figures, and these, we regret to find, are very much higher in pro- 13 portion than those of either the United States or Great Britain, bearing the following ratio to their premium income, viz. : — Canada Life, 21 percent.; Confederation, 30 per cent. ; and Sun Mutual, 49 per cent. ; whereas taking forty-one of the companies doing business in New York, the percentage is only about seventeen, the lowest being that of the Mutual lafe, which is un- der 12 per cent., while many of the English offices are even lower than this, that of the Equitable of London being only just over 5 per cent. To conclude this por- tion of our subject, we see no reason why the Domi- nion Government should not work the business through the existing post-office savings bank deposit system without additional expense, or at any rate at a cost which would be merely nominal. Finally, as an in- stance of what such accumulations amount to, we need only point to the fact that during the past eight years the assets of the English life offices have increased £27,000,000 sterling, or about $135,000,000 ! In our next we will consider the difference of security offered by the scheme we are advocating as compared with ordinary life companies. No. 4.— SECURITY. * Respecting the difference in security between the Government and ordinary life companies, the first thing 14 which must strike any one who will take the trouble to inquire into the matter is the immense number of persons who, on being asked to insure, reply that they do not feel sufficient confidence in the companies, and prefei" to invest their money elsewhere, but that if the Government would establish a life department they would not hesitate to invest earnings therein. Nor is this very astonishing when we examine the subject closely ; for Mr. Gladstone, in one of his speeches in Parliament, justly said : " In the first year of the (life) society the premiums far exceeded the death claims. This is also the case in subsequent years. For how long does the House think that the premiums to be re- ceived are in excess of the death claims ? For thirty- seven years. That is to say, you foumi an institution - which ought to be a very gospel of prudence, and the balance of its liabilities is postponed for one full generation of men." Now, let our readers take the list of all the companies transacting life business on this side of the Atlantic, and count how many have been in existence for the above length of time. We believe, with the exception of the older English offices, the number is only one or two ; and looking at the numer- ous disgraceful terminations of many of the life insti- tutions during the trade depression and vast deprecia- tion in values through which we have been passing, composing, to quote the words of a well-known life in- surance manager, " a black trail of defalcations, em- % 16 bezzlements, pilferiiigs and breaches of trust," can we compare for one moment the security of a stable Gov- ernment with even the largest joint stock corporation ? The one, as we have already intimated, is the country itself ; the other merely a portion of the community trading upon the country. The one will be supported because every one has an interest in it ; but the other has no such claim, and consequently doubts may be en- tertained as to whether it be " a very gospel of pru- dence." We find, in a petition from bankers, mei- chants and other citizens of Manchester, England, made to Parliament in 1868, the following sentence : — "That your petitioners have heard with surprise and alarm that out of about 400 Assurance Companies which have been established, only about 120 now exist; that one- half of these have been established during the last seven years, and that more than fifty companies are now winding up in Chancery." And further, in a re- cent number of the New York Chronicle we observe that the Globe Mutual Life, incorporated in 18()4, showed a deficit as regards policy holders in Decem- ber, 1877, of $378,739, all of which, we venture to say, has deterred thousands from insuring their lives, for the plain reason that the security, taken as whole, is entirely insufficient. Now, if the Dominion of Canada were to take upon itself the obligations of life insur- ance, very few indeed would doubt either its willing- ness or ability to fulfil its obligations. As far as our 16 own particular scheme is concerned, the fiiinsy argu- ments propounded in the Globe! h notice of the subject in the Speech from the Throne would have no effect, for it is a part of our plan that the Government should give the assured the greatest possible amount of secu- rity at the very least possible cost. We do not ap- prove of the Government accumulating vast sums like ordinary life companies. This is entirely unnecessary and would be taken into account in the calculation of the premiums. It is the country, not any particular administration, that vre desire to enrich, and thus in- crease the very security we Jire advocating ; for the more wealthy the population, the greater will be the value of the Government scrip or Consols. What we aim at, and what we maintain can be carried out, is to make life insurance as safe and profitable an investment as any other that a prudent man can place his earnings in, and we think a fair inducement might be held out by enacting that all moneys derived from Government life scrip should be free from taxation. This feature, however, we will touch upon on another occasion. No- body has ever doubted the security of the English Government, or lost a dollar on the (Jonsol Annuities, however corrupt individual members of the Cabinet may have been ; and until life companies as a whole can point to a similar career, we hold that Government Life Insurance is both desirable and necessary. & 17 No. 5.— VALUE OF POLICIES. Returning to our figures, we will make a brief com- parison between the value given by the existing life companies and what the Government could offer were our scheme adopted. For this, we will revert to the nine companies we have already named as doing business in the Dominion. We find the following premiums charged for the sum of $1,000 on the life of an insurer aged 30, viz. : Canada Life $22 30 Confederation. 20 89 Equitable 22 70 London and Lancashire 23 42 North British and Mercantile 24 90 Reliable Mutual 24 38 Royal 24 90 Standard 24 40 Sun . 22 50 or an average for the nine companies of $23.37, which is to include " profits." These profits, however, are very small, unless the insured attains a great age, those who die early merely contributing their premiums for the benefit of the heirs of their longer-lived brethren. This, we hold, is hardly equitable, if both contracts are faith- fully carried out. Now, we not propose that the Gov- ernment should accumulate profits to be afterwards B 18 II flivided among the policy-holders, but that it should give the largest amount of insurance possible for the [>remium paid, whether the insurer die in twelve months or live to a hundred. Taking the tables of the com- bined actuaries, we find the average expectancy of life at the aforesaid age of 30 to be a fraction over 34 years' so that for a premium of $23.37, calculating the interest at 4 J per cent, (the rate fixed by statute for the com- panies in the Dominion), the Government could grant insurance for just $1,800 — not reckoning the "loading,'* which we will consider upon another occasion. This, our readers will admit, presents a wide difference as against $1,000 ; and although the latter amount may, with " profits," accumulate after long years to as much as the sum of $1,800, still, such a result is merely de- pendent upon so many annual premiums ; whereas the Government policy would be for $1,800 (the "loading" excepted) if the insured died after paying only one premium^ There are periods in life companies when sums of money are inactive and not invested, which must be considered in calculatiug the premiums ; but the Government funds are never idle, and consequently such calculation is unnecessary in regard to them. We have next to look at the " loading " of premiums, and will then point out the sum which will insure $1,000 by the Government scheme. For the present, however, we believe that it is certain insurance — not possible profits — which policy-holders desire most to secure. 19 No. 0.— PKEMIUMS. The following are used for illustration, and could be adjusted by the Government Actuary. We have seen that for an annual premium of $23.37, being the average rate for a policy of $1,000 among nine companies, foreign and native, the Government could afford to grant an insurance for a sum close upon $1,800, not taking into consideration the "loading" necessaiy for expenses. It is an easy matter, there- fore, to calculate what the net premium on $1 ,000 would be from the Government standard ; for, if $23.37 would purchase $1,800, we shall find that $12.98 is the net premium for $1,000. Now, as regards " load- ing," we are of opinion that five per cent, would be ample for all contingencies ; but for the sake of illus- trating still more forcibly the superiority of what we are advocating over that ordinarily offered by life companies, we will go so far as to load the premium ten per cent., and then the gross charge on $1,000 will only amount to $14.27, which is considerably less than that of any company doing business in the Dominion. We have already endeavoured to prove that there is no need for the Government Life Department to accumu- late large reserves either for security or profits. Re- specting the first, no greater security could be offered than the gradual transfer of the foreign into a home n^* 20 indcbtednesSjthere suit of which would be that in place of the $5,780,540 hein^' remitted abroad for interest and connnission, as was done for the year ending 30th June last, it would be paid to our people hero. Secondly, regarding profits, our scheme proposes to give insu- rance, not profits, in striving after which an insurer must to a certain extent speculate upon the length of his own life. We shall next proceed to consider the surrender value of policies, which is a very important feature in life insurance, especially in times of misfor- tune, when an insurer finds himself, under the ordi- nary system, compelled to accept whatever the com- pany chooses to offer, and often sees the premiums by which he has, perhaps, for many years been striving to provide for himself in old age or his family after death, swept into the coffers of the institution he en- trusted Vith the same, with the exception of a sum 80 small as to represent a merely nominal value. No. 7.— REPLY TO AN ATTACK. Before considering the question of the surrendei value of policies, we will reply briefly to an attack made upon the above subject by a paper which pro- fesses to be the honest exponent of commercial ques- tions. The paper referred to assumes — upon what au- thority it is difficult to see — that, if the Government 21 were to adopt a system of life insurance, it would f 'opt it for one of two reasons, namely : (1) Either because the Government thinks assurers are not now .sulHci- ently protected against fraud, or the insecurity of the existing chartered companies ; or (2) because the Gov- ernment desires to obtain possession of the funds now paid to the companies. Now, as regards the firet of these, we would observe that the paper in question might with equal justice assail the system of Govern- ment Savings Banks, as reflecting upon the standing of similar private or joint-stock institutions. If this be the ground. upon which the existing life companies would be prepared to oppose a Government scheme, we would ask them to remember the French proverb, ** Qui s excuse, s' accuse." It is for the insurers or depositors to decide which is the best company or bank to do business with. Our critic is evidently a firm believer in the efficacy of State supervision. We frankly con- fess that we are not, and there are hundreds who are of our way of thinking. There are thousands more whom the present life companies never reach, but who could all be induced to insure by the offer of a Govern^ ment policy. Where is the injustice in such a gap be^ ing supplied ? We do not quite understand the nature of the second reason given, but if it is meant that in- stead of the premiums being paid to add to the accu- mulations of a few companies the Government would I 22 desire to see the same — through a medium offered — enriching the country at large, we readily admit that such is the end we advocate. We cannot allow that life insurance, like fire insurance, is a branch of com- merce, the latter being trade while the former is in- vestment. The writer of the article we are reviewing would seem to feai- that were the Government to open a life insurance department the existing companies would find themselves with their occupation gone — which, by the way, is not a very high compliment to their stiength or stability — and then, with charming inconsistency, he endeavours to prove that the Govern- ment would assuredly fail in the object it would have in view. The paper boldly asserts that Canada can boirow all the money she requires abroad at four per cent., whereas we find, according to the Finance Min- ister's statement for the year ending 30th June, 1878, that the debt of Canada, payable in London, was $121,- 244,41G, and the interest thereon $5,780,540, which is more nearly five than four per cent., besides being an annual loss of so much money to the country. Again, with the most surprising contradiction, our contempor- ary, after observing the ease with which Canada can borrow — a pretty good proof that her credit is good — goes on to assert that " from present appearances it is impossible to predict what may be the condition of public credit twenty, thirty, forty or fifty years hence." ' ■■'< 23 We must thank our critic for having helped our scheme so well be proving the weakness of those who attack it. 1,- is ,n n, •r- ,n [is lof No. 8.— SURRENDER VALUES. Having disposed of a weak attack on the above sub- ject, we come to the question of surrender values, which for the uninitiated simply means the amount payable to the insured at th^ end of any number of years, sup- posing he either cannot or does not desire to continue the policy. We think it will be readily admitted that the said surrender value is almost invariably absurdly inadequate, in many cases being purely nominal when compared to the amount of premiums already received upon the policy. It is this inequitable state of things we would like to see remedied, for we hold that life in Hurance, properly conducted, should be an investment for the insured or his heirs. To be informed when one has paid some ten or fifteen annual premiums that in case cf withdrawal the policy is worth less than half of what those premiums amount to, savours not only of hardship, but of absolute injustice. To rectify this, we think that the Dominion Government, were it to estab- lish a life insurance department, might adopt a scheme something after this fashion : If an insurer wished from any cause to withdraw after having paid five annual premiums, or a less number, the Government 24 would band him a Consol for the exact amoimt of the premiums paid, bearing interest at the rate of three per cent, per annum. Should the number of premiums have exceeded five, but not reached ten, then the Con- sol should bear four per cent, interest ; over ten and up to twenty, 4J per cent. ; and when more than twen- ty annual premiums had been paid, five per cent. Tiiat this would be a very attractive feature we feel con- vinced ; and that it would also be perfectly feasible> may be easily illustrated. Supposing an annual pre- mium cf $10 has been paid regularly for ten years, the surrendei" value of the policy would be a Consol of SI 00 , bearing interest at 4 per cent., to meet which, together with expenses, &c., it will be found, calculating com- pound interest at 4 J per cent., that rather over $125 has been received ; or take it at twenty years, and the Consol would be for $200 at 5 per cent. ; whereas the le- ceipts, still taking the compound interest at 4| per cent., amount to over $313. Of course we fix the in- terest on the surrender Consol — if we may coin the word — lower when taken out during the first few years then afterwards. This will be readily comprehended when it is seen that the accumulations by compound interest only amount to not quite 10 per cent, of the total premiums at the end of five years ; whereas in ten years they add up to 25 per cent., and in twenty years to over 50 ])er cent. We shall next proceed to consid- er these accumulations as connected with tbe Uquida* 25 tion of our foreign national debt. Meanwhile, if any ordinary life company ofter similarly favourable surren- der values to their policy-holders, we shall be glad to hear from them. No. 9— S'J'ATE SUPERVISION. In connection with this subject it will not be out of place to consider what is called State {i.e., Government) supervision of insurance companies, especially at this time, when there is a movement being attempted in New York State, to dispense with what we firmly be- lieve to be one of the gi-eatest shams and delusions ever perpetrated upon a confiding public. Superinten- dent Smyth, finding that a rebellion was on foot to de- pose him from his throne, issued a circular to all in- surance companies transacting business in New York State, requesting their individual views as to the effect likely to be produced by the abolition of State super- vision. The majority of the replies were just what might have been expected, for, as the New York Un- derwriter cleverly put it, Mr Smyth resembled Mr. Squeers, of " Nicholas Nickieby," with a cane in his hand ready to reprimand sulkiness, and insisting that all should be joy and gladness. Two or three companies* however, were honest enough to sulk, and one appears to have been guilty of poking fun at its Mr. Squeers, for no one who read the reply of the manager of the mim 26 Royal Insurance Company could fail to be reminded of Pope's lines, — " Damn with faint praise, and without sneering teach the rest to sneer." We are glad to find our general view on the subject so completely endorsed by one of the soundest underwriters on this continent. When an attempt was made in England to pass an Act for State supervision, we believe almost the identical words used by Mr. Gladstone were, that a company might conform to all the requirements of the Govern- ment Inspectors for a hundred years, and yet be utterly insolvent the whole of that period. We venture to assert, that State supervision has never saved the policy- holders one single dollar. Will those insured in the Continental Life, the American Popular, or the Globe Mutual, ever have occasion to thank Mr. Si .j th for his fatherly protection ? We must not be too hard on Mr. Smyth, however, for he has an impossible task to per- form. We might ask our friend Professor Cherriman what kind of a staff he would require for the purpose of examining the securities of, say, fifty millions of assets; and yet one of Mr. Smyth's companies, the Mutual Life, has nearly double that amount to be checked over. A more palpable farce it is scarcely pos- sible to conceive. The best proof of this is to be found in the fact of a company like the Globe Mutual having been permitted to continue, when the leading journals are all agreed that it has been insolvent for years. Can Mr. Smyth guarantee all the other life companies which 27 he professes to supervise ; or can our eountiymen fail to see that a scheme of Government life insurance is the only true inspection, so far as that branch of insur- ance goes, and that it supplies the substance for the shadow ? We must confess our surprise that a system so palpably absurd should have gi-own up in the States, where they pretend to have completely thrown over the patriarchial style of government. Had it been under an autocracy like Russia, professing a paternal solicitude for its children, then we could have comprehended it, and exclaimed " Maxima dehitur piieris reverential but we are puzzled at our " cute " neighbours becoming so hookwinked that they risk their property and earn- ings in any institution which has the superintendent's certificate attached. By the Dominion Government grasping the reins of life insurance in its own hands, Canada may be saved the record of fraud and corrup- tion through which our neighbours have been (and who can predict the future ?) passing of late years, in spite of — or shall we say assisted by — this boasted State Supervision. No. 10.— TRANSFER OF FOREIGN DEBT. In concluding, for the present at all events, our re- marks upon the above subject, we must refer to the advantage to be derived from the adoption of the same, in connection with our foreign indebtedness, and the time MMiii mm S8 it.:' ■ft- it would take to transfer the latter intoCanada, a p)liey which we venture to repeat is most truly " national," and in dealing with which all " party " spirit should be banished for the sake of the general welfare. Taking the Finance Minister's returns it will be found that our foreign debt is rather over $120,000,000 redeemable at various dates extending from the present time to the year 1910; and the question is how soon we can wipe out what draws away annually a certain amount of wealth from the country, or, in other words, transfer said debt to our own people. When commenc- ing these articles it was assumed that an annual in- come of $15,000,000 could be collected by the Govern- ment for life insurance, and although such figures were used chiefly as an illustration, we see no reason why they should be wide from the mark. However, to show the gains which would accrue from a Govern- ment Life Department formed upon the most moderate dimensions we will suppose a premium income of $5,000,000 per annum obtained for twenty-five years, and making ample allowance for expenses and death claims — the latter to be paid in consol scrip bearing () per cent, interest — we shall find that the net income at 4J per cent, compound interest, in the time named, vvou]«- J . . ..t ti between $150,000,000 and $200,000,- 000, a:?' ^^^ai j!«r:i^ as this ap}>ears, our readers can test its accitrjAcv i- ' then;selves^ for the $5,000,000 income 29 without deductions at the same compound interest would in 25 years amount to the enormous sum of over $220,000,000 ! Thus we see that with a Government Life Department it is not only possible but quite pro- bable that within a (juarter of a century our foreign debt could, be owing at home instead of abroad, and the interest thereon at present collected by taxes abolished. It has been hinted in the attack made upon Govera- ment Life Insurance before noticed, that it would open the door for political corruption in the shape of sad- dling the department with the undesirable lives of friends to the ruling powers. A more absurd charge could scarcely have been brought forward, for it might as well be said that the Government Savings Bank would accept spurious coin, or " bogus " notes from friends of the Receiver General or his subordinates. Our scheme we maintain would tend to purify, not corrupt, the political atmosphere, inasmuch as it would increase the numbers of those directly interested in the Government, and a man thinks twice about robbing himself however little he may hesitate to mulct his neighboui". When the soldier dies in defence of his country, we repeat to his memory the words of Horace, learned at our school deski " Dvlce et decorum est pro patria mori," but on the other hand Canada would not forget to pass as deserving a eulogium upon her statesmen 3a who, in the best sense of the term, LIVED for their country by removing heavy obligations and spreading plenty and happiness over the land. We have written to little purpose if we have not pointed out the legitimate means leading to that end. M leir ing Dot nd.